|
Badger of Basra posted:If I'm understanding correctly, if it was decided that the federal government would run on MMT terms there would be no bonds. They'd "print" a bunch of money through the Federal Reserve to pay off existing debt (all at once? unclear if this would just generate huge inflation) then not issue anymore. New deficit spending would be paid for through money printing. This is already how it works. The govt issues treasuries to pay for spending and the Fed can buy those up as it sees fit with money from thin air to inject or remove money from the economy. https://www.youtube.com/watch?v=DGZ7nJCzlW4 Moridin920 fucked around with this message at 01:36 on Jan 26, 2019 |
#
?
Jan 26, 2019 01:30
|
|
|
|
| # ? Apr 19, 2024 10:22 |
|
|
Owlofcreamcheese posted:Yeah, I get the conceptual idea that the money you pay in tax and the money the government spends isn't the same money, but the idea they actually physically go out of their way to physically destroy the currency if you pay in cash seems really silly and doesn't sound like it'd be a thing. Like, if your tax bill was $57.26 do they have to bring out the smelter to make sure to melt the quarter and penny down? Probably not. That could be wrong. That was just what one of the founders of MMT says Though that does beg the question is if the IRS did get cash, what would they do with it?
|
|
#
?
Jan 26, 2019 01:37
|
|
|
Herewaard posted:Just a note about why Dollars have value since it's been mentioned a few times already. More precisely, USD is worth what the guy holding a gun to your head says it's worth. Of course, political leaders don't tend to hold guns, so it's worth as much as the guy being payed to hold a gun thinks it's worth. And if he decides it's worthless, very little keeps him from flipping his aim.
|
|
#
?
Jan 26, 2019 02:42
|
|
|
theblackw0lf posted:That could be wrong. That was just what one of the founders of MMT says The IRS does accept cash, I'm sure they just put it in a bank account and it goes in the same system cash from any other organization goes through.
|
|
#
?
Jan 26, 2019 04:07
|
|
|
theblackw0lf posted:If all this is true, it has massive ramifications for our debates, because this discussion of how we “pay for” programs is essentially irrelevant, at least from an economic perspective. A better question is, how do we ensure that what we want to spend doesn’t create high inflation? This also means that, and one reason I've become so enthused about it, that there’s little reason, economically speaking, why we can’t have an extremely generous M4A program, free college, GND, etc.. We can create ambitious programs, and not tie ourselves into knots figuring out how we’re going to pay for all of it. In fact it was learning about MMT that led me to embrace Bernie's generous M4A program. And given the current crisis we are in, especially regarding climate change, MMT is becoming popular at just the right time to help us address the urgent situation we're in. I get that deficits don't matter in that the US Government doesn't have a finite supply of dollars it can run out of, but I think a majority of people both inside government and out understood that (although some Republicans pretended otherwise when Dems were in power.) Under MMT, government spending is still constrained by the need to avoid high inflation, so the government can't run huge deficits year over year by spending past that limit, since its creditors want to get paid evertually... which would require printing more money past that limit. Pay-as-you go programs are premised on a false idea, yes, but you have to impose fiscal discipline on congress somehow. Given that voters want low taxes, high services, and cuts only to foreign aid, allowing representatives to fund specific programs by contributing to a collective risk of future inflation would have... predictable results.
|
|
#
?
Jan 26, 2019 18:44
|
|
|
Dead Reckoning posted:Can you explain this part to me? Because I don't really understand it. Not to mention that the entire point of fully funding these bills is to avoid annular appropriations where the funding can just be zeroed out effectively eliminating M4A?
|
|
#
?
Jan 26, 2019 18:50
|
|
|
karthun posted:Not to mention that the entire point of fully funding these bills is to avoid annular appropriations where the funding can just be zeroed out effectively eliminating M4A? How do you "fully fund" socialized healthcare for the entire country forever without it being part of the annual budget? Like isn't it necessarily an ongoing expense subject to modification by subsequent budgets? And necessarily so because obviously the cost is likely to increase with the population and over time as more conditions become treatable and the population subsequently gets older and requires more medical care to sustain? OwlFancier fucked around with this message at 19:15 on Jan 26, 2019 |
|
#
?
Jan 26, 2019 19:07
|
|
|
OwlFancier posted:How do you "fully fund" socialized healthcare for the entire country forever without it being part of the annual budget? You fully fund it by increasing the dedicated FICA taxes to the Medicare trust funds. And you can structure those taxes to not only be progressive in nature but to be reactive to the needs of future medical costs.
|
|
#
?
