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> Asking "can modern monetary theory work" is sort of like asking "can I recreationally use heroin and not get addicted". The answer to both of these questions

> Asking "can modern monetary theory work" is sort of like asking "can I recreationally use heroin and not get addicted". The answer to both of these questions is yes, in theory both are possible. But look at the realities of these situations. Sounds like the theory is wrong then

manfredo 8y ago
The theory is correct it's just not feasible or reliable to apply. Lots of things have a correct underlying theory but are too difficult to apply. Nuclear powered aircraft is correct in theory. There's no reason why we couldn't use thermonuclear power to spin a turboprop to generate thrust. But in practice, there's no way to make a nuclear pressure vessel light enough to mount on an airplane. At least not with current technology. (Maybe we just have a semantics mismatch of what we refer to by "theory")
- nostrademons 8y ago
  Communism too, for an example directly related to economics. If the central planning board has perfect information about all consumers' desires and all costs of production and acts perfectly rationally, communism is significantly more efficient than capitalism. The central planning board never has perfect information, and in the absence of it, usually tries to maximize the welfare of the individual humans that make it up. The result was nearly 100 million people killed and widespread suffering, for what was supposedly going to be a utopian society.
  - jl2718 8y ago
    Excellent theoretical analysis. Unfortunately wrong. It assumes that central planning works with perfect information. This would be true if everybody’s primary motivation was for the common good. Maybe true for most people. Not for those who seek power.
    - nostrademons 8y ago
      That's what I mean by "acts perfectly rationally", which is another idealized abstraction that could be defined as "maximizes the unweighted sum of the utility functions given to it". In other words, if we replaced the central planning board with a computer and gave it full information of the utility functions of all citizens and the cost of production for each of these goods and services, it could in theory come up with an ideal solution. Coming up with full information on utility and cost functions across all possible things that could be produced is left as an exercise to the reader.
- Anderkent 8y ago
  AFAIK there's no actual theory - no specific model one can evaluate. The couple attempts by economists to critique MMT were always met with the response that the thing being critiqued isn't actually MMT (but never with specifics of how it is different).
  - deleted 8y ago
    [deleted]
  - dools 8y ago
    So many specifics have been provided. So, so many.

manfredo 8y ago

The theory is correct it's just not feasible or reliable to apply. Lots of things have a correct underlying theory but are too difficult to apply. Nuclear powered aircraft is correct in theory. There's no reason why we couldn't use thermonuclear power to spin a turboprop to generate thrust. But in practice, there's no way to make a nuclear pressure vessel light enough to mount on an airplane. At least not with current technology. (Maybe we just have a semantics mismatch of what we refer to by "theory")

nostrademons 8y ago
Communism too, for an example directly related to economics. If the central planning board has perfect information about all consumers' desires and all costs of production and acts perfectly rationally, communism is significantly more efficient than capitalism. The central planning board never has perfect information, and in the absence of it, usually tries to maximize the welfare of the individual humans that make it up. The result was nearly 100 million people killed and widespread suffering, for what was supposedly going to be a utopian society.
- jl2718 8y ago
  Excellent theoretical analysis. Unfortunately wrong. It assumes that central planning works with perfect information. This would be true if everybody’s primary motivation was for the common good. Maybe true for most people. Not for those who seek power.
  - nostrademons 8y ago
    That's what I mean by "acts perfectly rationally", which is another idealized abstraction that could be defined as "maximizes the unweighted sum of the utility functions given to it". In other words, if we replaced the central planning board with a computer and gave it full information of the utility functions of all citizens and the cost of production for each of these goods and services, it could in theory come up with an ideal solution. Coming up with full information on utility and cost functions across all possible things that could be produced is left as an exercise to the reader.
Anderkent 8y ago
AFAIK there's no actual theory - no specific model one can evaluate. The couple attempts by economists to critique MMT were always met with the response that the thing being critiqued isn't actually MMT (but never with specifics of how it is different).
- deleted 8y ago
  [deleted]
- dools 8y ago
  So many specifics have been provided. So, so many.