Wednesday, 1 July 2020

The incompetent Roger Bootle in the Telegraph tries to criticise Stephanie Kelton’s new book.


Simon Wren-Lewis (former Oxford economics prof) has long had a low regard for newspaper economics commentators: indeed he has his own special term for the nonsense they spout, namely “macromedia”. Google SWL and “macromedia” and you’ll find dozens of his articles on that subject.

Coincidentally I also did an article on this blog a few days about the sheer idiocy of  journalists.

It’s actually very easy to get away with nonsense if you’re a journalist: all you have to do is put your stuff in nicely worded English, with a few technical terms thrown in to impress the gullible, and the relevant newspaper editor will probably OK it,  among other things because the editor knows newspaper readers will lap up any old nonsense.

Bootle’s article in the Telegraph starts by claiming that MMT’s idea that deficits and government debts don’t matter is “dangerous”. But he then says “Yet there are some places where the book seems simply to be reasserting the precepts of Keynesian economics for the benefit of an audience that has never comprehended them before. These Keynesian nuggets are propositions with which I wholeheartedly agree.”

Well yes: MMT (as I’ve pointed out a thousand times) is largely Keynes writ large. Moreover, Keynes argued that the deficit should be as big as needs to be to deal with excess unemployment, which is what MMT says. So do we take it that Bootle has changed his mind in the space of a few sentences and is now claiming that MMT is no longer “dangerous”? Unfortunately it’s far from clear exactly what Bootle is trying to say.

But never mind: he manages to fill up column inches and get his salary at the end of the month, which is all that matters from his point of view.

Next,there are two paras by Bootle as follows:

“At one point, she says that “increasing the deficit doesn’t make future generations poorer and reducing deficits won’t make them any richer”. That is a message I have repeatedly conveyed in this column. The interest paid on government bonds doesn’t disappear into a black hole. It is received by the bondholders.

Mind you, this doesn’t mean that there aren’t potential problems for future generations as a result of fiscal largesse because, unless governments resort to inflation, other things equal, higher debt means higher interest payments that have to be financed somehow or other. In the end, they are financed out of reduced spending or increased taxation. Taxes distort and depress incentives and hence economic growth. So having a setup that implies more taxes in future is hardly to be recommended.”

So is Bootle saying large deficits matter or not? He both praises deficits and warns about deficits in the latter two paras. He is entirely unclear, presumably because he has no idea whether he’s coming or going.

Actually, and as regards his point that the stimulatory effect of a large deficit may at some time in the future have to be reined in via tax increases, well of course that’s possible! Business and consumer confidence constantly ebbs and flows, not to mention to problems brought by Covid-19, all of which means governments and central banks have to counteract those gyrations, sometimes by implementing much larger than normal deficits. But if Bootle wants the amount of stimulus THIS year to be inadequate because that stimulus may have to be reined back in two or three years time, then he is simply asking for excess unemployment THIS YEAR!!!


Conclusion.

Given Bootle’s obvious incompetence, I can’t be bothered reading any more of his article. Indeed, it’s entirely possible he isn't all that he isn't as incompetent as I just suggested: that is, he may well know that he can very easily churn out nonsense, and no one will notice. When he gets home on an evening it wouldn’t surprise me if, while he sips is gin and tonic, he has a good chuckle to himself over the idiocy of a newspaper that actually pays him to write the above nonsense.

In stark contrast to the Bootles of this world, there are the intellectually honest Keltons, who even if they make a few mistakes, are at least genuinely concerned to make the world a better place.


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