Friend of EPJ, Robert Murphy, provides some background and criticism of its foundations, here*. To say that so-called MMTers come to some rather unconventional conclusions is understated, and something from which they do not run. For instance, Murphy writes, "if the federal government runs a budget surplus, then by simple accounting the private sector can't save."
However, at its heart, MMT appears to be based on accounting identities derived from national income accounting methods, which are themselves based upon imperfect abstractions. These are the same familiar equations [sadly] taught in nearly every economic intro course:
However, at its heart, MMT appears to be based on accounting identities derived from national income accounting methods, which are themselves based upon imperfect abstractions. These are the same familiar equations [sadly] taught in nearly every economic intro course:
GDP = C + I + G + (X — M)
and
GDP = C + S + T
Austrian economist, Frank Shostack, tears apart GDP and its foundations here (emphasis mine):
To gain insight into the state of an economy, most people rely on a statistic called Gross Domestic Product (GDP). The GDP framework looks at the value of final goods and services produced during a particular time interval, usually a quarter or a year. This statistic is constructed in accordance with the view that what drives an economy is not the production of wealth but rather its consumption. What matters here is demand for final goods and services. Since consumer outlays are the largest part of overall demand, it is commonly held that consumer demand sets in motion economic growth.By focusing exclusively on final goods and services, the GDP framework lapses into a world of fantasy wherein goods emerge because of people's desires. This is in total disregard to the facts of reality (that is, the issue of whether such desires can be accommodated). All that matters in this view is the demand for goods, which in turn will give rise almost immediately to their supply. Because the supply of goods is taken for granted, this framework completely ignores the whole issue of the various stages of production that precede the emergence of the final good.In the real world, it is not enough to have demand for goods: one must have the means to accommodate people's desires. Means—i.e., various intermediate goods that are required in the production of final goods—are not readily available; they have to be produced. Thus, in order to manufacture a car, there is a need for coal that will be employed in the production of steel, which in turn will be employed to manufacture an array of tools. These in turn are used to produce other tools and machinery and so on, until we reach the final stage of the production of a car. The harmonious interaction of the various stages of production results in the final product.The GDP framework gives the impression that it is not the activities of individuals that produce goods and services, but something else outside these activities called the "economy." However, at no stage does the so-called "economy" have a life of its own independent of individuals. The so-called economy is a metaphor—it doesn't exist.By lumping the values of final goods and services together, government statisticians concretize the fiction of an economy by means of the GDP statistic. By regarding the economy as something that exists in the real world, mainstream economists reach a bizarre conclusion that what is good for individuals might not be good for the economy, and vice versa. Since the economy cannot have a life of its own without individuals, obviously what is good for individuals cannot be bad for the economy.The GDP framework cannot tell us whether final goods and services that were produced during a particular period of time are a reflection of real wealth expansion, or a reflection of capital consumption.For instance, if a government embarks on the building of a pyramid, which adds absolutely nothing to the well-being of individuals, the GDP framework will regard this as economic growth. In reality, however, the building of the pyramid will divert real funding from wealth-generating activities, thereby stifling the production of wealth.Because the GDP framework completely disregards the intermediate stages of production, it can be of little help in the assessment of boom-bust cycles. It is little wonder then that mainstream economists are forced to conclude that recessions are a response to a sudden fall in consumer spending. Consequently, it is quite logical within the GDP framework to advocate loose monetary policies to revive the "economy."The whole idea of GDP gives the impression that there is such a thing as the national output. In the real world, however, wealth is produced by someone and belongs to somebody. In other words, goods and services are not produced in totality and supervised by one supreme leader. This in turn means that the entire concept of GDP is devoid of any basis in reality. It is an empty concept.
Quoting the Austrian masters on the fallacy of national accounting:
According to Mises the whole idea that one can establish the value of the national output is somewhat far-fetched:The attempt to determine in money the wealth of a nation or the whole mankind are as childish as the mystic efforts to solve the riddles of the universe by worrying about the dimension of the pyramid of Cheops.Furthermore,If a business calculation values a supply of potatoes at $100, the idea is that it will be possible to sell it or replace it against this sum. If a whole entrepreneurial unit is estimated at $1,000,000 it means that one expects to sell it for this amount the businessman can convert his property into money, but a nation cannot.In addition to all these issues, there are serious problems regarding the calculation of the GDP statistic. To calculate a total, several things must be added together. To add things together, they must have some unit in common. It is not possible to add refrigerators to cars and shirts to obtain the total of final goods. Since the total real output cannot be meaningfully defined, obviously it cannot be quantified.To solve this problem, economists employ total monetary expenditure on goods which they divide by an average price of those goods. There is, however, a serious problem with this. What is price? It is the rate of exchange between goods established in a transaction between two individuals at a particular place and a particular point in time. The price, or the rate of exchange of one good in terms of another, is the amount of the other good divided by the amount of the first. In the money economy, price will be the amount of money divided by the amount of the first good.Suppose two transactions were conducted. In the first transaction, one TV set is exchanged for $1,000. In the second transaction, one shirt is exchanged for $40. The price or the rate of exchange in the first transaction is $1000/1TV set. The price in the second transaction is $40/1shirt. In order to calculate the average price, we must add these two ratios and divide them by 2. However, $1000/1TV set cannot be added to $40/1shirt, implying that it is not possible to establish an average price.It is interesting to note that in commodity markets, prices are quoted as Dollars/barrel of oil, Dollars/ounce of gold, Dollars/tonne of copper, etc. Obviously, it wouldn't make much sense to establish an average of these prices. On this Rothbard wrote, "Thus, any concept of average price level involves adding or multiplying quantities of completely different units of goods, such as butter, hats, sugar, etc., and is therefore meaningless and illegitimate."
More on the fallacy of average price level, and getting to the heart of the matter (that GDP is simply a tool of coercion for the ruling class):
The powerful conclusion:The employment of various sophisticated methods to calculate the average price level cannot bypass the essential issue that it is not possible to establish an average price of various goods and services. Accordingly, various price indices that government statisticians compute are simply arbitrary numbers. If price deflators are meaningless, however, so is the real GDP statistic.So what are we to make out of the periodical pronouncements that the economy, as depicted by real GDP, grew by a particular percentage? All we can say is that this percentage has nothing to do with real economic growth and that it most likely mirrors the pace of monetary pumping.As a rule, the more money created by the central bank and the banking sector, the larger the monetary spending will be. This in turn means that the rate of growth of what is labeled as the real economy will closely mirror rises in money supply.So it is no wonder that in the GDP framework, the central bank can cause real economic growth, and most economists who slavishly follow this framework believe that this is so. Much so-called economic research produces "scientific support" for popular views that, by means of monetary pumping, the central bank can grow the economy. It is overlooked by all these studies that no other conclusion can be reached once it is realized that GDP is a close relative of the money stock.One is tempted to ask, why it is necessary to know the growth of the so-called "economy"? What purpose can this type of information serve? In a free unhampered economy, this type of information would be of little use to entrepreneurs. The only indicator that any entrepreneur relies upon is profit and loss. How can the information that the so-called "economy" grew by 4 percent in a particular period help an entrepreneur make profit?What an entrepreneur requires is not general information but rather specific information regarding the demand for his specific product, or products. The entrepreneur himself has to establish his own network of information concerning a particular venture.Things are quite different, however, when the government and the central bank tamper with businesses. Under these conditions, no businessman can ignore the GDP statistic since the government and the central bank react to this statistic by means of fiscal and monetary policies. Likewise, participants in financial markets closely follow the GDP statistic in order to assess the likely responses of the central bank.The entire army of economists is busy guessing whether the central bank will lower, or raise, interest rates. Moreover, to provide a rationale for all this, a new form of economics labeled macroeconomics was invented. Needless to say, this type of economics doesn’t deal with the real world but rather with a nonexistent entity called the economy.By means of the GDP framework, government and central bank officials generate the impression that they can navigate the economy. According to this myth, the "economy" is expected to follow the growth path outlined by omniscient officials. Thus whenever the rate of growth slips to below the outlined growth path, officials are expected to give the "economy" a suitable push. Conversely, whenever the "economy" is growing too fast, the officials are expected to step in to cool off the "economy's" rate of growth.
If the effect of these policies were confined only to the GDP statistic then the whole exercise would be harmless. However, these policies tamper with activities of wealth producers and thereby undermine people's well-being. To take a particular instance, by acting to make the nonexistent entity the "economy" more efficient, U.S. government officials are busy destroying a major wealth generator—Microsoft. Likewise, by means of monetary pumping and interest rate manipulations, the Federal Reserve doesn't help generate more prosperity, but rather sets in motion a "stronger GDP" and the consequent menace of the boom-bust cycle—i.e., economic impoverishment.We can thus conclude that the GDP framework is an empty abstraction devoid of any link to the real world. Notwithstanding this, the GDP framework is in big demand by governments and central bank officials since it provides justification for their interference with businesses. It also provides an illusory frame of reference to assess the performance of government officials.
