Responses to MMP Blog #47: The JG / ELR and Real World Experience

By L. Randall Wray

Before we get underway, I have two appeals.

Appeal #1: About twenty years ago Don Roper and Ric Holt created the PKT (Post Keynesian Theory) internet discussion group. It was the first such group I’d ever come across. All the “top” heterodox economists participated. The discussions were interesting and important. You might still be able to access some of them.

However, the list was destroyed by frackers.

I won’t go into all the details but here is the basic problem. Every couple of weeks some pseudo Austrian would come along with the free market /anti government ideology posts. That was not really the problem—which was two-fold. First these people had no understanding of heterodox economics—they never read previous posts and were congenitally lazy (and, it appears, dense).

Further, they had no interest in learning anything. They were selling, not buying. They were self-appointed evangelists for the Austrian cause. Now, in truth they had no understanding of Austrian economics, either—which is why they were pseudo. I gather they spent most of their time in their mothers’ basements alternating between (how shall we put this?—as delicately as possible!) fracking themselves and fracking progressive discussion groups.

They would force participants in PKT to begin anew each time, with well-meaning discussants trying to bring the interlopers up to speed by restarting from ground zero. This happened at least once every two weeks. The frackers would divert discussion for a couple of weeks, then move on—back to self-abuse in basements or on to discover another discussion group to disrupt.

Gradually all serious economists left PKT. And then it shut down forever.

We are now on MMP Blog 47 (with a few asides) and very nearly a year into this blog. Our interloping frackers have come and gone over that year. With my long-term experience in discussion groups, I’ve developed a nose for frackers–and an intolerance for them (that has probably not gone unnoticed).

It has been very clear from day one what this particular MMP blog is about: discussing the basics of MMT. From day one it has been about explaining MMT to those who are interested in it. I have no interest in pushing MMT on those who are against it. I have zero interest in debating enemies of MMT, and have zero tolerance for them. This is a primer. Anyone who comes here does so voluntarily. And while I never suffer fools very well, I do not suffer idiot salesmen who come to the MMP at all.

Jerry can sell his wares somewhere else. I’m not buying. You will note the large number of comments by MMPers who have masterfully dealt with every stupid complaint made by Jerry.

These comments in response to Jerry display deep understanding of MMT. But understand this. Jerry, by his own admission, has no interest in understanding MMT. He has a career that began by defrauding government, and now like most pseudo Austrians uses that experience in an attempt to discredit government. This is a well-known psychopathic behavior.

But more importantly for our purposes, his self-described career aims to destroy MMT. I presume he means he is paid to do so—and I’ve got my suspicions about who is paying him (hint: a new website was set up with six-figure funding to hire individuals to do just that). Now, to be clear, I am not worried about that. Heck, the well-funded Vatican could not destroy Galileo. MMT is correct and it will win out—no matter how much funding is against it, and no matter how many career flackers attempt to destroy it. Truth is on our side. The liars cannot win.

But here’s the appeal. Ignore the frackers. They will go away much more quickly if they illicit no response.

Appeal  #2. As usual I’m way behind the technological frontier. My colleague Stephanie Kelton is apparently a champion Twitterer. I have no idea what that is, but I presume it is important. So I got an Ipad. And Twitter was sort of already on it.

(I will not go into the details of trying to get the Ipad set-up. I wince whenever I hear anyone say that Apple is “more intuitive” than Microsoft. Yeah, right. To get the damned thing to do anything I had to answer 25 questions of increasing difficulty, ranging from the first girl I kissed (isn’t that a bit presumptive?), to my favorite color and automobile, on to the occupation of my third cousin on my mom’s side, and finally to the names of the six people who separate me from Kevin Bacon. And the most frustrating thing about it was that the Ipad kept correcting me. Somehow Steve Jobs knew a lot more about me than I did. And he was arrogant about it, to boot.)

So I was all set to Twit and Twat, but Twitter informed me I have no friends and no followers. Isn’t that sad? How humiliating after all the effort.  I have no idea how to get some. I emailed Kelton but she is off, apparently, dining with the Princess of Monaco.

My Twit address, I think, is GLF530619. I need friends and followers.

