The details of the “invalid opinion” chosen to illustrate your case are particularly ironic. All central banks in the world monetize government debt – instantly, unconditionally and without discretion – in defense of their overnight rate target. (Except the ECBuBa, which is why the Eurozone is going down the toilet right now.) The point of QE is not monetization (which happens anyway), it is to fix the long-maturity end of the yield curve – in other words, to conduct interest rate policy on a broader band of maturities than just the overnight rate. And to couch this long-maturity interest rate intervention in a language that will not send “sound money” quacks (and other apologists for giving free money to lazy rich people) into an apoplectic hissy fit.

You then object that inflation is simply a tax on lazy money and a (smaller) subsidy to working money, and the same tax and subsidy scheme could be implemented by the inland revenue office. To which I would respond: Whatever happened to your desire for cost-efficiency? A full Gesellian tax, recapitulating the distributional consequences of a higher inflation target and depreciated exchange rate (which distributional consequences are, of course, a valid policy objective for the Green Party) would be exceedingly expensive and onerous to implement, and the really large holdings of lazy money will find a way to dodge it. Inflation will do the same work without having to spend a single bureaucrat-hour collecting and disbursing funds, without having to spend a single lawyer-hour wrangling with spoiled, wealthy brats with entitlement issues, and without having a single unit of currency sitting untaxed in a Swiss bank account.

– Jake

“If we think it isn’t, we are essentially saying the RBNZ is failing its current mandate”

Not necessarily. It’s also possible that the mandate is wrong. Inflation the only target, interest rate the only tool, the RBNZ is pretty much the sole survivor of the Austrian school (Germany is trying to hold the ECB to this, and it’s exacerbating the train wreck). I don’t think anyone wants to go back to the Muldoon era : an independent central bank is fundamentally a good idea : but yeah, it’s time to re-examine its mandate.

I don’t have a “conspiracy theorist view of economists”, there is a large range of views among economists about the issues we have been discussing. I daresay some of the better-known ones would disagree with your view that “monetary conditions are appropriate” in NZ, and that all is for the best in the best of all possible worlds (literary version of “we don’t know how lucky we are”). For example : Paul Krugman, Martin Wolf, Joe Stiglitz are some of the economists I respect.

When one narrow school claims to hold the absolute truth, and attempts to disqualify any opinion which differs from their orthodoxy, then the problem is not a conspiracy theory in the eye of the observer.

I have plenty of respect for economists, but the implicit idea that you are defending (and the subject of James’s post)– that it’s an exact science producing objective policy prescriptions that are above politics, that lay people, and politicians, should learn to respect — is completely out of order. You say : “you trust people who don’t follow the evidence and have vested interests” — good grief, if a political party’s policy is illegitimate for you because you claim they have “vested interests”, then why not just declare a dictatorship of the philosopher-economists and have done with this democracy crap?

 To return to the doctor analogy : If I visit three different doctors and they give me three radically different diagnoses of what’s wrong with me, and three radically different prescriptions to make me well, I’m entitled to ask what the heck is going on, and who I’m supposed to trust.

“You might not think much of economists”…
The problem in this thread is that “the economists” are assuming that people are attacking their expertise when in reality they are attacking their assumptions. Chill, guys.

 Hola,

“You lost me at “since monetary conditions are appropriate”.

This smells like argument from authority to me”

It is an argument based on the fact that forecasts of inflation and the output gap indicate that the time path of interest rates the RBNZ is saying it will follow (conditional on the forecast) is appropriate.

If we think it isn’t, we are essentially saying the RBNZ is failing its current mandate – this doesn’t seem like a fair assumption to start with.  And if it is, the key is to tell them this now – instead of taking monetary policy off them in the first instance 🙂

I note in the rest of the comment you turn around and assume RBNZ failure, and state that its fine for the Greens to turn around and say this.

So let me get this straight, you trust MPs with the Greens about the economy more than economists and the RBNZ – you trust people who don’t follow the evidence and have vested interests against people who research these issues their whole life and have written a contract to do their best to improve outcomes.