Bob Roddis writes in the comments in Wenzel's post about MMT's intellectual heritage:
Never forget that MMT godfather Abba Ptachya Lerner’s magnum opus was “The Economics of Control”:Chapter l. INTRODUCTION. THE CONTROLLED ECONOMYThe fundamental aim of socialism is not the abolition of private property but the extension of democracy. This is obscured by dogmas of the right and of the left. The benefits of both the capitalist economy and the collectivist economy can be reaped in the controlled economy.
And again, in a subsequent comment:
More things I have dug up on MMT…1. Abba Lerner was a longtime economic Stalinist. He writes in the preface to “The Economics of Control” that he was long resistant to the any “free market” analysis but finally he thanks Joan Robinson for getting him to overcome his prejudices against “Mr. Keynes great advancement in economic understanding”. Great. A Stalinist tempered with some Keynesianism. That’ll work, right? This is their starting point and helps explain how they can be so joyous when they explain “The government is not revenue constrained!!! [how cool is that??]”2. In 1980, two years before he died, Abba Lerner (1903-1982) was dabbling in the following price control system based upon this article by David Colander, a co-author of a 1980 book with Lerner:Lerner found the implications of sellers’ inflation so important that, beginning in the 1960s, he changed his research program to center on finding cures for sellers’ inflation. Initially he toyed with various administrative wage and price control policies, but he found those lacking and soon gave them up. He replaced them, first, with a tax based incomes policy and ultimately, a market based[??!!!] incomes policy in which property rights in prices are set and individuals have to buy the right to change prices from others who change their price in the opposite direction. It was this idea that formed the basis of our market [???!!!!] anti inflation (MAP) book. (Lerner and Colander 1980) Under MAP, rights in value added prices would be tradable so that any firm wanting to change its nominal price would have to make a trade with another firm that wanted to change its nominal price in the opposite direction. Thus, by law, the average price level would be constant but relative prices would be free to change [@page 12]So, we now know enough about MMT to know that Abba Lerner wrote a book in 1980 proposing a ghastly and barbaric Rube Goldberg system where one would be precluded from raising (setting) one’s one prices without trading the right to do so with somebody else under penalty of statist law. But I thought the MMTers could cure inflation just by changing the tax code. Hmmm.
And it was Keynes, himself, in collaboration with a few other economists and statisticians at the beginning of World War II, who invented the national accounting constructs that would give rise to GNP and GDP. All for the purpose of justifying a protracted, expensive war. Writes Judo Cuyvers in the Economic Journal:
The elaboration of national economic accounts and detailed national income estimates is generally considered to be a direct result of Keynes's emphasis on the main macroeconomic determinants of employment and aggregate demand.
Scholars have repeatedly stressed Keynes's impact in the course of the first few years of the Second World War, or have pointed to Colin Clark's pioneering calculations during the 1930s. However, as we shall show in the following pages, it was at the very beginning of the Second World War, not in 1937 nor in 1941, that British national income accounting entered a critical phase. Determined to convince the authorities and public opinion of the necessity of financing the war effort properly, Keynes immediately set himself the task of elaborating a proposal based on statistical evidence. It was during the period between Octboer-November 1939 and February 1940, when Keynes was working on his December 1939 article in this JOURNAL and subsequently on his pamphlet How to Pay for the War, in close statistical collaboration with Erwin Rothbarth, that the first double-entry national accounts were developed and the still very crude accounting and estimation procedures became essential steps in economic policy making.
In true Ministry of Truth fashion, decades of Keynesian and related indoctrination continues to facilitate and propagate the lie that the banking system is somehow not regulated enough--too free market. As Tom Woods recently wrote:
She likewise thinks the banking system is pretty close to a free market – after all, hasn’t she seen news reports about bank "deregulation"? To the contrary, the banking system is perhaps the least free-market sector of the entire economy. The whole system is overseen by the government-created Federal Reserve System, which presides over a system-wide cartel. It involves monopolistic legal tender laws, a monopoly of the note issue, artificial disabilities on other media of exchange apart from the depreciating dollar, and various forms of bailout guarantees. For a sense of what a free market in banking would actually look like, read Murray N. Rothbard’s The Mystery of Banking.
Even if we ignore MMT's dubious historical origins and assume beneficent intent, it's important that Austrian economics not be conflated with MMT and the work of its practitioners, such as Wray, Mosler*, Aureback, Mitchell, Fullwiler. Why make the distinction? As governments and economies fail around the world, there is and will be increasing demand for alternatives. MMT ensures the status quo ante. It's simply another system for central planning and price fixing. And prices matter, as I wrote last November:
Though it's possible we will eventually transition to a new Ponzi (which is in the works), the case for optimism can be made that a better informed public with no prospects for a future bailout will rebuild a system in which prices are given the respect they deserve.
* EPJ Regular, Taylor Conant, produced a series of critiques of Warren Mosler's book called "Seven Deadly Frauds of Economic Policy", which itself is based upon MMT.
BobE,
ReplyDeleteA great compendium and summary inquiry into this subject which will hopefully prove useful to all late-comers to the fight. I appreciate the nod, as well.
I believe we need a new slogan, "Syndicate for freedom!" with Bob English as our mascot.
Thanks, Taylor. Austro-Contrarian Capitalist provides some more great links re: GDP and Minsky in Wenzel's comments section and at his blog:
ReplyDeletehttp://austrocontrariancapitalist.blogspot.com/
BobE,
ReplyDeleteThanks for the link! Austrian econ and value investing? What a wonderful combination. I'll have to visit more often.
(Damn, guy beat me to the punch with my latest blog idea... oh well, going to do it anyway!)
Decided to wait until Mon. or Tues.
ReplyDeleteAs a former expatriate (from the US) business person, I spent time in far flung places whose languages are not among the world's well known. As a result, I get caught up alot on names. They tell you much of what the namer wants you to take for granted. Ask someone you know why the PATRIOT Act is called that. Count how many know it's an acronym. Don't bother counting how many will know the words of the acronym wihtout looking it up (the count will be zero). On this MMT argument, consider a moment of comparative satire:
ReplyDelete"The Holy Roman Empire was neither Holy, nor Roman, nor an Empire -- discuss." Mike Meyers, Cawffee Tawk, SNL.
Now, as a non-specialist, it occurs to me that Modern Monetary Theory is none.
Modern: would that be since 1913, or 1972? In any event, the word "modern" sounds as clunky here as Hemingway in lit class. "Modernists" What era are MMTers trying to eradicate from validity by using this talisman term? MMT presumes, axiomatically, a FED, a fiat currency, and an electronic banking system, no? Is this term supposed to evoke the heady days of single engine Piper Cubs ferrying plastic crates full of dead-tree checks between white-painted branches across the dusk gloaming over the fruited plains? The wump-wump of rubber-stamp cancellation? Any theory logically bound to such a set of fragile, temporary, and artificial mechanisms fails to attain economic scope. This term restricts MMT to the status of engine schematic. Far from a comprehensive theory of lift.
Monetary: So long as the money is United States Dollars, as convertible into Federal Reserve Notes, or their electronic equivalents, yes? Does MMT work for rupees? I find no obvious answer to this in the literature. What other currency now in use can be described as "being spent into existence?" Unless that phrase is to be transmogrified into a semantic equivalent to "printed into existence?" And would that lexical alchemy really advance any MMT argument toward a desirable end? The chauvinistic synecdoche of the middle term alone should offend at least 6,65 billion people.
Theory: this word is supposed to refer to the status an assertion is granted after sufficient evidence, combined with multiple replications, has promoted it from hypothesis. There have been a few exceptions in actual usage, in the American Heritage sense; Creation Theory; Theory of Intelligent Design; Eugenics Theory. Maybe the MMTers mean it like those. In the historical record, where is the evidence that MMT is anything other than a set of descriptions for limited systematic functions of a small subroutine of a vastly larger system?
There is ample square footage between the name of this construct and what it refers to to dismantle it on nominal grounds alone. The Modern Monetary Theory cannot be expanded, by means of any evidence describable in terms of mass or temperature, beyond the Current Assertions Regarding Federal Manipulation of US Dollars.
CARFMUD.
MMT can explain the operations of any monetary system.
DeleteThat being said, most discussion & most statements concern specifically floating currencies in which all nation debt is denominated.
Ellis Wyatt,
ReplyDeleteThat was beautiful!
Ellis, your use of "transmogrified" registered an email that went viral maybe a decade ago. It reprinted a letter from the Smithsonian to a man who sent the Institution items he dug up in his backyard. Each with a detailed scientific assessment of how it fit into the dinosaur archaeological record.
ReplyDeleteThe conversion of a T-Rex femur into something more familiar was explained as the Transmogrification Of Ferrous Ions in a Structural Matrix (TOFISM). He had sent a rusted wrench.
A few of the commentators at Wenzel's thread recoiled from Koerner's words and from him being used as a source. To be fair, there is a much better presentation here (not that it is any less incorrect):
http://pragcap.com/resources/understanding-modern-monetary-system
The author says, "The name MMT is a bit of a misnomer as it is really just a way of describing how modern monetary systems work and is not necessarily a theory."
