Bill Mitchell and Chris Williamson Podcast

The GIMMS organised Labour Fringe Meeting with Bill Mitchell on the Green New Deal successfully happened and there will be a forthcoming video on this from GIMMS shortly.

A second meeting, organised by Greg Hadfield at the Rialto Brighton (no surprises there on either count with respect to Chris Williamson alone), involved both Chris Williamson and Bill Mitchell. I was not able to attend either meeting but, thanks to the MMT Podcast team,  there is an audio podcast of the latter.

This is primarily Williamson introducing and mc’ing a talk by Bill on MMT and Labour and. also, MMT in general. It is a good talk with some decent and serious questions with interesting answers in the Q&A. I do recommend it, whether you are a Labour supporter or not. There is much to gain there, especially if you are not familiar with MMT.

Still I think a major opportunity was missed by GIMMS and Bill, on both the topic and fellow participants. Given Bill”s last two books (not the text book) and the situation in the Uk over Brexit I thought a three way talk/debate between a hard Lexiter such as Bill, a soft Lexiter such as Stephen Kinnock and a Remainer such as Kier Starmer could have drawn much interest from across Labour and possibly achieved national media coverage.

Once I had heard there was going to be a GIMMS Labour Fringe meeting, I thought of then suggested this to a couple of Labour activist friends who are well connected in Labour and with whom I have discussed MMT before and had recommended they read Bill’s blog. They thought this was an excellent idea and very doable but there were a number of caveats.

Whether we could have got the MPs I suggested, still possible they said but given the official evolving stance of the Labour Party was moot but, certainly, we could have got speakers significant to Labour, MPs or not, to represent those other positions.

Yes, this would have been more than just an MMT meeting but Bill (or someone else) could have started with an introduction to MMT, noting that, even within the MMT lens, one could be for any of those three positions (as is the case across the different members of GIMMS and the advisory board).

When GIMMS was  planning this meeting, surely something like this was thought of as a possibility? Maybe this was preferred but not feasible in the end – unlikely given the feedback I received? Surely someone in the advisory board would have suggested something like this, if not by GIMMS executives? Were the board consulted? I suspect that nothing like this were ever considered and the board were not consulted.  which would be a failing of the GIMMS team.

From my chats with these activists we all thought this could have far more potential than just a GND/MMT meeting with one MP. Which brings us to the other caveats.

Of course they said : “it’s a bit late to suggest this now”,  “you need a venue”, “who is going to organise/promote/fund it” , “too late to get on the official fringe program”. When they found out that there was a venue, organiser, topic and speakers already, we still all thought my suggestion was better. The killer, go on guess,  was when I said it was currently with Chris Williamson. They both said this might make it harder for GIMMS, and  Bill, for any future such meetings especially with other MPs such as I suggested. Neither I nor they knew the personal stance of these specific MPs on each other (one signed the letter to re-suspend him, one did not) but they noted it as a general concern.

Now I am sure that GIMMS executives are far better connected with Labour than I am and they will disagree with this, but this is what two people I know, both very long time Labour activists, that I happened come across recently said. In old internet parlance YYMV, your mileage might vary.

Following on this note, I have to add a few comments given the background of my issues over Chris Williamson  with regard to the promotion of MMT.

On the one hand, this talk alleviates 99% of my concerns in  my previous post. There was nothing contentious or controversial that would have caused me problems to have attended. I was going attend anyway and the training meeting the next day but was unable to attend either in the end. Certainly, even though, as should be clear, I dislike Chris Williamson, and continue to hold the position that our  only official MMT organisation should not be promoting him, should there any further such meetings, I would have no qualms about attending. I will continue to criticise GIMMS if it were them doing the promotion, in the future. In this case, and only through force majeur, the second meeting was not organised by GIMMS.

On the other hand, this podcast was weirdly edited. Williamson’s introduction to Bill sounds like it starts mid flow and that likely other prior statements had been omitted, or it could have just been an engineering/sound issue? At around 14 minutes, Bill comments on social media controversies over him talking with Williamson. Apart from me defending Bill against an insinuation of antisemitism by a well know UK economist, there was apparently much I missed out on. I could not find the particular phrase Bill stated was associated with him (or MMT?) “the dark side of fascism” in online searches.

On a side note, I did find something intriguing although not do with Bill directly, but I imagine it is of the same ilk – Statement Against Stephanie Kelton’s Meeting With the Far Right in Japan –  since I know Bill has met up with Japanese politicians too. This goes to the point that I have made  calling MMT a ‘framework’ and, what Bill calls a “lens”, it is independent  of ideology and values. Bill makes this clear in the talk and I fully agree and have stated the equivalent myself. We want all parties to use the MMT framework, this will manifest different policy implementations given differing value sets. For just illustration one could imagine both Labour and the Conservatives agreeing that the Job Guarantee is a better macroeconomic stabilization tool than the alternative of unemployment, but Labour might do this with a Basic Income too and the Tories without. (Bill uses another example).

Still Bill does make some unfortunate and ill judged comments, in the talk and online. He unnecessarily defends Williamson over his antisemitism issues in Labour in the talk. He does the same online and, it seems,  he continues to encourage a silly and non-existent division in the MMT community when he says, in conspiratorial tones:

As a result of Chris’s suspension from the Labour Party for spurious claims he made anti-Semitic comments, some characters (unknown – not enough courage to reveal themselves) threatened the venue where our event was to take place.     