At least you are transparent about this – but I’ll have to heartly disagree 🙂

“I think they’ve got you rattled because they are questioning a cozy
framework that you are comfortable with. Don’t worry, it happens to
medical professionals too. Sometimes the questioners turn out to be
right; but you can be sure that the docs will try to disqualify them by
argument from authority.”

No I got “rattled” because you obviously have a conspiracy theorist view of economists, and have no interest in trying to follow what they are actually doing and why.  As a result, I found your comments to be arrogant and insulting – but I gave you the credit of the doubt in stating that you probably didn’t mean them in the way they came across 🙂

You might not think much of economists, but to be fair they do a lot of work and spend a lot of time looking at evidence – I’m surprised that in turn their discussion of policy is treated as no more than a passing opinion based purely on their self-interest.  However, I shouldn’t be – economic issues are viewed inherently in political terms, so this is the way of the world.

 You lost me at “since monetary conditions are appropriate”.

This smells like argument from authority to me. i.e. both you and James are expressly implying that Russel Norman’s opinions, expressed as Green party policy, are invalid, because he simply doesn’t understand monetary “science”.

In the other thread, it turns out that you are open to the idea that there are differences of opinion about the output gap, and appropriate interest rates, and what a desirable exchange rate might be, and why the exchange rate is at its current level, and what monetary and fiscal measures might be used to modify it, and whether debt should be monetized, and whether the RB is fit for purpose, and what the purpose of the RB is anyway. And since these questions are eminently political, and the Greens are a political party, then they are entirely legitimate in proposing action on all these issues.

Again, in the other thread, you point out that the GP’s policy would interfere with RB independence, then arbitrarily decide that they can’t possibly have intended this because it’s sacred, therefore deciding that the question can be reduced to purely fiscal terms and that the Greens are incompetent on questions of monetary policy.

I think they’ve got you rattled because they are questioning a cozy framework that you are comfortable with. Don’t worry, it happens to medical professionals too. Sometimes the questioners turn out to be right; but you can be sure that the docs will try to disqualify them by argument from authority.

I think the safest statement is that other disciplines usually mess up when they try to say things about economics, but that economists typically bring light and rigour to disciplines that are methodologically foundering. 

argumentum a rectum?

 Matt’s very generous. To me, this looks like a classic ‘argument without authority’ where you don’t state your assumptions or even make logical connections between concepts. There isn’t even an appeal to authority, just a few randomly chosen accusations and insults plucked out of the ether.

Huh?  I clearly separate what this type of monetization of debt means into its two channels – monetary policy and fiscal policy.  I then state that since monetary conditions are appropriate, we can think of it solely through the idea of fiscal policy.

I then discuss why its more transparent to then do the fiscal tax directly instead of doing it implicitly through the central bank.  This may come as a surprise to you, but economists have studied these issues for hundreds of years – and I’m simply using basic ideas from monetary and public finance economics to discuss what the policy meant.  I didn’t realise that you asked the doctor to explain the full biomechanic explanation for why things are happening before you would ever listen to them – and given that you wouldn’t understand it (unless you yourself are a doctor) such a request may be a bit unfair.What you are saying about economists here is insulting – but not because you are trying to be rude.  It just betrays a complete lack of understanding about what economists do and their motivation.  We aren’t about “blood-letting and leeches” – FFS, we support having a monopoly central bank that leans against economic cycles with fiat money, we support having a state that accounts for nearly half of economic activity, we’ve argued in depth for a minimum income in society.  

But yet we are still hated because we “admit there are trade-offs and publicly state them” instead of letting people run around thinking they can get lots of free things. 

As a side-note, James’s post is explicitly written too economists saying we need to listen to criticism more – not a post blaming the media for any communication issues.  Perhaps if you had finished reading the post you would have been able to stop yourself making these comments.

This may be “the media”‘s fault, but there is a perception of economists arguing from authority without stating their assumptions.

I find it mildly amusing that you link to Matt Nolan’s remarks on Russel Norman’s proposals on monetizing debt, as an illustration, we are led to suppose, of an “invalid opinion”. I say this because I don’t see much of a rebuttal there, more of an argument from authority.