Jan 26, 2019 19:59
|
|
|
Is that... not equally susceptible to manipulation by hostile governments? If there's one thing the republicans like doing it's cutting taxes, obviously. I mean I guess it's not a bad thing to try to do but I'm not sure there is a way to credible write "permanent good healthcare" into law and not have it be easily breakable by a government so inclined to doing it. Your insurance against that is popular support for the program which is achieved largely by creating universal dependence on it, so that it becomes politically impossible rather than legally difficult. OwlFancier fucked around with this message at 20:29 on Jan 26, 2019 |
|
#
?
Jan 26, 2019 20:26
|
|
Dead Reckoning posted:Can you explain this part to me? Because I don't really understand it. What's the limit? Are we close to it? How much room do we have? You assume implementing some selection of policy goals plus payment on debts would necessarily overrun the limit. Further, if inflation is becoming a problem because of the money flowing out of the government, the government could always do some combination of increase taxes or decrease spending. Mechanically speaking, I'm not seeing an issue. The government would also stop issuing debt, so debt payments would not climb indefinitely. The government doesn't need to issue debt to bring money into existence. That's not to say it couldn't choose to do so as a policy choice, though. The fiscal discipline comes from looking at the overall state of the economy and making a genuine evaluation of whether things like taxes or government spending should be changed. Yes, elected officials or the public could choose to not implement identifiable solutions to identifiable problems. That's not a new risk. People have been making dumb decisions for ages. OwlFancier posted:I mean I guess it's not a bad thing to try to do but I'm not sure there is a way to credible write "permanent good healthcare" into law and not have it be easily breakable by a government so inclined to doing it. Your insurance against that is popular support for the program which is achieved largely by creating universal dependence on it, so that it becomes politically impossible rather than legally difficult. I think the gist of the argument is it's politically easier to not appropriate funds for a program (or appropriate fewer funds) than it is to actively pass a bill modifying a tax for that same program. The latter gets headlines like "Senator so-and-so introduced a bill to kill <program> today." This is a political issue, though, not a mechanical one.
|
|
|
#
?
Jan 26, 2019 21:28
|
|
|
OwlFancier posted:Is that... not equally susceptible to manipulation by hostile governments? The permanent funding method is how Medicare A and B are funded and I think that's pretty drat close to permanent good healthcare. And in regards to making it politically impossible rather than legally difficult how about we do both? I see no reason why we can not fully fund M4A on the backs of the top 5% and send a $100 Medicare for All refund check at the start of every fiscal year on Nov 1st. I'm not opposed to using naked bribes to get what I want.
|
|
#
?
Jan 26, 2019 21:28
|
|
|
There is the question as to whether not simply wholly rejecting the argument of "we need to be careful about paying for things" is an obstacle to getting the programs in place to begin with. If people buy into the tax and spend idea of monetary policy they become susceptible to other forms of attack on national spending such as "we need to balance the budget" or the perennial favourite: "the national budget is like a credit card". Convincing people that the government works just like they do is a major underpinning of quite a lot of reactionary economics and it would be valuable, I think, to break that idea.
|
|
#
?
Jan 26, 2019 21:34
|
|
|
Dead Reckoning posted:Under MMT, government spending is still constrained by the need to avoid high inflation, so the government can't run huge deficits year over year by spending past that limit, since its creditors want to get paid evertually... which would require printing more money past that limit. If you create the money, there are no creditors for those funds, so there is no "deficit" spending. The policy question is "will the value of the services / infrastructure / whatever we create with the money we create offset the inflationary pressure of creating it." Which is why "create a million dollars for everyone and just give it to them" is a bad idea, but something like "create enough money to build wind & solar farms and power storage facilities for that energy" could be a good idea (or at least "not bad").
|
|
#
?
Jan 26, 2019 21:36
|
|
|
Replace all currency wit teef  e: to actually contribute, what effect would self destructing money have? Say a dollar that was only good for five years? Triskelli fucked around with this message at 01:39 on Jan 27, 2019 |
|
#
?