Well every MMTer I have (UPDATE: I meant privately, most, cowardly in my view, go public on this)  corresponded to on Bill’s position with respect to Chris Williamson, given my previous posts and tweets, is of the view, explicitly or implicitly,  that Bill is simply blinded to the failings of Williamson, because Williamson is the only UK MP who promotes MMT, thats it.  Whilst I can’t speak for anyone else, from my correspondences, I doubt that any MMTer would have tried to sabotage that event.  Far more likely, in my view, it would have been either a campaigner against Labour Antisemitism or a local resident, as this was public knowledge given the Independent article: Labour facing fresh Chris Williamson row as suspended MP set to speak at ‘multiple’ events at party conference, 

Making such insinuations is pathetic and unbecoming of an economist of your stature  Bill. Grow up.

 

 

 

 

 

Gower Initiative at Labour Fringe

Most people who study, follow and/or advocate Modern Monetary Theory (MMT) in the UK probably know that the one official advocacy body here – the Gower Initiative for Modern Money Studies (GIMMS) – is organising an event at the Labour Fringe – the unofficial events around the official Labour Conference in Brighton next week. I want to make a few comments about this.

I say this is the only official MMT advocacy body because of the many eminent MMT academics, practitioners and advocates who have backed this group by joining the advisory board.  Primarily this blog post is addressed to that board.

First of all, I fully support that GIMMS is organising a meeting promoting MMT at this event. That is a key part of its advocacy. Such a body surely should also organise events at all major party conferences, the Liberal Democrats, the Conservatives and so on? Well, it is doing so at the Greens conference and that is to be commended too. However, it is not at the other major party conferences and that is a pity. I suspect that is because we do not know significant people, in either of those parties, that could help us do so. For sure, both of those parties are far more wedded to a neoliberal political program than Labour (although that still is with, e.g. its Fiscal Rule) but neither are intrinsically neoliberal and could still promote their own political values without neoliberalism (albeit some would have to change) and through MMT. Unlikely, at present, I know but still, if we do not show them There are Real Alternatives – TARA –  then they will remain stuck, through ignorance (as opposed to choice – we can’t reach those), in TINA – There Is No Alternative. Hopefully, next year, GIMMS will organise events at all party conferences.

Some of you might be aware that I have had issues with GIMMS original planned meeting promoting the highly controversial and suspended Labour MP Chris Williamson to speak alongside Bill Mitchell. I had previously asked for GIMMS stance on this and now have an answer and one with which I am extremely disappointed and concerned.

This is not the place to discuss the antisemitic issues specifically with regard to Chris Williamson, that has been covered thoroughly elsewhere. Whatever you position over this, it is surely undeniable that this makes him both controversial and divisive. So why did GIMMS invite him to speak?

I can only guess but there appear to be two rather obvious reasons and one questionable one.

First no one more than Bill Mitchell (along with Warren Mosler) has worked to promote and get traction for MMT in polities around the world. As I understand it Chris Williamson is the first MP to publicly support and promote MMT. The first of many I hope. Still he is currently the only one. (Given his noted notoriety I hope that Bill’s efforts to find any MP who could openly advocate MMT has just blinded him to the other issues surrounding him).

Second, he is a Labour MP and this is the Labour Fringe.

The third one is more of a marketing or PR nature, his controversial status would help promote MMT. I am really not sure about this but certainly this had to be factored in anyway, one way or another, in deciding to have him at this event. And surely the advisory board would have been consulted on this both for the the meeting and any statements made by GIMMS in this regard?.

Still he is a suspended MP and currently without the Labour Whip. He specifically is barred from official Labour Conference.

He is so controversial that he has been barred by various venues, obviously not the Fringe event organisers who invited him, from speaking at various Labour Fringe events. This now includes the main GIMMS event and so it is proceeding without him. However GIMMS still plans to have another meeting with him there and they have not remained neutral on this controversy and this is what I am addressing here.

Now if the meeting had gone ahead with Chris Williamson I was in two minds as to whether to attend or not.

On the one hand, I have previously expressed my concern that the association with Chris Williamson could tarnish the MMT brand in the UK.

It is important to note that I only paid attention to Chris Williamson because, long ago, I was informed that he was the only MP openly promoting MMT but I was concerned over his connection with antisemitic issues. Plenty told me one issue should not overlap with the other and I agreed then but needed to find out more. Now whilst antisemitism has always been a concern to me, in the various groups and organisations I have been involved in over many years, it was always secondary and mostly very minor. So I needed to find out more about Chris Williamson and Labour Antisemitism and spent much effort researching this. I have learnt far more about antisemitism than I wished but do not regret this work in the slightest. As a consequence, my position on Chris Williamson is that a necessary but not sufficient condition to fix problems in the Labour Party is that he needs to be expelled. For sure, I am aware that  many will completely disagree with my position here, well we both now know each others views on this.

Anyway,  given this,  I would not wanted to have been the person to aggravate the controversy in that meeting. I certainly would never have initiated it nor been pro-active but I certainly might have found it difficult not to be reactive. I had hoped the GIMMS meeting could and should focus solely on the economics and the politics of economics and nothing else. The question outstanding to GIMMS was whether they were to remain neutral on this and ensure such controversy would not obfuscate the primary thrust of the meeting,

On the other hand, on the assumption that this meeting was going to be neutral on this controversy, I would have attended and hopefully learnt something more about MMT and the Green New Deal and so on. I would have had no interest in Chris Williamson talking on these topics especially when we have Bill present, but to hear Bill speak again  and to network with others would have been worth it.

