4 ms·

> My whole point was that this is not necessarily true, and depends on the form the spending takes place. Did you miss that? Nope, I didn't miss it, because it

by rsj_hn 5y ago

> My whole point was that this is not necessarily true, and depends on the form the spending takes place. Did you miss that? Nope, I didn't miss it, because it's not relevant. Giving money to poor tenants ends up in the pocket of landlords. Letting poorer people buy iPhones ends up in the money of shareholders and is realized as an increase in Apple stock price, etc. When you have a small group of the people disproportionately own the capital stock, then giving people more spending money absolutely ends up benefiting those people disproportionately. > Even if a UBI eventually trickles up, we must not conflate solvency and liquidity. Neither is being discussed here. I am saying that if you have an economy in which people earn unequal incomes which, you know, must happen given that people make unequal contributions to society, then things like supports for the poor have to be funded with taxes, otherwise this will drive more inequality. And given that the wealthy pay by far the most taxes, then deficit spending disproportionately benefits the wealthy.

Ericson2314 5y ago
I don't think we can have conversation. To me, the numbers are secondary to their effects, that is kind of the thesis of the function finance paper too. Concretely stuff like UBI and a JG at least in the first order takes away a power of employers now amount of nominal inequality can give back. And if the limits to spending are real and not nominal, and rich people don't spend their wealth so much, taxing them hardly makes a difference w.r.t those constraints. Conversely, if they do spend it, easy to levy consumption taxes will be less recessive. If you want to continue to the debate, I think need to you get more precise about what exactly is bad about the nominal inequality you speak of. I think that is the only way to reconcile our analytical frames.
- rsj_hn 5y ago
  So, consider for a moment that I've understood MMT for almost two decades now. Also consider that there is a lot that MMT does not address, in its maniacal focus on whether it's possible to fund government programs without paying for them with taxes. There are other problems, like assuming savings demands are inelastic, but let's just focus on the distributional aspects. One of the main drawbacks is that ZIRP or massive deficit spending is always and everywhere correlated to increasing wealth inequality vis-a-vis nations that have more balanced budgets. Then consider that none of the social democracies that have large safety nets use MMT principles and all of them run fairly balanced budgets for a reason, and that reason is not lack of knowledge about fiat currencies. Really there is a lot less here than meets the eye, and you pay a big price for adopting these kinds of policies. ZIRP is also a great way to privilege land over productive investment, because when you increase the duration of assets, then you want more stable assets whose value is guaranteed at the expense of more risky (productive) assets. And it's a great way to drive down the marginal product of capital -- a good example of all these effects playing out would be Japan. Rapidly increasing inequality, small businesses are starved for loans, but tons of free money for incumbent bureaucracies and housing, and hugely inefficient large corporate bureaucracies. By the way, it's no accident that Warren Mosler is a wealthy former hedge fund guy. It is literally the utopian economic policy of Finance, because MMT is clear that it does not want banks subject to discipline on the liability side of the balance sheet (Mosler owns his own bank and would like lower funding costs), and folks like Mosler even advocate eliminating income taxes entirely and funding the government -- oops, I forgot to say "anchoring the currency" -- based solely on a property tax. So this is a mix of forced savings, inefficient business, rising inequality, and credit allocated towards non-productive industries at the expense of productive industries. Anyways, if you want to create a feudal society, then this is a good way to do it. But don't worry, there will be a job guarantee in there for you.
  - Ericson2314 5y ago
