That’s all.


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Cullen Roche

Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services.

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  1. The author in no way attacks Cullen as a “hack” of any kind. He/She argues that most pushback against the JG appeara to originate from the libertarian-right (which the author explicitly states is not a pejorative) and argues the JG is in reality most conducive to laissez faire economics. One may disagree, but the tone is polite and not offensive in any way I can see.

  2. I don’t see how political leaning is even important. It sounds to me like the JG supporters are trying to politicize the debate rather than focusing on the weakness in the JG research. And I don’t see how Mike, Beowulf Cullen are right libertarians. Did I miss something?

  3. The interesting part is not if you want full employment or not? (who doesn’t?), but how you want to achieve that, and possibly how you define full employment.

  4. If you’re objection is to political mislabeling, that’s fine. But there’s no personal attack here; let’s not stir up problems where none exist.

  5. I think the JG supporters, who njow openly admit (as that author did) to being extremist left libertarians (even communists and socialists) are trying to dsicredit MR by making it equally extreme in politics. Besides, claiming that MRists are on the same political plane as extreme austrian economists is about as personally insulting and misleading as it gets in terms of civil discourse.

  6. That’s a nice clear statement Cullen. Then the debate is about means not ends. And it distinguishes you from people who believe we should intentionally aim for a permanent stock of unemployment and underemployment.

  7. Why does America discuss every little detail until everybody is beyond exhausted. I just don’t get it. Maybe its because you can’t make decisions……..

  8. I read Peter’s post at Heteconomist. It’s unusually unfair for his writings. I don’t think it’s aimed at me personally, but the post clearly discusses the MR followers and being one of the primary MRists I have to say that the implication that we might be right libertarians is about as misleading as it gets. Even bunching us in with right libertarians is beyond absurd and yes, a rather personal jab. I am not even sure why I keep having to explain my politics to total strangers who keep claiming to know my politics better than I do, but I obviously do because I haven’t been clear enough about it. That’s my fault. So, I went ahead and took the political test in the Heteconomist post (the same on Bill Mitchell scored an extreme left libertarian score on). The result:

    Not surprisingly, I am what I keep repeating to everyone. A centrist. So this idea that I am some sort of far right leaning politically biased and politically motivated person needs to stop. It’s the very worst kind of strawman.

    Also, that one comment from Joe Firestone seems to keep coming up in an effort to marginalize my position. The sad thing is, I responded to Joe in that comment just minutes after I wrote it and clarified my position:

    “I shouldn’t have even bothered with the anecdotal. Lesson learned. It totally distracted from my main point which was not to say that we don’t need full employment, but that we should seek full productivity (and hence FE). The personal experience doesn’t prove anything….”

    But that didn’t stop Joe from taking the comment out of context (even though it had been clarified later) so he could try to politicize the point and paint me as some big bad capitalist who has no sympathy for the unemployed. He used it in several of his posts as some sort of “gotcha” comment. The only problem being that he entirely misrepresented it and failed to mention the clarification that disproved his entire point.

    Bottom line, anyone who tries to claim that MRists are extreme on the political spectrum doesn’t know us. And anyone claiming we aren’t in favor of full employment is just flat out misrepresenting our position. I hope that’s all crystal clear now. Obviously, I should have written something like this a long time ago so as to avoid the confusion. My fault.

  9. Good comment by Ralph Musgrave on the JG:

    “There is a very simple and fundamental reason for rejecting full employment as an objective, which is not mentioned above. This is that the BASIC economic objective is not to create work for the sake of it. The BASIC objective is to maximise output per hour, within environmental constraints, while providing work for as many of those who want to work as possible (or something like that).

    A point that JG enthusiasts ignore 99% of the time is a very simple text book point, namely that the marginal product of labour declines with increased numbers employed. In particular, increasing the number of less skilled people in the public sector (regular public sector plus JG) involves this declining marginal product. And the decline is RAPID in the public sector, because the public sector is not as good as employing the less skilled as the private sector.

    Moreover, if a JG system is set up, and with a view to making the work concerned as productive as possible, skilled labour, capital equipment and materials are withdrawn from the regular economy, the net effect can be a REDUCTION IN GDP because the reduced output from the regular economy exceeds the increase in output derived from the JG scheme. Plus there are the bureaucratic costs of running JG schemes to consider (a point which particularly concerns Cullen Roche, if I remember rightly).

    I’ve gone into the theory behind all this in some detail here: http://mpra.ub.uni-muenchen.de/19094/

    Creating work is a classic example of what economists sometimes call an “intermediate objective” – that is an objective which LOOKS LIKE it might help achieve the above mentioned BASIC objective, but doesn’t necessarily do so. Other examples of intermediate objectives include “cutting the deficit” (or the debt) and improving the balance of payments, or external surplus/deficit.

    Having criticised work creation which fails to increase GDP, it can of course be argued that where someone has been unemployed for an excessively long time, some form of work for them is justified even if GDP does not rise in consequence. The justification is what you might call “hysteresis prevention” – hysteresis being the idea that being unemployed too long makes it difficult to get back into the labour market. However the evidence in favour of hysteresis is not clear cut.

    Re the suggestion above that “Job Guarantee participants would be kept more “job ready” than the unemployed”, I’m afraid the empirical evidence is not clear cut here. Though there is good evidence that private sector JG is the best option as regards maintaining employability. See:


  10. They need to marginalize your position by making you appear irrational. It’s their last defense and like the rest of their argument it’s failing.

  11. It’s amazing how two people can view the same video and come away with such drastically different impressions. When I watched that, I saw a constructive exchange that moved the debate forward.

  12. The true motive behind the JG is now coming out. From the heteconomist post:

    “I agree with some of the others in believing that the chief motive for full employment is social or communal and not purely economic.”

    This is a social welfare program. Nothing else. It’s pathetic that they’ve tried to frame it in terms of an economic debate.

  13. Thank you for that unambiguous statement Cullen.

    All we need now is an explanation of full productivity, proposals to achieve it and an explanation of how that leads to full employment. That prescription is very important for some of us to be able to understand your position.

  14. I see the post by Peter as moving the argument to how is full employment going to be achieved without something like a JG and while still controling inflation? I know you have faith in productivity but I am still waiting for that to be teased out. The JG seems to address both unemployment and inflation. He throws in planned socialist investment as an aide to the JG. I think I saw something from Mitchell on that as well recently.

    I did not see him as attacking you, but then I may not have tuned into that.

    I should note that I still have some difficulty figuring our how the JG would actually work and what sort of work it would provide. We are a ways away from anyone seriously going to make this happen.

  15. At least they’re finally admitting that they’re motivated by extreme political views.

  16. Does the drop in marginal productivity of labor mean one should not pursue it? Could it be that a lower marginal productivity is still profitable and output increases? Somewhere out there the marginal productivity may fall sufficiently to make it useless, I suppose, but is that always the case?

  17. SS, FDO15: your comments are kind of childish. There isn’t some conspriracy on behalf of JG proponents to cover up their “hidden” social and political aims. MMT has people within it who come from different parts of the political spectrum. Bill Mitchell is open about his political stance, which is generally ‘left libertarian’. He has the same graph as that posted here by Cullen on his blog. You can see it in the ‘about’ section. I’m guessing Mosler would be a lot closer to Cullen’s position. http://bilbo.economicoutlook.net/blog/?page_id=2

  18. Seriously, talk about beating a dead horse.

    OT: I just saw this on the Bloomberg ticker: “Sarkozy Increases Sales Tax to Finance Cut in Payroll Charges”

    All I have to say is: “WTF?”

  19. From the same post:
    My own political position, as should be obvious, is measured as extreme left-libertarian. I am aware that there are people who think labeling somebody a “communist”, “Marxist” or “socialist” is an insult, but I am happy to identify to a large degree with any one of those labels and do not consider them derogatory other than in the minds of the ignorant and uneducated.

    I’ll give him points for honesty.

  20. BTW today on Bloomberg TV Adair Turner (head of the UK’s Financial Services Authority) was explaining how the debt of eurozone countries is different to that of truly sovereign countries because they can’t issue their own currency.

  21. I’m curious to know where those claims are coming from. From what I’ve seen it’s been claimed that the JG is not itself inflationary but I haven’t seen claims of it as a general panacea against inflation.

  22. Well, the ecomony IS a social welfare program, by definition. You gotta do better than that.

  23. Let’s assume productivity sat a level uch that we don’t need people anymore to produce anything. Robots make everything. How do the people that don’t own the robots get the income to buy things?

    Productivity alone does not ensure fulll employment. People have to make it happen.

    If you have an objective, you build a strategy to achieve it. If the objective is to maximize profits, everyone is clear on the goal, we justify actions taken by people and companies based on that objective. Full employment, for some reason, we can’t be explicit about it as a goal, we have to hope that all our hand waving and the magic of the market will somehow make it happen.

  24. That comment was by me. I’m surprised that you don’t think issues of social welfare and the broad distribution of economic benefits and economic responsibilities is an economic is an economic matter. Although Cullen continues to debate these issues constructively, a lot of the responses on this site to the very idea of a full employment program smack of sheer pants-wetting hysteria, and a fanatical hatred of government and public sector activism.