Still, even given my stance on Chris Williamson, there is a topic that would have been worthwhile to hear him speak on and one which GIMMS could have promoted in an uncontroversial manner (as they could the planned one too). GIMMS could have said something along the following, which goes back to my point about GIMMS advocacy of MMT at all party conferences:

‘We are inviting Chris Williamson as a sitting MP to speak on the challenges of getting other MPs in various parties to be educated and understand MMT. We recognise that he is currently suspended and controversial but we take no position on that controversy and that issue is not to be discussed in any way in this meeting’.

I would certainly have been interested in that talk, would have attended and would not have had concerns over GIMMS promoting it in that manner. Whether you like my topic or the planned one, either way I expected (and previously asked) GIMMS to make an effort to block or neutralise the controversial aspects of this MP.

This is not what happened

On the 24th of August GIMMS issue a Press Release , in which they made a number of concerning statements.

First, with regard to Chris Williamson, over the antisemitism issues they state: “we know are false allegations against him”!!  Really? How do they know? On what basis can Prue Plumridge, Sara Holland and Claire Jackson-Prior confidently claim this? Because he said so? How do they know  in spite of a series of copious publicly available independently verifiable evidence? Can this all be subjectively interpreted to make him innocent of all allegations? With difficulty but I guess so. Not sure how that counts as objective knowledge and for this official body to make such a strong a statement, one quite unnecessary and irrelevant to MMT theory, practice and advocacy, whether you you disagree with me or not over their claims about Chris Williamson, they are clearly no longer neutral on this matter and very much over-reaching. I am not going to speculate on their motives but, as I have said before, this is not a good look. A great disappointment. Far from avoiding controversy they are courting it. Is this a planned and carefully considered PR move?

“Having searched without success for an alternative venue at such short notice and following a great deal of discussion and personal distress we have taken the difficult decision to go ahead.” Did this discussion involve the advisory board? It should have done.

“We are painfully aware that this may cause some unease amongst our supporters however we hope that you will understand our reasons.” They were already aware that inviting him, if not handled carefully, would cause unease among other supporters – and surely not just me. Whilst I have addressed  Bill’s over-reaction to a tweet not addressed to him in a previous post, I did not need let alone expect support on that. Yet it happened. However, most of it was private. It seems no one else wanted to put their head above the parapet as I had  done, not only due to Bill’s over-reaction but to GIMMS now quite clear position over Chris Williamson.

They continue with “However, whilst we share left-wing values, we also took the decision at the organisation’s inception to remain politically non-aligned.” That is exactly what they have failed to do by clearly coming out and supporting Chris Williamson – not through inviting him to talk, as I noted above that could have been handled sensibly and sensitively – but by their non-neutral stance here: “we know are false allegations against him”. This is nothing to do with genuine left-wing values.  A blatant performative contradiction.

“Whilst we are indeed very disappointed and upset by this turn of events there are plans afoot for Bill to join Chris, a much valued MMT advocate in the UK, on a fringe platform elsewhere on the same day. We are, however, not in a position to give any details at the moment as the logistics are currently being worked out.”

My primary concern over the official organisation in all of this. If Bill had wanted to organise a non-GIMMS meeting with Chris Williamson that would have been another matter. And one perfectly possible too. (Not so long ago Bill had a free slot and asked to see if I could organise something (not with Chris of course) but I had no time). Now I would have disagreed with Bill on this but it would not have been the official UK organisation doing it.  It seems GIMMS still want to promote such a meeting even if they do not organise it? Far from hoping GIMMS would neutralise any controversy over Chris Williamson, it now seems they have gone out of their way to court controversy. And that is my concern.

Were the advisory board consulted on any of this? What is their position on this? I am addressing Warren Mosler, L Randall Wray, Mathew Forstater, Stephanie Kelton, Pavlina R. Tcherneva, Fadhel Kaboub, Rohan Grey and Steven Hall (and Deborah Harrington and Jessica Ormerod). Also the GIMMS associates too Phil Armstrong and Alan Hutchinson.

Given the divisive position that GIMMS has taken over Chris Williamson how effective do you think they can be to convince other Labour MPs, let alone MPS from other parties? As I see it, this has impaired their advocacy ability going forward.

Whatever anyone says or does not say, does not alter any of the evidence and reasoning behind MMT, we desperately need an official body to promote MMT in the UK,  however do you want one that is so currently and unnecessarily divisive?

I know I am not the only one who wants to know.

 

Quora answers on Quantitative Easing

A couple of Quora answers here.

How is QE different from MMT

My answer:

These are not comparable as they are entirely different – one is a policy evaluation framework and the other is a specific policy tool.

Modern Monetary Theory (MMT) is a macroeconomic paradigm that can be used as a policy science framework to evaluate the context specific economics of any policy.

Quantitative Easing (QE) is an “unconventional” monetary policy.

MMT can be used to evaluate the claimed benefits and deficits of a monetary policy such as QE.

