I’ve entitled this episode of Cantillon Effects, ‘Duck Hunting’, not because I have any sudden urge to blast waterfowl out of the sky, but because a number of economic canards clearly need shooting down before they can find a safe place to roost in the general consciousness and there begin to breed even more confusion than already exists. [To listen instead to my podcast on this, please go to CantillonCH at SoundCloud, or search Apple Podcasts and Spotify for ‘Cantillon Effects’]

First of all, it’s time to take another pop at MMT – so-called Modern Monetary Theory – a logically and practically unsound conflation of half-truths, tautologies, and pseudo-originality that is well on its way to becoming another Hashtag: Cult of the Day.

A mark of this was a recent tweet we saw in which some poor ingénue  – who had obviously stumbled onto yet another social media battleground of inter-tribal warfare – plaintively asking: ‘Has anyone recently asked YOU to defend your criticism of MMT?’

Ironically enough, I had and, having pointed the True Believer making that demand at the several expositions I’d already given (some of them over a decade old), I was instantly dismissed as just a sniper, someone who could do no more than sneer at the gospel of his newest of New Gods and was promptly blocked for my sins. (O, the infamy! The infamy!).

Since time is short and errors manifold, let’s be as blunt as possible: MMT is just a hastily-repackaged programme calling for a state-led commandeering of resources and the wholesale conscription of labour. To invert Clausewitz’ famous dictum, it is a policy which is a continuation of warfare by other means – something its advocates effectively concede when they link it to their other current hobby-horse, the alleged need to ‘combat’ climate change.

Nor should you imagine that mass de-industrialization is the only grandiose project of bien pensanterie whose realization under the auspices of MMT is being loosely advanced as both an enticement to new followers and as a cudgel with which to beat us disbelievers into acquiescence.

Oh, no! We are promised by the MMTers – the Double-Emptiers, to use an alternative rendering neatly suggestive of the essential vacuity of their schema – not just a Parthenon; not just a Taj Mahal or Hoover Dam; not even ‘just’ a Green New Deal and its prospect of ‘planetary’ salvation, but nothing less an end to all the social evils – both real and imaginary – which occupy the thoughts and disturb the sleep of your typical Humanities student and Brooklyn coffee-shop waitress, both.

Mises used to deride Keynes’ not entirely dissimilar delusion that prosperity issues directly from the printing press as a belief in making ‘bread out of stones’ – a temptation whose attempt a Christ starving in the Wilderness sagely resisted, but which seems utterly beyond the capacity of the political classes ever to forego.

But the Double-Emptiers go far beyond even Keynes’ wishfulness, by espousing what is a sweeping, de facto nationalization – a seizure of the means of production, as our Classical Marxist friends would say. It is a closet series of Five-Year Plans to be carried out by counterfeiting. It is an elevation of the state and an enshrining of the many pitfalls mapped out in what is called ‘Pubic Choice’ theory – that eminently reasonable body of work which simply says that Men do not miraculously become Angels once elected to public office or employed by those who are.

It also fundamentally confuses two entirely separate, if generally overlapping, concepts: those of ‘finance’ and ‘funding’.

The former – as everyone from a late Roman Emperor to Henry VIII, from Charles Ponzi to Bernie Madoff, from Rudolf Havenstein to Gideon Gono and Nicolas Maduro could confirm – is simply a means of offering a notional promise to pay, no matter how fraudulently constituted – and so incapable of being fully honoured – that promise might be.

Funding, by contrast, entails the allocation of the real resources needed to see one’s project through to its envisaged conclusion. Far more than just waving specially-printed oblongs of paper around, this involves the direct or indirect sacrifice  – the opportunity cost, as economists say – of therefore not being able to employ the same means for other, more instantly pleasurable purposes.

Again to echo Mises, in making such crass mistakes, MMT exposes itself a doctrine only fit for that satirical Mediaeval garden of earthly delights, of dreamy idleness, of endless cakes and copious ale, the Land of Cockaigne or – in the more earthy German usage, Schlaraffenland – Lazy Ape Country.

A couple of years ago, I started an article with the following observation:

“Perhaps the first great lesson of economics, as emphasized by Henry Hazlitt, is that there is no free lunch. The second, courtesy of Frederic Bastiat, is that if it sometimes appears that there is one, it means that we simply have not looked deeply enough into the consequences of our attempt to enjoy it. The third, the joint insight of several generations of Austrians, is that the attempt to buy one for ourselves by resort to monetary manipulation is eventually doomed to fail. A cynic might say that the fourth and final lesson is that no-one ever wishes to abide by the strictures inherent in the first three rules.”