He goes on to say, "The theory is all in its application. Some believe government should be highly involved in managing its currency while others believe it should be involved to a lesser extent."
Given the blind faith in central planning on at least some level and CARFMUD, MMT is a clear cut case of TOFISM.
It is quite generous to call the labeling of something which is not a theory, a theory, a "misnomer."
ReplyDeleteI don't know what CARFMUD is (somehow, the only reference on all of Google is to this very post) and TOFISM is new to me. But I think we can all agree that this "misnomer" is a perfect example of HDYFTU? (How Do You F That Up?)
@ Mr. Conant:
ReplyDeleteSorry to have left that thought suspended --
Current Assertions Regarding Federal Manipulation of US Dollars - the phrase from the concluding sentence of that post, and all I believe MMT is capable of claiming to be, as an operant set of statements.
@Bob: And here I was simply thinking of Calvin's cardboard box for magically transforming himself into a tiger:
http://postimage.org/image/gjyfgf0k/
Austrians don't appear to understand one simple fact. The government exists for a public purpose. That government creates a common currency that we all acknowledge is fiat currency. If the government never creates the currency in the first place then it doesn't exist.
ReplyDeleteAustrians try to circumvent this one very basic idea through fear mongering, ideological debates, claiming the data is wrong, conspiracy theory, etc. This is a simple fact. If the US government doesn't name the US dollar as the official currency of the USA and then create some of those dollars to be used then it is factually impossible for any private sector entity to obtain those dollars.
This should be common sense, but politics clouds your judgment.
DanielR,
ReplyDeleteLet's examine your "one simple fact" and start by defining our terms.
Please define the following terms which you used:
"public" - Who is the public?
"purpose" - What is the purpose which government is supposed to serve?
We can proceed from there.
I'm as apolitical as they come, and am quite open-minded. Anytime I here "public purpose" or "public good", I am rightfully skeptical. You write:
ReplyDelete"If the US government doesn't name the US dollar as the official currency of the USA and then create some of those dollars to be used then it is factually impossible for any private sector entity to obtain those dollars."
You've stumbled on quite the tautology there, but have not asked the relevant question of why the private sector would need any dollars to begin with. Money predates the state, and private scrip has been in use in the West since at least medieval times. There is simply no need for a state issued currency.
Thanks for your comments.
I know you're going to try to turn this into a semantic debate because that's what you guys are best at.
ReplyDeleteThe public is the citizens of a country. Who else would it be? Citizens form nations for simple reasons. As a species, we depend on one another for our survival. As the species has evolved small groups have become large groups. We call them "nations" now and they are represented by "governments".
Now you can proceed to make your semantic debate that will display how little you understand about our monetary system and the evolution of man.
Bob,
ReplyDeleteYour statement that there is no need for a state issued currency implies that there is no need for the state. After all, you cannot have the state without state money.
Again, this should be common sense, but it escapes you.
DanielR,
ReplyDeleteI didn't realize we were discussing the evolution of man now, as well. I am trying to stick to one subject for the time being, and I made a simple, small request of you that you seem to have had trouble following. I asked you to also define "purpose".
I am happy to proceed with my "semantic debate" (note, I haven't debated your semantics so far, only asked you to properly define them so I know what it is you mean by your terms when we debate) at the point you decide to comply with my request.
I'll accept your reasoning in good faith if you'll pledge to do the same and not attack mine beforehand.
It is common sense, and lots of things escape me. But not this. The paradox you impute to me is simply you bumping up against the limits of your self-created cognitive reality. Apparently, you have not considered the possibility that I believe there is no need for the state.
ReplyDeleteThe two are synonymous. You can't discuss the creation of governments without understanding how the evolution of man resulted in their existence.
ReplyDeleteAustrians clearly don't understand this. Which is not surprising because most Austrians are bible thumpers who reject the fact that man is in fact evolving.
The purpose of government is always to enhance the survival of the species through increased prosperity. That might involve national defense, caring for the elderly, etc. Obviously, public purpose is only as perfect as the imperfect men and women who implement that policy, but there's an obvious reason for the existence of these governments that Austrians simply can't grasp due to their ideological beliefs.
BobE,
ReplyDeleteLet's be clear, semantically, about whose "need" for the State is lacking here, lest you upset Daniel:
It is yours.
Now, Daniel must demonstrate to you why you are wrong for subjectively valuing the State at nil, or less.
I would imagine this response would somehow entail Daniel explaining how he got inside your head to examine your internal value generation mechanism and notice that a few screws or loose, or a few gears have ground flat. Something like that. Otherwise, I will be curious to see on what basis he makes the argument that you are wrong to not value the existence of the State for purpose X, Y or Z.
Bob,
ReplyDeleteI am 10 steps ahead of you. If your anarcho capitsalist dream is realistic then why doesn't it exist anywhere on the face of the earth? Where is this great utopia that you dream of? It doesn't exist because it's not realistic. Again, you don't understand the evolution of man and our existence so your thinking is grounded in fantasy.
DanielR,
ReplyDeleteThis is the second time you have chosen to ignore my polite request that you fully define two simple terms you used. I will give you a third opportunity to demonstrate you are not willfully acting in a dishonest manner. If you fail to do so at that point, I will choose to disregard you and your arguments and consider you to be a dishonest person who does not merit a civil response.
For the record, I do not believe in god, any god, or the supernatural. I am not an adherent of any organized religion and I reject any claims of the existence or authority of supernatural agents or their supposed earthly representatives. I despise all fanciful notions equally and consider the "faithful" to be a sorrowfully self-deluded and intellectually immature (and emotionally childish) group of individuals taken as a whole. Any attempt to assassinate my character or ability to reason be identifying me with this group (guilt by association) is necessarily false.
You may proceed!
The seminal treatise on Austrian economics, Human Action by Ludwig Mises, goes into great detail about the earliest history of money and the state. Other branches of economics simply start in the middle.
ReplyDeleteAs to your comment re: anarchocapitalism, at an earlier time, constitutional republics did not exist anywhere on earth. So what have you demonstrated?
From your tone and slurs, it's evident you're simply a troll, so this will be my last comment to you.
Taylor,
ReplyDeleteI gave you both definitions (in different comments) even though you did not deserve the answer to either. Now, you sir, may proceed.
Bob,
ReplyDeleteI don't expect you to engage me as it's clear that you are far outmatched. You have nothing to gain.
Yes, monkeys live without governments. But again, are we really going to go back to prehistoric times to try to prove the rationality of modern economic theory? You simply cannot be serious with that line of thought.
Also Bob,
ReplyDeleteRandall Wray's book "Understanding Modern Money" has an entire chapter on the origins of money.
DanielR,
ReplyDeleteIf I am to understand you correctly, the "public" is the citizens of a country (but not the non-citizens who are present within the borders of that country) and the "purpose" of the public, which government is to be a means in attaining, is to enhance the survivability of the species (so now government is biological?) and it does this by "increased prosperity" which might be accomplished through examples given of "national defense" or "care for the elderly."
Do I have all of this correct so far? I want to make sure you don't challenge my understanding of what you said before I make a response based off of it.
Those are pretty vague definitions, but I'll let you proceed. Is this going anywhere counselor?
ReplyDeleteDanielR,
ReplyDeleteThey are the definitions you gave me. Are you now accusing yourself of vagueness? Maybe you can see the reason I asked you to precisely define them, rather than accepting your accusation that I was trying to avoid the self-evident truth of your propositions by engaging in semantic debates.
Your sarcasm isn't necessary. It's easier to discover the truth of a particular matter when you don't start the debate from the premise that your opponent is a helpless moron who has no chance of being right because his judgment is flawed by his preconceived religious inclinations and his blinding ideological bias.
If anyone's judgment is in question, it would be yours, as you accused me of possessing a barely functioning mental facility due to a religious disposition which is not mine. I am trying to overlook that act of haughtiness and give you the benefit of the doubt that it was a simple error and not an example of any debilitating preconceived ideological bias you yourself might possess.
I am asking that you please treat me with the same fairness if you can. If you aren't capable of this, I won't bother wasting your time as it's obviously quite valuable.
Taylor,
ReplyDeleteYou've spent 10 comments DEMANDING definitions to a remarkably broad topic. Would you like me to teach you the ways of the world while we're at it?
Let me make a demand of you. Since we live with governments and those governments create fiat currencies, how can the private sector ever obtain the currency which they are legal required to use if the government does not first create that currency?
The correct answer is that they cannot. And that simple point renders this entire discussion flawed. Bob's ENTIRE premise is wrong.
DanielR,
ReplyDeleteYou can't have it both ways. You can't accuse your opponents of being obsessed with semantic issues to the point of avoiding addressing self-evident truths AND admit that the definitions you provide are so vague as to be potentially useless in understanding the issues, as if this gives you some kind of crutch to lean on so you can make things up as you go.
It isn't fair to carry on an intellectual debate by essentially saying "I will know the truth when I see it" because the point of the debate is to find objective truths that are visible to all parties, not subjective opinions which have validity only in the mind of the beholder.
