Monday, February 27, 2012

Randy Wray — MMT for Austrians


Read it at New Economic Perspectives
MMP Blog 38: MMT for Austrians
by L. Randall Wray

3 comments:

Dan Kervick said...

I've been trying for some time to convince the recent critics of the point that Randall Wray is making here: that MMT is compatible with various sizes of government. MMT emphasizes that the government almost always needs to run deficits to counteract demand drains. But whether to have a large government or a small government is a separate question that depends on other judgments of social and economic value. For any desired size deficit, you can achieve that deficit with high taxes and high spending, or low taxes and lower spending.

That said, I personally want to go on record as a supporter of an egalitarian and Big Government version of MMT. I believe our society is holding itself back in a dreadful way because it insists on relying on the private sector to do things that only government can accomplish effectively and efficiently, and on the scale needed. I support greatly expanded public investment in infrastructure, public goods and services, and people, as well as aggressive measures to achieve greater income balance in our society.

I don't think I much like Wray's idea of a JG program organized around paying private corporations to employ people. It strikes me as unworkable and wasteful, and also an odious form of corporate welfare: a needless corporate subsidy. Let's put people to work in the public sector doing all of the many things that we need to do and are failing to do. Then force the private sector to compete harder for those workers with more attractive wage and benefit packages.

If that raises the price of labor at the bottom and bottom-middle, I say great. We should only be so lucky! These people have been on the receiving end of the neoliberal unbalancing of income for decades, and it's time to get on their side.

And if the high labor costs in that area threaten price stability, then remove income from the top of the pay scale with maximum wage laws, higher marginal rates, tax penalties for corporations with exaggerated pay differentials, etc.

I'm not all that excited about the prospect of a MMT-Austrian hybrid. That strikes me as a kind of Frankenstein's monster, with some of the MMT body parts used to empower an inherently anti-progressive and anti-social movement.

Bob Roddis said...

Adam Smith as the ultimate in free market thinking? Au contraire.

http://www.economicpolicyjournal.com/2012/02/jim-rogers-has-better-pick-for.html

Mr. Wray simply does not understand the essential economic concepts of catallactics, human action, human exchange, economic calculation, the pricing process or Cantillon Effects. Further, there is absolutely no basis for the claim that the government must issue money or currency. We know that it presently does, but so what? The government has announced that the president can kill any citizen without trial too. That is not an argument for making it right.

BTW, I personally am always thanking the MMTers for emphasizing how effortlessly the state can/could create money out of nothing without the obsfuscation of the present Rube Goldberg Fed system. It's important that average people understand the real source of inflation ASAP and the MMTers do, in fact, make that clear, as horrific as the truth is.

Finally, since you guys seek to grant the government even more plenary economic power than it presently exercises, don’t be surprised when it is captured by the elite and totalitarian forces of evil. It’s called “The Road to Serfdom” which these days should be called “The Waterslide to Serfdom”. See Charles Hugh Smith.

Senexx said...

To Bob Roddis,

It is all ready captured by all those interests by Austrian Libertarians and Big Business conservatives (the fusionists) and is all ready on the road to serfdom.

That is why the US is such a mess.

Hayek was right about that, wrong about the economics.

And the Austrian definition of inflation is not the commonly accepted definition of inflation.