So what is Quantitative Easing anyway? My answer   to the question Where can I find a theoretical framework for quantitative easing?:

The German Professor of Economics at the University of Southampton, UK, Richard Werner, invented the term, developed in advising the Japan government on fiscal and monetary policy in the 1990s. How QE is actually applied now is different but you should start with some of his arguments such as Quantitative Easing and the Quantity Theory of Credit. This starts:

“‘Quantitative easing’ (QE), has received much publicity in the past five years. However, its effectiveness remains disputed. Moreover, there are different views about what constitutes QE. It is the purpose of this contribution to review the origins and varying applications of QE, using and thereby explaining the macroeconomic model that gave rise to the concept. Called the ‘Quantity Theory of Credit’, this is arguably the simplest empirically-grounded model that incorporates the key macroeconomic role of the banking sector — a task belatedly recognised as crucial by researchers in the aftermath of the 2008 crisis.

The Quantity Theory of Credit after 20 years (QTC)
“The central argument is a dichotomous equation of exchange distinguishing between money used for GDP-transactions (determining nominal GDP) and money used for non-GDP transactions (determining the value of asset transactions). Money is not defined as bank deposits or other aggregates of private sector savings. Banks are recognised as not being financial intermediaries that lend existing money, but creators of new money through the process of lending. Growth requires increased transactions that are part of GDP, which in turn requires a larger amount of money to be used for such transactions. The amount of money used for transactions can only rise if banks create more credit. Banks newly invent the money that they lend by pretending that the borrowers have deposited it and thus crediting their accounts without transferring any money from elsewhere. This expands the money supply and it suggests that the accurate way to measure this money is by bank credit.It can be disaggregated into credit for GDP transactions (CR) and credit for non-GDP (i.e. asset) transactions (CF). ”

The Origins of Quantitative Easing

“The QTC suggests that neither interest rate reductions nor fiscal expansion, nor reserve expansion, nor structural reforms would be able to stimulate nominal GDP growth. Based on this model I proposed in 1994 and 1995 that a new type of monetary policy be implemented in Japan, which aimed not at lowering the price of money, or expanding monetary aggregates, but at the expansion of credit creation for GDP transactions. Since the expression ‘credit creation’ was considered difficult to understand in Japanese, I prefaced the standard Japanese expression for monetary stimulation (‘monetary easing’ or ‘easing’) with the word ‘quantitative’ to declare that ‘Quantitative Easing’, defined as credit creation for GDP transactions, would create a recovery”

“ I suggested in numerous publications that the central bank purchase non-performing assets from the banks to clean up their balance sheets, that the successful system of ‘guidance’ of bank credit should be re-introduced, that capital adequacy rules should be loosened not tightened, and that the government could kick-start bank credit creation and thus trigger a rapid recovery by stopping the issuance of bonds and instead entering into loan contracts with the commercial banks ”[My emphasis]

Abuse of the term Quantitative Easing

“While my recommendations were not heeded, the label I used caught on. Critics from both the Keynesian and monetarist camps began to redefine QE as an expansion in bank reserves — despite the fact that I had been arguing that such a policy would not work. A new name for an old policy was only likely to cause confusion.”

Leading MMT economist, Australian Bill Mitchell, Professor of Economics at the University of NewcastleNew South Wales, Australia analyses what is actually QE – an expansion in bank reserves – arguing a) that that is just an asset swap of primarily Treasury Securities for Central bank Reserves, neither adding nor subtracting to private sector assets, only changing their composition and the interest rate channel and b) that, since banks do not lend out deposits and that, instead, loans create deposits, therefore they are not reserve constrained and, therefore reserve expansion has no direct affect on banks willingness to create new bank credit “loans” – which was the purported goal of QE.

For more see Quantitative easing 101

Note that some QE, such as part of QE1 in the USA did buy “bad” loans from the banking sector, such as some Mortgage Backed Securities and this is closer to the original design of Werner’s QE but, on the whole, QE is reserve expansion.

It is important to note that Werner and Mitchell both disagree on the model of bank credit – particularly on the second emphasis point above in the Werner quote, that is, banks loans to the government – although they are more closely aligned than, by contrast, the Monetarists and “Keynesians” (actually New Keynesianism) that Werner discusses.

How does MMT avoid the results experienced in Weimar Germany?

Another quora answer. The question was “How does MMT avoid the results experienced in Weimar Germany?”

MMT (Modern Monetary Theory) is a description of economic reality, arguably better than alternatives such as New Classical and New Keynesian etc. approaches.

Hence it can be applied to any economy, including the Weimar Public and to identify whether policies were fit for purpose, that is to achieve what the policy makers claim.

A government can only buy available real resources including the unemployed. If its balance is more than available resources, inflation will result since there is too much money chasing too few resources. It also recommends not to have foreign currency denominated debt, as this diverts and prevents efforts to successfully manage the domestic economy

In the Wiemar’s case, due to the Treaty of Versailles, Germany both had unsustainable gold denominated debt (which is equivalent to foreign currency denominated debt) and there was a supply side resource crash, due to the actions of France over Rhine resources. In such a scenario MMT shows that inflation would result, and, with positive feedback due to these two process, likely to turn into hyperinflation.

If people had understood MMT (or the equivalent then), they would have argued against the terms and conditions of the Treaty of Versailles and predicted the result. This is pretty much what Keynes did in The Economic Consequences of the Peace – Wikipedia.

So if MMT had existed then, it would have evaluated and criticised the Treaty of Versailles economic policy proposals, warning of the consequences of those policies and it would have been shown to be correct for that scenario.

Is Modern Monetary Theory Legitimate

I am going through some old answers of mine to Quora questions. Here the question was “Is Modern Monetary Theory Legitimate“. The following is a copy of my answer:

It depends on what you mean by “legitimate”. I take it to mean as in an effective and successful explanation of a phenomena, better than alternatives. That is more sound, valid and likely than alternatives.