OK on to comments. Since most were correcting Jerry, there is not much for me to respond to. Here are a few comments.

  1. Taxes and threat of violence. Look, this always comes up by those who want to argue MMT is fascism. Forget it. The reality is that States impose taxes—even the most democratic ones. They do not make tax payment voluntary, for obvious reasons. They are not running charities. In democracies, the citizens approve the taxes—either directly or through representatives. But they still want penalties for nonpayment. Anyone who opposes this lives in LaLa land. Good luck with that. MMT lives in the real world. Where taxes drive money. And that is the ultimate justification for them: they allow a monetary system that moves real resources to the public sphere. For the benefit of the public, in the democratic system. Is the US (or anywhere else) an ideal democracy? No. Democracy always means holding the feet of representatives to the fire of the indignation of the 99%. I’ll take that over some utopian anarchy any day.
  2. JG and efficiency. Look, efficiency is the most over-used and most misunderstood notion in economics. Neoclassical economics has a definition that cannot be applied in the real world. It is somewhat based on an engineering definition—to minimize inputs relative to outputs. But that plays almost no role in real world economies. To put it very simply, in a monetary economy (“capitalism”) the only thing that matters is money: so it is all about trying to minimize money inputs and maximize money receipts. But that has nothing to do with the engineering definition—which is in real terms. No megacorp (financial or nonfinancial) ever pursues an engineering strategy. In truth, the most profitable strategy usually involves constraining the OUTPUT. In any case, neither of these definitions have much to do with social costs and benefits—which from the public policy perspective is what matters. I’ll come back to this in a later MMP blog.
  3. Volunteer work vs JG paid work. Nathan’s view is close to my own. Note that all rich people engage in substantial charity “work” (usually, donating money), and get all sorts of things named after themselves (parks, schools, bridges, charities). That’s nice. Most people would like the same—but cannot afford it. Indeed, most people are so busy struggling to make a go of life that they do not find the time and energy to do a lot of volunteer work—in some sense, that is a “luxury” they cannot “afford”. By the same token, except for the Red Carpet crowd, volunteer work does not provide the same access to social and political networking that jobs generally do. And even if we provided sufficient hand-outs so that even the poor could do all the volunteer work they’d like to do, they are still stigmatized by the hand-outs. Capitalist societies expect much or most of income to come from “work” and those that do not receive their income that way are penalized in numerous ways—some overt and objective, others are subtle and subjective. Why not give the jobs, and then let people choose whether and how much they will volunteer? This is not either-or. As I have insisted all along, the JG is “add on”, not a replacement. It is a diversion to pose volunteer work to the JG. Most Americans have jobs and then decide whether to volunteer. Let’s give everyone that choice. However, let me disagree with Nathan about the Jefes experience. The networking was because the women worked together; putting them onto welfare did not completely destroy that network. But if they had not first had Jefes, they never would have had the network. Working together is fun!
  4. The JG and MMT: Next week I’ll get into the necessary (?) links, and the inflation issue.

Thanks for the comments!

23 Responses to Responses to MMP Blog #47: The JG / ELR and Real World Experience

  1. That’s a very good point about the networking, and setting them (the women who eventually ended up on welfare) up to do some productive work initially, which they were then able to continue once they were moved onto welfare.

    The reason I suggested disbursing checks at a community volunteer center that were not means tested in any way was as a way to remove the stigma, which I think would still be attached to JG jobs, similar to the way it was with the old WPA program. If Bill Gates can come into one of these centers and pick up an $800 check every month, then there’s no stigma for the recently-laid-off Joe Sixpack to do so. But fundamentally, you’re right, you get more easily identifiable social benefit out of making the enrollees work, where they form social networks and learn and maintain job skills they wouldn’t necessarily be able to do in volunteer work.

    I have a different concern, however, about the Job Guarantee buying into the Capitalist morality, that if you lack sufficient assets to earn an income off of renting them, that you should get a job or make up your own job to earn that income, otherwise, you don’t deserve the consumption on which you would spend that income. On the one hand, I understand the point of it, if you don’t contribute, then you’re just a parasite on someone else’s work, on the other hand, it strikes me as an outdated remnant of an old ideology when we live in an era where real production can easily and routinely outstrip real demand. Rather like the old morality that condemns women for engaging in pre-marital sex. There was a good reason for that morality prior to easy and cheap birth control, though it was still horribly gender-biased, but now, it’s just horribly gender-biased. But I can’t fault you for not attempting to buck the dominant, if outdated, public morality, even though merely positing a Job Guarantee is a minor bucking of it. It’s no doubt beyond the scope of what’s proposed here.

