Ep. 418 Steve Keen Sides With MAGA over MMT on Trade Deficits
Steve Keen is an iconoclast economist who is sympathetic to MMT claims that right-wingers worry too much about government budget deficits. However, in a recent post Keen says that Trump Admin economists (such as Stephen Miran) make more sense on trade deficits than Warren Mosler does.
Mentioned in the Episode and Other Links of Interest:
- The YouTube version of this conversation.
- This episode’s sponsor, PersistSEO.com.
- Steve Keen’s free book and subscription-based online course.
- Steve’s post on trade deficits, Trump, and MMT.
- Murphy and Hendrickson give qualified support to Miran’s paper on tariffs.
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About the author, Robert
Christian and economist, Chief Economist at infineo, and Senior Fellow with the Mises Institute.
It’s very bizarre that Steve so effectively dismantles the simplistic reasoning about trade deficits but then concludes that the government should just force us to all trade differently rather than that the government should just stop interfering with trade entirely.
He makes a big deal about recent Chinese stats, but has Steve never looked at early American stats?
I think I get your point Dave, but can you spell it out? (About “early American stats.”)
A coin toss is necessarily always ergodic because there is no mechanism by which one coin toss can communicate or coordinate with a different coin toss. Each toss is an entirely separate operation, regardless of space or time.
Borrowing Steve Keen’s example … suppose we take it that all bets are exactly $100 as the original problem proposed, and you have a guy (call him “Investor X”) who starts out with $1000 and then splits this down into 10 simultaneous bets, which are all uncorrelated, then the most likely outcome is $1050 but only slightly less likely outcome would be either $960 or $1140 and then a bunch of low probability outcomes.
Then you have another guy (call him “Investor Y”) working longitudinally, who starts with $1000 and then makes a single bet of $100 and takes whatever return he gets and puts that back into the pool, makes a second bet of $100 and puts those returns back into the pool … so on and so on … for a total of 10 bets. Well, the second guy has exactly the same probability of outcomes as the first guy. They both made 10 bets each of $100 and they both got the same outcome. You can do any mix you like to a total of 10 bets … you can have 2 bets of $100 running simultaneously and then do it 5 times longitudinally … you can have 5 bets running simultaneously and do it 2 times.
Then Keen comes up with this concept out of nowhere that “Investor Y” somehow needs to always make a single large bet, which for no particular reason takes away the original rule that all bets are $100 … but hey if you carefully compare apples with orangutans you can convince yourself of the spurious result that a coin toss is non-ergodic.
Let’s not get started on the MMT idea that government can spend money without taxation … which is just too bonkers for further analysis.
“… and in my model, I state all market products are a sphere, and go on to prove that…”
“… and in my model, I state that hummingbird song frequencies are stock market prices…”
“… and in my model, bees are fish…”
The ludicrousness of the proposition that posits an equivalence for averaging outcomes of market processes over space versus time – explodes any explanation.
It is such bat-sh** insanity that there is no possibility for discussion with an entity that unironically expresses it. This kind of non-sense is specifically satanic. It’s numerology in economics.
Are you caught-up on your gene-ja.. ahem, ‘vaccines’, Mr. Keen?
You know Steve’s point was that the mainstream subscribes to this equivalence, and he was saying it was a fallacy?
The export deficit isn’t a disease in itself, but in the case of the USA it’s a symptom of multiple illnesses.
These illnesses are destroying the human-capital stock, the manufacturing capital stock, and far more importantly and under-appreciated: The Hayekian embedded knowledge that is built-up over *generations* within a network of production. If you’ve got a dollar-empire, these losses don’t show-up in dollar value today, or tomorrow, but rather over generations. THAT is the harm.
That is not addressed at all by Steve’s facile observation that one nation’s export is another nation’s import. We already knew that. You’re not teaching anything, Steve.
Without the ability to even *maintain* the embedded knowledge of how to produce the stuff you need, within your sovereign political unit, you’re vulnerable to forces and conflicts which economists, (including Dr. Murphy) spend their careers ignoring. The ‘unseen’ in this case is … the entire existing world of geopolitics which stands knee-deep in the blood of history.
In this domain, the methodology of the historical school stands without alternatives. And that is the kind of stuff makes the kids who liked math and avoided fights really uneasy. In this doman, some groups of people enslave, poison, torture and kill other groups people — without requiring economic gain to do it.
In the current instance of targeted, intergenerational, maleficent, systemic national genocide, the name of the game is to eradicate our nations potential for transforming lower value inputs to higher value outputs. That has been achieved by the monopolization of media, the cartelization of banking, the destruction of independent schooling, the imposition of woke corporate culture, the draining of market talent to ‘defense’ projects, the draining of talent to ‘financial markets’ (casino).
The curret ‘trade deficit’ is just a symptom of the political success of our enemy making US unable to compete. Absent that, the only thing feeding the American gut is the global predations of the US Empire, which the enemy also controls, as recently made blatantly obvious, again.
So sorry Bob. So sorry Steve. Nukes, Nintendo and Netflix will not save the nation.
I probably shouldn’t waste so much time on these things … but Steve’s history of Toyota kind of bugged me until I went and looked it up. Turns out that Toyota started out in the Meiji Period (late 19th Century) working in the textile industry … focusing on power looms and steam engines. They branched out into cars in the early 20th Century and never make pedal bicycles … although they did briefly have a subsidiary called “Toyo Motors” which started making motorbikes in 1949, without using any parts borrowed from military surplus fighter planes. This forray into motorcycles was OK but unexceptional, never did all that well and got wound up in 1960.
I found evidence of one bike in the entire world built using part of a Rolls Royce Merlin engine taken from a Mustang fighter … the original engine (I believe) was a hulking V12 and they cut off two cylinders to make a beefy V-twin approx 300 cubic inches. Hand made custom chopper and never a commercial product … not even Japanese!
Very likely, what Steve remembers is the history of Honda, not Toyota … the parts were taken from disused Imperial Army radios … and no they didn’t fly.
https://www.honda.co.jp/powerproducts-brand/en/history/
Honda went on to specialize in small engines … while Toyota did much better in the 4 cylinder vehicle market then V8’s and recently V6’s.
I find these historical school anecdotes fascinating … but it massively helps to get the details right 😎. I know that’s difficult off the cuff … but the Bob Murphy Show is forever ya know.