MMT Documentary - Finding The Money
There is a MMT documentary now out — “Finding the Money.” I have not watched it yet, as it is on a streaming service I recently dropped. (My family rotates through the various streaming services, so I will watch it once we swap around again.) Obviously, I cannot give any recommendations about it, but it sounds like a good introduction to some of the debates.
Unfortunately there was a lot of howling on X (the everything app) about one aspect: the economist Jared Bernstein had a bad interview based on running into a question that he had not thought much about (I believe it was along the lines of “why would a floating currency sovereign borrow its own currency?”). The unfortunate thing is that there were a lot of activists playing this clip up, which then was picked up by right wing political opponents of Bernstein. This then led to a backlash by liberal-left mainstream types about Bernstein being set up. (From my understanding, other mainstream(-ish) critics of MMT came off better within the documentary.)
Since I have not watched the documentary, I obviously cannot comment on whether the treatment of Bernstein was appropriate. I would chalk up his inability to answer the question cleanly to not preparing for it in particular. I do not see this as too surprising, as it is a concept that people outside MMT do not spend time thinking about. (I certainly did not think too carefully about that question before I ran into MMT, even though I directionally agreed with MMT about fiscal policy questions courtesy of covering the JGB market.) (I updated this paragraph, as Bernstein did have some earlier discussions/debates with MMTers before the documentary.)
The problem with focussing on the framing of fiscal policy is that it can lead people to lose track of why the framing matters. You need to focus on substantive theoretical differences that led to differing policy analysis. This was much easier in the early 2010s, when mainstream fiscal analysis was utterly terrible. “The United States is going to be the next Greece!”, etc. However, the pro-austerity crowd was thrashed politically, and so it is much harder to determine what exactly the mainstream position on fiscal policy is. You cannot have a debate with a group that has no concrete views.
What people are arguing about now is inflation. And what is the mainstream view on inflation? They assume that higher interest rates lower inflation. However, they are not sure how high that is, since they have no idea where r* is. Have a fun time debating that view!
At present, political debates are about foreign policy and political economy — not raw fiscal policy. Debates about MMT views are largely confined to financial market commentary, where hard money types have an extremely difficult time avoiding being wildly wrong about fiscal policy. Although such debates can be fun, they are a sideshow relative to what is actually happening in the political sphere.
I saw "Finding the Money" this past Saturday night in New York City at a screening where Stephanie Kelton was part of a post-screening panel that included Stephanie Kelton, the film's director Maren Poitras and others. The movie is very good; I strongly recommend it. But I agree that Jared Bernstein comes off badly -- more than necessarily so. I had friends -- Twitter users -- who saw the movie at earlier screenings and they were eager to tell me about Bernstein. So going into the film I was predisposed to laugh at him but was also expecting to see Larry Summers and Jason Furman be exposed as well.
The film's director has said that most of the interviews were conducted in 2019. At that time Bernstein's long-time boss, Joe Biden, was out of office, so Bernstein was not yet a member or chair of the Council of Economic Advisors. I can't remember how the film captioned him, but he was probably employed at some Democratic think tank -- perhaps the Center on Budget and Policy Priorities. According to his Wikipedia page, in 2018 he began a public dialog, "Questions for the MMTers," on the blog which he maintained before he went back to government. Bill Mitchell responded with three posts on his own blog. I haven't read either side of this dialog completely yet, but Mitchell does not appear to have been aiming to diss Bernstein nearly as much as he would have if the other side were Summers, Furman or Paul Krugman. I suspect that it was this public dialog in 2018 that led the filmmaker to request an interview with Bernstein a year later.
I recall seeing a hearing of the U.S. House of Representatives Budget Committee in 2021 or so, when it was under Democratic control and the chair was one of the few people in Congress familiar with MMT. Both Bernstein and Randy Wray testified at that hearing. Their relations appeared to be cordial. Though in his first two years in office Biden made the ritual boasts about the deficit-reducing features of his budget, he's been quiet about the deficit since, and I can't recall any anti-MMT statements lately from anyone in the Biden administration. In contrast, Joe Stiglitz and Charles Goodhart launched apparently unsolicited salvoes against MMT when testifying before the British House of Lords back in February.
I note from Bernstein's Wikipedia article that he was a working jazz musician playing acoustic bass, then pivoted to get a Master's in Social Work from the Hunter College School of Social Work. I attempted to play electric bass (never successfully), then later got an MSW from ... the Hunter College School of Social Work!
Many of my MMT acquaintances are two generations younger than me and I've always thought that Twitter brings out the worst in them. That's why I stay away from it.
I don't think it fair to call Bernstein an "economist." His training was in music and social work. How he gets to be in his current position is a good question.