This would apply to, say, the standard model theory of matter, the theory of evolution through natural selection, the genetic theory of inheritance and so on. These are all legitimate, whereas,say, the Lamarckian theory of evolution is not. By contrast, Newton’s theory of gravitational attraction is still legitimate but not as a complete explanation but, rather, as a special instance of Einstein’s General Theory of Relativity.

Macroeconomics as a distinct field within economics was launched by Keynes’ General Theory arguing that classical, marginalist, market economics was only a special case – legitimate within its constraints. The main Post-Keynesian position is that that and it’s successors such as neo-classical, Real Business Cycles and New Keynesian theories and so on are not just special rather than general but also fail to apply in the real world.

Well Modern Monetary Theory is, by design, an internally coherent and externally consistent systematic formulation and enhancement of some of the best discoveries in Post-Keynesian macroeconomics. It more effectively explains many real world financial phenomena such as how government finance actually works and what tools the government has to manage unemployment, inflation/deflation, productivity, investment, consumption, trade and so on.

If you agree in this scientific sense rather than just due your subjective opinion, politics and preferences, it is legitimate and more legitimate than its aforementioned conventional/mainstream/ orthodox competitors as well as Austrian and Marxist alternatives.

Do not confuse this, as other answers do, with it being a critique of Neoliberalism and/or of left or right political values. MMT does indeed undermine Neoliberalism (but you do not need MMT to do that), showing not only what are the myths that neoliberalism requires as a political ideology but also why these are myths and what the implications are of freeing us from these myths. Neoliberalism has long infected not just right but also left political views.

So debunking Neoliberalism is not a specific attack on the right, just on an empirically unsound ideology that they more commonly employ. Too many on the left are opposed to austerity but still drink the Neoliberal Kool-Aid without realising it. Whilst, as a result, MMT appears to be more popular amongst some left thinkers, MMT itself, as a legitimate theory is not bound to any political value sets. Given whatever value sets one has, MMT can better and more legitimately show what the real likely outcomes of proposed policies than alternative and less legitimate theories.

What is MMT and how does it work?

I have been replying to some questions on Quora, some on Modern Monetary Theory (MMT). Here is my answer to the question in the title:

There are two questions here.

What is MMT?

Modern Monetary Theory (not the most descriptive or accurate name, in my view) is a combination of key ideas and concepts in the empirical macroeconomics field known as Post-Keynesianism.

There are a number of dimensions, including:

A) Both Knapp’s State Theory of Money (explaining bank reserves, coins, notes and Treasury Securities -“high powered money” or “tax credits”) and Mitchell’s Credit Theory of Money (ATM money/liability accounts – “bank credits”) are combined and MMT shows how they relate – that whilst bank issued bank credits trade at par with state issued tax credits in the private sector, they cannot be used to extinguish outstanding tax liabilities to the state – which has significant implications for fiscal and monetary policy.

B) Keynes/Kalecki’s monetary production economy, showing that there can be macroeconomic equilibrium at less than full capacity with involuntary unemployment and that any economy needs to be understood in terms of monetary flows and stocks as well as real exchanges. This justifies fiscal activism as the Government therefore needs to be pro-active in handling private sector labour underutilisation, if it is a Government for the people.

(C) Godley’s Stock-Flow Consistent (SFC) accounting and balance sheet based models of such economies showing the actual relations between monetary and real exchanges. This shows that many accepted ideas are incorrect since, for example, it shows that Government/Public Sector Debts are actually Private Sector Assets.

D) It incorporates Lerner’s functional finance approach to fiscal and monetary policy. In combination with (A) and (F) it argues that fiscal policy is more effective than monetary policy in macroeconomic management and at all times, not just under some specific scenarios such as the “Liquidity Trap” – the mostly post GFC conditions.

E) It incorporates Minsky’s Instability Hypothesis and others, examining the actual and possible finance operations of states and banks and their effectiveness. This can guide bank reform and help show how to avoid or minimise financially caused recessions.

F) It identifies a macroeconomic policy tool to achieve both loose full employment and price level (inflation) stability called the Job Guarantee. This is derived from Minsky’s Employment of Last Resort, Mitchell’s Buffer Stock Employment and Molser’s Transition Jobs. This is a path not taken compared to the typical (Mitchell) “unemployment buffer stock” or (Marx) “reserve army of the unemployed” and one that specifically rejects Phillips Curve derived models that argue that there is an unavoidable tradeoff between employment and inflation. Whilst Phillips Curve derived models dominate (in the background) employment and inflation policies, the Job Guarantee is always a policy option, even though it is mostly ignored or misunderstood.

Overall it provides a coherent descriptive macro-economic framework, within which to examine current and past differing currency regimes – to identify their strengths and weakness and the actual (even if unrecognised or denied) scope of fiscal and monetary tools available. It can be used to evaluate the implications of existing and alternate fiscal and monetary policies, in any currency regime, on key macroeconomic factors such as unemployment, productivity, growth and inflation.