    A lot of people in this country support an expansion of public sector activity ands fairer shake for the majority of Americans. Sneering red-baiting and foot stomping might be a sufficient response among the narrow community of traders and portfolio watchers, but it doesn’t have the bite it once did among everyone else.

    By the way, my comment at Heteroconomist was not really about the MMT job guarantee, but the broader subject of full employment programs.

  25. That chart is a perfect example of how extremely left the hardcore JG supporters are. You guys aren’t a little bit left. You’re so far left that everyone to the right looks like a conservative to you. It explains a lot of the personal political attacks we’ve seen here in recent weeks.

  26. first they ignore you, then they attack you, then you win.

    Since the JG controversy began I have given a great, great deal of thought to it, and the holes in it don’t seem to be few or excessively difficult to spot. In theory its great – say, as an alternative to simple handouts – and its almost certainly true that people working under a JG will be better prepared to re-enter the workforce than people just receiving payments. But so many problems can and would come up.

    The Austrians may not understand money or where it comes from or how our monetary system works, but they do understand the downsides of crony capitalism and the inefficiencies of government spending. Some problems with the JG that have come to mind:

    -I cannot see how it would promote price stability as the proponents suggest. One guy was suggesting 12-24/hour wages for the JG. That would be flatly inflationary, leaving the $24/hour suggested not able to buy as much as hoped… so whats the response then? $30, 40, 50/hour? Its insanely risky to think along those lines, the pressure on wages could be enormous society-wide, causing chaos and in that chaos a real risk: sudden and significant drop in productivity. Institute a $12/hour JG wage and … how many factory workers quit? Every Mini Mart in the country shuts down? Every bar and restaurant comes under enormous pressure? The drop in productivity could potentially be disastrous.

    -It is difficult to imagine the JG jobs being productive much, if at all. It is extremely easy to envision the gov’t struggling to organize them (ESPECIALLY if a high wage was paid and many flocked to it), and the “job” winding up sitting around a gymnasium somewhere doing nothing.

    I realize large numbers of things have been suggested as occupations for the JG participants, but… some of those suggestions intrude on services already offered by the private sector (so you hurt some in the private sector).

    It would be a disaster, I promise. I realize many of you readers have never tried to employ people, much less alot of them. Its not easy. I do not feel optimistic that the scenario above (boatload of people just sitting in a gym) WOULDN’T play out

    -it is insane to set the JG wage at a level that would compete with current private sector wages. Flat out looney tunes. It could so easily send productivity into the slaughterhouse.

    -it could easily prove to be the ultimate hotbed of crony capitalism. would a well connected real estate developer wind up with free labor? Would companies start hiring JG people costing others jobs and shifting the bill onto the gov’t deficit? Then resulting in more people needing JG?

    I know, I know, the way its explained somewhere prevents that. But what would REALLY happen? When we move it from a happy-happy-joy-joy idea in some peoples minds who have probably very modest (or no) knowledge of what its like to employ people to the real world? What would really happy? REALLY?

    The concept of replacing simple transfer payments with people at least doing SOMETHING is exceptionally good. I doubt cullen or any of the new MR guys would rail against such a thing. The concept of the JG as presented ranges from theoretical and interesting to outright fruitcake, depending on the post and the author.

    I have to run to one of my companies christmas party. I’ll post more later.

    Its INSANE to assault Cullen or the other ex-MMTers for opposing the JG. THEY SUPPORT GOVERNMENT DEFICITS AND OTHER LIBERALISH POLICIES MORE THAN 99.9% OF THE POPULATION. Its LITEARLLY crazy to put them under attack for being right wing hate mongers, LITERALLY.

    Its like calling Brock Lesnor a pansy because he lost a fight once. It makes no sense.

    Some of the super-lib MMTers have simply gone off the reservation and its sad. YOU WERE WINNING! THOSE GIANT CANNONS ON YOUR SHIP ARE SUPPOSED TO AIM AT THE OTHER GUYS.

    Sorry to rant.

  27. Those who accept unemployment typically do not acknowledge that the pernicious social costs (depression, increased rates of mental illness, suicide, drug and alchohol abuse, domestic violence, poverty) have significant negative impacts on the greater economy, which itself exists to serve society’s interests. While I agree the JG is not central to understanding the monetary and banking systems, those who accuse JG proponents of ignoring the potential pitfalls would do well to follow their own advice.

  28. “This is that the BASIC economic objective is not to create work for the sake of it. The BASIC objective is to maximise output per hour, within environmental constraints, while providing work for as many of those who want to work as possible (or something like that).”

    No, the objective is whatever a given society decides to pursue. Your opinion does not automatically become a basic law of the universe.

  29. I cannot see how it would promote price stability as the proponents suggest. One guy was suggesting 12-24/hour wages for the JG. That would be flatly inflationary, leaving the $24/hour suggested not able to buy as much as hoped…
    Check out the Thomas Palley vid that SS links to below, he makes a similar point. I hadn’t heard of Palley until, oh, about 15 minutes ago but I’ll have to look out his work.

    Palley tries to develop Post-Keynesian macroeconomic models that combine the insights of various ‘brands’ of Post-Keynesian economics including the following: Yale Keynesianism (James Tobin), Cambridge-UK Keynesianism (Nicholas Kaldor), and American Post-Keynesianism (Paul Davidson, Hyman Minsky)… via the concepts of effective demand, price-setting, quantity-taking fix-price supply behavior and the ineffectiveness of nominal wage and price adjustments as a means of remedying aggregate demand deficiencies.

  30. There are certain persons who are exploiting a legitimate difference of opinion to start a war. Notice how they continually hurl invectives such as “socialist”, “communist” and “extremist” at their perceived tribal enemy. This is the sort of thing that will hinder Monetary Realism by bogging it down in poltical attack after attack unless the people spoiling for a fight are gotten under control.

  31. Cullen, you have on a number of occassions expressed the opinion that America became the greatest economic success story in history because it avoided over-reliance on government, and that you are opposed to massive government programs in principle (though not in total). I’m sure you can understand how one might get the impression, however inaccurate, that you have a right-libertarian perspective. I happen to agree that you are largely centrist and that the offending article mis-labels you and some others politically, but I do not see that the author intended this as an attack on you or your character. It’s all a matter of perspective.

    Regardless, You’ve done a magnificent job on your blog and I appreciate your efforts to make the greater public aware of the operational realities of our monetary and banking systems, even though I fall on the MMT side on certain issues. Please continue your good work, and I’ll continue enjoying interaction with the community you’ve put together here.

  32. I am in favor of wages. I could care less about jobs. A national dividend to all citizens! Those that don’t want to work can make due on their dividend. Those that want more can get a job. Unemployment would cease to be much of a problem.

  33. I’m in favor of motherhood and apple pie. I think a job for everyone would be nice, too.

  34. No you’re not a masochist. You’re position was totally unclear (this was nearly everyone’s issue with your previous statements). You have taken a single step to rectify that. The rest remains. I am concerned about you delaying prescriptions as you state on one post – whilst I do not wish to rush you – I am concerned that it will be delayed into never being done.

  35. The new jobs created to do needed work would be in the $10 to $15 / hour range, as is already common. The increased purchasing power would be a net gain for commerce. Not enough to ignite inflation, certainly not under present conditions.

  36. Some unsolicited advice. If you want to be an economist, then continue with this debate. If you want to educate and reach a broad audience then you have to let this go. In my (very humble) opinion it makes everyone look childish. You’ve accomplished too much to let other bloggers hijack your own blog. Let them have their blogs where they all debate an alternate reality with a jg. And you can have your blog where you show people the light.

  37. Ben Wolf could also add the more extreme political effects of high unemployment. History shows enough dangerous extremes that result.

  38. And lets face up to the great increase in automation as a challenge as much as outsourcing jobs. Automation enables Japan to produce despite a shrinking workforce (due to a very low birth rate). Smartphones now have an app that allows patrons to order from a menu directly to the kitchen, replacing waiters. Bus boys are capable of delivering the food. So even service jobs are threatened.

  39. That’s precisely my goal. This too shall pass so I can get back to doing what I’ve always done. Explain how the system works and not theorize about policies that will never be implemented in our lifetimes. It’s always a good reminder so thanks.

  40. My theories have nothing to do with this. You JGers are attempting to tear down my position the JG (thereby building up your own JG position) through personal, political and theoretical attacks. You will never legitimize the JG by diverting the attention and claiming that my position is weak just because I haven’t developed a whole new school of thought or by attacking my politics (which none of you are familiar with -partly my fault). If you want to legitimize the JG then you need to do that through more convincing evidence. I don’t think that’s been done. I hope you’re able to. No one would like to see MMT succeed more than me. But it will never be my responsibility to build theories that legitimize or don’t legitimize the JG. The onus is on the JG thinkers for that.

  41. No, I actually don’t understand that at all. I have said, on hundreds of occasions that I am a fiscal conservative, social liberal and generally fall pretty centrist over all. So when people keep coming back at me with this “right libertarian” thing they either have no idea what they’re talking about or they’re claiming to understand my own politics and thinking better than I do. Frankly, I find the whole discussion ridiculous and I think the JGers have done nothing but make themselves look really bad by making this all so personal and attempting these very weak personal and political arguments. We know the JG thinkers have extreme political views. But don’t try to claim that everyone that disagrees with you does just so you can build up your own position by tearing other people down. Not that you’re doing that Ben, but many others are.