MMT either ignores or willingly flouts all four of these rules and so the sooner those currently infatuated with its meretricious ‘daring’ realise that fact – and so consign it to the intellectual oblivion it deserves – the better.

But if MMT is a merely a nest of  misconceptions enjoying a current vogue, one of the hoarier mistakes – that a thoroughly capricious and monofunctional creature called a ‘Consumer’ is what drives the economy – has again popped up in all manner of guises.

For example, the mighty Jim O’Neill declared roundly on CNBC a week or so back that the ‘single most important thing in the world economy is the Chinese consumer slowing down’ while that well known US opinionator, Josh Brown, has been pushing a chart purporting to show that it is the American one who is still the predominant factor, accounting for, by his somewhat dubious reckoning, one-sixth of world GDP.

Now, like all such expressions of what passes for common wisdom, there is a glimmer of truth to these pronouncements. But they are also profoundly misleading in their conception and so conducive both to bad economic reasoning and worse-targeted intervention.

To see this, you only have to realize that a man shipwrecked on a desert island – whether Robinson Crusoe or Tom Hanks’ character –  is a ‘consumer’ in waiting. He must, as a bare minimum for his own survival, ‘consume’ food, water, and shelter.

But how does he get them? How does he obtain such basics? Primarily through his own productive labour. Even if that labour involves no more than beating a path to the nearest spring water, shinning up a palm tree to harvest coconuts, or gathering up a pile of dry leaves out of which to make his bed, he must labour before he consumes.

And how does he then increase the quantity of consumables his labour will yield? By setting aside time, effort and resources from immediate satisfaction – i.e., from end-consumption!

He might take time to shape an empty gourd into a water bottle, so he does not have to limit himself to ranging only a few hour’s walk from the well when he goes foraging. He might fashion vines and shoots into a kind of extendable net so he no longer has to spend time – as well as risk life and limb – climbing sheer trunks for his dinner.

When Man Friday later washes up on the beach, the same argument applies to him though now, if they are both astute, our castaways will quickly decide how to share different tasks between them in order to maximise their joint efficiency, having first come to some agreement about how each man’s particular contribution will be rewarded out of the bounty they derive from the wilderness around them. What we are saying here is that they will divide their work, specialize in their roles, and then exchange the proceeds.

It is therefore his actions as a producer, as a generator of capital (Robinson’s gourds and nets), and also as an exchanger – a trader in the widest sense of the word – that determine a man’s standard of living, not his consumption, per se. What that latter urge does is to direct and prioritise a man’s productive efforts: it does not somehow precede them, either temporally or logically.

To believe otherwise is to espouse a Cargo Cult school of economics which loses sight of the origins of the goods to be consumed. Worse, it is an economics of Aladdin’s Lamp – a belief that we only have to want something badly enough for it suddenly to appear, for the trifling cost of giving our fortuitously captive Genie’s container a quick, monetary polish.

So macromancers, come on, stop putting ‘the Keynesian cart before the Hayekian Horse’ and turn your focus to the real issue of the day which is: how can we better signal to one another the scale and composition of our individual needs, both today and through time, so that I can furnish you with what you want and you, me with what I desire, on a date, at a place, and in a proportion which is to our mutual satisfaction. How, also, can we do so in a manner which does not either degrade our capacity to repeat the process as needed or blind us to any changes in the intensity and constitution of what it is that we each want out of our interaction.

It may not make for an easily Tweeted platitude or a pseudo-profound TV soundbite, but that does not alter the fact that the ‘single most important thing in the world’ – as has long been the case – is how best can we unscramble the signals and clear away the most impediments to trade so that what we produce and when is in greater harmony, not just with what others desire to acquire, but with the means at our disposal with which to satisfy them.

The answer – simple to enunciate, exceedingly difficult to enact – will lie in making the price of both goods and capital more reflective of their relative demand and their ordinal priority – their scheduling – and then allowing free and unhindered exchange to take place between as many people as wish to participate in it, irrespective of the fact that those arbitrary cartographical divisions called ‘borders’ might separate them when they do..

It is a sobering thought on which to conclude that most of what today passes for public policy – and nearly all of the supposed remedies routinely proposed or endorsed by such luminaries as Messrs Brown and O’Neill –  are either wholly irrelevant or plainly inimical to our hopes of achieving any measure of progress in this regard.

Quack! Quack! Bang! Bang!