The Economics of Fairy Tales: A Critique of MMT Misrepresentation
Ever stumbled upon a book that left you questioning not just its content, but the very decision to publish it? That’s exactly how I felt after reading If You Can Just Print Money, Why Do I Pay Taxes? by Emmanuel Maggiori. Billed as a debunking of Modern Monetary Theory (MMT), it’s less of a critique and more of a masterclass in misunderstanding. Let’s dive into why this book is more fairy tale than factual analysis.
The Straw Man of MMT
One thing that immediately stands out is the author’s bizarre portrayal of MMT. Personally, I think the biggest flaw here is the creation of a straw man argument. Maggiori doesn’t engage with MMT as it actually exists; instead, he constructs a caricature of it. For instance, he claims MMT argues that governments can print money without consequence—a gross oversimplification. What many people don’t realize is that MMT outlines specific conditions under which money creation is feasible, tied to real-world constraints like labor, resources, and climate change. Ignoring these nuances is like critiquing a map for not being the territory.
The Fantasy of Economic Reality
What makes this particularly fascinating is Maggiori’s inversion of reality. He presents a ‘real world’ where governments operate like households, constrained by arbitrary rules. But here’s the kicker: this ‘real world’ is itself a fantasy. Governments are not households, and central banks are not independent entities floating in a vacuum. Take the UK, for example. The Bank of England’s operations are deeply intertwined with the Treasury, as evidenced by the Exchequer and Audit Departments Act 1866. The idea that central banks are completely independent is not just wrong—it’s a myth perpetuated by those who prefer economic dogma over empirical reality.
The Missing Pieces of the Puzzle
A detail that I find especially interesting is what the book omits. Maggiori fails to explain how money is created, destroyed, or managed. He doesn’t touch on the role of commercial banks, double-entry bookkeeping, or sectoral balances. It’s like writing a cookbook without mentioning ingredients. This isn’t just a gap in knowledge; it’s a deliberate avoidance of the mechanisms that make MMT a coherent framework. If you take a step back and think about it, this omission undermines the entire premise of the book.
The Neoliberal Underpinnings
What this really suggests is that Maggiori’s critique is less about MMT and more about defending neoliberal economic assumptions. He clings to outdated ideas like the gold standard and the quantity theory of money, even though these have been largely discredited. In my opinion, this isn’t just a misunderstanding of MMT—it’s a refusal to acknowledge the evolution of economic thought. The book reads like a relic from the 20th century, oblivious to the complexities of modern finance.
The Irony of the Real World
Here’s the irony: as Maggiori progresses, he inadvertently confirms key tenets of MMT. He acknowledges that governments can create money without necessarily causing inflation and that central banks coordinate with governments. These admissions are buried in his critique, but they’re impossible to ignore. It’s as if the real world is stubbornly refusing to conform to his fantasy.
Why This Matters
This raises a deeper question: why does a book like this get published? Is it a reflection of the state of economic discourse, where ideology trumps analysis? Or is it a symptom of a publishing industry that prioritizes sensationalism over substance? Personally, I think it’s a bit of both. The book’s lack of academic rigor is staggering, and its publication by a reputable publisher like Wiley is baffling.
Final Thoughts
In the end, If You Can Just Print Money, Why Do I Pay Taxes? is less a critique of MMT and more a critique of itself. It’s a reminder that in economics, as in life, the line between reality and fantasy is often blurred. If you’re looking for a thoughtful analysis of MMT, this isn’t it. But if you want a case study in how not to write about economics, it’s a perfect example. Save your time and money—there are far better ways to understand the complexities of modern monetary systems.