  2. GLF530619? Please tell me that’s not your password, for like everything.

    (Shakes head)

    • Trixie: OK Mitch had exactly the same reaction, and said it is a terrible twitter name. Maybe I can change the name–I’ll see how complicated that is.

      • I suggeast “LRWray”

        • “Maybe I can change the name”

          Wait, let’s think this through first. Start with your profile pic — a steering wheel. The 11-2 hands position doesn’t fool me. I imagine a car with dents, dangling taillights, and a busted window. Notice how every other driver on the road literally steers clear of you?

          Same with GLF530619. Right now, you OWN the Twitter highway whether you know it or not. And no one’s gonna get in your way. It’s utterly brilliant and possible the next Twitter trend. I know I am now considering a new username: gtfoMW48732!@%#.

          • OK Trix, you are probably onto something. But, no, it was a toyota 4×4 diesel with two tents on top, no dents, on fraser island, doing 90km on the beach. and the only thing between me and the waves was a lone straggly dingo. (am not making this up–can provide the photo evidence). anyway i did add my name in front of the cryptic (but meaningful) handle so I hope that appears in future twits. And decifering yours, me thinks it is not in the same vein. Anyway, the GLF is my other blog–great leap forward. As the great philospher Yogi said, you can look it up.

  3. Frackers, huh? I just call em trolls. They like to hijack threads, some just talk nonsense, anything to get people to respond to them.
    Since I am not the econ type, I would love a small primer on Keynes and the MMT connection. What in the world is new Keynesian or post Keynes or just plain John Keynes? New sounds better?

    • John MAYNARD Keynes = the man, wrote General Theory
      Post Keynesians = his followers, accept and extend the GT
      “Keynesians” (better known as “Bastard Keynesians”) = wrote most of the textbooks (think Samuelson), took a few of Keynes’s ideas but the basis of the approach is neoclassical
      New Keynesians = fairly diverse group, with Stiglitz at progressive end and Mankiw at conservative end. Generally take very little from Keynes. Actually the basis is neoclassical but add sticky wages and prices and other market “failures” to derive sort of like Keynes’s result (economy doesn’t automatically go quickly to full employment)

    • I bookmarked this page at WaPo, and printed out the “family tree” for good measure.

      http://www.washingtonpost.com/mainstream-economics-and-modern-monetary-theory-a-family-tree/2012/02/17/gIQAiy6RKR_graphic.html

      You can actually just save the JPEG as well… :)

  4. The good news is that MMT is so wonkish that most trolls don’t even waste their time.
    The bad news is that MMT is so wonkish that most progressives don’t understand it, which shows the mountain we have to climb.
    The good news is that most progressives are open-minded, and they constitute half of the electorate.
    I’ll end with the good news.

  5. If it’s true that MMT is correct and the others incorrect, and that it will win out in the end, then its failure to win out after so many years and so many instances of vindication, such as predicting the Euro problem and the GFC, must be due not to technical issues but to marketing issues. What you need is somebody to spread the gospel to the masses, not just to wonkish blogs of post-whatevers.

    Warren Mosler does this, a little, by appearing on some radio shows, but only on a precious few local financial/talk stations. If he could expand his appearances into maybe a PBS show once in a while, or C-SPAN, that would help.

    In the age of the Internet, though, what you need most is a you-tube video that could “go viral”. Once posted, everyone here could email the link to all their non-wonk friends to get started. Or tweet it, if you have a follower :-)

    • Yes, you’re right about that. The real breakthrough would be when we get a politician with some following and not afraid to talk about it. It would likely be a progressive pol, but then who knows? I continue to think though that MMT falls naturally behind progressive people, especially with the austerity talk and unemployment.