Jan 27, 2019 01:30
|
|
|
LuciferMorningstar posted:What's the limit? Are we close to it? How much room do we have? You assume implementing some selection of policy goals plus payment on debts would necessarily overrun the limit. Further, if inflation is becoming a problem because of the money flowing out of the government, the government could always do some combination of increase taxes or decrease spending. Mechanically speaking, I'm not seeing an issue. I think the problem I politically speaking it is always advantageous to kick the can down the road instead of imposing austerity (in the form of higher taxes or lower spending). Not that this doesn't happen already, but I don't think it's a massive leap to think that under an enthusiastic MMT policy regime that the temptation to just print money and let someone else worry about it in a few years would be nearly impossible to resist for politicians who, as all politicians tend to do, care only about winning the next election. This is sort of what I was getting at a page ago. Even if MMT is theoretically sound, that doesn't ergo make it a good guide to policy, since in the real world you have to account for, well, real people and their motivations.
|
|
#
?
Jan 27, 2019 03:13
|
|
|
Triskelli posted:Replace all currency wit teef New money would be more valuable than old money. There would be a market where you could buy new money with your old bills but your 2019 dollar would cost the 2015 dollar plus inflation over the intervening period. Whoever is operating this market would probably charge a fee and thus someone would be siphoning money off of anyone wishing to save.
|
|
#
?
Jan 27, 2019 03:16
|
|
|
I have some observations about the Production Possibility Curve, and how it relates to the idea of MMT. My expertise in this matter is taking Econ 101 at a community college over 20 years ago, so feel free to point out that this is very oversimplified. The Production Possibility Curve is the amount of a product you can get out of a resource, however that is defined, either through money, labor, or a physical material. A very basic example is that if I have 100 units of grapes, I can have 100 units of grapes and 0 units of grape juice, 0 units of grapes and 100 units of grape juice, or somewhere inbetween. Only, of course, for most things, you don't have a linear relationship between the products being produced. At the time that the foundations of economics were being developed, the physical infrastructure and the labor market were much more malleable than they are now (I believe so, I am kind of guessing at what the 18th century was like). If demand fluctuated in the economy, it was possible to fairly quickly change resources, as well as between the government and the private sector. If a business wanted to go from making bread to making candles, it was a pretty linear change along the production possibility curve, as far as the physical infrastructure, and the labor skills needed. The same with government employment, which at the time was often the military: the shift between farmers and soliders, and back to farmers, was a pretty linear process. Now, "Swords Into Ploughshares" is a metaphor. The idea of turning, say, an AR-15 into a John Deere tractor seems pretty ludicrous. But in the 1750s or so, it wasn't a metaphor: a blacksmith might make weapons, or farming equipment, with about the same level of skill. So here is something about the current economy that is relevant to the entire idea of the government paying for gigantic programs without taking resources from other sectors, or on the other hand, releasing resources by ending programs. And why this doesn't really work, in my view, in the way that socialists or libertarians want it to. Take NASA for example. It is a big government program. What would happen if the government doubled NASAs budget? Well, doubling it might allow NASA to produce more, as it could buy more of certain types of supplies (like computers and fuel and titanium) that are ready commodities. NASA could also hire engineers out of retirement, from the private sector, maybe from other countries. But then as the budget increases by higher factors, tripling or quadrupling, the gains get smaller. Because the limiting factor on NASA isn't nominal money, it is that the things it wants to purchase (which is primarily very specialized labor) is a limited resource. There are only so many astrophysicists and materials engineers and legacy FORTRAN programmers available. So as the budget increases past a certain point, it doesn't do anything (immediately). Now let's take the opposite example, the libertarian wet dream, NASA is decided to be a wasteful government program, it is totally discontinued, and all of the money associated with it is released back into the private economy. and about 20 billion dollars, divided by 300 million people, is released back into the economy. Everyone gets 70 extra dollars! But those 70 extra dollars, if they are chasing the same amount of goods and services, don't allow you to get more of anything in real terms. They only would be worth something if those NASA engineers are now producing something else. And here is the thing: as good as they are at building interstellar probes, NASA personnel don't really have a lot of skills at anything else. Okay, obviously some of them might go to work for Boeing and build planes, some might work as computer designers, but on the whole, they have incredibly specific skills that are not going to be producing things elsewhere in the economy. So the problem, as I see it, with the theory that the government can arbitrarily create money is that they quickly run up against the fact that in a highly specialized economy, production works in a pretty tight band, and that it is hard, in the short term, to increase or decrease resources in different sectors by much. (This is a pretty long post already, so I won't say what I think would happen in the long term: if the government increases NASA's budget, it is going to encourage people to study science and engineering, and you are eventually going to have a real increase in production, but with specialized employment, that might have ten or more years lag time)
|
|
#
?