I wish to continue by addressing the initial point. If you want to continue debating Bob English on that particular point, maybe you can find a more honest and civil way to engage him such that it promotes a response. If not, I'd be happy to address it after we first get through the matter at hand.
So far, you have been extremely rude and sarcastic. I don't have much tolerance or patience for that, particularly when it is uncalled for as I haven't done anything to you personally besides try to get you to clarify your position, and point out that while you throw about challenges to everyone else's credibility, you have begun to undermine your own with your inaccuracies (re: accusing me of being a religious adherent when I am not, as if "Bible thumping" and the belief systems it entails have anything to do withthe present, rational debate at hand, which it does not).
Taylor,
ReplyDeleteYou're ignoring a very simply question. If the government never creates the currency then how do we obtain it?
That is the only question that matters to this entire discussion. The rest of pointless semantics. I understand that your tactic is to try to divert the argument into another direction so as to prove some other semantic point, but it's not happening on my watch.
Neither you nor Bob can answer my simple question and it is THE vital flaw in your entire outlook. Once you agree that all money is a creature of the state (a simple fact of modern fiat monetary systems) you have unwillingly accepted the MMT perspective and the rest is, as they say, history.
The truth hurts. You guys are wrong. And yes, I am incredibly insulted by your attempts here to trick your readers into thinking otherwise.
DanielR,
ReplyDeleteThere is nothing profound in observing reality as it exists. The creative intellectual act is devising a logically consistent theory which can be used to interpret it.
"Modern Monetary Theory" starts by observing reality as it exists. It then utilizes other, preconceived economic theories to interpret observed reality and avoids addressing the flaws of those theories being used to interpret observations by repeated accusations of "semantic debates". There's nothing profound about this.
Your argumentative style is abusive and bullying. Perhaps you forgot to take your attention deficit medication this morning but I told you repeatedly I wanted to stick to one argument and one debate at a time. There is plenty of time to get to your other points and arguments but they must be handled in a particular order and you haven't provided a reason for why an argument you introduced prior to mine should be addressed first, aside from your insistence that it's the "only one that matters" (from your point of view). Your opinion is no weightier than mine and gives you no special authority to make demands of priority.
I'm not trying to evade anything. I'd be happy to address your point. One problem that presents itself, however, is having a shared understanding of the definitions of words being employed to conduct the debate. Because we may not be using the same definitions, or because we may have different understandings of their implications, we will likely continually run against this obstacle in trying to understand each other. That is why, petty as you obviously think it to be, I keep emphasizing my desire to fully understand the meaning of the words you use, as you use them. I don't want to use your words or ideas in an effort to point out where I think your error in reasoning is, only to be accused after all that work of twisting your words or otherwise being dishonest in use of them.
Again, it helps the whole process if you don't approach this with the mindset that I am a wicked, stupid asshole whereas your job and mission on Earth is to point this out to me by treating me in a hostile, aggressive fashion.
Now, to get back to your definitions and assertion that government is instituted to increase prosperity, I want to supply the following proposition and you tell me if you are in agreement with it. If not, please explain where your disagreement lies. Please do not try to anticipate arguments or specific points until I make them when giving your response:
Value is a subjective notion dependent upon each individual's interpretation of what that means. Value is not objective and can not be dictated by a third-party to an individual or group of individuals. To achieve his/her value, an individual engages in purposeful action by identifying an end that is desirable based upon his/her values, and then choosing a means by which to attain it.
Within the realm of purposeful action there are two primary ways by which an individual can obtain their values-- in isolation, on their own, or with other individuals, via exchange.
An exchange by two individuals which occurs in a mutually willing manner is called a "voluntary exchange." A voluntary exchange is evidence of an increase in the wealth of the parties involved because value is subjective and the voluntary exchange of values implies that the parties so engaged are each exchanging a good or service of lesser subjective value for a good or service of greater subjective value.
An exchange by two individuals which occurs in a partially or mutually unwilling manner is called an "involuntary exchange." An involuntary exchange is evidence of a transfer of wealth of the parties involved at best and a destruction of wealth of the parties involved at worst because value is subjective and the use of coercion to instigate the exchange implies that at least one party is losing a good or service of greater value in return for a good or service of lower value (or no value).
See, you're trying to do exactly what I predicted you would. You are just trying to divert attention from my one simple question in order to prove all of your other semantic points.
ReplyDeleteNothing else matters aside from my simple question. Once you accept the reality that fiat money is always a creature of the state then you are accepting the very foundation of MMT. Of course, rejecting this is like rejecting the fact that the sky is blue, but that's another matter. You still haven't even noticed that MMT is not a theory at all and is really just a description of a fiat monetary system.
If you don't accept the reality that money is always a creature of the state then you're not working within our reality and there is no point discussing anything further. It's like arguing with an alien entity who doesn't understand our world. What is the point?
DanielR,
ReplyDeleteYou must be quite a buffoon. I do accept that fiat money is a creature of the State. I did in fact describe MMT as nothing more than an observation of this aspect of reality. I did in fact observe that there is therefore nothing profound about MMT if all it can offer is a description of observable reality, ie, "Fiat currency is a creation of the State."
What you seem to miss is that it is not "self-evident" that, having observed that fiat currency is a creation of the State, it is therefore implied that it is GOOD that the State issue such currency, that it ENHANCES SURVIVABILITY OF THE SPECIES that the State issues such currency, etc. etc.
To confirm or deny any of those propositions requires a logical theory to successfully interpret the significance of various observed facts.
For example, you and I might stand outside and observe that we are being made wet by condensed moisture descending from the sky. I might go on to develop a logical theory to explain this natural phenomenon as being called "rain", that it is moisture which had evaporated from the oceans and the lands due to heat caused by the sun, which then condensed into clouds and fell as this rain.
You might conclude that there are OBVIOUSLY gods and they are OBVIOUSLY contemptuous toward humans and they are OBVIOUSLY pissing in your eyes.
Of course, this metaphor is only tenuously connected to the situation at hand because that would be a physical/natural phenomenon which is more mechanistic ("deterministic") in its operation, whereas matters of the economy relate to thinking and acting man. But the principle that you are introducing flawed theories as self-evident truths and then attacking your opponents' attempts to explain your error by continuously referring back to actual, observable facts (fiat currency is created by the State) as if that somehow proves your related theory ("therefore... MMT") is indeed the same.
I never visit MMT websites and try to "debate" the adherents by starting with accusations of their intellectual incompetence and poor character. In fact, I don't try debating at their websites at all, as I perhaps share your opinion that to do so would be ineffective and pointless. Why then, you show up here and proceed to repeatedly savage and belittle me when I've made every attempt to go through this discussion in a systematic and patient way is beyond me. Maybe you're a masochist. I don't know. I don't even care, at this point.
The only masochists here are the ones walking through life with wool over their eyes.
ReplyDeleteYou say you accept the all fiat money is a creature of the state. And then you come right back and question whether that is a good thing. You don't even seem to understand your own contradiction. Governments and state money can't exist in solitude. They are dependent upon one another. This is what you don't understand. So, if you accept the fact that all fiat is a creature of the state then you accept the obvious existence of governments the purpose behind their foundation.
Now, if you want try to claim that governments should not exist then you should crack open another beer and keep drinking. If you want to accept the fact that governments exist (at least at the minimum to protect the citizens via a unified military) then you accept the existence of fiat money and must begin thinking about the world as it exists and not as you wish it existed. That's all MMT is. It is a realistic perspective of the monetary system that currently exists. That's all.
You guys are here trying to find ways to reject that. It's irrational.
Keep in mind - some MMTers want small government. Others want big government. But they all are working within the same framework that acknowledges our monetary reality. Governments will always exist as long as humans interact in a collective manner. The size of that government and its role is totally up for debate.
ReplyDeleteDanielR,
ReplyDeleteYou state: "So, if you accept the fact that all fiat is a creature of the state then you accept the obvious existence of governments the purpose behind their foundation."
This is a theory of government. Whose theory is it? Is it yours? Why is your theory authoritative on this subject?
Is it someone else's? If so, whose is it? And why is their theory the authoritative one?
This is the "it's not self-evident even though you keep saying it is" part. We have already agreed that appealing to a non-existent authority such as god is not a valid logical method for resolving this question. I would like to know whose authority you pledge, instead of god's, at which point we can discuss whether that authority is valid and whether that theory is founded on sound reasoning, because surely we must agree that if that person is not god, then their authority and reasoning are not beyond reproach, as god's supposedly is.
Also, I don't think you realize it, but your acceptance of the state theory of money directly refutes Bob's most important point in his last post - the one about the private sector being able to save without the government issuing currency.
ReplyDeleteWhose authority do we all pledge? Again, that should be an obvious answer. We transact in the fiat currency of the issuing nation because we incur a tax liability in doing business within that nation. That tax liability can only be extinguished through accumulation of the state's money. This is the inextricable link that you aren't understanding. Once government exists and spends for public purpose there is a bond between the private sector and the public sector.