    I am pretty tired of the same debate devolving into the same petty discussions….This is going nowhere. The JGers and full blown MMTers need to move on, stop misrepresenting positions from those who disagree with them and work on the actual evidence surrounding the JG. That’s the only way they’ll ever legitimize the theoretical aspects of MMT. Me, I am going to stick to operational realities so let’s stop worrying so much about my position on the JG.

  42. Control is a little strong, I agree. But we have been living with inflation for as long as anyone cares to remember and things like monopoly supplied oil or world wide food shortages cause inflation. Wage inflation, not so much. A JG is a lot like unemployment insurance, except we will put people to work. It is not driving up prices. When the economy expands, JG or not, there will be inflation. It seems to me far more productive to let people work than to pay them unemployment to stay at home.

  43. not only does it not control it, it causes it with extreme risks in wild cases. Its flat out nutty in some presentations. Lets pay everybody $50 an hour!

    lol. its almost like tehy realized the USG could not go broke and just decided to export dollars as if they were oil.

    Funniest thing, oil is consumed, $$$ are not. Quite a diff, no? Sorry to go left field, and godspeed

  44. I suppose some of these disagreements may be alleviated once MR proponents fully articulate their positions. It appears the greatest difference lay in MMT’s desire to accomplish societal goals (full employment, price stability) via significant government involvement, while MR wishes to employ less “radical” means to improve quality of life. The problem I have with much of the criticism MR is getting from MMT is that it hasn’t yet really spelled our its goals and the means by which it wants to achieve them (there’s really nothing yet to criticize). MR advocates could end up pushing for the Guaranteed Minimum Income, the point is that MMTers don’t yet know. The time for informed and thoughtful criticism comes after that is done, assuming disagreements remain.

  45. I doubt it’s possible just to sweep it under the rug, because it looks like persistent unemployment will continue to be a problem, and that will continue to raise the issue of the appropriate policy response to the problem.

    It doesn’t matter whether the JG or ELR proposal is a core “component” of MMT, or whether there is a new cousin of MMT that doesn’t contain the JG as a constituent element. The fact that the government’s budget is not like a household’s budget and its spending is not operationally constrained by its taxes and borrowings, facts about which MMT and MR agree, inevitably raises the realities of functional finance and sectoral balances to the forefront, and raises the question of what role the government should play in supporting aggregate demand and private sector savings desires. These questions are inextricably linked with the whole question of policy decisions impacting the employment of material and human resources resources.

    The JG proposal will always be one part of that mix so long as the general question of employment and unemployment is not avoided. The fact is that both MMT and MR show that the currency issuer cannot in any way get out of the business of aggregate demand management, because its spending decisions and the size of its deficit always influence aggregate demand. It’s the nature of the beast in any system in which some entity is a currency issuer and not a currency user. The budget of that entity will always play a special role, and decisions about that entity’s budgetary policies will always be profound public policy questions. There is no way for the currency issuer to “step aside” in the context of high private sector deficits and savings desires, because it has too much influence and too much skin in the game. Stepping aside is itself a decision to neglect its unavoidable role and responsibilities.

    The question is always going to be this: In an environment governed by high private sector debts and savings desires, low aggregate demand, and significant unemployment and underemployment of resources, should the government use functional finance and its aggregate demand influence and inherent monetary power to boost employment directly – by hiring people – or indirectly by supporting aggregate demand through various kinds of spending. There is no other responsible alternative. The only actor in the economy that has the ability to increase or decrease the net quantity of monetary and financial resources through taxes and spending cannot shirk the responsibility of using this power for good rather than ill.

  46. For those opposed to the JG concept primarily on the grounds of (a) risk of unintended consequences, and (b) political obstacles, I wonder if a specific concretely defined program might be appealing:


    The “Zero Waste Jobs Program” idea is to significantly reduce material waste flows AND involuntary waste of human labor at the same time, with a single “mission” JG program that would be very compatible with a continuously fluctuating JG buffer size. It could also have highly visible benefits to society (beyond the harder-to-prove benefits of reduced unemployment, etc).

    I realize it has some problems and that there are plenty of objections to the JG that this doesn’t address, but I hope it raises food for thought (from an angle I haven’t seen addressed elsewhere).

    Also ask yourself — think about other external costs that society currently bears that we have not been able to “internalize” the cost of for whatever reasons — could a JG program directly tackle any of these other external costs, thus “paying for itself” even in the eyes of the public?

    (Sorry, I know I’m joining the JG fray after most of it has wound down, so I expect most will prefer to ignore this and move on, but perhaps a few are still interested in this sort of thing if it’s not a re-hash).

  47. HBL,

    Thanks for your posts as always, but I have to ask MMTers to stop posting their JG articles and rebuttals here. It’s not a policy I am going to push going forward and I can’t keep having these debates muddy the waters here at the site. It’s very counterproductive. If MMTers could keep the debates to their own sites that would be great.



  48. Sorry Cullen! I haven’t been able to follow all the comments but if I had seen any evidence of this as a past problem for your site I definitely wouldn’t have commented. Nor would I have commented if the JG hadn’t been the topic of the post.

    Please delete these three comments. Thanks and keep up the good work!

  49. No no. It’s nothing personal and I won’t delete the comments. I know you haven’t been around. I just have to put my foot down on this now as opposed to letting it continue to boil. It’s devolved into a very counterproductive discussion. So please don’t take it personally as much as it’s just a general announcement to all readers. But thanks for your efforts.


  50. I don’t think Peter was trying to be unfair, he said he didn’t mean it as a pejorative.

    Oh, as to your earlier question to me about the Buckaroos, I personally find it a little silly, and yes the way the currency came about was not through representative democracy but an absent dictator(Mosler). Nevertheless, the end result is that both are coercive, but you’re right that the way the Buckaroos was introduced was anti-democratic and should be overthrown. Oh, and don’t tell Mosler this, but last year the grad student running the buckaroo program had the printing press running ;) This year its running like its meant to again.

  51. I do apologize for the somewhat emotional posts last evening, I had just driven 3 hours and… and I have truly been saddened by the recent rift in MMT over the JG. It is, as I am sure that everybody realizes, incredibly important. We will, as I’m sure most all readers at pragcap realize, hurt real people and real businesses and our very country if we, at this time, try to balance the budget. The reasons for this have been explained tirelessly on this very blog.

    I am somewhat in shock that a school of thought that was winning would split and exile its most successful proponent, it makes no sense. THIS IS VERY IMPORTANT STUFF HAPPENING HERE, PEOPLE, AS IMPORTANT AS ANYTHING WE WILL SEE IN OUR TIME. It can change lives. Think about it this way: there was an article somewhere recently about people in Greece abandoning their children. MR can prevent them from needing to do so significantly. It can make the world a better place, and there isn’t much that we can say that about today. We already invented all the vaccines.

    This is Ben Franklin Louis Pasteur stuff happening here, people. Its the first time I’ve encountered anything like it happening (although I have been involved in industries just beginning before, its fun, and incredibly challenging, but those industries are not this important).

    Anyway, I will try to make all future posts “pragmatic”.

    I have a job offer for you, any of you, who are seeking work. It pays very well, it has great benefits, you are never judged on your job performance, you cannot be fired, and you wield a powerful title and you possess significant influence and social power.

    Sound good? Does it sound like a job that would lead someone to become relatively divorced from life in the real world? I mean what I just described shelters people from any and essentially all accountability for their own actions. Is such a shelter the best place from which to ponder what to do with the real world?

    Its just a hypothetical thought, but one that I’ve been forced to ponder now several times in my life.

  52. Ha. Well, I am glad we agree on the Buckaroo. I was mostly joking about overthrowing it. ;-) Have a good one Payam. Never meant anything personal.

  53. Gerald, thank you for your reply. Pragmatically anonymous here, emotions are in check.

    Here’s the thing: the JG jobs would amount to very little. They would not be stressful, challenging, or demanding. Real jobs tend to at times be stressful, challenging, and demanding.

    I realize that, in theory, the JG jobs do not need to be useless, but in practice there is an enormous chance that they would wind up just that. Does the force of liberalism that wishes these jobs into existence a) make sure they are productive to serve the greater good or b) something else?

    $10-15 per hour would put ENORMOUS pressure on private sector wages. For $15 per hour for a JG job, nobody would do a real job for less than 20. 18. Mini Marts everywhere would literally see their labor costs double, bars and restaurants (who pay minimum wage to many people who simply can’t get other jobs, like 15 year old bus boys, who are very happy to receive 8 bucks an hour, BTW) would be extremely challenged, grocery stores would have to raise prices, inflation would ensue. Inflation is not inherently bad, but, and this is a really big BUT, paying a wage like that for the JG would wreak absolute havoc on the private sector, you would truly risk an enormous shock to productivity.

    The inflation containing properties of the JG are not nearly adequately fleshed out, the proponents of it, I strongly suspect, do not really understand business, employing, and such.

    Economics has been a flop for a few hundred years now, because its not a real world occupation. You can be an economist, and wrong, your whole life and still get paid. Ironically, its incredibly important to the lives of a few billion people.

  54. You nailed that one. Now let’s get past this silly program that is a total non-starter and a distraction. Help me get the operational ideas out to the public and let’s stop pushing MMT with its political baggage attached to it.

