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John ‘John’ Morrison Profile picture
John ‘John’ Morrison
@J_MoAGoGo
Former blue check . Former Queen’s Counsel
Mar 21, 2021 • 13 tweets • 3 min read
There are some poor takes on this point going around tbh. Understanding that the UK government is not financially constrained or obliged to balance its budget is 100% essential for the left to counter austerity dogma. It is hugely important, and Labour have failed to do this. The point that the monetary operations behind fiscal policy aren’t important either practically or rhetorically is so easy to refute. Look at what happened to government bond yields in deficit countries in the Euro periphery post-crisis. The same basic pattern across the board
Mar 18, 2021 • 4 tweets • 2 min read
Do people really consider this a serious explanation of money? "Money arose spontaneously" to facilitate exchange or that the state or authority are external to markets? I'm sorry but that just doesn't cut it. ImageImage Critiques of MMT often betray desperation. This one is a series of assertions that do not hold up.
Feb 18, 2021 • 16 tweets • 3 min read
Overall I think Labour will be a bit disappointed with how the ‘relaunch’ has started. Labour have given themselves a mountain to climb anyway through a year of inaction but the speech today lacked coherence, purpose and distinction from the government. Starmer is (funnily enough) making a lot of the same mistakes Corbyn made in 2019. He is listing a ‘bold’ set of policy proposals that come across as disjointed and lacking connection to Britain’s priorities.
Feb 17, 2021 • 4 tweets • 1 min read
Whenever a disaster strikes that leaves millions without essential goods you get economists talking about how supply and demand will fix it. The same happened with the storms in Houston a few years ago. These events show perfectly what a pseudoscience economics is. Energy is an essential good, people will not survive long without it in these conditions, and in the real world (rather than the textbook world) people have unequal abilities to pay. So prices don’t allocate efficiently according to need, they allocate according to ability to pay
Feb 15, 2021 • 7 tweets • 2 min read
Because prices respond to costs rather than demand, and costs decrease with rising demand. Price competition is destructive for firms. The neoclassical conception of firms as atomistic, profit maximising price takers with rising marginal cost curves is the opposite of the truth. Saying that firms aren’t profit maximisers triggers a lot of people, but it’s true. Short term profit maximisation is not the goal of firms in oligopolistic industrial capitalism. The goal of firms is their continued reproduction.
Jan 26, 2021 • 8 tweets • 2 min read
Any argument that there is a true ‘market’ level of wages in an industry or economy based on technical factors like productivity or ‘value’ is going to fall down. Wages are influenced by institutions and most importantly by the level of effective demand. We can expect minimum wage hikes to increase employment and wages because wage rises increase effective demand and employment is determined by effective demand, which also further influences wage growth.
Jan 24, 2021 • 6 tweets • 1 min read
Packers vs Bucs is too close to call. I'll go for Packers considering Winfield's injury.