    It's great you are familiar with the stuff, but you against skirted the question I asked. I'll repeate what is so bad about inequality? To be clear I don't think it's good either, and I would not be opposed to all manner of wealth taxes. But just saying "It's bad, duh", "MMT is a con for Mosler" doesn't give me anything concrete to respond to. I mean really, would would you want me to say in response? Mosler would need a time machine to con Abba Lerner or Kalecki. > Then consider that none of the social democracies that have large safety nets use MMT principles and all of them run fairly balanced budgets for a reason. That reason is not lack of knowledge about fiat currencies. A good reason? The Euro is constitutionally ordoliberal and fucking over Greece in a way that makes the even Krugmans cringe doesn't look like deep wisdom to me. German nuclear policy is also insane, fwiw. I don't see the EU as being especially enlightened at all, I just saw a better and stronger legacy of the postwar era than over here, and better voting systems on the national level. I can well believe they don't get it same as over here by and large, and the left fringe is only "wiser" in the anglosphere as a consequence of being radicalized harder by pan-Anglo austerity. That's certainly not an accelerationism worth being proud of. > ZIRP is also a great way to privilege land over productive investment, because when you increase the duration of assets, then you want more stable assets whose value is guaranteed at the expense of more risky (productive) assets. So do the hardcore form LVT where we essentially, and instant-auction keeps self-assessments honest. > Anyways, if you want to create a feudal society, then this is a good way to do it. But don't worry, there will be a job guarantee in there for you. FWIW I am clearly not a 100% MMT orthodox person because I kept on bringing up UBI in a positive light. I do want to reduce working hours and the cultural valorization of work too and so I find pure JG kind of aethetically abhorent, even if it could put preasure on the workweek. ------- To sum up, I fully grant that unchecked unequality could allow a new powerful elite to suddenly end the JG or UBI. But a world in which either of those are possible in the first place is a) quite different b) should allow for the type of politics that also go after wealth / massage private property / undemocratic workplaces / whatever your boogieman is. But I believe that in great powers not savaged by war, there can't be good politics without tight labor markets, so to the extent there is a economic--political chicken and egg problem, Post-Keynesian ideas like this provide when of the few forseable bootstraps. If we fail to do so, we will get to that neo-feudalism you fear by austerity anyways, as lax labor markets make capital investment including maintainence uneconomical, and we barrel towards a less productive more dysfunctional society.
scythe 5y ago
>Nope, I didn't miss it, because it's not relevant. Giving money to poor tenants ends up in the pocket of landlords. Letting poorer people buy iPhones ends up in the money of shareholders and is realized as an increase in Apple stock price, etc. That's a little extreme. It's fair to argue that giving money or benefits to poor people may not directly reduce inequality. More importantly, since progressive taxes do reduce inequality, it follows that the same level of spending with lower tax rates results in higher inequality than the spending with a balanced budget up to inflation. But it also has positive externalities, such as improved public health. By contrast quantitative easing, almost by definition, has minimal externalities, although I'm partial to the argument that subsidizing real estate prices tends to increase inequality. These externalities disproportionately accrue to the poor because rich people tend to manage their personal environments in a way that insulates them from the winds of the societal landscape. Sometimes these are not easy to account for financially but that does not impugn their value. So deficit spending on the war in Afghanistan, for example, is probably worse for inequality than deficit spending on education.
- Ericson2314 5y ago
  Yeah really simply, if absent enough taxes, money "pools" to the rich and doesn't keep on circulating, that also means the rich aren't spending it. By definition. If so....then what's the problem? One possible answer is "well, the Rich have more risk tolerance, so they can just summon a catastrophe to improve their relative standing in a negative-sum situation with little pain" I think that's a fair argument. Do MMT, and the rich try to sabotage undoing global warming so they can rule the roost in some max max situation sure. But such analysis means we have to broach Solvency vs Liquidity as PP didn't want to. A UBI-empowered workforce can also more and safely easily go after the rich with pitchforks and shear numbers, strike at the plants that arm their body guards, not treat them when they are sick in the hospital. Keynes and Marx disagreed on many things, but did agree on C-M-C vs M-C-M. In regular-enough times, firms are slaves to nominal values: boost aggregate demand and they will not be able to able to boycott and resist. But also, workers are not slaves to rich people's unspent inert savings if empowered by means external to private emplyment. "Nominal dollar power" works better on the former than the latter.

