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| Stephanie Kelton |
I recently re-read my dear friend George Selgin’s thorough smackdown of Stephanie Kelton and so-called “modern monetary theory.” In doing so I was struck even more by how completely whackadoodle is this statement from a November 2018 op-ed by Prof. Kelton and her co-authors:
Anything that is technically feasible is financially affordable.
This statement is as anti-economics as any statement can possibly be. Over the years I have read and heard countless moronic statements, some of them offered by credentialed economists. But never have I encountered any statement more stupid, mistaken, and indefensible than this one – and it is one found in an op-ed co-authored by a credentialed economist.
I do not support licensing requirements for economists, but were such requirements in place, any economist who wrote such a thing as this specimen would not only be stripped of his or her license but would also be sued for gross professional incompetence.
George exposed the KY Cygni-sized idiocy of this statement in this way:
Nor does Professor Kelton’s observation that “Anything that is technically feasible is financially affordable” — with its suggestion that we might fund any “feasible” project without running into resource constraints — hold water. That something is technologically feasible means, not that it’s “affordable,” but only that it might be done at some finite cost. Perhaps Professor Kelton does not recognize, or does not want her readers to recognize, the difference. But a difference exists nonetheless, and it’s a lu-lu. For all I know, we might populate the moon, equip every U.S. citizen with a Ferrari, or fill Lake Meade with champagne, technically speaking. But I’m quite certain we can’t afford to.
Alas, I suspect that it’s not even technically feasible to arrange for Prof. Kelton actually to learn anything about economics.
The fact that modern monetary theory (I’ll not glorify it with capitalization) has as one of its chief advocates this Prof. Kelton is much more than sufficient to discredit this ‘theory.’
It literally hurts my brain and deeply distresses my soul to know that someone credentialed as an economist could write such a thing as Prof. Kelton has written above. Truly, it’s… well, I have no further words.
The above originally appeared at Cafe Hayek.
May well be the worst op-ed written by a professional economist in our lifetime. Ignores scarcity, opportunity cost, climate theory and history and, of course, almost 200 years of monetary theory and history. This group of progressives raises the stupidity bar (assuming that they don't understand the errors in their advocacy) to unprecedented heights.
ReplyDeleteThat's probably the worst, that this "economist" ignores opportunity costs. Yet seems popular to do so, hence Socialists like AOC or Trumpistas and their wall.
DeleteHere's a more sophisticated group of totalitarian-minded MMT busybody creeps. My interpretation is that since resources and workers are "underutilized", there cannot be much "inflation", which I interpret as painful rises in the CPI that the public won't swallow and that's where all the free stuff comes from. Note how they are going to blame business when prices do invariably rise. When everyone in the oil and gas business is laid off, that will certainly reduce "inflationary pressures" since they will be too broke to buy anything absent some big time "demand management" policies. As we know, Keynesians know exactly how much to stimulate and de-stimulate society:
ReplyDeleteFor two decades we and our like-minded colleagues have been putting forward the idea that a monetarily sovereign country like the United States with debts denominated in its own currency and a floating exchange rate cannot “go broke”.
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First, when we suggest that a budget constraint be replaced by an inflation constraint, we are not suggesting that all inflation is caused by excess demand. Indeed, from our view, excess demand is rarely the cause of inflation. Whether it's businesses raising profit margins or passing on costs, or it’s Wall Street speculating on commodities or houses, there are a range of sources of inflation that aren’t caused by the general state of demand and aren’t best regulated by aggregate demand policies.
Thus, if inflation is rising because large corporations have decided to use their pricing power to increase profit margins at the expense of the public, reducing demand may not be the most appropriate tool. The recent controversies over rising housing rentsand drug prices demonstrate that we need alternative tools in place to manage the power of big business and ensure their pricing policies are consistent with public purpose. The experience of the last decade inadvertently reflects the potential strength of alternative inflation-fighting tools, as one of the reasons inflation has remained below target for the past ten years is legislated cuts to medicare and medicaid payments.
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Second, we do not believe that any and all inflation that does result from excessive demand can and should be addressed by higher taxes. This is a distortion of our view, as years of publications can attest. When MMT says that a major role of taxes is to help offset demand rather than generate revenue, we are recognising that taxes are a critical part of a whole suite of potential demand offsets, which also includes things like tightening financial and credit regulations to reduce bank lending, market finance, speculation and fraud.
Assessing the potential inflationary effect of new spending proposals also requires seriously assessing how underutilised our existing resources are. This requires detailed, expert analysis from a range of industry analysts; not just statistical regressions on aggregate economic data by macroeconomists.
https://ftalphaville.ft.com/2019/03/01/1551434402000/An-MMT-response-on-what-causes-inflation/