Maybe it was better when they ignored us
Nicolas Goetzmann sent me the following article in the FT, by Wolfgang Munchau:
The third theory is monetarist. Some will be surprised to find that monetarists still exist, but they do under new guises, such as “market monetarists”. Milton Friedman, the godfather of monetarism, said inflation is always and everywhere a monetary phenomenon. And so, of course, would be a lack of inflation. The market monetarists argue that the central bank should target a certain measure of broad money in circulation to achieve price stability.
Yikes. I’m still counting the number of mistakes in that paragraph. How many can you find?
At least he didn’t call us Austrians, which is how Allan Meltzer referred to me (twice!) at the recent Mont Pelerin Society meetings. 🙂
PS. I wonder if famous pundits think this way: “I vaguely recall hearing something about market monetarists. I suppose they must believe X. I could look it up, but eh, I’m an important pundit and MMs are a bunch of nobodies, so they’ll just have to make do with my characterization. After all, I’m pretty busy right now.”
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7. September 2014 at 17:47
“I wonder if famous pundits think this way: “I vaguely recall hearing something about market monetarists. I suppose they must believe X. I could look it up, but eh, I’m an important pundit and MMs are a bunch of nobodies, so they’ll just have to make do with my characterization. After all, I’m pretty busy right now.””
Kind of explains how certain bloggers deal with Austrianism.
[runs away]
7. September 2014 at 18:10
Well, you’ve been called worse things than Austrian, I suppose.
7. September 2014 at 18:43
1. The godfather of monetarism would be Irving Fisher, not Friedman
2. A lack of inflation could be supply-side, as monetarists know
3. We want to target broad nominal aggregates, not broad monetary aggregates
4. We want demand/spending or nominal wage stability, not price stability.
7. September 2014 at 18:51
It is impossible to say and mean to say that there is no such thing as objective truth without in so doing actually presupposing objective criteria for the application of terms.
Rorty could only do and say what he did because what he said was false.
7. September 2014 at 18:59
Saturos:
“We want to target broad nominal aggregates, not broad monetary aggregates”.
It might help if you did not use the term “nominal aggregates.” Nominal means, in general, a “quantity” that changes apart from “real” changes.
Nominal can mean any of the money supply, price levels, and total spending. Every aggregate quantity whose variable is in dollars, can be perceived as a “nominal” variable.
It is why “nominal” is used alongside “GDP” in NGDP. It is to make it clear that the variable is nominal spending.
7. September 2014 at 19:38
Scott – I was tempted to reply to Wolfgang in the comment section on his misunderstanding about MM, but perhaps you could better straighten him out with an email. He would be a powerful ally if he advocated MM, especially in Europe.
7. September 2014 at 23:38
A good example of “why you should not believe everything you read in the news”.
In the few instances in which I read something in mainstream media that I have personal knowledge of. or which is within my narrow area of technical expertise, I find that they almost always get something seriously wrong or leave misleading impressions among readers or viewers. And yet, one tends to give the media the benefit of the doubt when reading or viewing something that is relatively unknown to us. We should constantly remind ourselves that such trust in major news outlets like the FT, the NYT or the WSJ is unwarranted. And, it goes steadily downhill from there…
8. September 2014 at 00:04
Everyone, Good points.
8. September 2014 at 02:04
Saturos,
Where do the early quantity theorists (Hume and Copernicus) fit in? Maybe the fathers of the godfathers?
Scott Sumner,
In the late 1960s people in the UK couldn’t even get Milton Friedman’s name right. 10 years later and we had a monetarist government. If they’re getting your views wrong, then they must at least know who you are!
8. September 2014 at 04:54
Could someone please fill me in on the substantive disagreement between Meltzer and Sumner?
8. September 2014 at 05:03
Noah Smith vs. Casey Mulligan: Debate!!
http://noahpinionblog.blogspot.com/2014/09/wages-and-great-vacation-cont.html
8. September 2014 at 05:07
I agree with TravisV. As Vivian notes above, the popular press never gets specifics exactly right, which we all see when the press handles our areas of expertise.
Scott, I think you should be less prickly about approximate mischaracterizations. Better still, can you explain your view reasonably accurately in a paragraph calculated to be understood by the average American?
Perhaps this is too much to ask, but if the message is being garbled, I think it’s up to you to help bridge the gap. At least, that’s how I’d view this if I were standing in your shoes.
