The people who seem to have the most opposition to the MMT school of thought are the Austrians. It really strikes at the core of all they are opposed to............... on MORAL grounds, of course. I find myself attracted to arguing the merits of my views with Austrians more than any other group and its usually because they make such strong moral claims about their arguments. I cant say I've ever felt I've argued an Austrian out of their view (about as likely as arguing a fundamentalist Baptist out of his view) but I have been able to crystallize I think what it is that they see morally wrong with my view of the economy and money. As I see it the Austrians have the largest problems with the following ideas; 1) A "state" issued money, especially if its not backed by gold 2) A central bank which is there as lender of last resort 3) Efforts to "stimulate" the economy 4) State provided employment or pensions 5) Inflation, which is really a result of the previous 4 in their view 6) States regulating business activity, which should be left to the court system (presumably a creation of the state)
I see #1 as falling under the "Money is the root of all evil" (MIROAE) type moral framework. The state takes over our money system and cannot be trusted with this responsibility and always ends up debasing our currency as they pursue frivolous wars, handouts to cronies etc etc. #2 falls into this category as well but also into the "Two wrongs dont make a right" (TWDMAR) framework I described in part I. Backstopping unproductive behavior is always and everywhere simply rewarding failure and cannot have a redeeming value in this view. #3 I would put into the "Invisible hand"(IH) framework. The economy is seeking a right equilibrium and we only delay, for a period, that effort. Stimulus never works we only think it works. #4 Is in the MIROAE because by giving people money for unproductive (anything outside private sector is simply exploiting private sector production) activity we are making them lazy, dependent and worthless. #5 I see as a falling into all three categories, which is due to the nebulous nature of inflation. To the Austrian inflation occurs because a state spends new money into an economy, the central bank monetizes debt and state employees have guaranteed raises and generous pensions which cause wage price spirals. Money is evil when spent by a state and guaranteed employment contracts go against the invisible hand regulating labor supply an demand through wage adjustments. #6 definitely falls into the IH framework as businesses are viewed as being sensitive to price fluctuations as their signals. Regulations, by affecting the costs, end up distorting price signals and increase uncertainty, leading businesses to functionless then optimally. Left alone businesses will always get it right because prices will reflect all real information out there. If their product is dangerous, we'll find out and punish them by not buying it. If their product is of poor quality, we'll price it lower then the higher quality competitor. Attempts by outside agents to rectify these issues will only end up hurting consumers, it is postulated.
The common theme in these critiques is the negative aspect of "The State" and the perfect condition of "markets". States always morph towards an immoral polluter of human quests to be economically free. While markets express and satisfy human whims and desires when allowed to operate uninhibited. This brings forth two questions (just to start) for me; So what makes a state different than a market? Is not the state a market response to the human question of "How best to organize and protect our collective interests"?
I can already see this exploration taking a lot of tangents but I want to try and focus my efforts on the six forementioned ideas and I hope to use the answers to my 2 questions to begin to show that the Austrians are creating a false dichotomy.