ReplyDeleteThe private sector creates government for their own good. We don't create governments so they can wreck our lives. That's the very essence of a democracy and a unified nation. Are those governments always fair and good? Not necessarily, but when government is run by the people and for the people it can have powerful and prosperous results.
DanielR,
ReplyDeleteAlso, I don't think you realize it, but your acceptance of the state theory of money directly refutes Bob's most important point in his last post - the one about the private sector being able to save without the government issuing currency.
I don't think you realize it, but accepting that the government issues fiat currency is not the same as accepting the "state theory of money." This is your confusion and intellectual hangup, not mine.
You seem to have a problem with understanding the difference between an observation of a fact ("The State issues fiat currency") with a conclusion reached by interpreting this observation through a theory.
Theory allows us to make sense of reality. Reality doesn't create theory. If you string together a bunch of observations of reality, related or unrelated as they may be ("The sky is blue", "The State issues fiat currency", "I have an ulcer") you do not arrive via your stringing at a "theory" ("DanielR's theory of reality").
This is a flaw in your understanding of epistemology. You don't understand how theory differs from fact and how the two do (or don't) inform one another. You appear to either believe that a bunch of observed facts put together constitute a theory, when they don't, they simply constitute a set of observed facts and provide no useful knowledge BY THEMSELVES, or you seem to be unable to observe your own intellectual process and keep missing the step where you apply a theory to an observed fact to arrive at a conclusion. Because you keep missing that you apply a theory in between observing a fact and arriving at a conclusion, you lead yourself to believe that fact creates conclusions, ie, that conclusions are self-evident from facts.
I can't really help you with that problem if what I am saying here doesn't register. Maybe intensive therapeutic sessions with a trained logician would? But I am no doctor so don't take this as a prescription. Hell, maybe you just need more cowbell! (Here I am, applying conclusions willy-nilly from observed facts without reference to a coherent, logically sound interpretative theory, first!)
DanielR,
ReplyDeleteThe private sector creates government for their own good. We don't create governments so they can wreck our lives.
You're slowly stumbling upon my point, the purpose for which I have gone through so many tireless "semantic debates" up to this point.
To wit:
I reject the feasibility and desirability of the government for achieving the ends you state above. Does this mean I am not a member of the private sector according to your definitions? If I am not, what am I?
You seem to be arguing that because a number of people agree with the existence or particular policies of government, or its use as a tool (means) for achieving particular ends, that this is justification enough. Here is your "authority" for the theory of government. And what of people like me who disagree? Is our opinion not worth anything? Are we subhuman? Sublogic?
If we reject god or the supernatural as an arbiter we must find an authority to replace it. The only objective authority we can turn to is LOGIC. Logical argument is the only way to settle this disagreement. But rather than use logic, you make appeals to majorities and other numerous collective bodies, as if enough people all agreeing or wanting the same thing necessarily makes them right. Does it?
Please explain how the simple act of a number of people all wanting something together, or reaching a particular consensus, results in their desire transforming into objective truth (rather than being a simple subjective desire, irrespective of it being right or wrong)?
Taylor,
ReplyDeleteI'll ask you again. If all fiat money is a creature of the state then how does the private sector save in the currency of the state if the state does not first issue that currency?
If you answer this question accurately you are accepting the very essence of MMT. And you should because it is our reality. But you keep trying to avoid this one simple question that I keep asking you.
Unfortunately, you don't even understand that it debunks all of your thinking....ie, this myth that the private sector can save without the government issuing currency. You should be connecting the dots by now....
"Please explain how the simple act of a number of people all wanting something together, or reaching a particular consensus, results in their desire transforming into objective truth (rather than being a simple subjective desire, irrespective of it being right or wrong)?"
ReplyDeleteI never said that the formation of governments in and of themselves would result in prosperity. I fully acknowledge that government can be entirely inept if it is run by inept people.
I am merely trying to show you that fiat money is a creature of the state and the state is a creature of the people.
Again, I am not sure what is so confusing about all of this. I don't like big government. But I understand that I am better off living in a country that has a government. I also understand that living within this government involves the use of the currency that they deem to be the monetary unit. And if they don't make that monetary unit readily available they can make life really hard for all of us.
Is that so hard to understand?
DanielR,
ReplyDeleteI dispute the idea that ANY governments are formed for the purpose of ENHANCING THE SURVIVABILITY OF THE SPECIES. I hold that ALL governments are constituted as predatory mafias whose intent is to pilfer the wealth of productive individuals while cloaking themselves in the propaganda of ENHANCING THE SURVIVABILITY OF THE SPECIES. Further, I dispute the idea that any governments possibly could ENHANCE THE SURVIVABILITY OF THE SPECIES even if they wanted to and were staffed by "competent" people. As I laid out in my italicized proposition earlier, which you chose to completely ignore, the operation of government (coercive financing via taxation) stands in direct contrast to the logic of wealth creation via voluntary exchange.
I am willing to defend these ideas through the use of logical argument, appealing to that neutral, objective authority (LOGIC) rather than attempting to couch my claims in a questionable authority neither they, nor any other body I might appeal to, might have.
You have not defended your belief that the "public purpose" of government is to ENHANCE THE SURVIVABILITY OF THE SPECIES with logic. You have attempted to do so by appealing to majorities and other numerous collective bodies which you declare to be in consensus on this reasoning.
If you wish to defend your belief through logic, without appealing to observation that some amount of people agree with your belief as some kind of authoritative affirmation of that belief, I invite you to do so.
I've actually said it many times. The very essence of most government creations has been to defend that particular group of people in times of war. If this is not an act of ensuring the survival of the citizens then I don't know what is.
ReplyDeleteSo, let me ask you another question. Do you believe in anarcho capitalism? Is that your response to government?
DanielR,
ReplyDeleteIn the event of a war, people on both sides die, irrespective of whether or not they have instituted a government, for whatever purpose. This is the nature of war and violent conflict-- people get hurt. Government is one potential technology (means) for pursuing the end of "don't get hurt or killed in a violent altercation". It is by no reason the only potential technology. It is, of course, the most prevalent technology. But evidence of existence is not demonstration of theory. The fact that there are many governments doesn't say anything about whether or not there should be, whether or not government is the most suitable means for achieving a stated end, etc. etc.
I don't provide a "response to government." What I have provided so far is a number of simple, logical assertions. At any point and time you can employ the tools of logic to attempt to successfully refute my assertions. So far, you have chosen not to do so, instead employing arguments from authority, arguments from existence (ie, "positive existence implies a specific normative conclusion), etc.
My assertion, simplified even more, is simply this: there is no such thing as a free lunch.
In other words, if you wish to consume, you must first produce.
Nobody can consume if somebody does not first produce.
I further assert that the act of theft is not an act of creation but of redistribution. Stealing something does not produce that thing, it simply transfers control of it from the person who produced it (or originally owned it via a process of voluntary exchange) to a person who did nothing to acquire it but coerce another.
Government acquires resources by theft. Government does not produce anything-- what it wants, it takes. To be able to take something it is implied that there is something there to take, that is, that someone has first produced something.
It is those who produce and exchange through voluntary means whom provide the government with something to take.
As government does not produce anything, it can not aid in enhancing the material prospects of individuals taken as a whole. Forcefully transferring wealth from one person to another does not create in a gain on net.
Which of these assertions do you dispute and on what logical basis? Please do not engage in pointing out to me current facts about reality (of which I am aware and which do nothing but illustrate themselves, tautologically, rather than prove your point in a "self-evident", theory-hopping manner) and please do not make appeals to unnamed, unstated or majoritarian/numerated collective authorities. Please use the only objective tool of arbitration the two of us can rely on in better understanding this matter, LOGIC.
Yes, I am very familiar with your standard austrian diatribe (sorry you wasted all your time writing something you regurgitated from one of your colleagues).
ReplyDeleteI will try again. Do you believe in anarcho capitalism and the idea that civilization can exist entirely without organized government?
DanielR,
ReplyDeleteAs opposed to "disorganized government", you twaddling halfwit?
For government to have anything to "organize" a society, complete with an already operating means of production (ie, that which government coercively takes from) would have to exist. So, quite simply yes, production predates theft as well as attempts to organize said production.
I do not believe in the Adam and Eve genesis of man, nor do I believe that said first humans arrived in a state of nature with a "state" of government already surrounding and "organizing" them.
Oh my. You're getting quite upset. I am sorry to see that.
ReplyDeleteCan you answer any questions or do you circumvent everything in an attempt to save face?
I will try again. Do you believe in anarcho capitalism and the idea that civilization can exist entirely without organized government?
DanielR,
ReplyDeleteAs you do, I answered that in "my own way", clearly, twice now.
Since you are apparently as dull as I am, I will make it more succinct and explicit for you:
Yes.
What's more, I believe that government is a force of dis-civilization, and to the extent which government the (institutionalized monopoly on violence) is treated as legitimate and allowed to exact its various depredations on a society and an economy, is the extent to which that society is de-civilized and is the extent to which that economy is destabilized and restrained.