  55. Without a prescriptive aspect, there seems absolutely no point to MR. Please note I’m not saying there is no point.

    Without a theory of how to get to Full Employment via Full Productivity it is an empty shell.

    I can only speak for myself and not others, your theories have everything to do with it as you have not provided a guide of how to get there. That is a theory and without that it seems empty.

    As stated previously, up until recently you were not clear so the position assumed was the current default position – deliberate involuntarily unemployment.

    Your positioning was a rejection of stuff without a recommended replacement. It is the replacement that is the key to the entire thing. And yes people will attempt to tear things down and argue with it and that will help you reconstruct it even better. It is how these things work.

    I cannot speak to everything written by others here I haven’t read it or what you received in private communication but you may consider some time off from here given the way you feel.

    Best of luck explaining the operational mechanics of a sovereign economy & keep with Monetary Realism.

  56. I really shouldn’t respond to this one but that doesn’t sound like any JG I’ve ever read about from the literature.

  57. Okay, let’s stop assuming so much then about my politics, about my feelings, about everything. It’s now clear that the JGers are just making personal attacks based on things they clearly don’t even know (although some claim to be close friends of mine, understand my politics better than I do and understanding my general economic thinking better than I do).

    We’ve been very clear that MR is based on the operational realities of the monetary system and that any policy proposals (we’ve made dozens) are peripheral and theoretical. I don’t know what’s unclear about that. You can call it an “empty shell” if it makes you feel better about MMT, but that’s not at all what it is.

  58. The last comments weren’t a reference to the jg. They describe an actual occupation.

  59. Americans can always be counted on to do the right thing… after they have exhausted all other possibilities. -Winston Churchill

  60. When speaking to people who are still stuck in conventional paradigms, yes, dragging them kicking and screaming into a reality-based framework by sticking to the simplest descriptive material is a priority.

    Once a person has embraced MMT descriptions though, they are always going to steer the discussion towards policy. Having agreed on a snapshot of present reality, the next logical step is to ask where to go from there.

  61. I understand that. But where is the confusion? We know that involuntary unemployment occurs when there are not enough NFA’s to meet the savings demands of the currency users. I say supply the NFAs. I just don’t say supply them via a JG. That’s been my position since the very first day of this debate. I’ve mentioned many different possible approaches to spending and we’ve also mentioned many possible inflation buffers. Ironically, the JG doesn’t even offer an inflation buffer at all (though its proponents claim the price buoy is a price anchor – very misleading) so it’s really just come down to a political argument based on the belief that govt has a moral responsibility to provide everyone with a living wage. Warren says it’s all about a more liquid buffer stock, but that’s another unproven claim. So, I don’t really see the power in the JG policy at all compared to what I am proposing. Except that it’s morally superior (depending on your morals). Personally, I think a govt policy that potentially reduces the living standards of the majority in favor of increasing the living standards of the minority is at odds with what we should be trying to achieve, but hey, that’s just me….Then again, we seem to be forgetting that we reside in a society of government for the majority, not a government for the entirety. Some people just want to up and change the foundation of the country and claim that we are some different entity now….I don’t think they make a very convincing case at all.

  62. Great point scored by Palley!

    I suppose we could sum this whole debate up by agreeing with him and go one step beyond by saying that the JG is a well intentioned proposal of left-leaning MMTers whose implementation could plausibly produce an union busting, right wing nightmare.

    That is, another instance of the law of unintended consequences.

  63. Yes Cullen. Your point has been crystal clear all along. But the JG supporters are viewing the world through their socialist utopia. I have two sons. They’re great soccer players. 8 and 10 years old. And you know what happens every season? They all get a trophy. No, not both sons. THE WHOLE TEAM! Every team. There’s a “champion” at the end of the year, but it doesn’t matter. They all win a trophy. This is the same mentality the JG argument is based on.

    It’s really simple. Let’s say you have an economy with 100 people and you all agree on a military. You impose a tax rate of 10% and a wage of $x to join the military. Let’s say 10 of the lesser talented folks in the economy will enter the military. But mind you, these lesser talented folks have a few great skills. They’re aggressive, strong and willing to take orders. They’re INCREDIBLY valuable to the society. The other 90 have to rely on the government to supply the NFA’s so they can grow the economy and improve living standards doing other things. So let’s say the govt supplies more than enough NFA’s, but not everyone gets hired? Why? What’s wrong? Well, maybe you’ve got 5 really savvy rich guys at the top who are hoarding a lot of money. You’ve got 5 others serving as bankers who are hoarding a lot. And then you’ve got the other 80 fighting in the rat race. But 3 of them just don’t have any talents that anyone else finds valuable at the time. So you’ve got an economy with 3% unemployment and large deficits. But the larger deficits don’t result in anyone hiring those 3 because they just don’t have any skills that anyone else wants to utilize or that anyone feels is worth the investment. They’re rather save in government bonds or something than take a risk on some poor unskilled worker that might not be a worthy investment.

    The JG thinking is simple. 97 people have a trophy. So we should give those other 3 a trophy even though hiring those 3 might not offer anything to society. They have no productive value to offer to society, but we continue spending and spending thinking that if we can just reach full employment that we’ll be at some magical level of optimal output. All the while driving up prices. The JG argument goes and says the just skip that and hire all the people. Don’t even bother waiting to see if the private sector will hire everyone. And they don’t care about the possible repercussions.

    That’s it. That’s the JG right there. It’s a “give everyone a trophy program” and it’s downright socialism in its worst form. It’s a pure political argument based on far left leaning socialist perspectives. As someone else mentioned, it sounds like none of these JG supporters (aside from offshore tax haven Warren) has ever hired anyone in their whole life. Work has to be earned. Just like a trophy. And if you can’t earn a trophy then that’s how the cookie crumbles.

  64. You know FDO, you’re a bright guy. If you could tone down your rhetoric your contributions would be taken a lot more seriously. There’s no need to throw around pejorative terms at everyone. It makes us look like hypocrites when we say the MMTers are attacking me personally and you’re over here getting all ad hominem.

  65. It’s a political argument in the sense that as soon as you advocate for any policy, even the status quo, you have set foot in the political arena. It’s no more political to argue in favor of it than it is to argue against it. When I say political I mean it in the most loose sense–that’s where policy happens.

    It’s not an insult nor does it imply any kind of partisan hackery which to be honest is something I’ve never seen from you or any of the MMT’ers.

    Obviously I don’t expect all the answers here and now, but the following claims are ones I’d love to see addressed in future posts:

    “I’ve mentioned many different possible approaches to spending and we’ve also mentioned many possible inflation buffers.”

    – I’ve seen one so far, the highly theoretical :) but intriguing Vickery warrants. What are the approaches and how do they measure up cost/benefit wise to the status quo and JG?

    “Ironically, the JG doesn’t even offer an inflation buffer at all (though its proponents claim the price buoy is a prince anchor – very misleading)”

    – There’s some unpacking to be done here to get more specific on just what the buffer stock concept is describing and how a JG purports to fit into it. As currently phrased, I believe that some of what this critique aims at is beyond the scope of what a JG claims to offer.

    “so it’s really just come down to a political argument based on the belief that govt has a moral responsibility to provide everyone with a living wage.”

    – MMT argues a strong case that the very existence of a state money regime creates a certain level of unemployment. If that case isn’t refuted then perhaps the govt does have a moral responsibility to clean up its fallout.

    ” Warren says it’s all about a more liquid buffer stock, but that’s another unproven claim.”

    – Liquidity in this context means suitability for employment. The translation of this claim is: The employed are more employ-able than the un-employed. To argue against this is an unconventional stance, to say the least.

  66. Loud and clear. I am just so tired of this debate. You’ve had these guys pinned down since day one. Their argument is so weak it’s sad that some of them even call themselves economists. Here I go again. Enough out of me. Thanks for your work here.

  67. The NFA point is a very simple one. If the govt taxes us then they immediately create unemployment if they don’t provide enough NFA’s to meet the savings needs of the pvt sector. In other words, involuntary UE occurs when the deficit is too small. This isn’t up for debate. It’s a fact of being in a currency union like ours. But that doesn’t mean we need the govt to hire every last person. We need the govt to supply the right amount of NFAs to reach FE. It’s not the govt’s moral duty to hire every last person on the planet. But they should ensure that the NFA’s are available to even make it possible. MMT just skips right to the end though and says, “there, hired” and in doing so they seem to gloss over the important details. I’ve been trying to make this point for weeks, but I think I should have been clearer on it from the start because a lot of people have just come out and stated that I am against FE, which is a totally ridiculous notion. Of course, MMTers change the definition of FE to 0 involuntary unemployment, but they aren’t always clear that their definition is different than 99% of other economist’s definition so it’s easy to get lost in detailed points here and talk past one another.

    It would be better if they just came out and said “we think it’s the govt’s moral responsibility to hire everyone because we don’t trust capitalists to do it”. LIke FDO’s example, JGers are worried that not everyone will get a trophy so MMTers just come out and give them one starting with the bottom up. In glazing over the big picture fact (or intentionally ignoring it because it’s totally unworkable from a political perspective) they mix in all this buffer stock nonsense and mythical inflation fighting powers and other social benefits which distract from the root of the argument while also glossing over all the risks. I get the whole point and thinking behind the JG. I just don’t think it’s been very well thought out. But that’s just my little opinion.

