I thought Stephanie Kelton was advising this guy!@#$%^
Once again, Trump is the real MMT guy. Sectoral balances. Making the foreign sector run deficits while spending on domestic investment--infrastructure, single payer health care, Social Security, etc.
Sanders' economics is increasingly unrealistic. The country needs Trump, but we may end up getting Hillary.
32 comments:
Mike it looks like they are trying to control "the deficit!" via modifying current tax policy or something... iow trying to avoid a potential "deficit is too big!" situation like now they are saying its "the deficit is too small!" situation....
That's an analysis of what Sanders plans would do over 10 years. Think it should be taken with several grains of salt. IMHO such analyses and candidates detailed plans are quickly forgotten. Bernie is rather saner, his plans are more realistic and achievable, he plans to spend on the right things. That's enough for me.
Bernie is constrained by the political correctness of the Democratic party that requires a pay-for for every spending plan. That just doesn't exist on the R side hence the disparity
Right, Justin.
If Jerry Friedman's analysis is to be believed (and of course I think more economic growth and increased participation from "equal pay" is a silly assumption), growth and inflation might be so high that we'll need a big increase in taxes... Add a reduction in the deficit via trade, and we'll have to start taking money out of the economy through taxation.
Bernie is a Mike Norman guy. He doesnt think the size of the deficit is important, he thinks that the most important thing is to grow top line Govt spending. Which is why he wants to increase Federal Govt spending by $1 trillion, and the taxes are irrelevant because the deficit is meaningless.
The taxes are important politically. Bernie is running on a populist platform against growing economic inequality. "Soaking the rich" (taxing away economic rent) is a key piece if not the key piece in his pitch. Bernie also emphasizes social issues, but his focus is economic.
Trump is also running a populist program that includes economic aspects but his emphasis is on social issues.
The different is between left and right populism. But there is also some overlap.
Neither is saying that deficits and debt don't matter. This is for the simple reason that deficits and debt are unpopular and don't fit into a populist pitch, even if a candidate knows better.
I don't know Trump's view on this, but we can assume that Stephanie has explained the MMT view to Bernie and he has chosen the tack he is taking for political reasons.
If Stephanie designed Bernie's economic plan, or to the degree she did, it is MMT-friendly, even though Bernie is not pitching it that way. I rather doubt that SK would stay if she were not having some impact.
Trump is saying pretty much anything off the cuff, sure it would be better if Bernie displayed he had listened to Kelton but perhaps he is more economically aware than you may suspect.
For example someone got to speak to him just two days ago and asked this
"Do you know about Henry George and the land tax issue?"
And he said yes and mentioned that he would be interested in appointing Joseph Stiglitz to a key cabinet position and referenced Stiglitz work on the Henry George theorem.
What are the chances real estate baron and serial bankrupt moocher Trump would agree?
Wikipedia-Henry_George_theorem
Warren Mosler has said that he is OK with a land rent tax in addition to financial reform.
For once I have to agree with Calgacus. The article is a smear job. But at the same time the article is true -- Bernie does propose big tax hikes, including regressive taxes on the working class.
This hit piece is just a taste of what is to come if Bernie gets the nomination. The airwaves will be saturated with ads saying that Bernie wants to raise your taxes, take your gun rights, and open the borders to immigrants. Personally I think Bernie has miscalculated.
@Tom, of course Mosler is OK with a land tax because most of Mosler's wealth is not in land.
For the record, some time ago in a comment at his place when he was taking comments, I asked Warren about taxing economic rent. He said that he was OK with a land rate tax and thought it would be the only tax needed. He favored addressing other forms of economic rent directly through legislation and regulation that pre-empted rent extraction. In his view, financial reform would go a long way toward that.
@Dan Anyone with any understanding of the issue would be ok with a land tax even if they owned land. In any case if Mosler is influenced by the lack of a personal vested interest is not falsifiable so it is merely insinuation, I'm sure he doesn't own many other types of assets but does not advocate taxing them instead.
Michael Hudson obviously also supports LVT, Bill Mitchell supports value capture which amounts to the same thing.
Auburn taxes are not irrelevant because we have 'withholding' type taxes...
iow current tax structure is a constant parameter and if we change that, ie increase the withholding policy, then leading flows are reduced from present levels...
iow if they didnt touch taxes and THEN increased leading flow, that would have a stimulative effect... if they were to increase tax withholding parameters without increasing leading flow then that would result in reduced leading flow...
Tax parameters can be treated as a constant unless policy changes that...
Auburn they dont really know what they are doing...