Of course, understanding this idea is dependent upon my definition of the word "civilization". By "civilization" I refer to the peaceful, voluntary cooperation of numerous individual persons for the purpose of social enjoyment and economic prosperity. Notice that my definition of "civilization" does not allow a place for murders, thieves and other criminals to play a role as legitimate participants or otherwise necessary accoutrements.
Do you agree with my definition of "civilization"? If not, how do you define the term? If you define it differently, I might have to adjust my response to your question as I originally interpreted it one way when you in fact might mean something completely different from it.
Yes, I got the inkling you were an anarcho capitalist from the very beginning.
ReplyDeleteLet me tell you why there are no working anarcho capitalist societies out there today. It is because societies require protection. Protection requires men with guns. And men with guns have a history of getting on power trips. And power trips have a tendency to result in corruption. My guess is that you think we could have all these little private militias take care of our national defense. Cute thought, but not realistic. The early USA was essentially a bunch of militias. If you have any understanding of the military you will know that the military is based on a chain of command. This means that someone ALWAYS takes command of a military in wartime. This leads the power to collect in the hands of one specific entity. Hoping that that entity will continue to work in the best interests of the rest of us is a pipe dream. How many times has the world seen a corrupt militia take over an entire government? Hundreds? Thousands?
You just haven't thought this all out rationally. It's a cute little idea. But there's a reason why it has NEVER been successfully implemented.
So, while you live in your anarcho capitalist dream I am going to get back to focusing on the reality of the world around me and the actual workings of the monetary system.
Good day to you sir!
DanielR,
ReplyDeleteThis whole time I thought you and I were striving to translate observation of reality (experience) even historical observations of reality, into meaningful knowledge (understanding truth). I didn't realize the whole point of the exercise was to state the obvious, over and over, as if doing so enough times would result in the profound.
Even if you think you don't, you still utilize a theory in shaping your reactions to your observations of reality. Your action is not deterministic nor a forgone conclusion given the impressions reality makes on your mind. You still must logically consider the implications of these impressions and create a logical system of thought to properly interpret these impressions in such a way that you arrive at conclusions which are both meaningful and significant in terms of allowing yourself a chance to successfully attain the ends you seek.
By choosing to ignore this particular aspect of reality (something seemingly self-evident, but perhaps not!), you are no more freed from its consequences than you would be if you imagined that you wouldn't be hurt by a speeding bus by stepping in front of it so long as you ignored that it exists.
It must be quite painful to be as willfully stupid as you appear to be. I wish you luck in navigating reality while purposefully using a broken compass, as it were.
Good day to you as well, sir, and I do hope you thoroughly enjoy your completely unearned, smug sense of self-righteous satisfaction!
Enjoy spending the rest of your life dreaming about an anarcho capitalist world that will never ever exist! I hope you continue to mislead your readers into believing that all of this is achievable. In fact, you'd do your readers a great service by just coming out in the beginning and saying:
ReplyDelete"Okay people, my beliefs are totally unrealistic, but they will feed into your misconceptions and populist beliefs. They will sound great in theory, but they will be totally unrealistic in reality. Now follow me off this cliff (jumps)!!"
Is that about accurate? It could be the website disclaimer perhaps?
DanielR,
ReplyDeleteYou're a strange fellow. Why do you keep coming back here? Is it because deep down in side you're aware of your glaring epistemological shortcomings?
I can't speak for all Austrians or all ancaps here so when I say this this is my personal opinion but: I don't base my discussions of truth on my interpretation of the possible. I agree it is highly unlikely to the point of being a near zero probability that any part of the world, large or small, will likely be inhabited by a group of people (a society) who are avowed anarchocapitalists. It is even more fleetingly unlikely that were such a situation to develop, they would suffer no external predations from other statist societies around them, nor suffer any internal predations from individuals who suddenly desire to form a mafia organization (a State) within their "borders."
It's more likely that the experience for most people for most of the rest of time will be one characterized by differing types and degrees of statism.
That doesn't change the fact that statism is unjust and uneconomic. The moral status and the economic status of statism are determined by the state of reality, the laws of which are discoverable by logical consideration. The state of reality concerning the moral and economic viability of statism does not change simply because statism tends to dominate societies around the globe and throughout time.
That being said, as I have mentioned before, government itself is a technology, just like monarchy and democracy are forms of government technology. As ideas and attitudes toward what is a desirable governmental technology have changed over time (and will continue to change), so too have ideas and attitudes towards the technology of government itself (and they will continue to change). Today, many people who were once "trapped" under monarchies and dictatorships and couldn't imagine a future where they wouldn't be, now live under regulatory democracies and can't imagine a future inwhich they might live under some other kind of governmental technology.
(cont'd)
ReplyDeleteMy attitude goes even further. I think people can't imagine living without a government now but their attitude might change about that over time. The number of people subscribing to the idea that government is wholly unnecessary and undesirable might never be enough at any one time to create a "sustainable" anarchic society, but certainly their beliefs will play a role in agitating toward minimizing the extent and effect of governments which they do live under for the time being.
Your entire attitude toward this topic is indicative of a failure of your own imagination AND, as I continue to highlight, a glaring flaw in your epistemological knowledge. I won't bother asking you to explain by what logic you entertain the idea that you are a "government minimalist" because even if you have one, it doesn't matter-- you believe that minimal government is best for "society" presumably because you think it is most just and will afford the most economic opportunities to all. I know this to be true of the total absence of government, and am ready and willing to logically defend this proposition, if only you could pull your head out of your ass long enough to do me the favor of engaging me on that level, rather than haughtily dismissing my "starry eyed dreams of anarchocapitalism" as errant mumblings of a lunatic.
You really are an uncreative, moral coward. I truly pity you. You are like the person who examined the long, human history regarding attempts to create a flying machine and decided it couldn't be done so it wasn't worth trying or thinking about any further. Meanwhile someone invented an airplane and later used it to deliver a bomb right into your house.
You operate on the moral premise that if you can't beat the Nazis, you might as well join them. Wow, what a sad, pathetic philosophy to live one's life by, and what sorrow it brings to other people. It's a shame!
Let's inject a little common sense into this insane discussion. You admit that AC is totally unrealistic and unachievable. Have you ever considered why that is? Could it be because the idea makes no sense and is unrealistic? Could it be that the majority of rational people have thought about living their life in an AC society and decided that it is not something they want?
ReplyDeleteYou're just trying to force your opinions on other people. You THINK AC would be good for society. But you can't prove it. And you certainly can't rationalize it. Instead, you're just using all the typical fearmongering techniques utilized by people who don't like the current system.
News flash chief. If you don't like America then get out. Move to Somalia. You can get a taste of anarchy over there. Send me a telegram if you survive more than a few weeks. Until then, sweet dreams of AC be upon you!
DanielR,
ReplyDeleteIt's a bloody miracle the people haven't risen up and "chosen" a state in "stateless" Somalia by now! I'm not sure how that one squares with your worldview, but, nonetheless, it's perverse and cruel to condemn the victims of statism by calling their submission to the overwhelming violence and coercive power of government a "choice" to live under such circumstances.
That whole "voluntary" versus "involuntary" exchange seems to be quite a hump for you to get over.
Next time I hold a gun to someone's head and force my opinion on them, as government does, I'll be sure to give you a ring. That'd be an appropriate time for you to lay into me about forcing my opinions on others. Until then, feel free to be in touch whenever you want to give me an opportunity to logically walk you through the proof for anarchy. You've dodged every attempt I've made so far.
Taylor,
ReplyDeleteWhat has America done to you that is so horrible? All of the people pushing this line of thought appear to be old rich white guys who have benefited enormously from this system. What is the great injustice you have experienced at the hands of this government? Do you have real life examples or reasons for your hatred of the US government?
DanielR,
ReplyDeleteI won't respond to you any further unless you agree to a logical discussion. So long as you reject logic and try to employ character assassination, arguments from authority, arguments "from observation of reality" (theory-hopping), etc., essentially the irrational, fear-mongering and psychologically assaultive tactics you have accused "we Austrians" of (though I have never given you any example of it myself), there is nothing to be gained from answering your questions. You just find a new way to try to assassinate my character, undermine the validity of my ability to reason, impugn my motives.
In short, you are being an asshole. Whenever you want to stop being an asshole, we can reconvene.
Right. You think I am being an "asshole" because I have exposed your ludicrous line of thought. You've even agreed that your world view is totally irrational and unrealistic. So you've only made yourself look bad here.
ReplyDeleteDon't blame someone else for all of your problems. You've vastly misinterpreted the world in which you live. It's obviously led you to a very pissed off place in this world. Now you're blaming me for your poor showing here and the government for your pitiful existence. YOU are the problem. Not everyone else. Be accountable man. Change your ways. Change your perspective. Look at reality and not some fantasy. You've eaten up some other old pissed off white guys cooking and its poisoned your brain. If you want to live that way then be my guest. But don't blame me for it.
Mises explained in 1917 that the so-called “state theory of money” was acatallactic:
ReplyDeletehttp://mises.org/books/Theory_Money_Credit/AppendixA.aspx
Of course, since MMTers have never heard of the concept of catallactics much less have an understanding of it, debating them is like arguing with your poodle.