Jan 27, 2019 03:30
|
|
|
LuciferMorningstar posted:What's the limit? Are we close to it? How much room do we have? You assume implementing some selection of policy goals plus payment on debts would necessarily overrun the limit. Further, if inflation is becoming a problem because of the money flowing out of the government, the government could always do some combination of increase taxes or decrease spending. Mechanically speaking, I'm not seeing an issue. "The government can solve this problem of overspending by some combination of increase taxes or decrease[d] spending" is a solution that is already available to us, and yet our government refuses to take it, so I don't think "mechanics" are the problem. LuciferMorningstar posted:The government would also stop issuing debt, so debt payments would not climb indefinitely. The government doesn't need to issue debt to bring money into existence. That's not to say it couldn't choose to do so as a policy choice, though. LuciferMorningstar posted:The fiscal discipline comes from looking at the overall state of the economy and making a genuine evaluation of whether things like taxes or government spending should be changed. Yes, elected officials or the public could choose to not implement identifiable solutions to identifiable problems. That's not a new risk. People have been making dumb decisions for ages. The problem I see here is that our government is a collection of motivated self-promoters and not a philosopher-king. Under MMT, every representative can argue in favor of printing money for specific projects or tax cuts with their name attached to it, the downside being contributing to a collective future risk of inflation. The temptation to spend would be overwhelming, and motivation for fiscal discipline low. When inflation inevitably starts to heat up, and it comes time to decide how to increase taxes or decrease spending, how would our government be any more able to make that decision than it is today? All MMT seems to add is the risk that the govt will choose to keep printing money and hope inflation goes away on its own.
|
|
#
?
Jan 27, 2019 08:04
|
|
|
Dead Reckoning posted:Can you explain this part to me? Because I don't really understand it. It's not just that deficits don't matter, but that they're actively desirable. The sectoral balances framework in MMT illustrates that as an accounting identity the currency issuers deficit is equal to the private sector surplus (minus the trade deficit of the country in question). Portions of the Democratic party still push the idea that a government surplus is indicative of good governance, but as Stephanie Kelton puts it: quote:The private sector cannot survive in negative territory. It cannot go on, year after year, spending more than its income. It is not like the US government. It cannot support rising indebtedness in perpetuity. It is not a currency issuer. Eventually, something will give. And when it does, the private sector will retrench, the economy will contract, and the government's budget will move back into deficit. So deficit spending is a necessary component of fiat currency system, and the real question is what policy goals should the issuer have for its deficit spending. quote:Under MMT, government spending is still constrained by the need to avoid high inflation, so the government can't run huge deficits year over year by spending past that limit, since its creditors want to get paid evertually... which would require printing more money past that limit. Inflation is a relation between the size of the active money supply and the total goods and services available, and the major historical examples of runaway inflation are tied to major destruction of productive capacity or some other resource bottleneck. Given this, the goal of the government is to use it's deficit spending to ensure that the material development of the economy is sound. We're trained to be terrified of this perpetually impending hyperinflation and subsequently refuse to make investments in our infrastructure that would insulate us from the type of resource shocks that lead to actual hyperinflation. We had constant warnings of runaway inflation from the 2008 qualitative easing that never came close to materializing, and maybe it's time to recognize that these inflation fears are a gross exaggeration pushed by people with an agenda to encourage austerity politics in order to prevent governments from doing anything about the runaway wealth inequality that's gradually undermining both our economic development and the underlying social contract that stabilizes society as a whole. Phantasmal fucked around with this message at 08:34 on Jan 27, 2019 |
|
#
?
Jan 27, 2019 08:28
|
|
|
So if I'm understanding right the size of your deficit is basically the size of your economy? Or should track relatively closely? Because the deficit represents the liquid money supply, more or less?
|
|
#
?
Jan 27, 2019 14:53
|
|
|
What do the proponents of MMT think about the modern Japanese economy? IIRC they have maintained high deficits alongside very low unemployment and low inflation for the past two decades.
|
|
#
?