      • I’m not sure about whether MMT would appeal more to the progressive (more spending) crowd than the (pick your expletive) lower taxes crowd. I think Warren’s statement, that our taxes are too high for the size government we have, allows both sides to participate without ideological compromise. Fear of inflation must be overcome, but that is not impossible. It would be easy for that politician to make a very public “read my lips” type guarantee to back off in case of accelerating inflation in the absence of any sort of “shock” event like another oil embargo.

        I think the progressive politician would have less of a chance of winning, though. A conservative who supported lower taxes while maintaining the current trend of increasing spending on social programs would have better bona fides.

    • Jonf et al. You are here. MMT is winning, And there are many Utubes. Go to my GLF blog, today, for a Utube of my talk on money as a public monopoly. Follow Yogi’s advice, if necessary.
      And, yes, just last week I was in Washington making a presentation to congressional staffers, many of whom read the NEP blog. And tomorrow, Canton Ohio–apparently the absolute center of American political thought.

      We are winning. As Eliza said, “just you wait”.

      • Nice job on the lecture, but that’s not what I had in mind when I suggested youtube. I don’t envision that sort of thing going viral.

        Deficit Owl is a clever and catchy idea. Make a series of 5-minute video debates between the deficit hawk and the deficit owl, animated characters who discuss your issues in a way that can be readily grasped by an ordinary American who is not an economics professor and was not an economics major. Poke some good-natured fun at some things that our politicians have said. Be careful, nothing mean or denigrating. Review some of Reagan’s speeches for the tone he used when calling his opponent an idiot. Remember, your opponents are not idiots, they’re just misguided. No mentions of Keynes or Minsky or Say’s Law or any of the other stuff that you know all about, but nobody else has ever heard of. OK, maybe a lot have heard of Keynes, but only as a curse word in a political speech. They don’t know what he really said.

        You need help from people with skills outside the realm of economic theory.

        As for winning, I’m not sure how you measure that. Of 535 Congressional representatives, how many are advocates of MMT? I would say the score is 535-0, which is not “winning”. Making progress, sure, maybe you’ve made a first down, but you’re not on the scoreboard yet in any meaningful way, never mind having more points than the “other” side(s).

        The other guys have economists on the Sunday morning shows almost every week. How many MMT economists have been on Meet the Press, or This Week, or Fox News Sunday? When you’ve done that, then you’re at least in the game. (If you have done it, and I missed it, then please post that on YouTube.) After that, maybe you can talk about who’s winning. And after the MMT Congressional Caucus can’t hold their meetings in a walk-in closet.

  6. Many folks will admit to being socially liberal but fiscally conservative. The trick is to somehow link fiscal conservative to deficit owl. Once the masses figure out that the government budget is not analogous to a household budget, MMT could be off and running. There are no politicians out there willing to admit how the monetary system works. The few that do understand are not willing to risk their careers.
    Wars have a way of teaching geography. Let’s hope Global Financial Crises can teach macroeconomics. In the meantime, keep telling your open-minded friends about the MMT blogs. Slowly but surely, the reality of modern money is becoming apparent as events unfold throughout the world.

    • Well, I can confess to having been “one of those folks” … but that was before my eyes (and brain) were opened to Chartalism and MMT. I’ve been spreading the word ever since… :)

  7. I’m a little late to the party here, but I am surprised that MMTers never talk about the Indian job guarantee program and how it is failing. The NREGA is rife with corruption, is causing inflation and has proven to not help the poor. In fact, the government is considering ending the program because it is failing. Isn’t this kind of important to note when discussing a job guarantee?

    http://www.atimes.com/atimes/South_Asia/ND12Df01.html

    http://online.wsj.com/article/SB10001424052748704081604576143671902043578.html

    http://articles.economictimes.indiatimes.com/2012-04-21/news/31378994_1_minimum-wages-nrega-hundred-days

    • Oh, yea, right. We do indeed talk about the NREGA, and indeed actually study it. And go way beyond the ideological stance you take, Peter. I have a PhD student doing her dissertation on the program. And it is a bit silly to claim that India’s inflation is due to NREGA–a partial job guarantee program in rural areas, whilst India grows at Chinese rates. Note there is NO JG in cities–where the rapid growth is occurring.
      So, anyway, your post displays nothing but ignorance and knee jerk ideology.

