Wednesday, 14 November 2018

I’m tired of fake progressives.

So is Bill Mitchell. See for example his article entitled “When neoliberals masquerade as progressives.” But if you Google the name of his blog (“Billyblog”) and “progressive”, you find plenty more articles by him criticizing self-styled progressives.

Of course there are some genuinely progressive progressives. Unfortunately there are about as many people who haven’t the faintest idea how to bring about “progress” who describe themselves as progressive because that’s the cool thing to do nowadays.

Moreover, the very word “progressive” is a bit silly. Reason is that anyone who advocates X presumably thinks that X represents progress. Indeed, and to take an extreme example, no doubt Adolf Hitler thought that invading most of Europe and half of Russian represented “progress”. For that reason, I never describe myself as a progressive: the word is superfluous.

An example of a fake or defective progressive is Peter May and his “Progressive Pulse” blog. In this article entitled “Positive Money and MMT (continued)” he makes the classic mistake that dozens if not hundreds of critics of PM have made (including Ann Pettifor). The mistake is the assumption that because some independent committee of economists (e.g. a Bank of England committee) decides how much new money is to be created and spent each year, that therefor that committee has usurped powers which should be those of democratically elected politicians.

The flaw in that criticism of PM, as I’ve explained umpteen times, is as follows.

Under the existing system central banks (assuming they have a fair degree of independence) have the final word on how much stimulus is imparted over the next few months. Reason is that governments / politicians can impart as much or as little fiscal stimulus as they like (i.e. “borrow and spend”), but the central bank can negate that decision by governments via interest rate adjustments. E.g. if a central bank thinks there’s been too much fiscal stimulus, it can negate that by raising interest rates.

To summarise so far, in the case of the UK, the Bank of England ALREADY DETERMINES the amount of stimulus. But it DOES NOT take strictly political decisions, like what proportion of GDP goes to public spending or how that is split between education, health, etc. And quite right. To illustrate, if government wants to expand public spending by £Xbn a year and raise taxes by £Xbn to pay for that, it is free to do so.

Under the PM system, stimulus is implemented simply by government and central bank creating new money and spending it (and/or cutting taxes). The decision as to how much new money to create, i.e. the decision as to how much stimulus there needs to be is in the hands of a Bank of England committee or some other committee of economists. In contrast, politicians are totally free, as under the existing system to raise public spending and raise taxes to pay for that extra spending.

Incidentally, and in relation to Ann Pettifor, the above referred to article of hers was published in 2014, so it is conceivable that she has changed her mind since then. However, as it happens I have been followed her blog for years and I have not seen any sign of her changing her mind on the above topic.

To summarise, under both systems (the existing system and the PM system), a central bank committee or some other committee of economists decides on the amount of stimulus, while the decision as to what proportion of GDP goes to public spending and how that is split between education, health, etc remains with politicians.

Ergo a PM system would not usurp any democratic rights of politicians.

And finally, if you’re wondering why I haven’t made the above point in the comments after the fantastically “progressive” articles at the “Progressive Pulse” site, I have actually tried to. But it seems the fantastically progressive “Progressive Pulse” site does not like publishing comments which criticise its articles in too direct a manner. At least mine don’t get published there.

Strikes  me that part of being “progressive” ought to consists of an open debate which allows all views to be aired, with the possible exception of views and comments which a downright offensive or plain stupid. But as you ought to have gathered by now, it tends to be the political left (which devotes half its time to telling all and sundry how “progressive” it is) which opposes free speech.


  1. "But it seems the fantastically progressive “Progressive Pulse” site does not like publishing comments which criticise its articles in too direct a manner. At least mine don’t get published there."

    I say the same thing about Bill Mitchell's blog! He censors my comments! The MMTers are as fragile as Progressives!

    Banning is out of control. Glad you don't seem to ban. I hope we can have frank discussions without censorship raising its ugly head!