Jan 27, 2019 17:32
|
|
Dead Reckoning posted:The problem I see here is that our government is a collection of motivated self-promoters and not a philosopher-king. Under MMT, every representative can argue in favor of printing money for specific projects or tax cuts with their name attached to it, the downside being contributing to a collective future risk of inflation. The temptation to spend would be overwhelming, and motivation for fiscal discipline low. When inflation inevitably starts to heat up, and it comes time to decide how to increase taxes or decrease spending, how would our government be any more able to make that decision than it is today? All MMT seems to add is the risk that the govt will choose to keep printing money and hope inflation goes away on its own. Your whole post seems to be a lot of words to ask "What if leadership just makes bad decisions over and over and then bad things happen?" That's not a new risk. What if the President throws a fit and shuts down the government? What if leadership oversells the importance of paying off the national debt and drives the country into economic downturn? MMT proponents aren't denying there are risks, but I think you have to put some effort into explaining why harms are more likely under an MMT-friendly regime than what we're getting under the status quo. Squalid posted:What do the proponents of MMT think about the modern Japanese economy? IIRC they have maintained high deficits alongside very low unemployment and low inflation for the past two decades. I think I've seen two or three speakers use it as evidence what they're proposing is plausible.
|
|
|
#
?
Jan 27, 2019 17:57
|
|
|
I wish I could find a less dense writeup but http://bilbo.economicoutlook.net/blog/?p=32396 is still, I think, a good outline of the formulas underlying it.quote:First, we can measure the sources of spending that flow into the economy over a given period. Economists use the shorthand expression: I'm not 100% sure I would commit to saying that the deficit is the "size of your economy," but it's necessarily the offset for the private sector to express a net preference for savings. Apparently I don't know how to embed images anymore, but https://theweek.com/articles/625515/hillary-clinton-loves-trumpet-bills-budget-surplus-shouldnt has a picture that illustrates this dynamic. If you're more of a pivot to video person, there's also a pretty succinct explanation here: https://www.youtube.com/watch?v=zxDVRISfsls Squalid posted:What do the proponents of MMT think about the modern Japanese economy? IIRC they have maintained high deficits alongside very low unemployment and low inflation for the past two decades. I don't know if this helps answer your question directly, but http://bilbo.economicoutlook.net/blog/?p=3225 goes into Japan's recession in the 90s and http://bilbo.economicoutlook.net/blog/?p=20607 talks about some of the more recent developments in their economy. He's just one MMT perspective, but most of the other MMT stuff I can recall tends to be US-centric. Also, the Japan stuff gets pretty dense, so I don't feel comfortable trying to summarize it.
|
|
#
?
Jan 27, 2019 17:57
|
|
|
OwlFancier posted:So if I'm understanding right the size of your deficit is basically the size of your economy? Or should track relatively closely? Because the deficit represents the liquid money supply, more or less? The size of the deficit matches (or needs to) the annual growth of the economy. You have to add currency to the economy at the rate that the economy grows so that you don't run into effective deflation (i.e. try to keep the 'share of the economy' that a single dollar represents constant)
|
|
#
?
Jan 27, 2019 18:50
|
|
|
Family Values posted:The size of the deficit matches (or needs to) the annual growth of the economy. You have to add currency to the economy at the rate that the economy grows so that you don't run into effective deflation (i.e. try to keep the 'share of the economy' that a single dollar represents constant) Sorry, the debt is the size of the economy then, the deficit year on year being the size of the added currency each yeah because yes you need currency proportionate to the amount of exchange happening. Keep conflating deficit and debt.
|
|
#
?
Jan 27, 2019 18:53
|
|
|
Dead Reckoning posted:Under MMT, government spending is still constrained by the need to avoid high inflation, so the government can't run huge deficits year over year by spending past that limit, since its creditors want to get paid evertually... which would require printing more money past that limit. you remove money supply from the economy to curb inflation. Usually via taxation but there are other ways (selling bonds, etc.). This is kind of a moot point to me though specifically with healthcare because the USA already pays way way way more per capita for a much worse result. So if anything, an efficient single payer system with proper preventative care for everyone where people aren't afraid to go see the doctor would result in a huge reduction in costs overall. With regards to deficit chat... Private and public spending are like a balance sheet. Where there is a '-' on the public side, there must be a '+' on the private side. The money has to go somewhere. The opposite is if the government takes in more money well then it has to come from the private sector. It doesn't come from the aether. So yeah the idea that Clinton shouldn't necessarily be super happy about his surplus is valid - if there is a government surplus then that money is coming from the private sector and... not doing anything because the government doesn't need it. I'm presenting it simply of course. But we're all looking at inflation a bit simply, too. There are many factors at play when it comes to what the actual price of a good on the market ends up being. The high school idea of "if everyone gets X more, then all the prices increase by some fraction of X in a linear fashion!" is really wrong. For one thing it ignores that competitors want to try and be cheaper than one another and the price they set is often then largely a function of how efficient they can make their production process - only in a monopoly or near monopoly situation would a company say "great everyone has more money now they have to pay more for my widget!" Coincidentally this is how healthcare in the US is run - in a near monopoly with little competition. And many other industries, too. Telecoms, etc. Thus the vaunted benefits of the free market aren't even applicable to our most vital industries as it is now but I'm getting off on a tangent. The point is that the amount of money in your pocket isn't necessarily that influential on the price of goods and services you buy. IMO especially as automation keeps minimizing labor costs from the overall costs of production. This might sound stupid but it helps to think of it like an MMO economy. Definitely simplified but accurate imo. There are gold sources and gold sinks and the devs just want to manage the amount of gold flowing so as to keep it worth something while not pissing everyone off. Its value just comes from the fact that people want to play the game. The gold itself doesn't matter to the devs, it's not like they actually need it for anything or couldn't make as much as they wanted. Moridin920 fucked around with this message at 21:35 on Jan 27, 2019 |
|
#
?
