I'm glad that you've decided to engage this highly interesting topic. Larry Summers has a very solipsistic classically orthodox view of the modern world that went unchallenged for far too long. This was not only the case in economic or monetary theory.
Summers forgets that Bretton Woods itself was once a radical idea when it was first proposed as capitalist economies and world central banks departed the Gold and Silver standards of the 19th and early-to-mid 20th centuries. Now that we are entering the age of CBDCs, driven by China's Belt and Road Initiative (BRI) in the developing world that is winning hearts and minds (and political allegiance) around the globe, while we solipsistic westerners continue to enforce unsustainable orthodoxies as we abuse the US Dollar's status as a fiat currency that effectively debases other currencies as it distorts free markets through manipulation of ad hoc benchmarks like LIBOR over real effective and secular rates.
The world is changing because change is inevitable, and MMT is an evolving construct that endangers a system Summers only understands and embraces because he helped build it, not because it is inherently stable or serves the multilateral world economy fairly and transparently. He and Anna Stansbury reject Kalecki and Minsky's "Old Keynesianism", but embrace the distorted markets spawned by QE bailouts and short-sighted Interest rate manipulation.
Both Brussels and Beijing's evolving Sino (post-soviet) Russian alliances and economic bullying have signaled a willingness to embrace CBDCs (but not crypto blockchains) more than the Fed has. The Euro and Renminbi are becoming increasingly popular with the world's emerging economies because the Dollar became so obviously and corruptibly self-serving that the US Central bank no longer has the credibility and status it once did after WWI and II.
The world now embraces post-Keynesian (PKE) ideas about free markets that frighten hidebound intellectuals like Summers who failed to see the growth of monetary policy that was a product of brazen market manipulation by his hypocritical embrace of risky consumer investment "miracle" products like CDOs and the related Derivatives that ultimately caused the 2008 meltdown..
It would be interesting to examine why someone like Summers still has credibility--what are the mechanisms by which he stays on the list of people who media and policy- and opinion-makers consult and give air time to.
I'm not going to try to defend Larry Summers. He has many reasons for attacking others' ideas: often disconnected from their intellectual merits. But a defense of MMT on the grounds that Larry Summers dislikes it is just the old ad hominem attack run backward. Few economists think that MMT is little more than warmed-over Keynesianism. It is very hard to say something in MMT-ese that one cannot easily say in ordinary Keynes-talk. So why the new lingo, except to obfuscate? Opponents of MMT think it has something to do with proponents' taxophobia.
Perhaps he is trying to stifle MMT because it is not a good Economic Theory, and should not be seen by the world as "real economics".
For a normal people, it makes no difference to justify the American Rescue Plan through very orthodox counter cyclical fiscal policy (as many Twitter economists did, but not Summers) or through the heterodox MMT.
But for economists, it matters.
Most trained economists are taught to separate clearly economic theory (Positive Economics) from their political positions (Normative Economics).
Since MMT proponents refuse to compete in the same grounds as other theories -by writing down a model of how the economy works-, and those who have wrote it down find it lacking, then it can NOT be positive econonics
If, as you say, MMT it is "serving the same role of agitating for new solutions and expanding policy debate" then it MUST stop calling itself an economic theory and begin calling itself something like JPMM (Just Print Money Movement)
So that's your answer: Because MMT is not good economic theory, and the whole job of economists is to make good economic theory.
Incidentally, those "new solutions" of MMT, in the measure that they depart from orthodox counter cyclical fiscal policy, will "expand debate towards making the USA more and more like Argentina!
If the American people really wish for eternal free money, regardless of consequences, you will ruin your economy with or without theorical backing.
In the end, I'm not even an American, so I only hope that the subsequent crises doesn't reach us here on the South.
I'm glad that you've decided to engage this highly interesting topic. Larry Summers has a very solipsistic classically orthodox view of the modern world that went unchallenged for far too long. This was not only the case in economic or monetary theory.
Summers forgets that Bretton Woods itself was once a radical idea when it was first proposed as capitalist economies and world central banks departed the Gold and Silver standards of the 19th and early-to-mid 20th centuries. Now that we are entering the age of CBDCs, driven by China's Belt and Road Initiative (BRI) in the developing world that is winning hearts and minds (and political allegiance) around the globe, while we solipsistic westerners continue to enforce unsustainable orthodoxies as we abuse the US Dollar's status as a fiat currency that effectively debases other currencies as it distorts free markets through manipulation of ad hoc benchmarks like LIBOR over real effective and secular rates.
The world is changing because change is inevitable, and MMT is an evolving construct that endangers a system Summers only understands and embraces because he helped build it, not because it is inherently stable or serves the multilateral world economy fairly and transparently. He and Anna Stansbury reject Kalecki and Minsky's "Old Keynesianism", but embrace the distorted markets spawned by QE bailouts and short-sighted Interest rate manipulation.
Both Brussels and Beijing's evolving Sino (post-soviet) Russian alliances and economic bullying have signaled a willingness to embrace CBDCs (but not crypto blockchains) more than the Fed has. The Euro and Renminbi are becoming increasingly popular with the world's emerging economies because the Dollar became so obviously and corruptibly self-serving that the US Central bank no longer has the credibility and status it once did after WWI and II.
The world now embraces post-Keynesian (PKE) ideas about free markets that frighten hidebound intellectuals like Summers who failed to see the growth of monetary policy that was a product of brazen market manipulation by his hypocritical embrace of risky consumer investment "miracle" products like CDOs and the related Derivatives that ultimately caused the 2008 meltdown..
thanks for this note. Very interesting. Agreed that much of Summers' viewpoint is tied to a past that is receding quickly.
It would be interesting to examine why someone like Summers still has credibility--what are the mechanisms by which he stays on the list of people who media and policy- and opinion-makers consult and give air time to.
I'm not going to try to defend Larry Summers. He has many reasons for attacking others' ideas: often disconnected from their intellectual merits. But a defense of MMT on the grounds that Larry Summers dislikes it is just the old ad hominem attack run backward. Few economists think that MMT is little more than warmed-over Keynesianism. It is very hard to say something in MMT-ese that one cannot easily say in ordinary Keynes-talk. So why the new lingo, except to obfuscate? Opponents of MMT think it has something to do with proponents' taxophobia.
Perhaps he is trying to stifle MMT because it is not a good Economic Theory, and should not be seen by the world as "real economics".
For a normal people, it makes no difference to justify the American Rescue Plan through very orthodox counter cyclical fiscal policy (as many Twitter economists did, but not Summers) or through the heterodox MMT.
But for economists, it matters.
Most trained economists are taught to separate clearly economic theory (Positive Economics) from their political positions (Normative Economics).
Since MMT proponents refuse to compete in the same grounds as other theories -by writing down a model of how the economy works-, and those who have wrote it down find it lacking, then it can NOT be positive econonics
If, as you say, MMT it is "serving the same role of agitating for new solutions and expanding policy debate" then it MUST stop calling itself an economic theory and begin calling itself something like JPMM (Just Print Money Movement)
So that's your answer: Because MMT is not good economic theory, and the whole job of economists is to make good economic theory.
Incidentally, those "new solutions" of MMT, in the measure that they depart from orthodox counter cyclical fiscal policy, will "expand debate towards making the USA more and more like Argentina!
If the American people really wish for eternal free money, regardless of consequences, you will ruin your economy with or without theorical backing.
In the end, I'm not even an American, so I only hope that the subsequent crises doesn't reach us here on the South.