It’s rather like living in society where everyone thinks the world is flat. If we insist the world is really round then they might not like that and vote for someone else. We, in turn, wouldn’t like that so the best approach may be to pretend we think the world is flat too, and work our way around the problem as best we can!
One way is to redefine what we mean by ‘government deficit’. As Neil Wilson has recently noticed, Ed Balls has been astute enough to use the term ‘current deficit’.
http://www.3spoken.co.uk/2014/12/how-to-eliminate-uk-deficit-trick.html
I think we all missed the inclusion of the word for slightly too long, so full marks to Neil for spotting that. Maybe, we gave Ed slightly more criticism than he may have deserved over his advocacy of ‘balancing the books’.
So what could be the plan? The idea is simply that we shouldn’t count capital spending, just current spending. On a personal level, current spending is our going down to the pub and drinking a few pints. We’ve nothing to show for it the morning after. Capital , or investment spending, would be on building a house or investing in a viable business. The value of that would, if we drew one up, appear on our personal balance sheet, so even if we went into the red financially we would still be in the black overall once the value of the physical assets was counted.
So how’s it going to work for government? Current spending is, amongst other things, paying out unemployment benefits. Capital spending includes electrifying all railways and building houses.…Modern Monetary Theory: Real Economics
How to Balance the Government Budget. The MMT way! (Part2)
Peter Martin
See also
Ralphonomics
The flaw in Ed Balls’s deficit conjuring trick.
Ralph Musgrave
1 comment:
in the long run it's a losing cause;
"balancing fiat" is just completely broken semantics
it's completely analogous to "balancing evolution"
You don't efficiently recruit people to be pragmatically agnostic by endlessly telling them that there is no Devil, no God, no angels ... and that they aren't going to hell.
All that does is imprint in their minds the archaic terms which emerging adaptive pressures demand they forego using as their primary social construct. There's a reason why separation of state and religion evolved. It works.
Until we separate policy from broken semantics, we're only spitting different amounts into the wind.
http://mikenormaneconomics.blogspot.com/2014/08/deficit-doves-crowded-out-by-semantic.html
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