The Piltdown Man hoax, a faked ‘missing link’ between humans and apes, escaped exposure for 41 years.
hrenology had a similar run of credibility, even some widely respected scientists thought the contours of a person’s cranium could be ‘read’ for what it said about intelligence and character.
Lysenkoism was around long enough that – to his eternal disgrace – the proponent of that bizarre theory of plant heritability had his name attached to it.
Blatant ‘bogusity’ is no guarantee that a preposterous idea will die quickly.
These days, transparent nonsense can be shielded by tribalism or the groupthink of ‘elite’ opinion. If a notion is convenient enough in justifying a preferred outcome, it can survive despite mountains of evidentiary, or just common sense, refutation. Think of imaginary stolen elections, or defunding police in an era of exploding crime.
One recent bit of hogwash appeared to have expired quickly. A concept dubbed Modern Monetary Theory (MMT) enjoyed a brief run of massive publicity a few years ago when an academic trying to popularise it was, for a time, taken seriously in suggesting the modern equivalent of alchemy.
The suggestion was that a government could borrow unlimited amounts of money in its own currency and repay it without risk simply by printing more of that currency. There was nothing modern about a government spending wildly beyond its means and searching for an easy way out.
In 1455, Henry VI granted patents to those pursuing alchemy for the purpose of “enabling of the king to pay all the debts of the crown in real gold and silver”. ‘Medieval Monetary Theory’ would have been a more apt label for the recent version of Henry’s fantasy.
And yet for those whose zeal for bigger government spending was not sated by the trillions already on or headed for the government’s books, MMT offered a fig leaf of validity.
It came under George Orwell’s familiar heading of “an idea so absurd that only an intellectual could believe it” – and the theory probably only attracted any attention at all because the academic in question was associated with a presidential campaign.
MMT died a quicker death than its predecessors in quackery, or so it seemed.
First, a host of intellectuals, of all persuasions, did not buy it, and said so.
A survey of economists by the University of Chicago’s Booth School of Business found zero in agreement, and nearly three-quarters strongly disagreeing with the theory’s basic assertion.
Many of the earliest and most emphatic critics were especially credible because their policy preferences were not hostile to more expensive, more interventionist government.
Prominent economists, such as Larry H Summers and Paul Krugman, were quick to dismantle and dismiss the MMT notion.
Summers, likening MMT to the more extreme version of supply-side economics, labelled it a “fallacious” product of “fringe economists” that would lead directly to inflation or even hyperinflation. Krugman, attacking MMT more than once, has called it “indefensible” and “the cryptocurrency of macroeconomics”.
The same points made by limited-government advocates or debt-fretters such as my colleagues at the Washington DC-based Committee for a Responsible Federal Budget might have been ignored as familiar and predictable – but when even the likes of America’s Progressive Policy Institute chimed in, the last rites for MMT had been performed.
Or at least they had in intellectual terms. But it’s hard to tell from the US federal government’s continuing behaviour.
MMT’s academic cover might have been blown – but that has not slowed the unprecedented torrent of spending of borrowed dollars gushing out of Washington. Each recent administration has outdone its predecessor for profligacy, but records are made to be broken and the current regime seems determined to break them.
Collectively, Washington’s actions over the past couple of years have taken US national debt beyond $30tn, and driven inflation to multidecade highs. The Federal Reserve Bank of San Francisco calculated that the ‘stimulus’ bills of the pandemic period added about three percentage points to the current price rise – just as Summers predicted it would.
Unfazed, the federal government belched forth yet another 12-digit spending bill earlier this year, this time with the chutzpah to label it “inflation reduction”. The MMT theory might be dead, but its zombie lives on.