  68. I am also for full employment, and I am a conservative. I would use deficit spending for basic infrastructure to help the private sector grow. I would wipe out the payroll tax to cut labor costs in the USA and turbocharge hiring and the return of offshored industrial jobs. I would also build the Keystone pipeline and put many thousands of construction and fabrication workers to work. I would also frack the daylights out of the USA and tax the production from that work to fix whatever environmental eggs got broken on the road to energy independence and full employment for the working class. I would also reenact Glass Steagall word for word, and say about bank bailouts: never again. Then, after putting Wall Street back in FDR’s cage and getting Wall Street off welfare, I would start getting regular people off the dole and back to work. And, if I could resurrect FDR and ask him what he thought, I think he would say: Do it! And he wouldn’t worry about making the faculty loungers, Sierra Clubbers and champagne socialists so dear to Obama’s heart mad at him.

  69. i just heart him so much … so much …

    Dr. Wray on Real News Network, May 30th, 2011

    Interview “break-out”:

    at about 15 minutes: start of ELR/JG discussion;
    at about 23 minutes: “resistance”;
    at about 24 minutes: some on inflation;
    at about 27 minutes: some more on inflation;
    at about 39:35 minutes: how will it be run?
    at about 31:30 minutes: eliminating waste, permanence.

    [NB: Federally funded, not Federally run (aka "decentralized")]

    oh … i heart the JG/ELR too. i’m not ashamed, it fills me with happy-joy.

    and … at the end Mr. Jay is looking for someone that disagrees with Dr. Wray. Anybody know of someone that disagrees with Dr. Wray and would like to debate him?

    he he, okay, enough … i heart you all too … thanks & peace.

  70. at about the 18:40 mark: Economists aren’t mathematicians. Neither are interviewers. Awkward.

  71. I can’t believe that MMTers have been citing the $8/hr figure when Wray wants “double that”. So $16/hr or $33K a year and the employees get full health benefits. Are you kidding me with this? For what? Being a musician? A family of two could play the guitar all day long making almost 70K a year with full benefits. Do you know how destructive this would be to the private sector? How can anyone compete with that? You’d have to pay 45K+ to get people to justify a more demanding job than that. Do you know how inflationary that would be? Talk about a “one off” inflation.

    And then he says, in response to the costs, “the details are going to be fuzzy on that”.

    Sorry, but this is a joke. I can’t believe anyone would take this program seriously.

  72. Honestly, I’ve always thought your position on full employment and what the government could do to encourage it have been pretty clear. I’m not an economist, nor have I studied economics anywhere but on the internet, so here’s my layman’s attempt to state what I believe your position is. If I can figure it out then I would certainly think that those who claim some sort of expertise in the subject should be able to as well. The balance between taxation and deficit spending is what controls how much money is in the economy, which controls how much demand there can be which strongly influences how much we will produce, and therefore how many people will be needed to produce it. Is this right? I know it’s pretty simplified, but this is how I understand it.
    It seems like the JGers are using “libertarian” to mean “a person who thinks capitalism is okay”. I think the idea is to create a correlation like this: “i think capitalism is okay” = “libertarian” = “let everyone fend for themselves like an Ayn Rand wet dream”.

  73. Speaking of digging holes (and filling them up; I hope for the last time). I recently agreed to help dig a grave (when the time comes, for a rather large woman – another thing I never dreamed I’d do, but this sort of thing comes with the turf of living in Appalachia).

    Those of you in finance know much about the head of the elephant. I may, on occasion, be able to contribute something about its hind quarters.

  74. Hi Cullen,

    I am sorry to see that you considered my recent post to be a personal attack. I can assure you that this was not my intention.

    My argument – rightly or wrongly – focused on two aspects: (i) the effects of full employment on productivity; and (ii) the prospects of non-inflationary (true) full employment in the absence of a job guarantee or socialized investment.

    I had hoped it would be clear that I was not criticizing your political perspective, whether right-leaning (as I incorrectly perceived) or centrist, which is of no concern to me in any case.

    By way of clarification, in the term “right-libertarian” as per the Political Compass, the first word refers to economic stance and the second word refers to social stance. The term right-libertarian does not necessarily indicate Randian ideology, although extreme values on both scores might.

    My (incorrect) impression of your political perspective was based on your previous statements that you were a fiscal conservative and social progressive. That tends to suggest the right-libertarian quadrant (though not necessarily) without in any way suggesting extremism. In fact, your “test result” indicates that, strictly speaking, I was only one square off the correct quadrant. ;-)

    Obviously, if I had my time over, I would not include any discussion of political perspectives in my post, as it only served to side-track the discussion.

    More generally, given our political differences, which are due to my far left-libertarian tendencies in relation to the political center, it may not be readily apparent just how much in agreement we seem to be in many ways.

    Correct me if my impressions are wrong, but based on my interpretation of your writings, we appear to have the following in common. We are both social progressives. We both think full employment or GDP measures do not necessarily ensure high quality of life. We both think there should be less emphasis on inflation, provided it is mostly moderate. We both accept the MMT insights on monetary operations, the importance of stock-flow consistency, and many other matters.

    It may not be apparent that I also remain somewhat undecided on the external sector arguments, as discussed in the past by Ramanan, although I provisionally side with MMT. (I used to have to tutor on the “BOP constraint” in a former life, long before my exposure to MMT. It is a familiar idea in at least some lines of Post Keynesian thought.)

    Anyway, I hope it is obvious that I have great respect for you and the major role you are playing in disseminating a correct understanding of monetary operations. I consider this to be the most important task. Once people understand that, they can make up their own minds on policy and politics.

    On a personal note, I visit pragcap all the time. It is first rate.


  75. You are mistaken that they state the JG alone puts a lid on inflation. Here they imagine a circumstance when that would happen (strong investment+no changes in taxes/other spending). The point they make is by offering full time employment at a fixed wage, it changes the dynamics to allow the economy to run with a higher level of employment without inflationary pressures than the UE buffer.

    “With a JG in place, inflationary pressures may arise, for example, if private investment becomes very strong. When inflationary pressures do appear if government does choose to deflate demand to fight it (this is not our policy recommendation, but it is a possible response), it will increase the size of the JG buffer stock, inflation- fighting, pool. Since JG workers are (we believe) a better inflation- fighting force than are the jobless, the necessary adjustment to demand will almost certainly be smaller with JG in place. If government decides not to deflate demand, the JG pool still allows the economy to operate with higher aggregate demand and lower inflation pressures, although inflation can still result. Hence the NAIBER is actually below the NAIRU in the sense that employment can be higher before the inflation barrier is reached.” source: http://www.cfeps.org/pubs/wp-pdf/WP39-MitchellWray.pdf

  76. When you launch into a defense of capitalism as a response to the JG proposal, it did strike me as highly ideological. In my view the JG would be overwhelmingly beneficial to the private sector, not a threat.

  77. Where did I say the JG “alone”? Are you going to misrepresent everything I say or do you have a single valid claim? First, you call me an idiot in a public forum and then you come here blatantly misrepresenting my position. Is this all your position now amounts to? Take it elsewhere please.

  78. Yes, god forbid I have a well rounded economic position that encompasses both capitalist and socialist frameworks. Unlike the blatantly extreme left position of the JG supporters where anything remotely to the right of them looks like a fire breathing capitalist.

  79. Peter, I know you meant nothing personal. Wish I had more time to respond. I really respect your work which is why I think it’s really dangerous to get involved in political labeling. It seems like the JG supporters have increasingly turned to my personal politics in an attempt to pin me as some sort of far right crazy. It’s a blatant misrepresentation and very crude personal attack. I think MMTers have to be particularly aware of this because many of them are so far left that (like Bill Mitchell’s test results) anything over their right shoulder appears “conservative” to them…As my test results show, I am a centrist but I have been painted as some far right wing hack by a number of MMT JG advocates in an attempt, to tear me down and marginalize my position as opposed to actually building the JG position up. It’s the wrong approach if people want the JG to become more broadly accepted.

    Water under the bridge. Thanks for clarifying.



  80. I have no desire to misrepresent you. I said if “you were smarter” in a private small group, it was undiplomatic of me, and gave you fodder cry foul about everything else I write, I regret typing that and apologize. I should have said if you were aware of some things. As you have told me, writing in an arrogant and hostile way is no good, some of your comments struck me as such and I reacted by writing that negative word.

    “I am sorry that I don’t find the research convincing enough. I mean, hell, I debunked the price anchor stuff in about 30 minutes while eating a burrito and I’m not even a trained economist….The whole inflation argument is weak at best.”

    So the price anchor stuff that you “debunked” was actually consistent with the MMT literature. You and MMT academics were in agreement! The price that the JG anchors is the JG wage. The improved price stability aspects of the JG:

    1) Employers will have a pool of skilled fixed-wage workers to hire from. This option gives employers more ability to resist higher wage demands in an inflationary episode. In the eyes of most employers, long-term unemployed and those who demonstrate availability to work are not equivalent. This isn’t theory. There is also no reason to think the JG projects can’t be designed to take advantage (and maintain) people’s existing skills or include training for workers to acquire new skills. There is ample evidence of this in our own history, present (look at the Job Corps) and in other countries.