If the government could simply pronounce that something is money, they could just as well dictate that money would be 85 pound bags of belly button lint. That’ll work, right?
Clearly, gold and silver were originally market-based money but subsequently paper money became used as warehouse receipts. People foolishly began to think of the receipts themselves as money and thus have been misled when the possibility of an exchange of the receipts for specie was taken away.
As Bob Murphy said, even with a government diktat about a particular form of money, the government would not know the appropriate initial exchange rate of the “money” vis-a-vis real goods because such rate would not yet exist. And the government is going to pronounce that? That’ll work, right?
Further, these MMTers have no conception of Cantillon Effects, economic calculation, OR the distortion of the price, investment and capital structure caused by funny money dilution so you will find that having a conversation with your poodle will be more informative.
I suppose that MMTers have one important function. They are like a free book of 10,000 really dumb economics questions (and poly sci questions), sorta like an SAT prep book.
Finally, MMTers have the most naïve third grade level understanding of the nature of government and clearly have no familiarity with the “problems of knowledge in society”.
MMTers are trying to “solve“ problems that do not exist while the vast majority of economic problems afflicting mankind are their very own policies
Bob,
ReplyDeleteLet me ask you a simple question. If the US government did not name US dollars as the currency with which you can pay your taxes and then issue them, how would you pay your taxes?
Or are you like Taylor and believe that government need not exist?
If the US government did not name US dollars as the currency with which you can pay your taxes and then issue them, how would you pay your taxes?
ReplyDeleteWith legal money.
Regardless of my views about “government” in general and the Constitution in general, our Constitution grants Congress a very limited power:
“To coin money, regulate the value thereof, and of foreign coin, and fix the standard of weights and measures”
And no state shall “make anything but gold and silver coin a tender in payment of debts”. I really don’t see any loopholes in those phrases. BTW, they say nothing about limiting the right of people to coin their own money. Nevertheless, average folks could come to the US mint and have coins minted out of their own gold and silver.
http://www.scribd.com/doc/28478136/The-U-S-Constitution-and-Money
This all worked just fine except for the problems created by fractional reserve banking.
Further, because the federal government was granted a limited set of powers, it has no authority to do ANYTHING proposed by the MMTers in any event. Thus, your wacky fiat system is not only unconstitutional and illegal, but is based upon theft and fraud, is the cause of the boom/bust cycle and is the sustainer of endless unconstitutional wars and mass murder. And MMT is apparently based upon a belief that you have abolished the law of scarcity. A freakin’ horde of dingbats.
What else do you want to know?
And this isn't fiat money because....
DeleteI have yet to hear an Austrian give an example or describe money that is not debt/fiat.
Oh boy. Here we go again with fantasy land. If you just keep making stuff up in your own mind then you can convince yourself of anything I guess. Like Taylor, you are horribly confused about the actual laws of this country and the actual workings of the real world.
ReplyDeleteThe constitution clearly states that the state governments may not coin their own currency:
"No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility."
But that does not apply to the Federal government of the USA:
"The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defense and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States; To borrow money on the credit of the United States."
That is, they can issue bills of credit.
Thanks for proving to everyone reading here that you have absolutely no clue what you're talking about.
Are we about done here gentleman? I feel like I've thoroughly ruined the reputation of everyone writing here? Thanks. It's been a real pleasure.
Reference to history clears away the confusion of present-day politics, by showing beyond cavil that the "dollar" is a specific coin, containing 371.25 grains (troy) of fine silver, and nothing else.
ReplyDeletehttp://www.fame.org/HTM/Vieira_Edwin_What_is_a_Dollar_EV-002.HTM
So the first draft of the Constitution was put forward with the same power that the Continental Congress had, and there was a debate. You look at Madison's notes, and it was a rather vociferous debate, and they threw out the words "emit bills," so that now that provision of the Constitution says, "Congress shall have the power to borrow money on the credit of the United States." It says nothing about emitting bills. Well, by hypothesis, if the power is proposed and then stricken from the final version, it doesn’t exist, right? You don’t need to be a Harvard law school graduate to understand that. So we look at those two provisions of the Constitution: One explicitly prohibiting the states from emitting bills of credit, because otherwise the states would retain that power. And the other with respect to Congress, where they didn’t grant the power, even though the power was proposed to be granted and that proposal was overruled, and so it wasn't granted. Based on that it is clear, I would say, that there is no power in Congress or in the states to issue bills of credit. - Dr. Edwin Vieira, Jr.
ReplyDeleteOf course, we still have Austrian Economics to demonstrate the unmitigated evil of fiat money assuming the often flawed Constitution didn't actually say what it clearly says.
Trying to redefine the Constitution now Bob? Please. Stop. Embarrassing. Yourself.
ReplyDeleteNot even an Austrian economist could honestly believe that the US government has been working illegally all these years without having been contested. Could you truly be that naive?
1. The name-calling begins.
ReplyDelete2. Tom Woods vouches for Mr. Vieira. Good enough for me.
3. I haven't found anything suspicious in Mr. Rozeff's outline of Mr. Vieira.
4. MMTers do not know Austrian Economics. They aren't even entitled to have opinions on economics.
Not even an Austrian economist could honestly believe that the US government has been working illegally all these years without having been contested. Could you truly be that naive?
ReplyDeleteRon Paul has raised almost $5 million this go-round with his major theme being that the US government has been working illegally all these years. Ron Paul is an outstanding Austrian Economist. Do you live under a rock? Hello!
If Mr. Vieira is such a force to be reckoned with then have him take a case to court and see how far he gets.
ReplyDeleteAnd when he loses miserably we can get back to focusing on the actual fiat monetary system in which we exist and not the fantasy land that you guys have created for yourselves.
PS - There is nothing original about praxeology, catallactics, cantillon effects, etc. It's mostly just fancy sounding jargon to describe really simple concepts. The fact that Austrians think this stuff is all so intricate, original and complex is really absurd. A beginner econ student learns that sort of stuff.
I've been an Austrian since 1973. I went to law school 1977-1980, then got an LLM in 1984.
ReplyDeleteI've never met a non-Austrian who had the slightest familiarity with even the most basic Austrian concepts or the basic concepts of constitutional money. The entire topic of constitutional money was always considered gauche and dealt with as such in the entire legal profession. Do you think that I worry about what half-wit statists think or that I base my opinions on the peer pressure of certified dolts?
You don't know anything about Austrian concepts and neither does any other MMTer. Are you going to debate or name-call (as if we don't know)?
As Taylor Conant has pointed out, the MMTers rely upon an unstated economic "theory". That theory seems to be the most primitive, simplistic form of Keynesian "aggregate demand" manipulation. All of the various MMT forms of intervention were eviscerated by the Austrians decades ago but the MMTers haven't the slightest familiarity with even basic Austrian concepts or analysis.
ReplyDeleteFurther, let Mr. Mosler himself explain the fundamental and foundational morality and operational reality of his version of the “Controlled Economy“:
The following is not merely a theoretical concept. It’s exactly what happened in Africa in the 1800’s, when the British established colonies there to grow crops. The British offered jobs to the local population, but none of them were interested in earning British coins. So the British placed a “hut tax” on all of their dwellings, payable only in British coins. Suddenly, the area was “monetized,” as everyone now needed British coins, and the local population started offering things for sale, as well as their labor, to get the needed coins. The British could then hire them and pay them in British coins to work the fields and grow their crops. See Mosler’s “Seven Deadly Innocent Frauds”, page 26.
http://moslereconomics.com/wp-content/powerpoints/7DIF.pdf
My initial reaction to reading this is that I would never invade Africa nor force Africans to pick my crops nor would a normal moral person. My initial response to learning of this episode would be to find the perpetrators of this outrage and then arrest and convict them as the criminals that they are.
But this is the "morality" of the MMTer.
Lots of contradictions in there. All you've done is call me names yet you insist that I am the one doing the name calling.
ReplyDeleteYou call say we don't understand austrian economics (as if it's that complex!) and then call us Keynesians. We are Minskyans. FYI. So you clearly don't understand MMT either.
It's been fun chatting boys. I always enjoy making you austrians look like a bunch of fools. Until next time.
"When you decide to wrestle a pig, you get dirty and the pig gets happy."
ReplyDelete"You have to understand, most of these people are not ready to be unplugged. And many of them are so inured, so hopelessly dependent on the system, that they will fight to protect it."
"Liberals tend to hold the bribe-giver as somehow more reprehensible, as in some way 'corrupting' the taker. In that way they deny the free will and the responsibility of each individual for his own actions."
"It is easy to be conspicuously 'compassionate' if others are being forced to pay the cost."
"The great non sequitur committed by defenders of the State, including classical Aristotelian and Thomist philosophers, is to leap from the necessity of society to the necessity of the State."
"There can be no truly moral choice unless that choice is made in freedom; similarly, there can be no really firmly grounded and consistent defense of freedom unless that defense is rooted in moral principle. In concentrating on the ends of choice, the conservative, by neglecting the conditions of choice, loses that very morality of conduct with which he is so concerned. And the libertarian, by concentrating only on the means, or conditions, of choice and ignoring the ends, throws away an essential moral defense of his own position."