  2. Yes: Bill Mitchell does get a bit tetchy on occasion. But he doesn't normally actually censor comments unless they are downright offensive in my experience. Francis Coppola won't leave comments on Bill's site because
    of his tetchiness. Mind - my language isn't exactly 100% diplomatic 100% of the time...:-)

  3. After a bit of debate on Peter May's site. He seems to be pushing MMT as only concerned with spending our way out of trouble,(and at most other times by the looks),as it has a a"liberating appeal"

    He points out that it is perectly possible to control money via spend and tax,seeing as the Uk gov is actually spending more than it raises in tax.

    What he wants is spending being used as a lead and the economy will always pick up.Tax is seen as a way to control/deter behaviours and spread wealth more equitably. Obviously this this means deficits are not a problem for him. Oddly I kind of agree with him.

  4. The amazingly “progressive” Peter May is an idiot, far as I can see. His first sentence claims "Positive Money never mentions tax."

    Well is it really LIKELY that an organisation concerned with matters economic will NEVER mention tax? Next he'll claim he has a horse that doesn't need food.

    I’ve just done 30 seconds Googling and have confirmed that PM does in fact mention tax (surprise surprise).

    In his second sentence he makes the ridiculous claim that the idea that 97% of money is privately created is incompatible with the fact that tax totals 33% of GDP.

    Well that’s just a classic case of confusing stocks with flows. While Pos Money has many critics, many of them far better qualified than Peter May, none of them have pointed to that alleged incompatibility apart from the amazing progressive Peter May, far as I know because no one else is as daft as Peter May.

    So that’s two major blunders in the first two sentences. Don’t think even I have managed that amazing – er – “achievement”…:-)

  5. Stocks and flows?

    Accoring to the figures he quotes there we taxed net 32.5% of GDP(NB not 33.2% he quotes,which is for 2016, so he actually make a mistake on his own figure there).But that is not a signicant mistake on this point. Spending was in 42.2% of GDP so he claims a net money creation of 9.7% of GDP,if true it does warrant mention.

    GDP in 2015 was about £1,935bn which is £187bn. M4 is about 2300bn so thats about 8% of the money supply.

    1. What I mean is this. Government spending is roughly £2bn a day. So HM Customs and Revenue collects about that much a day (say in the form of cheques drawn on high street banks. So about £2bn a day is transferred from the accounts of those banks in the books of the Bank of England to HMCR, i.e. to government. Government spends about £2bn a day, so the money flows back to households, employers etc. So in the “dual circuit”, every £ turned over in the commercial bank circuit is matched by a £ turning over in the base money circuit.

      But the STOCK of commercial bank money is about 30 times the stock of base money (that’s on the basis of the 3%/97% figure). So does that big difference in the size of those two stocks matter? According to Peter May there’s a big problem there. I suggest, to the contrary, there is no problem because that difference is catered for by having base money turn over about 30 times as fast as commercial bank money. Indeed if there is in fact a problem there, then that’s news to HMCR, the Bank of England, the Treasury, etc.

    2. i've tsken a quick look at public psending last 4 years. And also tax revenues. There seems a mismatch to me,despite the deficits figures (borrowings)I can't seem to make any balances. I must be doing something wrong here. Seem to me we are as a nation spending far more than we raise in taxes and borrowing. My figs shown below last 4 years
      Spend Tax Diff deficit new
      (bn) money?

      2015 759 632 127 55 +127
      2016 765 653 112 39 +112
      2017 781 695 86 7.5 +78.5
      2018 817 733 84 -2 +86

      Its a big point for me as Pomo claim spendng is more or less wiped pout by taxes/borrowing,but I just cannot see it here;

      Of course my figs may be pants,but May is calling PoMo out on this.

    3. This comment has been removed by the author.

    4. Sorry my chart failed

      Left to right
      New Money? Surplus spend over tax and borrowings

    5. Far as I can see from that site, for 2019, total spend will be £817bn. Total collected in tax is £775bn. That suggests to non-expert me that the debt will rise by £42bn (817-775). The debt is actually projected to rise by £52bn (1.835-1.783). So that’s a discrepancy of “only” £10bn: nothing. That’s small change for Warren Buffet!!!!!!

    6. Well last 4 years we have had an average of £100bn a year from spending over taxes+borr0wing. So that HAS to be new money created by the state. Those 2019 figures show a decline in that trend but its still £42 bn(assuming no deficit that year),

    7. I'm going to do some homework here.


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