Being empirically based it rejects many foundational assumptions in various other economic theories such as neoclassical/New Keynesian/Austrian/Marxists including : that banks are originators of credit and are not intermediaries; that deposits do not create loans, it is loans that create deposits; that focusing on government deficits/debt is concern with the wrong form of debt – the real issue is private debt, its type, distribution, stability and sustainability; that government net financial liabilities are nothing more than private sector net financial assets – state spending in the private sector and saved there; that both the labour theory and marginalist theories of value are wrong; that whilst Hayek correctly saw that economies are complicated and so limited in top-down planning but that they are also complex and so capable of being modelled and understood and can be better managed with feedback mechanisms through enhanced automatic stabilisers (tax/benefit fiscal flows and bottom-up localised tools such as job guarantees) to handle unemployment and inflation; that is such automated fiscal policy is superior to ineffective “independent” monetary policy; that one cannot model the economy by ignoring money, banks and private debt; that trade and markets do not work the way that mainstream economists assume; it rejects “sound” government finance as being dysfunctional and irresponsible; that government finance is radically different to household finance; that recognising and exercising these policy tools would enhance the business, employment, productivity, inflation and growth prospects for everyone compared to the status quo.

If you think there is a lot of information above, you are correct. There is much to this that the various simplistic straw man caricatures in some answers to various Quora questions completely misrepresent and misunderstand. In short this is a realistic heliocentric framework overturning the dominant geocentric and ptolemaic fantasies. (But is it more like Galileo or Copernicus?) Still this is just a very high-level description of some of the key aspects and implications of MMT.

There is no argument for any of the above, you asked what it is, not whether it is correct. This leads to the second question:

How does it work?

This is simpler to state, although much needs to be done to understand and implement its insights.

It works because it is a more accurate, empirically based description of our world than conventional macroeconomic frameworks which rely assumptions of a fictional or fantasy world that does not exist and without the use of out of date, mis-stated, flawed mathematical models that are inadequately curve fitted and adapted on an ad hoc and post hoc basis to mis-describe the real world.

I made the contrast large but note that MMT is no panacea. Reality is too complex for any simplifying model to successfully capture.

There are a handful of economists who have developed this framework to date. If some of the many thousands of professional economists in industry, finance, academia, governments, treasuries and institutions gave up their fantasies and started to use this framework this could have a remarkable benefit in providing better identification, evaluation and implementation of national and international policies across the world.

 

Response to Bill Mitchell

This blog post is a reply to what became and should have remained a Twitter spat, between myself and Bill Mitchell, over Chris Williamson and MMT. I would have liked to have replied just on Twitter and to keep it short and simple except that Bill has taken it to another level, responding on his blog in a highly questionable manner, so I am forced to reply this way too.

I do not know who will read this, even though this will probably be no one, since I do not promote this blog and it is pretty much inactive anyway (no posts for over a year), but on that basis I need to add some detail for those who do not know the parties involved.

Anyway, given this, I will first provide sufficient notes on our shared economic views, followed by my concerns on Labour in the UK. Then I will summarise the discussion between myself and another twitter MMT advocate which will also cover my concerns over Chris Williamson. I will then expand it to the discussion between myself and Bill which led to some questions for Bill to answer which he sort of answered in a post and to which this is the response. Still I will try and be as concise as possible hopefully without losing any nuance.

Modern Monetary Theory

Bill Mitchell is one of the founders of a macroeconomic framework called Modern Monetary Theory or MMT. This post is not about this theory per se. If one peruses previous posts here, in this dormant blog, you will see I support this approach.  My concern here is about PR and marketing of MMT in the UK, at this point in time in 2019.

For those of you who are unfamiliar with MMT, all you need to know for this discussion is that we argue it is a descriptive framework,  one that is available to anyone, whatever political values or location that they take in a political spectrum or compass: Left, centre or right; Authoritarian or libertarian; racist, including anti-semitism and also anti racist. Even if they are not consciously aware of this framework. That is, it is above and beyond any political value set anyone might have. Critics might disagree but that is beyond the scope of nor relevant to this discussion.

This is the same as a position over the theory of gravity. It does not matter what one’s political values are the theory of gravity still applies. There is an obvious difference to that analogy since, if one groks MMT, then one’s political values are likely to be altered or modified e.g. one could no longer use “neoliberalism” to support one’s position, however one could keep that position but need different arguments. (I put neoliberalism in scare quotes but again as to what that is not relevant to the substance of this discussion, I use it here and elsewhere for illustrative purposes only). Still the fundamental point remains, disputed by critics or not, that any political values can be congruent with MMT.

This means that differing MMT academics and advocates can operate within this framework with differing political values. So I fully expect to disagree with others within this framework.

A case in point is the UK remaining or leaving the EU. One cannot tell merely from knowing that one uses this framework, as to what their position is over the EU. In Bill’s case he is, what I call, a Hard Lexiter. Some founders of the first formal MMT advocacy group in the UK (I was in the meeting where the seeds for this were sown but was not involved in it’s creation) the Gower Initiative for Money Studies (GIMMS) voted Remain. I, if anyone is interested, support a soft Lexit position: Efta/EEA. Reasons why and for these differences are, again, not relevant and outside the scope of this post but the point is all these positions can be made within an MMT framework combined with everyone’s differing political values.

Labour and Antisemitism

That all being said both myself, Bill, GIMMS and others that might be mentioned here are of the left persuasion. I like to say I am  left but not of The Left. I am critical of Labour for the same reasons that Bill is, they are still under the influence of “neoliberalism”, not just what I call the social neoliberals – called by the democratic socialist wing of Labour e.g. Corbyn et al. “Blairites” – but also the democratic socialists themselves, with, for example, their Fiscal Rule.