Here:
https://en.wikipedia.org/wiki/Gas_constant
" the gas constant is the constant of proportionality that happens to relate the energy scale in physics to the temperature scale, when a mole of particles at the stated temperature is being considered. Thus, the value of the gas constant ultimately derives from historical decisions and accidents in the setting of the energy and temperature scales,"
So there has been historical decisions made as far as tax policy and when we change the tax policy, it would be like re-setting this gas constant in themodynamics... which we could do but you would have to take that into account...
" they dont really know what they are doing..."
Should have added: "neither does Trump and his people..."
@Mark Foster, don't get me started on the Georgist religious cult. :-)
@Tom Hickey, yes MMT as a whole supports reducing inequality by "pre-distribution"rather than redistribution.
All the MMT criticisms of redistribution also apply to MMT's proposals. The rich will use their political clout to avoid taxes? That also applies to a land value tax, or to financial reform, or "public delivery of public services for public purpose," to any other MMT proposal.
As long as we live in an oligarchy, the laws will serve the rich, aside from the occasional Roosevelt with noblesse oblige or the occasional Bismark who wants to keep his neck attached to his shoulders. Political change has to happen prior to economic change.
Bernie's proposal is flawed whether you believe in redistribution or pre-distribution. If you believe in redistribution then you shouldn't campaign on raising taxes on the working class. If you believe in pre-distribution then you shouldn't campaign on raising taxes, period.
@Mark Foster, don't get me started on the Georgist religious cult. :-)
@Tom Hickey, yes MMT as a whole supports "pre-distribution" rather than redistribution.
IMHO all the MMT criticisms of redistribution also apply to MMT's proposals. The rich will use their political clout to avoid taxes? That also applies to an LVT, or to financial reform, or "public delivery of public services for public purpose," to any other MMT proposal. Major political change has to happen before there can be major economic change.
Getting back to the OT, imagine if FDR's 2nd Bill of Rights speech had been 80% on how to pay for it and 20% on what it would do, and oh by the way it requires a new regressive tax on the working class. Because that's how Bernie comes across.
@ Dan Lynch
I have argued previously that none of the candidates is in paradigm but Bernie is closest and at least is allied with some of the right people.
My gripe with Bernie is that he is not taking an MMT tack, apparently for political reasons, since he must know about it through SK. It is a disappointment to be so close and yet so far.
In addition, the policies MMT proponents recommend don't solve the political problems that are resulting in social and economic problems. That would take deep reform that gets the money out of politics once and for all, which would probably require a constitutional amendment.
In the final analysis, the only effective resolution is raising the level of collective consciousness, which current events reveal to be abysmally low. The result in a supposedly liberal society is the many paradoxes of liberalism. A necessary condition for liberalism is a people capable of it.
@Tom, "knowing about MMT" and believing in it are two different things.
I'm not sure what Sanders really believes, but my gripe is that he puts a lot of emphasis on "pay fors" while remaining vague on programs, just the opposite of how most politicians do it.
In fairness to Bernie, he will be criticized no matter what he does. If he did not explain "pay fors," he would have been criticized for being unrealistic. Now that he has offered "pay fors," he is criticized for wanting to raise taxes. IMHO he made a strategic error by playing defense instead of offense.
Bernie did not have the time and money to educate people about the MMT view on fiscal matters. There is, however, a good chance that he understands that view and is friendly to it. Remember the dream team has Jamie Galbraith, Bill Black, and Mr. Pre-distribution himself, Randy Wray, as well as Stephanie on it, and also Joe Stieglitz, who is friendly to MMT.
Last summer I went to Bernie's seminar at the Senate on the crises in Greece and Puerto Rico, and then did a quick Kindle e-book on the subject. See: http://www.josephmfirestone.com/books/ It was apparent from the interpersonal dynamics at the panel that Bernie and Jamie Galbraith have a continuing relationship. Jamie has a farm in Vermont, I suspect, dating from his father's time at Harvard. I suspect he summers there and knows Bernie for some years, perhaps going back to when Bernie was Mayor of Burlington, and certainly from his Congressional days. I also suspect that Jamie was the link between Bernie and Stephanie creating the opportunity for her to serve in her present position, and that he is also the reason why Bill and Randy are on the dream team as well.
In view of the above links and my hunch that Jamie is at the center of Bernie's network of economists, I think it is unlikely that Bernie values increasing taxes because he thinks the money is needed to "pay for" the spending he thinks is necessary. On the other hand, he probably thinks increased taxes on the rich and corporations are desirable eventually for creating distributive justice, greater equality, and a stronger political democracy in the United States.
So, given his interest in getting both a growing economy with much greater rewards for poor and middle class people, and greater economic, social, and political equality for democracy's sake, it isn't surprising that he sticks with a traditional New Deal approach to spending and taxes during the campaign. For us, however, I think the issue is what will Bernie do if he becomes the president, and actually has to deal with Congress.
End of Part One
This is Part Two of my comment.