    2) The NAIRU type buffer stock is dynamically different than the JG buffer. When the private sector contracts, the government payrolls expand automatically, with no action by congress. The current gimmicky way of doing stimulus, means politicians can over do it (inflation) or do it insufficiently (deflation). They tend to be poorly allocated to do their stated job of stimulating, whereas the JG is the best stimulus we know. There are non-negligible political consequences like a rejection of fiscal multipliers to stabilize the economy possibly dooming us to decades of stagnation (Japan) or worse (Europe).

    “The JG introduces no relative wage effects and the rising demand per se does not
    necessarily invoke inflationary pressures because firms are likely to increase capacity utilisation to meet the higher sales volumes. Given that the demand impulse is less than required in the TV-NAIRU economy, it is clear that if there were any inflation it would be lower under the JG. There are no new problems faced by employers who wish to hire labor to meet the higher sales levels. The rise in demand will stimulate private sector employment growth while reducing JG employment and spending.” source: http://e1.newcastle.edu.au/coffee/pubs/wp/2001/01-09.pdf

    Stephanie Bell also took issue with something you said “Cullen, you said, “some MMTers have even gone so far as to make wild claims that the JG could eliminate inflation altogether!” To which you responded “A few days ago my jaw dropped when Neil Wilson said this: “You are assuming that [the JG] allows the inflation to start in the first place.””

    So if all this price anchor debunking business is just about an MMT autodidact saying the JG could eliminate inflation all together, then you me and the MMT developers all agree that this isn’t a function of the JG.

  81. “Unlike the blatantly extreme left position of the JG supporters where anything remotely to the right of them looks like a fire breathing capitalist.”

    The extreme left position would probably be the basic income guarantee, although I am not a fan of left-right labels. My experience has been the right dislikes the JG because it’s big govt and the left dislikes it because it doesn’t offer a higher wage and it softens the lows of capitalism thereby delaying its demise.

    I personally believe the JG can offer big tangible private and social benefits if done right. It’s possible that it won’t, and if that’s your argument that’s a perfectly legitimate one. I believe we can do better, and that there is a moral imperative to try. A friend reminded me of this quote by MLK:

    “In our society, it is murder, psychologically, to deprive a man of a job or an income. You are in substance saying to that man that he has no right to exist.” –Dr. Martin Luther King, Jr.

  82. Yes, I get the liquid buffer stock argument. It’s a theoretical claim with no realistic proof. It’s an assertion of beliefs. Not a proven aspect of the JG. So claiming that it will somehow serve as a more stable buffer stock than anything else is unfounded. One of the things I have been trying to show over the last few weeks is that all of the unintended consequences could in fact make the employed buffer stock a more unstable environment.

    As I’ve shown in the past, we’ve become fairly adept at halting deflation. The JG adds no value to what we already have in place. So the deflation fighting effect is rather irrelevant. What it doesn’t do is put a ceiling on inflation. So, the JG doesn’t accomplish much if anything along these lines when compared to what’s already in place. As I’ve shown, it’s a price buoy and not a price anchor. But you all keep calling it a price anchor for reasons I don’t know.

    Warren has also said the JG likely won’t add to demand. Randy has stated it could be deflationary in Understanding. But then you’ve got Mitchell saying there will be a “one off” inflation and then in a recent interview you’ve got Randy arguing for a $16/hr living wage under the JG. Anyone claiming that this won’t all be inflationary (when the current minimum wage is $7.75) is misrepresenting the facts or just misunderstanding them. In the same interview, Randy referred to the cost details of the program being “a little fuzzy”. Astounding really. Personally, there’s so much confusion/disagreement within the MMT camp on the JG topic that I don’t even think you all know where you stand on it.

    These debates have been rather eye opening for me. I think Marc Lavoie nailed you guys with this comment in his MMT critique:

    “While criticisms and counter-criticisms are healthy in a scientific setting, neo-chartalists
    occasionally seem to over-react to criticisms, blasting away even people that are essentially on
    their side.

    That’s what you call a dead ringer there. I criticized the JG and stated that I didn’t even reject it, but was not in full support of it because I didn’t think the evidence was there to support it as a core tenet of what we should be pushing forward. But the ensuing personal attacks and criticisms have been so wild and over the top that it proves Marc’s comments dead on. And now the conversation has basically devolved into one misleading presentation of my politics and personal beliefs. The end result is that one of your loudest and farthest reaching proponents has now been forced out and under a different umbrella.

  83. The position that productivity and increasing our standard of living should be our target makes me think of something Noam Chomsky once said (in a somewhat different context)…

    I’m paraphrasing: slave societies were better off in the early 19th century than the early 18th century. Is that a good argument for slavery? You could give that argument for Stalinism. There was substantial economic growth in the Soviet Union. Even Hitler, why was he popular? It was because people were living better (obviously not the Jews) …


    The reason I bring this up is that maybe Productivity and Standard of Living should not be our MAIN stick for measuring the success of an economy and society? While they may at times hinder productivity or limit the advancement of our standard of living, maybe there are things that are more fundamental, more humane… that we should be considering?

    I think it’s interesting to consider Chomsky’s words. Does focusing on productivity and standard of living leave out some very important things? Likeiwise, does the JG even address any of these important things?

    I don’t know the answer to this.

  84. Hey, I hope you’re right. I hope the JGers can provide convincing evidence over the years. I just don’t think it’s there. And if you can’t convince people like me then there’s no chance in hell you’re going to convince Congress. That’s the way I see it. Anyhow, I am going to continue doing what I do. Push MMT’s core aspects into the mainstream. If it develops into the public accepting the JG at some point then it’s a win win.

  85. The key is finding the right balance between that which we believe the govt should provide for all of us and that which we believe the pvt sector should provide for us. For instance, do we want a large military, universal healthcare, a JG, etc etc? And how do we balance that with the need for capitalists and entrepreneurs to do what they do best by creating things that give us more time. Time is, in my opinion, the key because it gives us the ability to do more with our lives. And that can be whatever you desire. Giving to the homeless or ransacking companies like Gordon Gekko. But more time gives each individual the choice. And the only way we get more time is through reducing the amount of labor hours it takes to acquire goods and services. So to me, the balance should swing towards the capitalists and not the socialists (please don’t take this terminology as pejorative!).

    There is a give and take here. Having all of these luxuries provided for us by the govt COULD reduce the effect the capitalists can have on us through the innovative channels. But we have to also keep the capitalists in check as the recent banking crisis proved. I don’t know what the perfect balance is, but I fear a society where we increasingly forget that it’s the capitalists (mostly) who give us the true holy grail – time. That said, I am all for the balance and I am not some free market maniac. But we shouldn’t forget that there’s two sides to this coin….

  86. “Yes, I get the liquid buffer stock argument. It’s a theoretical claim with no realistic proof.”

    There is ample reason to believe it will be the case which I can go into if you’re interested, but a bigger question would be why should we limit ourselves to only doing things that have been done before? Is that really the best we can ever do?

    “So claiming that it will somehow serve as a more stable buffer stock than anything else is unfounded.”

    What do you mean more stable buffer stock?

    “The JG adds no value to what we already have in place.”

    Value in what sense?

    “So the deflation fighting effect is rather irrelevant.”

    First of all, you acknowledge that we’ve become good at fighting deflation, I agree. We have fiscal policy to thank, so why not strive to improve the social benefits, size and duration problems we have with fiscal policy? Secondly real wages have been declining for those who would most likely find themselves in the JG pool despite tremendous productivity gains. To me the working poor aren’t irrelevant.

    “What it doesn’t do is put a ceiling on inflation.”

    Straw man.

    “As I’ve shown, it’s a price buoy and not a price anchor. But you all keep calling it a price anchor for reasons I don’t know.”

    Did you even read my comment?

    “Warren has also said the JG likely won’t add to demand.”

    Right, he wants to minimize the “splash” the JG would create for political reasons.

    “Randy has stated it could be deflationary in Understanding.”

    I don’t have that book, but I have this from him
    “Implementation of a JG program can be undertaken while pursuing deflationary fiscal contraction, or while pursuing inflationary pump-priming. Hence, unlike conventional ‘Keynesian’ policy, full employment can be achieved without the inflationary pressures that might arise from demand stimulus.” http://www.cfeps.org/pubs/wp-pdf/WP39-MitchellWray.pdf

    “But then you’ve got Mitchell saying there will be a “one off” inflation”

    Yes he says that could happen if wages are set above going market rates.

    “Then in a recent interview you’ve got Randy arguing for a $16/hr living wage under the JG. Anyone claiming that this won’t all be inflationary (when the current minimum wage is $7.75) is misrepresenting the facts or just misunderstanding them.”

    As he said, there can be one off inflation. Where you set the minimum wage, or JG wage and taxes is a political choice. Even to pick unemployment over inflation is a political choice. There is considerable flexibility over how the JG is set up depending on normative values of the people.

    “In the same interview, Randy referred to the cost details of the program being “a little fuzzy”. Astounding really.”

    Why is coming up with an exact figure important? It will change according to the spending decisions of the rest of the economy. We know that stimulating the economy with monetary policy is indirect and ineffective. We know that traditional fiscal stimulus has problems of allocation, timing, and size. We know that spending on the JG would add directly to GDP and that those in the JG have the highest marginal propensity to consume. So given the shortcomings, and need for fiscal policy the JG would be something worth trying.