I'll take the Chiefs over the Bills. Chiefs have too many strengths. However they've only scraped through nearly all of their games lately. The Bucs will have to score a lot to win. Packers will be more alert and well organised than they were when the two met last time.
Jan 24, 2021 • 7 tweets • 2 min read
I’m seeing this line of argument a lot so I guess this is what the right are going to keep wheeling out. Stimulus = inequality. It’s hard to even know where to start it’s so wrong. It muddles different aspects of macro policy, gets causation wrong and is based on static thinking. You can make the case that QE has exacerbated inequality. But QE is a result of neglect of fiscal policy in terms of managing demand. Fiscal policy managing demand and targeting full employment is in no way the same as attempting to stimulate through cb asset purchases.
Jan 14, 2021 • 10 tweets • 2 min read
Reading Anneliese Dodds' speech on Labour economic policy and it's fascinating how steeped in neoclassical macro dogma it is. People should probably be aware that on fiscal and monetary policy McDonnell wasn't actually much better though. His strengths were more supply side. Implicit in her remarks is the belief that there is a natural rate of interest driven by supply side factors (technology, demographics etc) and that the government is essentially lucky that this rate of interest is so low.
Jan 13, 2021 • 4 tweets • 1 min read
Interest rates on government debt are administered by the monetary authority. That doesn't mean that authorities have total discretion to do this without cost, but it also doesn't make interest rates a purely market phenomenon The finer points matter. Summers etc argue that savings gluts from China create an excess of saving over investment that pushes equilibrium interest rates down.
Oct 22, 2020 • 4 tweets • 1 min read
The mainstream argument against fiscal policy dominance is clearly inconsistent with mainstream axioms. Why would the government in a mainstream model, with rational expectations, expect to create unanticipated inflation when it knows that the public has rational expectations? If every agent has rational expectations, ie knows the true model of the economy, then effect of inflationary policies will be anticipated and thus real effects nullified (policy ineffectiveness proposition).
Oct 21, 2020 • 4 tweets • 1 min read
A monetary economy is one where money is essential. Production & exchange are done for the sake of money & can't exist without it. Starting from a model where money is not essential, then adding money to give a price level etc does not yield a model of a monetary economy. That's the issue with mainstream models, money is not essential. Yet it is in the real world.
Oct 20, 2020 • 4 tweets • 1 min read
If you think money gives rise to business cycles, you have no idea why money exists and your model of an economy makes no sense with money in it, and as a result you’re in no position to explain business cycles in monetary economies. Economics - the dismal science. Image Economists since the last crisis have been in denial about why their models fail. The problem is that their general equilibrium models don’t need money to work. In fact, money is added to these to serve as a friction. This is the total opposite of the role of money in reality
Jun 15, 2020 • 31 tweets • 134 min read
@sullivan11169 @DfJackson89 @duncanpoundcake @JamesJohnTapper @Pamos19 @PatriciaNPino @MMTpodcast @in_mmt @PDWriter @GowerInitiative @nevin_simon @StephanieKelton @billy_blog @DerbyChrisW @ptcherneva @QuestionerMoney @MarkFabian21 @tonywestonuk @marxistcom @socialist_app So, I've read this article and I'll be honest, it's spectacularly poor. It could have come from the Mises Institute. And for a Marxist critique, it doesn't seem that the author has read much on Marx beyond volume 1 of Capital. @sullivan11169 @DfJackson89 @duncanpoundcake @JamesJohnTapper @Pamos19 @PatriciaNPino @MMTpodcast @in_mmt @PDWriter @GowerInitiative @nevin_simon @StephanieKelton @billy_blog @DerbyChrisW @ptcherneva @QuestionerMoney @MarkFabian21 @tonywestonuk @marxistcom @socialist_app Let's start with this. Marx follows his contemporaries in seeing money as arising out of exchange. Here's the problem: this does not explain why money itself is used as a medium of exchange. Just that a common medium of exchange is necessary.
Nov 2, 2019 • 16 tweets • 3 min read
If you hiked taxes at the top end and increased welfare spending it would have a net expansionary effect. Everyone knows this. So let's stop with this whole "billionaires create jobs" bullshit. Even from the standpoint of innovation or productive investment, by far the most important determinant of investment is the state of aggregate demand, which redistributive policies would improve.
Oct 15, 2019 • 4 tweets • 1 min read
IMO:

1) Economics isn't a real science & doesn't really make falsifiable statements
2) Mainstream macro has been built with the goal of internal coherence rather than observation & explanation of reality

So getting theory to accord with facts requires a monumental upheaval On the topic of internal coherence, it was established long ago that the essential ingredients of the mainstream approach (that are purported to give it it's coherence) - microfoundations and the aggregate production function - are not coherent at all. Yet they persist.
Oct 2, 2019 • 14 tweets • 3 min read
The problem with @MattBruenig and the other sound finance Marxists' arguments (also the reason they find allies in the mainstream camp) is that they don't consider chronic aggregate demand deficiencies to be a problem. Bruenig doesn't really want to get into an academic debate (what he terms word-games) and instead says that for all practical purposes MMT is just a restatement of functional finance. Okay, but even functional finance has a lot to teach the sound finance Marxists & neoclassicals.
Aug 22, 2019 • 9 tweets • 2 min read
The 'revolution' in macroeconomics in the 70s produced useless models and set the discipline back 40 years and counting. Not only do Rational Expectations not explain inflation dynamics, but the whole microfoundations project was theoretically incoherent. In the same decade that the microfoundations craze (the idea that macro relationships had to be based on optimising behaviour of microeconomic agents) took off, a series of results were published that showed you couldn't derive a stable, unique equilibrium from micro behaviour
Mar 29, 2019 • 21 tweets • 3 min read
Why negative interest rates won't cure stagnation: There were claims this week that negative interest rates would work to boost employment and inflation. There were also some claims that Keynes' General Theory relied heavily on negative interest rates working. I take the opposite view on these points.
Feb 28, 2019 • 29 tweets • 4 min read
Paul Krugman's argument against MMT, Functional Finance and using fiscal policy to achieve full employment hinged on the existence of a 'natural rate of interest'. But such an interest rate does not exist and therefore monetary policy cannot achieve full employment. The natural rate of interest is a theory that's over 100 years old and has taken many guises. It's essentially the interest rate that equates investment and saving, ensuring stable prices and full employment.
Oct 30, 2018 • 4 tweets • 1 min read
I see this error all the time in economics and it's so basic it drives me spare. First of all, deficits as a %of GDP are not reliable indicators of whether a government is engaging in stimulus or austerity because the budget automatically adjusts to economic activity. Apparently even Nobel Prize winners don't recognise this simple fact. As GDP drops the budget deficit is going to increase (or surplus decrease) as tax returns are lower (these are themselves a function of income) and unemployment benefits increase.