There he will find tremendous reluctance to raise taxes on the wealthy. However, if he approaches Congress with programs that contain both much greater spending and much increased taxes, he is then in a good bargaining position to get the increased spending he wants and needs in return for "giving up", at least to some degree on on raising taxes. So, comparing this to scenario to Obama's and Congressional Democrat's we have the following difference.
They say they want increased spending on domestic programs and higher taxes to pay for them and avoid deficits. So they try to compromise on a bit more spending and small increases in taxes, and deficit neutrality.
However, after bargaining, they get almost nothing on the tax front, and also lesser spending, with increasingly smaller deficits. On the other hand, Bernie will be proposing much more in taxes, much more in spending, and will be pressuring Congress for both. Rich donors will be pressuring Congress to block both, but they will be much more concerned about the possible tax increases than they will be about the increased spending that Bernie will be proposing.
If Bernie bargains hard, and continues to cultivate his movement, and uses it to pressure Congress, then I think that in situations like this Bernie can get a lot of his spending increases in return for slowing down the part of his program that involves tax increases. That, of course, means short-term deficits, very large at first, which we know will facilitate a return to full employment and a tight labor market. And Bernie can feel comfortable about that, especially in the short run, if as I suspect, he does listen to Jamie, Stephanie, Joe Stieglitz, and other members of his dream team who will tell him not to worry about the deficit per se, but only about its likely concrete effects on public purpose.
End of Part Two
I'm not sure what Sanders really believes, but my gripe is that he puts a lot of emphasis on "pay fors" while remaining vague on programs, just the opposite of how most politicians do it.
Dan, thanks for the agreement. But I think that is how it is coming across to you - it just isn't most of what he is saying, it isn't the general impression of his supporters or his critics. What is different is that he is mentioning "pay fors" in some detail, with some plausibility. But the emphasis is on the programs, with the "pay fors" an addendum. He is mainly playing offense, not defense. IMHO, It would only come across that way to an MMT-saturated audience, as at Mike Norman's. FDR, while clearly and prominently announcing his support for deficit spending if necessary before he was elected, emphasized the "pay fors" much more than Sanders is doing.
There is nothing inconsistent with supporting predistribution & raising taxes. As Kelton noted in the interview Unknown linked to, Bernie plans to take $1 out of your right pocket & put $1.25 in your left pocket. And critics who only mention the first and not the second (like this politico story) are not being very honest.
This Part Three of my comment
Now, how does all this relate to Mike Norman's feeling that it is time to support Donald Trump? Well my hunch, which I'm sure Mike will comment on, is that Bernie is done, and that Hillary has a lock on the nomination of the Democratic Party, and that it is time to move on to Trump, since, he, at least, will produce the larger deficits we need to goose the economy, in contrast to Hillary, who will just maintain and extend the current economic stagnation.
While I agree with Mike that Trump will produce greater deficits than Hillary would and get closer to full employment, I also think that there are other reasons why Trump is or should be unacceptable to us. Those reasons relate to what is likely to be his manner of governing. Trump is no supporter of constitutional democracy. I think that is apparent.
To be fair, it is also true that Hillary is no supporter of it, but is likely to further trim our right to privacy, and our civil liberties. However, I don't think Hillary will totally overturn our constitutional order. On the other hand, Trump may well do so, because he seems to be a person who is all about personal will, without any respect for rules, institutions, constitutions, or laws. He seems to be the kind of person who will recognize no limits to political or international conflicts.
He is being compared to Hitler. But he reminds me much more of the casual and disorderly evil of Mussolini, or Gaddafi, rather than the systematic and relentless evil of Hitler. So I see him as a Fascist dictator more than a thoroughgoing totalitarian. Still I think Trump's America will be a dangerous place for people who don't make it a practice to go along with authority.
Finally, I should say in closing that I don't agree with Mike's assessment that Hillary has it locked up. Here's a post of mine with my reasons: http://www.josephmfirestone.com/2016/03/02/super-tuesday-didnt-change-the-democratic-party-dynamic/ In addition, here's another analysis that when added to mine suggests that Bernie isn't done at all: http://www.nakedcapitalism.com/2016/03/clinton-will-build-her-biggest-lead-on-march-15-sanders-will-erode-it-after-that.html
I'll look forward to Mike's and other comments.
@Calc, historical note: in 1932 FDR campaigned to the right of Hoover, criticizing Hoover's infrastructure programs as wasteful spending, and promising to balance the budget. FDR's first major programs were pro-business. FDR was PUSHED to the left, and to his dying day remained a conservative at heart, morally opposed to welfare and to make-work programs.
As for taking $1 out of my pocket, Bernie proposes to taking 8.9% or more out of my pocket and put nothing back. I can't eat health care, I don't have a family so I won't benefit from family leave, and I'm an old man so I don't need free tuition. I'm not opposed to those things, but the bottom line is "what has Bernie done for me lately?"