  87. Well, you could make the same argument from the opposite side. Should we continue pouring money into the economy through unemployment benefits and welfare just because a lot of people decided to take on more house than they could afford? Sometimes people seem to forget that double entry bookkeeping economies involve two sides to every transaction. It’s not like the homeowners were all forced into a contract they couldn’t have better understood. No, they got greedy, the bankers got greedy and it all crashed down on everyone’s head. This isn’t a banks against the world conspiracy. If you want to beat Wall St at its own game you have to learn up and outsmart them. Most Americans don’t want to put in the effort that involves but they want the potential rewards. And now that it’s all come crashing down they’re looking for someone else to blame. Yeah, the banks messed up but so did the homeowners.

    So the solutions to our problems are more complex than some MMTers claim. They’re much more complex and broad. MMTers have fed into the idea that this was a banking crisis and not a household crisis. This divisive and one sided view of the problem doesn’t help resolve it because it appears biased. Which it is. We need a more balanced approach. Yes, the last 30 years of neoliberalism and deregulation were a huge mistake, but that doesn’t mean we need to pinpoint one evil in an attempt to swing the pendulum to the opposite extreme.

  88. I can’t hit reply so continuing our discussion here.

    “Well, you could make the same argument from the opposite side. Should we continue pouring money into the economy through unemployment benefits and welfare just because a lot of people decided to take on more house than they could afford?”

    This is why we have bankruptcy laws, and it benefits no one to keep people involuntarily out of work. There is a reason we don’t throw credit defaulters in jail and that is they are of more use to creditors working. Conservatives I’ve spoken to are strongly opposed to people being “paid not to work” (unemployment benefits), they feel much better about being being compelled to join the JG and contribute to society in order to earn that check. Those who don’t work wouldn’t get anything and those who do work would transition to the (better paying) private sector as quickly as possible. We know from the Jefes program that they do transition rapidly.

    “This isn’t a banks against the world conspiracy. If you want to beat Wall St at its own game you have to learn up and outsmart them.”

    I want to have a government that isn’t beholden to narrow private interests, that’s the whole point of having a democracy. Agreed?

    “So the solutions to our problems are more complex than some MMTers claim. They’re much more complex and broad. MMTers have fed into the idea that this was a banking crisis and not a household crisis.”

    I never saw them write that some borrowers don’t deserve some blame for the melt down. They are the most interdisciplinary school of thought that I am aware of, willing to take a good idea no matter where its source. That’s what attracts me so much to your blog by the way. The thing is everyone knows someone they wouldn’t lend money to. They are all over the place. These people always exist nothing and are nothing new. I doubt any MMT academic would be opposed to public policy aimed at resisting and overcoming credit addiction, they also favor policies which boost wages and lower health care costs thus reducing the demand for debt. What changed was that bonus and fee chasing lenders that wouldn’t touch these people with a 10ft pole couldn’t bring them in fast enough. There was a toxic combination of implicit govt backing of financial institutions combined with disastrous “self-regulation.” The predator state at its finest. There is no getting around the need for good financial laws and enforcement.

    “This divisive and one sided view of the problem doesn’t help resolve it because it appears biased. Which it is.”

    I’ll believe it when you can show me an MMT developer who argues in favor of a 1-dimensional approach. I have personally have had conversations with them saying good policy must be interdisciplinary. It is unfair to blame MMT for not being a theory of everything.

  89. I wonder what would happen if you asked those same conservatives the right question, which is: “would you be in favor of a permanent job guarantee for anyone willing to work at a living wage of $16/hr ($33,000/yr) with full benefits”? I think you’d be overwhelmed by the gasps of horror. So yeah, if you phrase the question correctly, replacing UE benefits with people working sounds greats. But give them the full scoop and the answers change. You and I both know how conservative this country is and we both know that most conservatives are not in favor of swapping UE benefits out with a full JG program so let’s stop pretending otherwise.

    I am in favor of strict bank regulations. I’ve never said otherwise. But I also don’t see any MMTers pointing out the importance of banks and corporations on a regular occasion. In this regard, I also don’t see the diversity that you do in the research. I see lots of research on public works and govt programs and very little on the importance of corporate America, capitalism, output, productivity, etc. I’m not saying MMT isn’t incredibly broad. It’s very broad. Broader than any other macro framework in my opinion. That’s an impressive feat. But we also know that MMT isn’t exactly promoting corporate America and capitalism in general. If we were to weight most MMT thinker’s between capitalism and socialism they’d likely lean much heavier on the socialism than I would. Some would lean full bore in favor of socialism.

    Just glancing at the index for Understanding Modern Money, I don’t even see the words output, productivity, production, innovate, entrepreneur, or even GDP. That’s a pretty glaring miss for a book about modern money and the role it plays in our lives. It’s almost as if the entrepreneur and capitalist are after thoughts or taken for granted in much of the literature. I don’t see a lot of appreciation in the research for all the great things that entrepreneurs, innovators and capitalists in general have achieved for the world. But I do see MMTers demonizing corporate America on regular occasion. Unless you know of some research that I’ve missed then I think the balance is a bit out of whack along these lines….

  90. “I wonder what would happen if you asked those same conservatives the right question, which is: “would you be in favor of a permanent job guarantee for anyone willing to work at a living wage of $16/hr ($33,000/yr) with full benefits”?

    As I said above there is considerable flexibility in the JG for wage/benefit options. It could be a replacement for UE (which does pay higher than $16/hr given the median wage is $23.24 http://www.bls.gov/news.release/empsit.t19.htm) it could include benefits or not, it could phase in the $16/hr or not, it could be indexed to inflation and productivity growth or not, the UE could be set below the JG wage and benefits, its up to our democracy where we set them.

    “You and I both know how conservative this country is and we both know that most conservatives are not in favor of swapping UE benefits out with a full JG program so let’s stop pretending otherwise.”

    What is the most red state? Mississippi? They were the first to use their federal stimulus dollars to implement a job program: http://www.pbs.org/wnet/need-to-know/economy/one-step-forward-a-jobs-program-provides-hope-for-the-unemployed/3310/ Then there was Reagan who’s father was employed by the WPA who argued this:

    “Welfare is another of our major problems. We are a humane and generous people and we accept without reservation our obligation to help the aged, disabled and those unfortunates who, through know fault of their own, must depend on their fellow man. But we are not going to perpetuate poverty by substituting a permanent dole for a paycheck. There is no humanity or charity in destroying self-reliance, dignity and self-respect … the very substance of moral fiber.

    We seek reforms that will, wherever possible, change relief check to paycheck. Spencer Williams, Administrator of Health and Welfare, is assessing the amount of work that could be done in public installations by welfare recipients. This not being done in any punitive sense, but as a beginning step in rehabilitation to give the individual the self-respect that goes with performing a useful service.”
    source: http://www.reagan.utexas.edu/archives/speeches/govspeech/01051967a.htm

    So after the people settle on a wage/benefit package to their liking. This policy can be a huge hit. People will see the improvements to the community. Social and financial costs involved with being unemployed fall. Private employers will like hiring from a pool of people with demonstrated willingness to work. The WPA era programs were popular, but memory of them has faded. I’m betting it will be a lot more popular with conservatives than the next TARP.:)

    “I am in favor of strict bank regulations. I’ve never said otherwise. But I also don’t see any MMTers pointing out the importance of banks and corporations on a regular occasion. ”

    If that was the case they’d be arguing for nationalization of all banking and the means of production and confiscation of private property. The JG would recruit workers from the private sector rather than make use of the Americans the private sector doesn’t want. Their policy proposals focus on getting banks to make loans to credit worthy borrowers and restore demand so private businesses have customers, not very radical, just aimed at getting rid of capitalism’s extreme lows. Yes, it means using the government to work for us, and in that regard people can think MMTers are commie. Ideology aside, there are no pure capitalist or pure socialist economies, this is because they don’t work in practice. Bitter experience resulted in mixed economies.

  91. I’m all for balance. But do you honestly see that in the MMT literature? You see lots of research on the importance of corporate America, banks, entrepreneurship and capitalism to counterbalance all the research on the importance of consumption, aggregate demand, social works, govt, and deficit spending? I don’t really see it at all.

  92. “I also don’t see any MMTers pointing out the importance of banks and corporations on a regular occasion” (Roche 2012).

    Yeah, right, Dr. Randall Wray is not talking about banking? … $29 Trillion wet kisses here.

    Mr. Mosler? Dr. Bill Mitchell? Are you really going to stand behind that statement? Apologies if I’m out of line but that just seems quite thoughtless.

    In addition to Mr. Mosler’s monstrous contribution I hold it to be the case that MMT sits on a rich lineage, the work of which you most likely have not even glanced at the indices of.*

    * fine, yeah, me neither; I’m just sayin’.

    It is because of statements like that that I have fear for you in the “realism” endeavor. It’s like:

    jown: “Mr. Roche, I’m going to make you whole wheat pancakes, okay?”
    Mr. Roche: “Sure. Great. Thanks jown.”
    jown: “You are welcome Mr. Roche.”
    Mr. Roche: “You know, you should consider whole grain pancakes sometime, jown. I think you would like them.”
    jown: [to himself, "what?"]

