It is highly surreal listening to radio/TV commentators talking about government financial affairs (fiscal balance etc). These so-called experts are paraded before the nation and the script is generally the same. The interviewer who knows virtually nothing but has the key triggers on hand (‘budget repair’, ‘ratings downgrade’, etc ad nauseum) asks the ‘well respected expert’ about the state of affairs and the answers are always the same – fictional. This charade plays out almost daily but reaches a hysterical fever pitch at the time the Government releases its annual fiscal statement (May) or its Mid-Year Economic and Fiscal Outlook (December). The Government plays along with the charade releasing what it deems to be cleverly crafted documents, shifting revenue and spending across year lines to give one impression or another of the state of affairs. None of the charade is based on any fundamental economic understanding. None of it means anything other than a demonstration of a national scam to hide the truth from the ordinary citizen who for one reason or another relies on experts to summarise technical detail into meaningful sound bites. The nation then goes about its business in this cloud of ignorance, while the elites continue to suppress wages and living standards and march of with increasing shares of national income. They know what is going on and it is in their interests to keep the rest of us from having the same information. It is the same the world over. Well, here is what is going on with a framework that allows the reader to cut through the lies …
Exposing conventional economic analysis as ideological persuasion (propaganda) aka "duping the rubes."
Bill Mitchell – billy blog
A lying government pushing economy towards recession and greater inequality
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia
4 comments:
"The sectoral balances equation is interpreted as meaning that government sector deficits (G – T > 0) and current account surpluses (CAD > 0) generate national income and net financial assets for the private domestic sector."
This is sloppy...
This is sloppy...
How so?
He's is trying to use Accounting (which is ex post) to make causal inferences with the word 'generate' here...
So there is a problem with Time Domain here...
Hypo govt could start with $10k to every household on the 1st of the month 25% taxable income...
Households turn that over 11 times during the month while accruing income tax payable of 25% for each turn and on the 30th pay $9700 taxes leaving the govt with a "deficit!" of $300 for the month and every household realizing $38k of income for the month ... Then on the 1st govt pays each household another $10k ...
So income would be $38k for the month and the "deficit!" would be $300 for the month (10,000 - 9700)
so how does the govt sector "deficit!" of 300 'generate' (present tense) the $38k of income if you use a one month accounting period like the govt typically does to determine what "the deficit!" was for the previous month (past tense)?
Its really the original $10k that the govt spent that month that 'generated' the income.... and the taxes and any resultant "deficit!" (non-govt savings) is a function of that leading govt spending of 10k not the 300 of 'deficit'
So like Brazil saying they are going to stick to a 3% deficit could work as long as govt spent enough FIRST and nobody saved very much and you could tune the system to operate efficiently....
Thanks for responding, Matt. Really appreciate it. It was a sincere question. But right now I am so full of office eggnog I can barely type. ;-) Think I might be out of commish for the rest of the night. Holiday cheer.
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