Jan 27, 2019 21:13
|
|
|
LuciferMorningstar posted:Your whole post seems to be a lot of words to ask "What if leadership just makes bad decisions over and over and then bad things happen?" That's not a new risk. What if the President throws a fit and shuts down the government? What if leadership oversells the importance of paying off the national debt and drives the country into economic downturn? Well it certainly doesn't mitigate all the risks but under the current system a lot of control over macro policy has been outsourced to the Federal Reserve. My impression is a lot of economists have a very dim view of politicians with short term interests in their reelection sitting in the economies driver seat.
|
|
#
?
Jan 27, 2019 22:29
|
|
|
LuciferMorningstar posted:Your whole post seems to be a lot of words to ask "What if leadership just makes bad decisions over and over and then bad things happen?" That's not a new risk. What if the President throws a fit and shuts down the government? What if leadership oversells the importance of paying off the national debt and drives the country into economic downturn? Basically, since the country has gone off the gold standard, it has been possible for any subsequent government to either increase spending without raising taxes, or lower taxes without decreasing spending, without issuing debt, by printing more dollars to make up the difference. Given that lower taxes and higher services/entitlements are both very popular with voters, I'm guessing that there is a reason no one has done this besides "they didn't know it was possible because they thought the federal government operated like their checkbook." I'd like to know what those reasons are and how MMT proponents address them. If spending is decoupled from revenues, how is fiscal discipline imposed on lawmakers? The OP was extremely hype about MMT because they believed that it would allow the country to have generous social programs like universal healthcare and free college without worrying about the costs of those programs. MMT is just a different way of thinking about government monetary flows, and no one is actually proposing any structural changes to the way our government functions. Even under MMT, the ratio of government spending to taxation is still constrained by some factors, particularly inflation. What stops a Republican congress from slashing taxes to the max extent possible allowed by MMT without creating overinflation, leaving subsequent Democratic governments unable to enact generous social programs without raising taxes? If the answer to rising inflation caused by government over-printing of money can be solved by, "just raise taxes to take money out of the system," why have leftists not received a popular mandate to raise taxes under our current monetary system to pay for the programs they desire?* What problem with our current model does MMT solve, other than deflecting the question of "how will we pay for generous social programs on top of our current obligations without raising taxes?" *I understand why. The question was rhetorical. Squalid posted:My impression is a lot of economists have a very dim view of politicians with short term interests in their reelection sitting in the economy's driver seat. Dead Reckoning fucked around with this message at 01:29 on Jan 28, 2019 |
|
#
?
Jan 28, 2019 00:34
|
|
|
I think part of the notion is that politicians are ideologically opposed to high taxes and public spending because politicians are almost all rich people who own things. They therefore do not want to pay taxes and also do not want services provided in ways that do not maximise their ability to extract value from them. This is, in part, achieved by instilling a belief in the general public that government services and taxes are both evil and irresponsible because taxes simply go into a black hole of bureucracy and services are going to bankrupt the government. So, popularizing the belief that taxes literally do go into a black hole and this is fine and that service provision cannot bankrupt the government unless the government deliberately tries to make it happen, is an instrument against that. Essentially there is no such thing as fiscal discipline, politicians vote to spend money in ways that benefit them regardless of how wasteful or destructive it is to the country at large or the people in it, and they justify it in part by spreading the lie that national finances work the same way that your personal finances do. A wide scale MMT understanding of public finances would be beneficial to improving democratic control of society because the alternative is really stupid and destructive understandings of how it works.
|
|
#
?
