MMT: Who Is Listening ?

1. MMT: Who Is Listening? Presentation: Brian Romanchuk

2. Outline • Discuss what I see as the main audience types for MMT. • Differing characteristics as readers. • Some comments on future strategies.

3. Three Main Audiences for MMT

4. What Do I Know About This? I have spent the past few decades writing for these audiences, and so my assertions are based on that experience. • Starting the 1990s, I was an academic in control systems theory. Only a tangential overlap with economic theory, but I understand academic politics. • Roughly 15 years writing and reading fixed income research in industry. • Since 2013, writing a blog and short specialty books in “bond market economics.” My sales and web analytics give me some idea about readership.

5. Academia: No Comment I am obviously an outsider to academic economics. From my perspective, “economics” ought to get its act together and act as a relatively cohesive body of theory. That said, I see that is a completely naïve viewpoint when we look at the ugly side of academic politics. I do not have any useful recommendations in this area.

6. Professional Users of Economic Theory My interest in macro economic theory, not offshoots like auction theory. There are a number of occupations where macro is part of the job description. May or may not have studied economics. • Financial market participants and analysts, particularly interest rate markets. Financial media. • People at rating agencies, think tanks, economists embedded in industrial firms or unions. • Central bankers (overlaps with academia).

7. “Broad Public” People who are interested in economics for any number of reasons. For my purposes here, assumed to be people without economic training. Why would they possibly be interested in macro economics? • The Financial Crisis generated a lot of interest in the failures of mainstream economics. (The rise of economics blogs.) • Concerned citizens with an interest in political economy. • Hot button political issues: Green New Deal, Rep. Alexandria Ocasio-Cortez. • Personal finance, money bugs.

8. Professionals in Finance I will focus on finance, as that is where my experience is. • Financial firms, or firms selling investment advice, are selling a product. Getting into political arguments with your potential clients is a terrible sales strategy. For this reason, there is a narrow “Overton Window” for acceptable political content, and “non-partisan” with respect to the mainstream parties (e.g., Democrats and Republicans). • Obviously, a certain “yay for capitalism” bias exists, as well as a preference for developing countries to open capital markets. • Austrians have carved out a niche for free market apologetics, but often confined to funds selling collectibles as an inflation hedge.

9. Professionals in Finance (2) • Need to present a “better theoretical mousetrap.” • Very little interest in theoretical divisions, particularly ancient ones. (Bias towards “cutting edge” research.) • Mathematical models are valued, and/or being tied to real-world data. The main consumers of macro theory are the relatively small number of rates analysts and traders, and possibly forex participants. Other investors only use macro for story-telling, and no particular need to be right about macro calls. Even portfolio allocation types are mainly worried about equity markets.

10. The Broad Public Have many characteristics that are the opposite of finance professionals. • A great deal of interest in political economy. • Less interest in mathematical models. • Likes theoretical controversy. • Fans of social media, online squabbling. • Interested in topics that do not have immediate applications to the economic outlook (“what is money?”, fractional reserve banking). Raises a “marketing conundrum” for MMT.

11. “Why MMT Works”: Professional Audience For anyone in rates analysis, “conventional” analyses have had an abysmal track record. • Japan. (The “90% debt ratio” was just icing on the cake.) • Financial Crisis causes and severity. • QE and the lack of hyperinflation. Why MMT? • Gave a distinctive story, that fits facts on the ground. • Given model failures elsewhere, perceived lack of models small issue.

12. MMT and Post-Keynesian Economics • The distinction between “Modern Monetary Theory” and “Post-Keynesian Economics” is not particularly obvious to outsiders. • Highly visible academic turf wars are not helpful. • From a North American perspective, “Post-Keynesian” macro is largely invisible to outsiders, with Hyman Minsky (and possibly some other high profile academics) being the main exception. • This does not seem to be the case for Europe, where post-Keynesians are somewhat more high profile. • Room for improvement for explanations aimed at advanced readers, in between academic articles and op-eds.

13. The Future? • With the embrace of fiscal policy among (some) neoclassicals, easy point of disagreement between MMT and neoclassicals disappears. • Need to provide a “better theoretical mousetrap.” • Inroads into professional classes will be by rather boring advanced technical pieces that offer surveys of the literature. Few people willing to dive into academic literature (other than some high profile paper). • Among the broad public, seems contingent on policy debates.