Bill Mitchell: I fell off the left-right continuum today


Naked Capitalism highlighted the Bill Mitchell – billy blog article I fell off the left-right continuum today.

Second, Bill Keller says that in relation to “entitlement”:

The left-left seems to believe that government investments — roads and bridges, clean energy, education, etc. — and more-generous safety-net benefits can all be had by milking the rich and cutting military spending. Most centrists would raise taxes some and cut defense spending some, but they say that unless we also curb the growth of entitlements, the stampede of baby boomers into Social Security and Medicare will crowd out everything else.

The crowding out will only come if the US runs out of real resources that can be deployed to service the needs of the older citizens.

Increasing benefits to the poor might put a strain on real resources in the future (although I doubt it) which means that other cohorts will have to be deprived. But this has nothing to do with the capacity of the US government to purchase what real resources are available.
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Most of this dispute in US democratic politics spreads more widely. It also is based on the fact that the “centre-left” is nothing like a reasonable depiction of centrist positions. They represent positions that the right-wing used to advance especially in economic matters.

They perpetuate the neo-liberal myths about government financial capacity and then demonise positions that used to be centrist. Further, the new left still refuse to embrace a truly progressive view of the monetary system.

They remain locked into believing that currency-issuing governments have financial constraints. Until they jettison that mythology they will remain populist but ineffective.

I am a firm believer that it is the “real resources” that matter as indicated in the first Mitchell paragraph above.  You can use debts and deficits as a convenient way to measure things, but if those measures contradict what looking at real resources tells you, then something is wrong with your interpretation of the meaning of the convenient measurement quantities.

I have used that concept throughout my career developing computer simulation programs.  If the simulation goes against your intuition of how the real system should behave, then you need to look at the discrepancy very carefully.  It could be that your intuition is wrong, or it could be that the simulation is wrong.  In either case, you need to pin down what is happening.  Either you find a bug in the software, or you find a new insight into how the real system works.

In economics, when the economic theory diverges from your intuition about how the real economy operates, then you shouldn’t just blindly pick the theory or your intuition as being correct.  You need to dig more deeply to see if you can find other ways to resolve the divergence until you know which one, theory or intuition, is closer to reality.

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