8. September 2014 at 05:37
Hah, I’m not a market monetarist but every descriptor was wrong about you. Funny.
8. September 2014 at 07:09
Ryan Avent:
“Now when demand falls and firms have to scale back production, they can’t afford to hang on to workers they don’t need, because they can’t cut their pay. With inflation at or below 2% the only way to get big wage cuts is to reduce the numbers on the cheques. Some firms manage to do that, but the data show an enormous discontinuity in the distribution of wage changes at zero.
As a result, firms end up sacking lots of workers. Many of the workers who are retained will nonetheless have real wages that are stuck “too high”, and evidence suggests that firms address this problem by attempting to get more effort from existing employees. That leads to rising productivity.
And because the more productive retained labour is able to meet more of the demand when the economy starts to recover, recoveries are increasingly “jobless”, and economies tend to accumulate a stock of “pent up wage deflation”, as Janet Yellen described the dynamic in August……”
http://www.economist.com/blogs/freeexchange/2014/09/americas-economy-0
8. September 2014 at 14:01
Andolfatto throws you a belt high batting practice fastball:
http://andolfatto.blogspot.com/2014/09/whos-afraid-of-deflation.html?m=1
9. September 2014 at 03:12
Elizabeth Warren and Paul Krugman discuss issues for 80 minutes in this new video:
https://www.youtube.com/watch?v=leMhyvgPye0
Pretty disappointing…..
9. September 2014 at 07:42
Brian, You said:
“I think you should be less prickly about approximate mischaracterizations. Better still, can you explain your view reasonably accurately in a paragraph calculated to be understood by the average American?
Perhaps this is too much to ask, but if the message is being garbled, I think it’s up to you to help bridge the gap.”
I presume “approximate” means “total and complete.” So I devote 6 years of my life to endless blog posts, op eds (including several in the FT), and public speeches. Munchau doesn’t spend 2 minutes checking out MM in Wikipedia, and it’s my fault.
Travis, That passage from Avent confuses me. Productivity has done poorly during the recovery.
Thanks Michael, I have a post at Econlog.
10. September 2014 at 15:53
Is so called ‘wasteful spending’ less or more bad than.unemployment?
10. September 2014 at 15:55
My comment was meant for the Simon-Wren-Lewis post
12. September 2014 at 06:22
Scott, Jesus you’re a prickly SOB. I come as a friend. I have spent many hours over the past few years reading through your stuff. You have convinced me of your vision. It took a lot of doing, because it is extremely tricky subject matter. This is why I said above “Perhaps this is too much to ask.”
Still, when I spit back what I’ve learned from you, I know I haven’t got it quite right yet.
I work in an extremely technical field. My job is to figure difficult stuff out, then present it to non-expert clients in a way that is meaningful and useful to them.
The first part of the job is hard, but the second part of the job is a lot harder. I spend tons of time on this. If I were to give up on this, and just say “Look, I’ve laid it all out here in this 100 page white paper” it wouldn’t cut a lot of mustard, and all my efforts at figuring out the difficult stuff would be for nought.
Maybe you don’t care about having an influence in the wider world, but I suspect you do. Why else blog? I also think, and have said, that you are the heir to Friedman. What set Friedman apart, however, is that he was a brilliant communicator.
Surely you are aware of feedback that your position is sometimes confusing or hard to follow. Doubtless some of this is down to the difficulty of the subject matter, but if you really want people to understand, I think you need to keep coming back to a single unifying story, refining, shaping, pruning constantly, and boiling it down to something that people find meaningful and useful. Perhaps this is too much to ask.
You can choose to interpret this as me ‘blaming’ you if you choose, but this is very far from the spirit of my comment.
12. September 2014 at 06:38
Sorry Brian, Sometimes I get burned out and overreact. I misinterpreted the spirit of your comment.
12. September 2014 at 06:41
FWIW, when I answered your comment I had just flown back from Hong Kong, and also had a cold. I should probably not operate heavy machinery like a keyboard when in that condition.
12. September 2014 at 06:56
Damn, now I feel bad. I know I can be a dick.
I’m rooting for you man. I think you are in a position to change the world for the better over the next decade in a way that very few people ever will. Part of me finds it amazing that you can take time out to respond personally to a nobody like me.
And I proselytize on your behalf, but when I read this particular post, I’m sure I don’t quite get it all yet, and I don’t want to misrepresent you.
Keep on truckin’.