by rsj_hn 5y ago

Ericson2314 5y ago

I don't think we can have conversation. To me, the numbers are secondary to their effects, that is kind of the thesis of the function finance paper too. Concretely stuff like UBI and a JG at least in the first order takes away a power of employers now amount of nominal inequality can give back. And if the limits to spending are real and not nominal, and rich people don't spend their wealth so much, taxing them hardly makes a difference w.r.t those constraints. Conversely, if they do spend it, easy to levy consumption taxes will be less recessive. If you want to continue to the debate, I think need to you get more precise about what exactly is bad about the nominal inequality you speak of. I think that is the only way to reconcile our analytical frames.

rsj_hn 5y ago
So, consider for a moment that I've understood MMT for almost two decades now. Also consider that there is a lot that MMT does not address, in its maniacal focus on whether it's possible to fund government programs without paying for them with taxes. There are other problems, like assuming savings demands are inelastic, but let's just focus on the distributional aspects. One of the main drawbacks is that ZIRP or massive deficit spending is always and everywhere correlated to increasing wealth inequality vis-a-vis nations that have more balanced budgets. Then consider that none of the social democracies that have large safety nets use MMT principles and all of them run fairly balanced budgets for a reason, and that reason is not lack of knowledge about fiat currencies. Really there is a lot less here than meets the eye, and you pay a big price for adopting these kinds of policies. ZIRP is also a great way to privilege land over productive investment, because when you increase the duration of assets, then you want more stable assets whose value is guaranteed at the expense of more risky (productive) assets. And it's a great way to drive down the marginal product of capital -- a good example of all these effects playing out would be Japan. Rapidly increasing inequality, small businesses are starved for loans, but tons of free money for incumbent bureaucracies and housing, and hugely inefficient large corporate bureaucracies. By the way, it's no accident that Warren Mosler is a wealthy former hedge fund guy. It is literally the utopian economic policy of Finance, because MMT is clear that it does not want banks subject to discipline on the liability side of the balance sheet (Mosler owns his own bank and would like lower funding costs), and folks like Mosler even advocate eliminating income taxes entirely and funding the government -- oops, I forgot to say "anchoring the currency" -- based solely on a property tax. So this is a mix of forced savings, inefficient business, rising inequality, and credit allocated towards non-productive industries at the expense of productive industries. Anyways, if you want to create a feudal society, then this is a good way to do it. But don't worry, there will be a job guarantee in there for you.
- Ericson2314 5y ago
  It's great you are familiar with the stuff, but you against skirted the question I asked. I'll repeate what is so bad about inequality? To be clear I don't think it's good either, and I would not be opposed to all manner of wealth taxes. But just saying "It's bad, duh", "MMT is a con for Mosler" doesn't give me anything concrete to respond to. I mean really, would would you want me to say in response? Mosler would need a time machine to con Abba Lerner or Kalecki. > Then consider that none of the social democracies that have large safety nets use MMT principles and all of them run fairly balanced budgets for a reason. That reason is not lack of knowledge about fiat currencies. A good reason? The Euro is constitutionally ordoliberal and fucking over Greece in a way that makes the even Krugmans cringe doesn't look like deep wisdom to me. German nuclear policy is also insane, fwiw. I don't see the EU as being especially enlightened at all, I just saw a better and stronger legacy of the postwar era than over here, and better voting systems on the national level. I can well believe they don't get it same as over here by and large, and the left fringe is only "wiser" in the anglosphere as a consequence of being radicalized harder by pan-Anglo austerity. That's certainly not an accelerationism worth being proud of. > ZIRP is also a great way to privilege land over productive investment, because when you increase the duration of assets, then you want more stable assets whose value is guaranteed at the expense of more risky (productive) assets. So do the hardcore form LVT where we essentially, and instant-auction keeps self-assessments honest. > Anyways, if you want to create a feudal society, then this is a good way to do it. But don't worry, there will be a job guarantee in there for you. FWIW I am clearly not a 100% MMT orthodox person because I kept on bringing up UBI in a positive light. I do want to reduce working hours and the cultural valorization of work too and so I find pure JG kind of aethetically abhorent, even if it could put preasure on the workweek. ------- To sum up, I fully grant that unchecked unequality could allow a new powerful elite to suddenly end the JG or UBI. But a world in which either of those are possible in the first place is a) quite different b) should allow for the type of politics that also go after wealth / massage private property / undemocratic workplaces / whatever your boogieman is. But I believe that in great powers not savaged by war, there can't be good politics without tight labor markets, so to the extent there is a economic--political chicken and egg problem, Post-Keynesian ideas like this provide when of the few forseable bootstraps. If we fail to do so, we will get to that neo-feudalism you fear by austerity anyways, as lax labor markets make capital investment including maintainence uneconomical, and we barrel towards a less productive more dysfunctional society.

scythe 5y ago

>Nope, I didn't miss it, because it's not relevant. Giving money to poor tenants ends up in the pocket of landlords. Letting poorer people buy iPhones ends up in the money of shareholders and is realized as an increase in Apple stock price, etc. That's a little extreme. It's fair to argue that giving money or benefits to poor people may not directly reduce inequality. More importantly, since progressive taxes do reduce inequality, it follows that the same level of spending with lower tax rates results in higher inequality than the spending with a balanced budget up to inflation. But it also has positive externalities, such as improved public health. By contrast quantitative easing, almost by definition, has minimal externalities, although I'm partial to the argument that subsidizing real estate prices tends to increase inequality. These externalities disproportionately accrue to the poor because rich people tend to manage their personal environments in a way that insulates them from the winds of the societal landscape. Sometimes these are not easy to account for financially but that does not impugn their value. So deficit spending on the war in Afghanistan, for example, is probably worse for inequality than deficit spending on education.

Ericson2314 5y ago
Yeah really simply, if absent enough taxes, money "pools" to the rich and doesn't keep on circulating, that also means the rich aren't spending it. By definition. If so....then what's the problem? One possible answer is "well, the Rich have more risk tolerance, so they can just summon a catastrophe to improve their relative standing in a negative-sum situation with little pain" I think that's a fair argument. Do MMT, and the rich try to sabotage undoing global warming so they can rule the roost in some max max situation sure. But such analysis means we have to broach Solvency vs Liquidity as PP didn't want to. A UBI-empowered workforce can also more and safely easily go after the rich with pitchforks and shear numbers, strike at the plants that arm their body guards, not treat them when they are sick in the hospital. Keynes and Marx disagreed on many things, but did agree on C-M-C vs M-C-M. In regular-enough times, firms are slaves to nominal values: boost aggregate demand and they will not be able to able to boycott and resist. But also, workers are not slaves to rich people's unspent inert savings if empowered by means external to private emplyment. "Nominal dollar power" works better on the former than the latter.