@LetsGetItDone, I respect Galbraith as an economist but find it hard to take his political advice seriously after his embarrassingly wrong calls on Syriza.
All of the economists you name are petite-bourgeoisie, none of them represent the working class, and that includes Stephanie the doctor's daughter.
As for the political realities of dealing with Congress, as I have commented in previous threads the only taxes Grover Norquist will approve are regressive taxes on the working class. The political reality as I see it is that Bernie will be able to pass his regressive taxes to pay for some sort of health care expansion -- very unlikely to be improved Medicare -- while the rest of his platform is DOA.
I don't buy 15 dimensional chess arguments, anyway. If you have to come up with a 15 dimensional chess theory to justify your candidate's behavior, I'm not going to take you seriously. Occam's Razor suggests the reason Bernie emphasizes "pay fors" is because that is what he values.
Dan: "I don't buy 15 dimensional chess arguments, anyway. If you have to come up with a 15 dimensional chess theory to justify your candidate's behavior, I'm not going to take you seriously. Occam's Razor suggests the reason...is because that is what he values."
I've been searching for a line like that for years, and you can pull it out like that on a thread?
I'm going to use that line about "15 dimensional chess and Occam's razor" every time I hear the mental gymnastics vomited up to explain why X is doing Y when in his heart he really wants to do Z. He or she did Z because they always wanted to do Z, you fucking dummy. And any arguments to the contrary by groupies is "15 dimensional fucking chess". I added the "fucking" to the "15 dimensional chess" so that I can claim the put down for my own. I hope you don't mind, Dan!
@John, thanks for your good humor. Yes, "mental gymnastics" is a good way of putting it.
Dan: @Calc, historical note: in 1932 FDR campaigned to the right of Hoover, criticizing Hoover's infrastructure programs as wasteful spending, and promising to balance the budget. FDR's first major programs were pro-business. FDR was PUSHED to the left, and to his dying day remained a conservative at heart, morally opposed to welfare and to make-work programs.
Back to normal. :-) We disagree strongly on these "facts", which might have been guessed from what I said above. I noted the prominence of FDR's comparatively unimportant "pay for" "balanced budget" promises above also. But what most today miss or ignore or never heard of is what is important: his prominent promise to deficit spend - made in 1932. Nobody pushed FDR anywhere he didn't want to go. Characterizing his positions on work and welfare or him as a conservative that way is close to absurd. Nobody in his own era did.
As for taking $1 out of my pocket, Bernie proposes to taking 8.9% or more out of my pocket and put nothing back. I can't eat health care, I don't have a family so I won't benefit from family leave, and I'm an old man so I don't need free tuition. I'm not opposed to those things, but the bottom line is "what has Bernie done for me lately?"
You pay nothing for health care? No government mandated extortionist? Social Security recipients would do better under Bernie than other candidates. Hard to see how this could be true, harder to see how it would be true of many people. In any case increased aggregate spending would benefit everyone - so everybody would be in the +1.25, -1.00 boat.
Occam's Razor suggests the reason Bernie emphasizes "pay fors" is because that is what he values. As above, we disagree on the facts. Bernie doesn't emphasize "pay fors", he mentions them.
" I think Trump's America will be a dangerous place for people who don't make it a practice to go along with authority. "
Joe, yes for a change... we've had 2,000 years of libertarianism it may be starting to swing back towards authority as evidenced by no less than a return of state currency in the last century... the Trump phenom could just be a co-incident indicator of this nascent return of authority...
Matt,
Don't you like the Bill of Rights and the Constitution? Be careful what you wish for: the authoritarian of your dreams may turn his sights on you. That's why "liberal" values are so important, and why so many countries have adopted them, lest the country revert back to tribalism and civil war.
To be fair to the libertarians, I don't think we've had even one week of libertarianism. We'd know if we had - human civilization would not be able to bear it.
John,
Civil authority is imposed THROUGH law... ie no law, no authority... our HUMAN (ie NOT chimpanzees...) ancestors termed theirs a 'numismatic' system iirc the Greeks said "because it is based NOT on nature BUT on law (nomos)"...
So a true return of authority would include full enforcement of the Bill of Rights and Constitution... if someone wanted to change that they would have to go through the amendment process ...
So you look at these red light cameras... ok we have laws that say "stop at a red light" so the fascist approach is to have private firms install systems that take pictures and then they fine violaters and the firms "make money!" and then send a check to the fascist govt... so the fascist govt can "get money!" too... THIS is textbook fascism 101...
When a non-fascist govt would rather install public owned systems that would PREVENT anyone to go thru on red using the EXACT same technologies... there is a BIG difference...
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