Jan 28, 2019 01:04
|
|
|
OwlFancier posted:I think part of the notion is that politicians are ideologically opposed to high taxes and public spending because politicians are almost all rich people who own things. They therefore do not want to pay taxes and also do not want services provided in ways that do not maximise their ability to extract value from them. Honestly it seems like the opposite, where the link where the government takes X% of my paycheck then buys food for poor people or roads or something is a lot more acceptable than the idea that the government just takes my money and does nothing with it and that vaguely helps manage national inflation levels totally separate from paying for government programs. It also makes it so it's near impossible to have any sort of intuitive sense of what taxes are good or bad or what. Tax a rich guy for 10 million dollars and that is 10 million dollars that can go into a program, but if the idea is tax just is a way to manage inflation I really have no idea at all how much inflation management taxing a rich guy vs a poor guy vs a business vs a consumption tax would do. It also makes it so I'm not sure what to do if someone studied that and found an answer I'm not pleased with. Like if someone (for example) did a study and found like, heavy tax on the poor or light tax on the rich or something else counterintuitive just objectively managed inflation best. It removes a clear answer compared to "more money = better than" that thinking of the money taken being money spent always provides and the way that generally more or less inherently aligns with my idea of fairness.
|
|
#
?
Jan 28, 2019 01:27
|
|
|
Owlofcreamcheese posted:Honestly it seems like the opposite, where the link where the government takes X% of my paycheck then buys food for poor people or roads or something is a lot more acceptable than the idea that the government just takes my money and does nothing with it and that vaguely helps manage national inflation levels totally separate from paying for government programs. You tax the rich guy for 10 million dollars because even if you only left him with 1 million dollars he can still buy literally anything he could ever reasonably want or need. The point of tax is to acquire money, you acquire money best from people with lots of it, both because they have all the money and because it doesn't actually harm them if you take it off them. None of that changes because of how the money works. You take millions off rich people who don't need it so that you can create it and give it to poor people who do need it while keeping a dollar worth about the same as before. That's no different to moving the money from one to the other in a big swag bag except that one of them is how it actually works. If inflation is a function of available currency per unit of economic activity, then there's no way not taxing the rich and taxing all the poor will actually help it, because poor people don't accumulate currency anyway, rich people do. OwlFancier fucked around with this message at 01:36 on Jan 28, 2019 |
|
#
?
Jan 28, 2019 01:31
|
|
|
OwlFancier posted:You tax the rich guy for 10 million dollars because even if you only left him with 1 million dollars he can still buy literally anything he could ever reasonably want or need. Are you agreeing with me or disagreeing with me? Under the conventional understanding of taxes you tax a rich guy a lot because he has the money and the government needs the money. This is intuitive, straightforward, fair, and makes sense. Under MMT the government doesn't need or use the money it takes and tax is just a tool to control inflation and there is no particular relation from the money taken in taxes and the money spent on government programs. In which case I have no friggin idea how many points of inflation any particular tax gives. And no reason to assume it just maps out to give the exact same answers, or even answer that I like or accept.
|
|
#
?
Jan 28, 2019 01:41
|
|
|
Owlofcreamcheese posted:Are you agreeing with me or disagreeing with me? You... don't need an exact number... More money = more effective tax. Money from people who have literally no legitimate use for it = ideal tax. Under either circumstance..? It isn't the act of doing taxes that reduces inflation it's the act of taking money out of the economy that does it, so more money taxed = more inflation reduction. The most effective tax remains the one that raises the most revenue with the least harm, which is exactly the same logic as taxes have always had... You don't just adopt absolute moon logic about how tax revenue works because the function of tax revenue has changed. The understanding is that you tax the rich guy a lot because he has all the money and you take it off him to reintroduce it in places that are useful. But it's not the same exact money. Also importantly is that this model helps you to understand the economic stimulus effect, if you keep injecting money at the bottom that fuels economic activity and grows the economy, if you want to operate under the capitalist model then this is very desirable, you issue currency at the bottom and structures grow to utilize labour to get that money off people, then you tax it again at the top and stuff it back in at the bottom, plus a bit more so that you grow even more businesses to get even more money off people. Injecting cash at the bottom of society either in the form of service provision which saves people money or in the form of flat injections of cash is what stimulates the allegedly "productive" enterprises in the world. They need people to have money in order to get it off them, an economy where people sitting on increasing piles of lucre argue about how best to pry pennies out of the hands of a population with bugger all is a pretty weak economy. The MMT model I find helps with that understanding a lot. OwlFancier fucked around with this message at 01:55 on Jan 28, 2019 |
|
#
?
