Hannah Blog

December 11, 2012

PPE, son of MMT?

Filed under: Economy,Hannah's views — hannah @ 9:27 am

PPE is People Purposed Economics, not to be confused with the Purple People Eater

MMT, of course, refers to Modern Monetary Theory, as expounded several months ago by Randall Wray and Michael Hudson in a forum at Columbia University, entitled Modern Money and Public Purpose, a real mouthful.

MMT hasn’t really caught on. Maybe it’s because money isn’t modern, having been invented about five thousand years ago and “theory” is sort of a dirty word in the twenty-first century, at best something we can take or leave. That there is a public purpose served when we use money seems obvious and non-controversial, except for the fact that the word “public” is in bad odor with people who consider anything public with suspicion. So, if public schools and public transit and public service and public interest have all become more or less anathema, doing things for people might be more acceptable.

Ergo, People Purposed Economics.

I’ve noticed an inclination to introduce just a bit more levity into discussions of the “dismal science,” not just to make it less dismal but because the negativity about how we are sustained by mutual trade and exchange seems to have been largely introduced by people who theorized about something they obviously knew little about.

Why else would they have started from the assumption that

“Man prefers leisure and must be bribed to work” ?

I can only think it was some bloke, whose hands were hinged backwards, who came up with that as an excuse for telling other people what to do. That the whole endeavor is people poiposed, as they might say in Brooklyn, introduces a bit of levity and is more accurate, besides.

Also, there’s a good reason to dismiss theory and go with economics, the science of household management, as the Greeks defined it ever so long ago. Why we still don’t understand it, is a puzzlement. After all, we are talking about real things, goods and services households, small and large produce to sustain the inhabitants.

Of course, the notion that the household is the basic economic unit is not universally accepted. Some economist seem to think that household management has been superceded by the market. In other words, who decides is not who inhabits, but who, for whatever reason, roams around outside. Which suggests that economic science has been enunciated from the perspective of the middlemen — all those agents waiting to take a cut for moving things around, adding little if any value.

It is true that the denizens of the market are also people. But, for the most part, they are people who produce nothing of value. So, while we would not want to begrudge them sustenance, why, as the aggregate commonly referred to as the market, their preferences for free stuff should be determinative is a puzzlement. Seems like the only reason they get away with taking without giving back is because most producers are inherently generous. And the widely shared notion that producers/workers are lazy is a nasty slur.

Just as it is true that marriage exists, whether or not it is certified by the state, and ideas exist, whether or not they are written down, trade and exchange create obligations, whether or not they are recorded in official IOUs, commonly referred to as dollars in the U.S. Other countries have different words for the formal memoranda of what people owe to each other. And on the European Continent, some seventeen countries have recently decided to adopt a common currency, the Euro, to keep track of their mutual obligations, much as they employ the centimeter as their common measure of distance. I mention the Euro experience only because it should help us realize that money is nothing more than a symbol, a representation of a reality we cannot easily visualize. I’ve been comparing it to the alphabet, another figment of the imagination, but perhaps a comparison to musical notes is easier to understand, if only because the ability to translate musical notes into pleasant sounds is a skill that’s not nearly as universally shared as saying what we can read out loud.

But, if dollars are symbols like a musical score, how does it happen that some people argue, contrary to the King in Amadeus, complaining about “too many notes,” that there aren’t enough dollars to go around? Why doesn’t the Congress, which is tasked with managing the currency, simply produce more?

The answer, I suspect, has nothing to do with the dollars. Rather, it’s a management problem. More particularly, it’s a matter of focus. Instead of being focused on managing the assets and productive resources of households, on a micro and macro level, managers in all venues, public and private, seem to have decided that management means moving the inhabitants around, as if that were enough to produce what they want. Indeed, it may even be money’s fault that some people became convinced, if they just accumulate enough money, all good things will inevitably follow.

Of course, that doesn’t explain the rationing to which the Congress has resorted. That seems to have been occasioned by the perception that because not enough money is being returned as taxes, they should distribute less. That’s a strategy akin to starving the cow that’s not producing milk. But then, if Congresscritters had the smarts God gave farmers, they wouldn’t be pontificating in Washington.

It may seem ironic that People Purposed Economics would ideally be focused on the material resources and assets people need, rather than how the people can be forced to produce. But, there it is. The acquisition of the necessities of life should not be conditioned on people being compliant with some overlord’s directives. That way lies “political economy,” a whole ‘nother kettle of fish.

“No free lunch” is a euphemism for an abusive, if not sadistic, attitude. Doesn’t matter which political party holds that persuasion. I’m looking at you, Mary Landrieu.


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