Where we differ is that I am also concerned over Labour Antisemitism, on which Bill and GIMMS has pretty much remained silent. That is fine, he and they are making economic critiques of all parties, there is no need, expectation or obligation to get involved in that, certainly nothing within MMT should be affected by remaining silent on that. That issue, I would put it, is orthogonal to economics.

I have been more than happy for him and the official MMT body in the UK to ignore this and not take sides. The bone of contention that is the primary trigger for this post is that this is no longer the case.

James Tapper,the Brighton August and the GIMMS Fringe Labour Conference Meetings

The issue started when James Tapper, a Twitter advocate for MMT, drew my attention to a meeting on MMT to be held by Chris Williamson  in Brighton on August 8th 2019. Now, as most people are aware, in the UK at least, Chris Williamson is a highly controversial Labour MP who has been stirring the mud in the Labour Party over a range of antisemitic issues and more, but specifically was suspended over comments he made over Labour being “too apologetic” over anti-semitism.

Now since Chris Williamson is promoting MMT, it is inevitable that he will gain some converts to MMT in his talks. After all advocacy is one of his goals. This also means whether due to Chris directly or not there will be MMT twitter advocates who stand with Chris Williamson. It is to be expected. I don’t like it and will happily challenge them, in the hope that they are more rational than others of his supporters unaware of MMT.

So I was concerned that he promoted Chris Williamson without qualification. For myself, I often quote, with qualification, writers that I or just others  find problematic or controversial, who still make specific good and well supported arguments, ones  that I can endorse without meaning I endorse anything else they say. Far from wanting to qualify his support for Chris Williamson’s meeting, he made the absurd claim denying that Chris is not even controversial and that there was nothing to qualify!

Then it turns out that Chris is not only giving a talk on MMT but he is also substantiating the moniker applied to him by the many in the Jewish community of “Jew Baiter”, by auctioning the infamous antisemitic Steve Bell cartoon that the Guardian refused to publish!

It is a bone of contention as to whether Chris is currently the most notorious provocative (suspended) Labour MP when it comes to the issue of institutional antisemitism in Labour  but no one could deny that he is controversial. Anyway far from being contrite over his suspension, here was Chris belligerently clearly stepping over the line and linking what should have been a much valuable discussion and advocacy of MMT with his notorious Jew baiting behaviour. It was his choice to mix these two entirely distinct and orthogonal issues. This should have drawn pause by anyone seeking to promote an understanding of MMT in the public arena, even if this was not an officially supported meeting. There is still to date has been no condemnation even any comments about from any significant MMTers involved.

After all our banter James then posted a promotion of a a GIMMS organised Fringe (i.e. unofficial) Labour Conference event which was hosting Bill Mitchell and Chris Williamson! It was here that Bill got involved but I first want to complete my twitter discussion with James Tapper.

After all our discussion James continued to promote the original August 8th meeting without qualification – when James undeniably knew that Chris was specifically and deliberately merging advocacy of MMT and Jew baiting in one meeting.

When he promoted the GIMMS meeting., I was concerned over his denial that Chris Williamson was controversial and that I did not want that controversy to affect the GIMMS meeting,

He then linked to an Independent article that made my case. I responded specifically to him with an acerbic, sarcastic and ironic piece of rhetoric. That is what triggered Bill’s response, which was not addressed to him and hence this blog post.  If instead I had said “QED” or equivalent none of this mess would have occured. But it is twitter and was a individual spat between two no names.

Here is the conclusion of our banter

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Questions for Bill and GIMMS

Prior to my last sarcastic tweet, Bill had become involved in our discussion and provided two tweets, which led to these questions from me. His tweets are included in this tweet thread

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Bill’s Blog post response

So what was his answer? It was in a blog post not a tweet. The full post is here but here is the relevant section:

Thugs try to derail MMT presentation

We learned overnight that an event in Brighton tonight, where British Labour MP Chris Williamson will talk about Modern Monetary Theory (MMT) has been compromised by mindless thugs who have threatened violence to staff at the proposed venue should the event go ahead.

The full story is here in the Morning Star (August 6, 2019) – Williamson refuses to bow to thuggery after venue threatened by two men.

One of the tactics fascists deploy is to bully people with threats of violence in order to curb ideas they cannot counter.

The last week on Twitter has seen a continuation of the barrage of anti-Semitic accusations being made.

They seem to keep coming. I wrote about them recently in this blog post – When the Left disgraces itself(July 30, 2019).

But the dirt continues to be aired.

One creep went so far as to Tweet this week:

So apparently MMT is “For the many, not the Jew”.

I have been roped into the fuss because I am appearing at an upcoming – GIMMS Fringe Event – at the British Labour Party Conference in Brighton on September 23, 2019.

I will be sharing the stage with Chris Williamson to discuss MMT and the Green New Deal.

Chris is a friend and a dedicated Labour MP who has been courageous in embracing MMT and seeking to advance those ideas within the policy space.

Apparently, for all these diehard defenders of freedom, my association to Chris proves I hold anti-Semitic views, and, in turn, proves that Modern Monetary Theory (MMT) comes out of the same dark origins.

It is an absurd proposition and reflects the desperation that people within the Labour Party or sympathetic to it are willing to go to undermine the leadership and purge progressive economic thinking.

The Tweet was grossly disrespectful of my academic work and the work of my MMT academic colleagues.

It was plain wrong because in the body of literature that defines our work you will never find anything that one could remotely infer as being consistent with that statement.

After all, MMT is not a regime (“for the many” or otherwise).