      • Peter’s exactly right. Inflation in India hit 12% recently using standard metrics. I really have to wonder if you understand inflation, Randy — it doesn’t matter where the price buoy is located. Indeed the gains are likely to be absorbed in other locations where things are actually being produced.

  8. Hmmm. Well, perhaps I can just offer another little anecdote from my own personal real world experience that might help you all distinguish fantasy from reality, freedom from fascism….. take it or leave it.

    Back when I was living in California, I helped create a green jobs training program that paid youth from a public housing project to work alongside other volunteers in nearby park. Almost none of the kids were employable in a traditional sense. Worse, these were grant funded charity jobs designed specifically for them, the kids knew this and acted accordingly. Everybody involved knew the program was a joke. Of course, when we wrote the grant applications and did publicity, we said things much like Randy is saying (or being told) about the Jefes program and the program in India — pretty much line for line. We all had paychecks in it! The program was very popular, people were throwing money at us and we got lots of media attention. We would even coach some of the more presentable kids on what to say to the media because, well, we all wanted it to look good and generate more grant opportunities. So don’t believe everything you hear.

    The truth is we were teaching those kids skills they weren’t interested in — and in hindsight the skills weren’t marketable anyway. The only thing we really accomplished there, aside from wasting time and money, was to further erode the almost non-existent work ethic in those kids. I personally got a very generous salary for that, along with valuable administrative experience that looks good on my resume.

    Now, if we had had access to an unlimited labor budget we could have done some real damage and wiped out the entire landscaping industry — and there’d be no reason to stop there. It wouldn’t be counter-cyclical employment, it’d be a whole new way of life, reminiscent of Stalinism. As it was, we were at least limited by the pool of available grant funds.

    You guys want an inflationary ZIRP, and the only tool for fighting the inflation is the hyperinflationary JG with no brakes! It’s got to be some kind of joke…. if you clowns think the JG is a price anchor, you need to go back to school, or just abandon economics altogether.

    The only real reason I can identify for proposing the JG is this ridiculous speculation that people will “feel good” about these charity jobs — or that they will somehow be fooled into believing they aren’t actually charity, and this will somehow build social capital. Naive to say the least. As Ralph Musgrave has already tried to point out, before he was accused of being a KKK sympathizer, it would be much more honest to just give people help when they need it, and then let them decide whether they want to spend their time volunteering, looking for real work, or just wasting away. How they might feel about that is pure speculation, but it’s much cheaper that way, less overhead, no hyperinflation. And then if private organizations want to invest in building social capital, they’re free to do so.

    Of course, it’s not strictly necessary for the government to be involved at all. In every town in the country you can get 3 meals a day, a sack of groceries, a warm and dry cot to sleep on, clothing, phone privileges, bus tokens, clinical care (usually), and can pull your life together without a single government handout. I’ve done it myself. Though, food stamps are very convenient.

    The trouble is that it’s almost impossible to get the socialists, by far the densest of the lot, to understand that the capitalists are not the enemy — the landlords are; the monetarists, by far the smartest, have been trained not to acknowledge that if I own all the land and you have all the money, you are the slave; and the Austrians, usually of fairly average intelligence, will illogically defend the homestead principle until they’re blue in the face, and, being sociopaths, will refuse any market solution that requires interacting and compromising with people; even though Friedman, late Marx and even Austrians like Yeager have all more or less agreed that real wages are determined at the margin of cultivation, the long forgotten law of wages. If you want guaranteed income that is non-inflationary and only frictional unemployment, look there.

    Theories and theorists that can’t stand up to scrutiny aren’t going to get anywhere. It appears MMT wasn’t really designed for that, it’s just commie trash. Look how they deal with dissenters, just proves my point. Probably too late for Randy but the rest of you may still have a chance. This is a professional embarrassment.

    I will say it’s interesting that I would be accused of being employed by the elite (I’m a graduate student); Randy is the one pushing a theory that makes no sense and will only benefit those holding the aforementioned inflation-proof assets.

  9. On the twitter name, it is possible to change it, the shorter the better to give you more room to say what you wish to say. After examining some names that were taken e.g. LRWRay – I would recommend GLFWray to keep the distinction. Just a suggestion.