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punk rebel ecks posted:I and others have mentioned MMT before in this board and have had people give brief signs of support/jabs. I was wondering what everyone thought of the economic theory so I decided to start this thread instead of derailing others. MMT is also suddenly hip with the left flank of American politics, because it abstracts the relationship between spending and the need to collect revenue or issue debt, which is useful when you want to talk about massive public spending on free college and Medicare for All, but don't want to talk about what it would cost. This is where the problems start to creep in. The first problem is practical: Under our current budgeting model, we clearly understand how to calculate how much any government policy would "cost": combine the number of dollars that the government would have to spend to execute it with the change that would result in government revenues. This is why spending on Internal Revenue Service enforcement is net positive: for every dollar spent on sending IRS agents to work catching tax cheats, they bring in more than one dollar that someone was stealing from the public treasury. (There is presumably a limit on this, but we have never to my knowledge even approached it.) Of course, people try to juice these numbers to make their preferred policies look better (for example, idiots and liars claiming the Trump Tax Cuts would pay for themselves because they would cause the economy to go gangbusters and result in increased revenue collection on that economic activity) but everyone largely agrees on the process in the outlines. If we assume that there is a finite ability of the government to control inflation through taxation and issuing debt, then in order to intelligently discuss government policy we need a similarly algorithmic way to figure out how much a government policy would contribute to net inflation. As far as I know, no one has proposed such a thing. Without it, everyone will simply declare that their preferred policy is inflation neutral/negative. The other problems are political: Our democratic governments are lead by a collection of motivated self-promoters, and not a philosopher-king. Voters want the same or higher levels of service, lower taxes, & cuts only to foreign aid, and political scientists have yet to find any education that will convince them otherwise. Allowing representatives to fund specific, popular-sounding programs by contributing to a collective risk of inflation would have predictable results: every representative would argue in favor of printing money for specific projects or tax cuts with their name attached to them, without restraint. 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. There is a reason that the US government chose to silo the part of the government that controls the money supply from the part that spends money. Also, from a taxpayer perspective, "we need to collect money from taxpayers at a higher rate so that we can pay for M4A and free college" vs "we need to delete more money from people's accounts so that we have room to print money for M4A and free college without causing runaway inflation" is a distinction without a difference. It might even be worse, since voters may be willing to stomach paying their taxes so that the government can fund free school lunches or a giant border wall, but less willing to accept the government deleting money out of their accounts in order to stave off an abstract risk of inflation. Believing that MMT tells us something new and useful the way its most rabid proponents claim requires believing that, since the 70s, it has been within the power of the US government to massively increase services without raising taxes, or to slash taxes without cutting services, but no one has done it because they were simpletons who believed the government functioned like a checkbook. Since such a move would be broadly popular with voters, it seems odd that no one until Alexandria Ocasio-Cortez had the courage to eat this free lunch that has been sitting on their plate for decades.
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Jun 20, 2019 16:40
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twodot posted:This either completely false or practically speaking we never bother to care about the cost. Like spend arbitrary amounts of money on forever wars on other continents? Apparently completely fine. Free college? Whoa whoa whoa, you can't just go instituting policy that would improve people's lives and the nation's economy, you need to know exactly what it costs, and then ahead of time raise taxes and debts, this is definitely how we handle all policy, which is why we've never raised the debt ceiling in bills unrelated to needing that debt to fund themselves.
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Jun 20, 2019 17:13
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Typo posted:The entire point of MMT's policy implications is that we assume political will for taxation doesn't exist If the political will to raise taxes to fund left wing policy priorities does in fact exist, then you can just call it taxes and it doesn't matter what framework we use to model government currency flows.
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Jun 20, 2019 17:17
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twodot posted:This is incorrect if we need to spend more money than is currently available as taxable. (Which would work out fine if we're spending money in a way that grows the economy as fast as we're spending) twodot posted:Yeah and I'm saying for the purpose of setting policy no one cares about this fact so stop pretending like anyone cares. We absolutely need to feed our children. If feeding our children bankrupts the nation so be it, but I bet you we can afford to feed our children and worry about the effects of that on the economy afterwards.
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Jun 20, 2019 17:37
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twodot posted:It does matter because if you think you have to actually line up costs and income because the federal government's checking account might overdraft or whatever, then you have to actually check your balance or whatever it is you think you'll run out of before you attempt to give a hungry child food. If you know that's nonsense and there is no checking account, and the only reason costs and income matter is due to their effect on the economy and money supply, then you can feed the child first and use monetary policy to achieve whatever macroeconomic goals you have. punk rebel ecks posted:Some interesting discussion happening. I'm surprised that so many posters in this thread seem so skeptical about MMT. It seems wildly popular in this forum. Dead Reckoning fucked around with this message at 18:05 on Jun 20, 2019 |
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Jun 20, 2019 18:01
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punk rebel ecks posted:So is the United States hosed with all the debt we have/accumulating? At a most basic level, debt isn't a problem as long as 1) people are still willing to lend you money, and 2) you can make the payments (which really goes back to 1). How this works on a national economy scale is not as simple to answer. Especially when the ability to print your own money comes into it.
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Jun 21, 2019 17:21
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