Robin Koerner, publisher of WatchingAmerica.com, addresses the balance budget amendment in light of MMT's warning about what it would entail economically.
The Huffington Post: A Balanced Budget Amendment Would Change Everything
It seems to me that Koerner presents the tradeoff pretty well. What he is saying is that most people calling for a balanced budget amendment don't realize that everything has consequences and they don't understand the political benefit that is supposed to result has an economic cost, even a serious one, in the tradeoff. He piece is about the political/economic tradeoff, and he things that the decision criteria should be normative. He sees it as a tradeoff between prosperity and tyranny and comes down against tyranny. That appeals to a lot of people both on the right and left in this culture of crony capitalism and corruption, in which the state is seen increasingly as predator.
He understands the basic points of MMT about the fiscal balance and then considers the tradeoff in terms of government power. This and his previous post show that he has at least taken the trouble to investigate MMT. That's a plus, since we are at least engaging on a playing field where our existence is being acknowledged. Moreover, he is objecting to MMT not on positive grounds, which he seems to have conceded, but on normative preference. That seems like an advance for MMT to me, rather than having to confront ill-informed blather.
The main objection of both left and right to MMT policy is that it gives politicians too much power in its attempt to offset saving desire with fiscal policy through the sectoral balance approach and functional finance. The right is concerned with politicians using fiscal power to bribe the rabble for votes, and the left is concerned with state capture as the wealthy and influential bribe politicians with contributions needed in increasingly expensive campaigns. Koerner makes clear that his concern is not economic as much as political. He cautions that there is a tradeoff between economic concerns and political concerns, and that a balanced budget amendment would have consequences that MMT warns about.
I don't that this can be shrugged off politically. This is why the work that Bill Black and Randy have been doing on the blogs is addressing corruption is so important, and why proposals for reform like Warren has put out are key to putting the MMT position across politically as well as economically. I have also brought up the input of Michael Hudson on economic rent, which MMT hasn't dealt with specifically as far as I can tell. But this is a good argument for progressive taxation that distinguishes productive and unproductive gains and taxes the unproductive. MMT does talk about targeted taxation, and this is what progressives are looking for to address inequality.
What do you think?
