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Saturday, December 28, 2019

Everything You Need To Know About MMT...In One Thousand Words?

One of the things that Modern Monetary Theory (MMT) obviously needs are good short "explainers" aimed at people who already consider themselves experts in economics. (In addition to people trained as economists, that would include market practitioners -- like myself -- who consider themselves macro experts.) There are plenty of primers aimed at people unfamiliar with economics, and academic journal articles -- but not a lot in between. The new textbook -- Macroeconomics, by Mitchell, Wray, and Watts -- covers this ground, but it is lengthy (a textbook), as well as being introductory. As can be seen in an earlier discussion of the book, that misses the mark.

I would obviously like to write such an explainer, but the need for brevity is the problem I face.

If the reader has stumbled onto this article and looking for such an explainer, all I can offer is the following: instead of looking for a one thousand word summary of MMT, look for a one thousand word summary of MMT views on a particular topic.

The Fundamental Problem With MMT Explainers

It is very easy to see why people who consider themselves experts on economics but are not MMTers have difficulties with coming to grips with it. This comes from a few directions.

The main stumbling bock is that MMT is a school of thought (from within broad post-Keynesianism). In particular,
  • Post-Keynesians reject a considerable part of neoclassical economics. The implication is that for anyone with a conventional education in economics, everything they know is allegedly wrong. This is obviously a message that will be resisted, and the implications ignored. Even conversations are difficult, as the definitions of words used are different.
  • Post-Keynesians reject the mathematical approaches used by neoclassicals. Over the years, I have run into oodles of neoclassicals who insist that MMT be expressed by a single mathematical model, which makes very little sense to MMTers.
  • The need for brevity in explainers means one cannot hope to cover all of the topic in one essay. For example, I have a short book (Understanding Government Finance) that is an introduction to Functional Finance concepts. However, we run into the concept of inflation being the limit on fiscal policy. Guess what? Modern Monetary Theory follows post-Keynesians in having a different theory of inflation than neoclassicals. That theory is another planned book. So we see that we are going to do an adequate job of both topics in 1,000 words.
  • If you put two economists into a room, one can very easily end up with three views on any topic. MMTers are not immune to this cultural trait.
  • One final issue is that for most people, their contact with MMT is based on reading comments posted on the internet by activists. There is an obvious gap between such comments and what one might find in an academic journal.

Will I Make a Stab at Writing One?

At some point, I hope to write an intermediate level MMT primer. To what extent I plan out my books, my objective is that they are designed to be useful for people who skim. If I can get a usable one thousand word introduction to MMT, it would be the first sections of the first chapter of the primer; the remaining text would be the supporting material for all the various assertions made in that introduction.

The question is when I will make the attempt. I am just puttering around with editing Volume One of my book on recessions, and should move to the final publication steps in January. The question is whether Volume Two will be next, or whether I work in something shorter in between. A MMT primer seems like the most sensible option from a commercial standpoint, so I may be pivoting in that direction.

This will be my last entry here for 2019, so Happy New Year!

(c) Brian Romanchuk 2019

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