But to try to slur our work with the anti-Semitic tag is disgusting and the person should be ashamed of himself.

As is clear – the hate talk of US Republicans against minorities has spawned gun massacres – the ‘manifesto’ of the El Paso murderer contains sentences that you can trace to various Tweets from Trump and his gang.

Relentless misuse of anti-Semitic accusations to make political points not only degrades the Jewish people but also spawns more extreme behaviour.

We cannot rule out the proposition that these thugs in the UK have been emboldened by this Twitter and social media onslaught against Chris and MMT (dragging me into the fray).

Let me state this clearly – the event that I am involved in on September 23 will go ahead, even if we have to stand on Brighton beach or in a park with a loud hailer.

Interlude

Before I respond to what was addressed to me, here is a comment I made on Labour Reddit:

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There had been some speculation there and elsewhere that Chris or Greg Hadfield – the organiser of this event and also twice suspended from Labour over… go on guess… antisemitism issues – had been making this up. Unlike many on Twitter, I did my best to actually find out. Only 10 minutes and two phone calls is all it took.  (By the way both Chris and Greg have blocked me so I have no idea what they might be tweeting.)

UPDATE: I still have seen no evidence for the “two thugs” claim and nothing Bill provided supported that allegation. This been further exaggerated by Jackie Walker claiming there was a bomb threat, although that is quite independent from anything Bill asserted – presumably his claim was via the ever reliable unbiased Morning Star. Note  the Holiday Inn Brighton has not confirmed to any journalist that the email was real, were they telling me the truth but then instructed to remain silent after my query? I will assume that is the case. Still one cannot infer the “two thugs” claim from that.

What happened

Well I was very surprised that Bill even saw my tweet to James. I know he has an impressive and  prodigious capacity for high quality work but where would he find the time to even see this tweet? I assumed that James Tapper had been a cry baby and DM’d the tweet saying look what Martin said to me.

I was wrong. 

After my cynical comment and long after his post the tweet thread continued:

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The penny dropped on my second reply.  Usually when, such as in this case, a tweet is misread in some form or other, the injured party responds, politely or not and I can redress it there and then.

Now realising that Bill received this directly he would understandably be extremely upset. In his shoes, I would be too. However it would never occur to me to amplify it to a blog (if I had an active one) without first seeking a response or redress on the original medium. Even more so if I had a far greater reach than my respondent. If he had responded, however irately, I am sure we could have quickly unravelled that that comment was not aimed at him nor the MMT community, that him seeing it all was an innocent mistake and that I would have more than happily apologised for any confusion or upset caused, including deleted this tweet. 

He did not do that. Instead he responded in a quite despicable fashion in that post quoted above.

That is a real dick move.

Given the way he did respond, I will not delete the text but it should be quite clear it is not aimed at him nor the MMT community. 

He owes me an apology for his appalling behaviour, in particular insinuating that this tweet  was somehow contributed or helped trigger the obnoxious behaviour that led to the event being cancelled. Apart from anything else,  look how many people have even read that tweet:

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He adds a most disgusting and near libellous rant when he knows I have defended him from accusations of anti-semitism from well know economists on Twitter. I have also said that I have never seen any antisemitism from any MMT academic (I have done enough screenshots for one post but you can check my timeline).

All I have said is that it is not a good look for MMT officially to be associated with  someone as controversial as Chris Williams.  The fact that he might be only Labour MP who groks MMT and defend it is sad. Bill has spent many years of effort trying to gain traction but I hope that this has just blinded him to Chris’ other failings.

Whatever has happened between myself and Bill,  I am and will be an advocate for the best realistic macroeconomic theory and to date I hold that is Modern Monetary Theory. I will continue to refer to the 20 odd years’ body of work including papers, posts and tweets by Bill.

I do not need to repeat the questions already stated above. Has he or GIMMS answered them? I think not but I will let you be the judge.

UPDATE: Given the disaster of the August 8th Brighton meeting, I fear for the GIMMS Fringe Labour Party meeting.

Whilst I think both Bill and GIMMS are one the wrong side of history on this, I also sincerely hope that the issue remains solely on the Jew Baiting of Chris Williamson. I hope it does not spill over to give critics giving  ammunition and another excuse to dismiss MMT, GIMMS and/or Bill. That was and is my primary concern.

Ironically my active active interest in Labour Antisemitism, was due to investigating whether Chris Williamson was antisemitic, in some form or other, solely in virtue of him being the only MP who groks and promotes MMT. Unfortunately my investigation led me to no longer supporting Corbyn’s Labour, with an emphasis on Corbyn and his cabal,  which also makes me politically homeless at present.  I am particularly concerned over those who “Stand with Chris Williamson”, noting that supporters of MMT I regard as an exception for whom I give the benefit of doubt – that they are not racists. Clearly James Tapper fails that test.  Still I wish it will eventually be dealt with and resolved, until then I cannot support Labour. It is quite clear that a necessary but insufficient condition would be the expulsion of Chris Williamson However since I repeatedly see support for Chris Williamson across my MMT timeline, I will address that as and when it occurs.

UPDATE 2:

So Bill  has deleted my reply merely pointing to this post to  resolve the confusion He has never done this before. Bill claims to support Freedom of Speech and is against No Platforming yet he he denies me the right to reply on the medium that he chose. In all my 30 years+ online debating, I have never been denied the right to reply on the medium of choice of my opponent. This is a first.

Hypocrisy or what?