"It is also important for the State to inculcate in its subjects an aversion to any outcropping of what is now called 'a conspiracy theory of history.' For a search for 'conspiracies,' as misguided as the results often are, means a search for motives, and an attribution of individual responsibility for the historical misdeeds of ruling elites. If, however, any tyranny or venality, or aggressive war imposed by the State was brought about not by particular State rulers but by mysterious and arcane 'social forces,' or by the imperfect state of the world -- or if, in some way, everyone was guilty -- then there is no point in anyone's becoming indignant or rising up against such misdeeds. Furthermore, a discrediting of 'conspiracy theories' will make the subjects more likely to believe the 'general welfare' reasons that are invariably put forth by the modern State for engaging in aggressive actions."
"The ability of a country to pay taxes must always be proportioned, in a great degree, to the quantity of money in circulation, and to the celerity with which it circulates. Commerce, contributing to both these objects, must of necessity render the payment of taxes easier, and facilitate the requisite supplies to the treasury. The hereditary dominions of the Emperor of Germany contain a great extent of fertile, cultivated, and populous territory, a large proportion of which is situated in mild and luxuriant climates. In some parts of this territory are to be found the best gold and silver mines in Europe. And yet, from the want of the fostering influence of commerce, that monarch can boast but slender revenues. He has several times been compelled to owe obligations to the pecuniary succors of other nations for the preservation of his essential interests, and is unable, upon the strength of his own resources, to sustain a long or continued war."
"Money is, with propriety, considered as the vital principle of the body politic; as that which sustains its life and motion, and enables it to perform its most essential functions. A complete power, therefore, to procure a regular and adequate supply of it, as far as the resources of the community will permit, may be regarded as an indispensable ingredient in every constitution. From a deficiency in this particular, one of two evils must ensue; either the people must be subjected to continual plunder, as a substitute for a more eligible mode of supplying the public wants, or the government must sink into a fatal atrophy, and, in a short course of time, perish."
"This has all happened before, and it will all happen again."
DanielR - That was fun, even though easy - always is with these catallactic types. ;)
ReplyDeleteI've been to Somalia - it is stateless but it does have currency - at least on the big deals - they use dollars and Euros. I think that's instructive on how the wished-for catallacitc community would work - as parasites. Most other exchange is barter but often, and with always the threat, of devolving into an exchange dictated by who brought the bigger firepower or who was quicker on the draw. Charming society - old Ludwig (and most angry white guys) wouldn't last a minute.
@DanielR
ReplyDeleteThe answers to your questions are fairly straight-forward.
> If the government never creates the currency then how do we obtain it?
It depends. Do people want to obtain money in nominal terms? Does everyone want to increase their cash balance by $100? If so, then "we" need the government to create some. Print it, enter it in a computer, whatever. If THAT's what everyone wanted, we'd just ask the Fed to do that and we'd be done. No additional hoops of "government deficits" and taxes are required. In fact, if you really want to get creative, we can hire some private printers to do it. It's only counterfeit if the majority don't want it to happen.
If people want to save in real terms, then there is no need for the government to do anything [in fact, unless the government actors want to voluntarily produce lots of goods and services and give them away, there's probably not much they CAN do]. People just withhold purchases. Prices drop. The money in their cash balances becomes worth more. Eventually, they hit their desired savings level.
> If the US government did not name US dollars as the currency with which you can pay your taxes and then issue them, how would you pay your taxes?
If the US government demanded taxes in dollars and I did not have dollars, then I guess I wouldn't pay my taxes. Duh! It's the same thing as Warren Mosler's chore-coupon example. If the parents demanded a certain number of coupons and the children did not want to do chores, they will simply take the punishment. If you made the punishment "bad" enough, maybe you could get some people to play the MMT game. But in a democracy, if lots of people faced stiff punishments from the government for not paying taxes, we would probably all vote for lower taxes! The government cannot "drive" people to pay taxes they don't want to pay. Not unless they're willing to go full totalitarian. And those don't do too well economically.
marris,
ReplyDeleteBut people do pay their taxes; people really don't want to go to jail - so they do "play the MMT game." That's the real world that MMT comes closes to describing.
It's not just that people don't have the time to "play" in your revolution, they don't have the inclination - live out the Austrian dream world and you get, at best, Somalia. Why do you even imagine that they want that? Why do you think you would last one minute 'playing' in such a world?
"The number one MMT site on the web!" links to this post:
ReplyDeletehttp://mikenormaneconomics.blogspot.com/2011/09/zero-hedge-sights-mmt-at-goldman.html
MMT simply describes how the currnet US monetary system works. It doesn't defend it. So if Austrians want to argue that we should go back to the gold standard, or dismantle the government, etc, that's all good. Make those arguments. But you can't say that a description of our current fiat system is wrong when there are numerous and easy to follow texts on the web that spell out exactly how our current monetary system works.
ReplyDeleteIt would be fair to call MMT a map, a map of our current fiat system. A map describes the landscape so you can find your way from point A to point B. Or tell you if you did a certain thing -like take a left turn (or an economic turn like QE2 or Twist) that you will end up elsewhere on the landscape as described by the map. So all this attacking of the map is silly. You should attack the landscape. Hate the system, but don't hate what describes the system.
Meanwhile, the main point that MMTers are trying to make is that if we only truly understood our current monetary system we would have a far easier time developing policies to improve the economy for everyone - even those of you who hate the government.
If you believe that the government is just one giant conspiracy aimed at stealing from the people and/or causing death - so be it. With an understanding of MMT you might at least understand what is really going to happen when a policy like QE2 or Twist is implemented. And one thing MMTers said, for example, is that since Bernanke doesn't understand MMT (which is the exact same thing as saying that Bernanke doesn't understand our current monetary system) he had no idea what QE2 would and would not do. You guys don't either because your erroneous understand of our current post 1971 fiat system thinks that QE2 was "printing money" and could cause a hyperinflation. MMTers knew it wasn't printing money. They thought the policy was flat out stupid, but they knew the money would not make it into the real economy.
Lastly, every article that tries to debunk MMT starts with nonsense like "more things I dug up: Abba Lerner was a longtime economic Stalinist." You pick some unrelated statement, or you make a statement that you ascribe to MMT which is not actually MMT, and then you debunk or debase it. In this example, Abba Lerner's politics or beliefs have ZERO to do with the fact that a map or desciption of a monetary system can only be accurate or not accurate. If his map was accurate that is all that matters. He could have been a child molestor or an alien from outer space - but if is accurate than you can use his map to navigate the terrain. If his map was flawed, but provided a framework for later map writers (he died in 1982. The US went off the gold standard in 1971. And much as been written about MMT since then) then what we have today is a very accurate map of our current monetary sytem.
Putting on your tin foil hats to say we need to get rid of paper money and disband governemt all you want. But trying to say MMT is wrong is like trying to say a round globe is wrong because you know the earth is flat or you want the earth to be flat.
The difference is that Austrians have done their best at examining and trying to understand MMT. Like all practitioners of statist economic religions, MMTers make no attempt to understand even basic Austrian concepts. Economic exchange is what economics is about and MMTers make it a point of refusing to examine the concepts surrounding economic exchange. Economic laws are the same whether there is barter, 100% specie reserve requirements or 100% fiat money. There is exists no attempt by an MMTer to understand, much less refute, basic Austrian concepts such as Cantillon Effects which are undeniable and immoral in a fiat money system. MMTers avoid serious issues and debate. There is no reason to take MMTers seriously.
ReplyDeleteWhat other money but fiat is there?
DeleteCould you give an example?
Monetary economies are nothing like non-monetary economies.
What about societies without economic exchange such as societies with Gift Economies?
> But people do pay their taxes; people really don't want to go to jail - so they do "play the MMT game." That's the real world that MMT comes closes to describing.
ReplyDeleteUh... I think your misunderstanding the point. It is true that people pay taxes (operationally true). I DON'T think it's operationally true that people accept USD for goods and services SO THAT one day they can use it to pay taxes. They are primarily accepting it because they think it is a good short term store of value.
If people did not think USD was a good store of value (for example, if thy expect the government to drastically increase the supply of USD), then they will raise their dollar prices of goods and services. The government is not going to be able to "counter" this by raising taxes. In a democracy, people will probably (operationally speaking), vote out the tax-raise politicians. In their view, they don't have ENOUGH (of the new) money.
I think an "MMT aware" world would look a lot like the current one. Lots of special interest groups trying to get new money, lots of lobbying, etc. Hardly an improvement.
The whole "MMT will bring better economic policies" rests on some fairly questionable assumptions of production-inflation tradeoff. Think Phillips curve. That is, Mosler and company really believe that high unemployment "implies" a lack of money in the system. I don't think that's what is really going on.
Typos:
ReplyDeleteI think YOU'RE misunderstanding..
unemployment-inflation tradeoff...
[production-inflation tradeoff does exist...]