Saturday, 8 May 2021

Getting simple ideas across is a herculean task, as MMTers have discovered.


Getting simple ideas into the head of even relatively intelligent folk is like getting through a thick concrete wall with a jack hammer. A classic example is the never ending claims that MMT would result in excessive deficits and excess inflation. A recent example of that claim appears in an Adam Smith Institute article written by Tim Worstall, who I actually have plenty of respect for. But like I said, getting simple ideas across, is a herculean task. (Article title: “It Would Appear that Larry Summers was Right”).

The answer to the above “excessive deficit” claim is (pretty obviously) that it all depends on who is in charge of the printing press (as I pointed out in a comment after the article). And MMTers do not do themselves any favours by being thoroughly vague on that question.

Anyway, if POLITICIANS are in charge of the printing press, then the dangers are obvious. On the other hand if the size of the deficit is decided by some sort of independent committee of economists (maybe at the central bank and maybe not) then the dangers are much less.

And incidentally, the fact that such a committee decides the SIZE OF the deficit does not, repeat not, repeat not mean the NATURE OF the deficit needs to be decided by such a committee: i.e. questions like whether more tax or more public spending are needed is clearly  a POLITICAL question: i.e. it’s a question which should always remain with politicians. Same goes for the decison as to what extra public spending goes on: education, health, etc.

The latter method of separating responsibility for the SIZE of a deficit and the NATURE of a deficit is a truly BRILLIANT and simple idea. Unfortunately (to repeat) getting it into the heads of even the relatively intelligent is a herculean task: I’ve found it necessary to make that “separation” point at least a hundred times in sundry articles. Moreover, a significant proportion of academia has no respect for original and simple ideas: what many academics really like is the opposite: complicated and irrelevant ideas, because that’s what keeps them employed.

Far as I know, credit for the latter original and simple idea must go the Ben Dyson (founder of Positive Money), Josh Ryan-Collins and a few others.  

Another example of a supposedly intelligent individual who appears to be incapable of understanding the above “separation” point is AnnPettifor. In contrast, one former chairman of the Fed and one former vice chairman have obviously grasped the idea (Ben Bernanke and Stanley Fisher).



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