    Point: I don’t need to tell you that whole wheat is a whole grain if I offer to make you whole wheat pancakes; if you have read the grain literature you know it, and you are on the level.

    MMT has a big Post-Keynesian foundation that is a direct reaction to Neo-Classical theory’s total neglect of money, banking, and finance. MMT doesn’t need to remind you that whole wheat is a whole grain every time it is invoked. MMT does a near flawless job of already describing the current monetary arrangements and, as a result of that revealed clarity, is now working on proposals with which to allow for a better performing of those arrangements, e.g. ELR, and, in toto, a lovely byproduct: greater productivity.

    The employment vs. productivity “cart” has been falsely “arranged” before and indeed still is; I for one prefer not to tolerate the human misery the current arrangement allows and will “run my mouth” and work in opposition. We can do better … I mean, Devo’s Duty Now For The Future came out in ’79.

    Please, I mean you big time respect. Don’t get me wrong there. I appreciate your running this site and your work here and your allowing me to give feedback on the content you provide.

    Thank you.

  93. Jown, you do know that the accounting in the cited Levy institute article is 100% wrong, right? The Fed did not lend out 29T. That was a very embarrassing mistake that many MMT critics have hung onto in recent months. It should not be highlighted in defense of anything. In fact, the LI should take it down and bury it in a hole in the ground so no one can ever cite it.

    Regardless, you missed my point which was to highlight the fact that MMTers see production as being of secondary importance to consumption. For instance, Bill Mitchell writes that consumption is more important than production:

    “People prefer to consume than to work. What we consume is more likely to give us joy than what we produce especially if the latter is in the context of exploitative capitalist production relationships. I am painting this in black and white terms to garner your interest. Clearly it is more complicated but in general I do not think you need a manufacturing sector to enjoy strong growth in material living standards and perhaps a polluting manufacturing sector erodes the capacity to enjoy broader concepts of growth and well-being. ”

    His argument is much broader than that, but it comes down to marginalizing what one produces vs what one consumes. He basically says, why make what you can buy from your neighbor? This is consistent across the MMT literature and misses a hugely important point regarding the appreciation for productivity, innovation and capitalism in general. The fact that productivity and what we produce ultimately allows us to consume MORE in the future. I think MMTers overlook this fact and it leads them to false conclusions regarding policy. But MMTers don’t really need an optimally productive society. They are fine with a marginally productive society as long as certain social benefits are provided for anyone who wants them. They might be right. That might make for a better or optimal world. I just don’t know and my work tells me they are wrong….

  94. Disagree on the Levy piece. I am interested in a chronic and continuous activity and not just some binges.

    I want the systemic risk, the systemic “lengths” they have taken. That is what that number and their work accounts for. As Dr. Wray said: “it’s horses for courses.”

    He further pointed out what that means:

    “… big banks borrowed for months and even years on end because they couldn’t fund their asset positions in markets. Why not? Because markets suspect they are insolvent. They know the banks still have toxic waste on their balance sheets. … they’ve still got risk exposures orders of magnitude greater than their generously-accounted-for and largely mythical capital.

    By lending long-term to banks, by allowing them to fund positions in junk, and by keeping insolvent banks open, the Fed is dragging out the crisis.” (link here)

    Interesting thoughts on a “consumption” versus “production” bias being found across the MMT literature.

    Gimme the hookup there! Love to read some of that.

    Thank you Mr. Roche.

  95. I agree that the banks need to be more tightly regulated. I’ve never said otherwise, but the accounting in that article is flat out wrong. Not even a debate. It’s rather embarrassingly wrong really.

  96. Thats not what I asked. I asked if you think the MMT literature contains substantial appreciation for the positive impacts of capitalism and production compared to the enormous amount of corporate bashing and social programs that are regularly emphasized?

  97. According to Wray “MMT is consistent with any size of government. It can be a small libertarian government if you like.” http://www.neweconomicperspectives.org/2010/07/towards-libertarianaustrian-modern.html

    We have John Harvey, who writes an MMT/Post-Keynesian blog that describes when markets are the best tool to use for the job here: http://rommeldak.wordpress.com/2010/03/25/health-care-economics-part-two/

    MMT economists, and probably economists in general are probably not all as enthusiastic about leaving some things to markets than political pundits on TV.

  98. “MMT is not workable in a small govt.”

    MMT tells you there is freedom to run the economy with more G, and/or less T depending on your politics. The JG is designed to crowd IN the private sector not crowd OUT by design. The desired consequence to businesses is they’ll see more customers and expand to meet increased demand and total output will rise. When Mosler says he wants to see a good economy once in his life, he’s not envisioning one where everything is run by the government, you make MMTers sound like Bolsheviks when in fact their proposals are designed enhance what most like about capitalism, not replace it.

    “They believe in a coercive monopoly supplier of currency.”

    I’d say in the US and many other that is an empirical observation. The MMTers reject the mainstream mengerist/metalist theory of money. There is a wonderful exchange between David Graeber and Bob Murphy and his blog readers over here: http://socialdemocracy21stcentury.blogspot.com/2012/01/david-graeber-versus-robert-murphy.html

    “That’s why all of the MMT examples begin with a highly coercive authoritarian entity that threatens to shoot those who don’t take business cards, starve children who won’t do chores or flunk students who won’t use Buckaroos.”

    Now this is just hyperbole. The Buckaroo exists to be as a hands on educational tool, although it illustrates the despotic power money always has. An IOU is worthless if the debtor will not repay, and as I know you know, money is always debt/credit depending on if you owe or are owed respectively. So the question for society becomes one of how do you manage the despotic power of money? The normative values for MMTers is full employment and price stability, therefore it is important for them that there is a uniform unit for measuring debts/credits and that it remain stable over time.

    “The JG just so happens to be a govt spending program that could hire as many as 15 million people currently. Being in favor of such a program and claiming that MMT is consistent with small govt is misleading at best.”

    Perhaps. What you are leaving out is that it is designed to be a “transition job” – not a permanent one. It will expand and fall depending on the hiring decisions of the private sector. As a pragmatist, you know that government has and and will again try to stimulate the economy. They can continue to do this the old way that has duration, size, and allocation problems that cause it to fail to meet its objectives or we can attempt to do those things better.

    I personally would prefer the govt get out of the job picking individual business winners and losers and let consumers decide that with where they spend their money. I’d like it it if banks were not given bailouts (an bailout guarantees) and be allowed to fail, govt could fast-track the creation of new banks so we have a financial system that grows the real economy rather than blow up serial bubbles, while using the best known bottom-up stimulus to mitigate the deflationary fallout, this is immensely superior in my view to the current way of doing things.

    “And claiming that MMT is just descriptive is just as misleading.”

    According to Scott Fullwiler there is prescriptive and MMT (http://www.nakedcapitalism.com/2010/08/guest-post-modern-monetary-theory-%E2%80%94-a-primer-on-the-operational-realities-of-the-monetary-system.html). Joe Firestone is better at discussing the political bias inherent to descriptions than me. To me, accounting is apolitical, just like saying 2+2=4 regardless of where you fall on the political spectrum. When the government makes a purchase certain accounts are credited and debited to say otherwise is illogical. But math is useless unless applied. How it is applied makes all the difference, it can be applied to make instruments of war or a vessel for space exploration. If you prefer markets to government to pay for health care that is a political choice. If you prefer barter over a state currency that is a political choice. If you prefer unemployment to a JG that is a political choice. These choices impact the many and usually unequally, the question becomes one of who should have the power to make these choices? There is an ethical dimension to all of our laws, institutions and actions that impact something else in the world. This is where economics gets contentious.

    The MMT developers, and many followers feel a moral calling to crush this lie that ravages entire nations that there can be no alternative. They went down a separate path from the mainstream by challenging absurd mainstream assumptions that conclude markets are the tool for every job. This doesn’t make them left wing, just devoted to reality-based theory, where market failure can and does exist. Markets respond to price signals, while this has tremendous benefits, it also has limitations which the dominant supply-side economics assumes away. For example the unborn don’t emit any price signals markets don’t price in their demand. Similarly, the poor and disabled are always have less power than the wealthy in a market driven economy so even in perfectly efficient market these features exist. Classical economists were concerned with the moral implications far more than neo-classical.

    Market imperfections once you acknowledge can exist, the next question is what happens when markets do not “work?” These problems aren’t acknowledged or discussed much by modern conservatives in public because they open the door to intervention, but they are real issues that impact real people’s lives. You accuse MMT as being overly simplistic, perhaps compared to what economists of the future will be aware of that’s true. However it is a level of sophistication above mainstream economics, its strength is its devotion to real world economics. I can’t fault them for trying to provide better alternatives to the way we run our society. I would fault them if they tried to keep those ideas to themselves.

  99. Tschaff, it comes down to one irrefutable point. MMT advocates a JG. A JG would require a massive govt. So, by definition, MMT is not in favor of small govts. The inclusion of the JG is the albatross around your argument’s neck. There’s no eliminating it. MMT has to involve the JG. It is the “base case”, “central”, “the most important”. I could combine the state theory and why it’s also wrong, but that’s a more theoretical debate. The JG component, however, is irrefutable. You can try to mislead people on this point on other sites, but I won’t allow it here.