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Sig Silber — Conflation Of Monetary Operations With Public Policy Options Is Confusing The Public MMT Debate

Summary:
Finally, some constructive criticism of MMT.  Civil engineer and manager Sig Silber suggests many points that he feels need to be addressed in debate. They are well taken. No doubt many encountering MMT will have similar questions. MMT economists have anticipated a number of them and addressed them already. Some just disappear on correct understanding of MMT. The remaining one are generally political issues as much as economic, which MMT also admits. Such issues have to be decided politically, but decisions should be properly informed before making choices. Open inquiry should precede judgment. However, in the end judgment often involves normative matters in addition to positive. Sig Silber rejects paternalism and "the noble lie" as an argument against MMT: I also do not

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Finally, some constructive criticism of MMT. 

Civil engineer and manager Sig Silber suggests many points that he feels need to be addressed in debate. They are well taken. No doubt many encountering MMT will have similar questions.

MMT economists have anticipated a number of them and addressed them already. Some just disappear on correct understanding of MMT. The remaining one are generally political issues as much as economic, which MMT also admits. Such issues have to be decided politically, but decisions should be properly informed before making choices. Open inquiry should precede judgment. However, in the end judgment often involves normative matters in addition to positive.

Sig Silber rejects paternalism and "the noble lie" as an argument against MMT:
I also do not agree with many current Federal Programs and others that have been suggested by MMT’ers. But that is a separate topic from whether or not MMT is correct - and whether or not it inherently has unpleasant side effects. The two authors [Lance Roberts and Michael Lebowitz] may be making the point that MMT encourages unwise expenditures which are political in nature rather than based solely on what might improve the economy. Again, that is a separate topic but well worth discussing.
Arguing that MMT is inherently dangerous because the information makes it possible to do unwise things is like saying that any explanation of how something works is inherently dangerous because this understanding makes it possible to do unwise things. I find that an improper way to review an explanation which is part of - and the key part - of MMT. Improper use of the information is certainly possible but to assume this will necessarily happen is speculative….
He adds a concern that many people have and which also needs to be debated:

I will add one more additional concern which I phrase as two questions:

  1. “Is an economy that is managed so as to never have a recession because it is managed to always be at Max Capacity or at some predetermined level below but near Max Capacity, a good idea?" (This question is separate from issues related to price stability and debt per se.) 
  2. “Will such an economy ossify?"
Question one depends, of course, on the criteria of "good," which is a normative terms unless naturalized. It opens the door to ideologically based assumptions and framing from particular points of view. Moreover, defenders of the current system would argue that this is what the existing system does using NAIRU, which involves defining down "unemployment." 

Question two is often phrased as an objection rather than a question by "free market" economic liberals who regard economic contractions as culling through nature taking its course. This assumes that recessions are positive in that they purge inefficiency from the economy. That is a very general assumption. What is the empirical foundation for the assumption and what do the facts show historically. 

Based on inquiry there are good reasons to doubt the assumption in the first place, and secondly to question its practicality in that it appears that a lot of other capital has been destroyed in the process and the social and political costs have been high. 

This aspect of the question can be boiled down to whether efficiency is to be preferred over effectiveness.  Management über-guru Peter F. Drucker pointed out in The Effective Executive that while efficiency is doing things right, effectiveness is doing the right things. Sacrificing effectiveness for efficiency is seldom good management, if ever. Both are important but must be prioritized to be correctly balanced.

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Conflation Of Monetary Operations With Public Policy Options Is Confusing The Public MMT Debate
Sig Silber is active in water and natural resources policy issues in New Mexico. He is a Supervisor of the Santa Fe- Pojoaque Soil and Water Conservation District, the President of the New Mexico Weather Modification Association, and a Member of the American Society of Civil Engineers (ASCE) Environmental & Water Resources Institute (EWRI) Atmospheric Water Management Standards Committee. In the 2003 round of Water Planning in New Mexico, he was the Chair of the Technology Committee of his area's Regional Water Planning Council and has recently served as a Member of the Santa Fe County Water Policy Advisory Committee. Mr Silber was a senior executive of a Fortune 500 Mining Company and has extensive experience in the information technology industry. Mr. Silber's firm provides business planning services in the areas of his expertise. He is currently researching the global long-term economic and geopolitical impacts of climate change.
Mike Norman
Mike Norman is an economist and veteran trader whose career has spanned over 30 years on Wall Street. He is a former member and trader on the CME, NYMEX, COMEX and NYFE and he managed money for one of the largest hedge funds and ran a prop trading desk for Credit Suisse.

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