Jan 28, 2019 01:45
|
|
|
OwlFancier posted:The understanding is that you tax the rich guy a lot because he has all the money and you take it off him to reintroduce it in places that are useful.
|
|
#
?
Jan 28, 2019 01:55
|
|
|
Dead Reckoning posted:But, unless I'm misunderstanding MMT proponents, you take money from a rich guy and then destroy it, with that transaction being only vaguely related to the useful spending of money elsewhere. Yes, but if you don't do the taking part you're just shoveling money into the bottom of society and never taking anything out, thus constantly inflating your currency and devaluing it. Like shoveling coal into the firebox and never letting off the steam. They aren't directly related but they should roughly round out and in particular, you can quite comfortably shovel a bunch of extra cash in right now if it results in economic growth fairly promptly, because that's the other way you can keep your currency supply to economy ratio about right. And there's a lot of projects you can do that do produce economic growth, infrastructure and things that improve the ability of people to work like education and healthcare and poo poo. OwlFancier fucked around with this message at 02:02 on Jan 28, 2019 |
|
#
?
Jan 28, 2019 01:58
|
|
|
OwlFancier posted:The understanding is that you tax the rich guy a lot because he has all the money and you take it off him to reintroduce it in places that are useful. This is what I am saying, and why I feel like you are agreeing with me but not realizing it. This is the conventional idea of how taxes work. Which has the advantage of being very very clearly right and fair and just. Moving away from this framework at best obfuscates this relation and at worst suggests other answers that you or I would not feel are as intuitively fair.
|
|
#
?
Jan 28, 2019 02:01
|
|
|
Owlofcreamcheese posted:This is what I am saying, and why I feel like you are agreeing with me but not realizing it. This is the conventional idea of how taxes work. Which has the advantage of being very very clearly right and fair and just. Moving away from this framework at best obfuscates this relation and at worst suggests other answers that you or I would not feel are as intuitively fair. How does it? What mechanism of action suggests that actually not taking any money out of the economy while continuing to print it to pay for things is the preferred option?
|
|
#
?
Jan 28, 2019 02:03
|
|
|
OwlFancier posted:How does it? What mechanism of action suggests that actually not taking any money out of the economy while continuing to print it to pay for things is the preferred option? I'm just not really sure what you are arguing? I feel like you are arguing FOR a largely very conventional understanding of taxation while responding as if you were the one arguing against one. It feels like MMT can only give an answer that is equivalent to the classical framework OR a worse one. Since the classical framework already gives a good/fair/agreeable answer.
|
|
#
?
Jan 28, 2019 02:25
|
|
|
What are you calling "the classical framework" because as far as I'm aware there's the idea that the government has a big pile of money and it can't spend more than that without borrowing from the government sized loan shark and when the government does this it means that the international loan shark's gonna come round with a big hammer and break the country's kneecaps which means your job. If you're gonna break that dumb idea outta people's heads you might as well replace it with one that illustrates just how not like you the government operates. If you go around telling people the government's finances operate inutitively you invite all the nonsense scare tactics about how governments can't have deficits because if you had a deficit you'd go bankrupt. Breaking that idea is a desirable thing. And to that end the MMT understanding has a lot of utility, as well as being apparently right. If people are for some reason on board with the tax and spend view of things then they probably aren't the people you necessarily need to convince, but a lot of people don't seem to be at that point. If you're putting in the effort to change that you might as well change it to something that wholly rejects the idea of the government being liable to anyone or having fixed budgets and paints the idea of government spending as being entirely a political decision. OwlFancier fucked around with this message at 02:51 on Jan 28, 2019 |
|
#
?
Jan 28, 2019 02:32
|
|
|
|
| # ? Apr 19, 2024 10:22 |
|
|
OwlFancier posted:How does it? What mechanism of action suggests that actually not taking any money out of the economy while continuing to print it to pay for things is the preferred option? So there are two facts/concepts here that you would need to convince people of: Fact 1: Since the government is not a person/company, and can print its own money, we *could* all have our cake it and eat it too (services *and* no taxes). Fact 2: If we actually did (1), everything would slowly, indirectly, sort-of-invisibly get much worse. Convincing people of fact 1, without being able to convince them equally well of fact 2, is probably worse than how things are now. This is difficult, because people are very good at being convinced they could have their cake and eat it too if it weren't for THE MAN keeping them down, and are also very bad at being convinced that things are slowly, indirectly, invisibly getting much worse.
|
|
#
?
Jan 28, 2019 02:52
|
|
