I am confused you are promoting MMT which puts masses of money under the control of politicians but at the same time you are going to great lengths to point out the deficiencies of these same politicians.
MMT is an analysis of currency, federal finance, monetary-bank operations, and macroeconomics.
Certainly MMT analysis of one monetarily sovereign country is essentially true of all monetarily sovereign countries albeit differences in scope of economic industries/sectors, resources. Monetarily sovereign countries are fundamentally characterised by floating their national money of account aka currency, not pegging the currency to a foreign currency or commodity (eg gold), and spending by fiat aka decree i.e. political will in govt. Some examples of monetarily sovereign countries are 🇺🇸, 🇯🇵, 🇨🇦, 🇨🇭, 🇨🇳, 🇦🇺, 🇬🇧
These same politicians are not the same politicians, these are Congressmen and -women elected by different people. The different parties debate over financial policies in the Congress and this is how the economist describes it.
It is possible to make economic reforms in the same political system. MMT is not imagining a different political system nor situation. When we imagine a different political system with different economics, and it can be a useful exercise, then the model of the financial system of that imaginary system would be an Imaginary Monetary Theory, IMT. Implementing it in the real world would require a political reform or a revolution. If this succeeds then the IMT has a chance to become an MMT. But this is not the case now, at the moment the whole discussion is about the reality the Americans live in.
No, George, although I am not an English native speaker, I expressed my view clearly and your response is a semantic game. It is only you who is talking here about perfect humanity and commenting on imaginary situations, not me, although you are trying to impress the opposite. It would be nice to refrain from doing this kind of things.
Thank you for your answer, it confirms my original suspicion that you did not come here for serious discussion. Like the same George in Twitter I have noticed. And sorry for not answering your further comments, I am not playing these games. The last word is yours.
The pay4 scam is so obvious. Alas, because both sides of the aisle play this hoax, voters and the MSM, never get woke to the fiscal gaslight.
In my over 4 decade of government service, I observed that it is often the budget-neutral or even positive bills that are the ones with the most unintended fiscal consequences. I recall several decades ago over dinner one night a senior congressman boasted to me that he was introducing a bill to require the Navy to provide access to private sector salvagers prior to using the hulls for artificial reefs. "Navy is sinking billions every year in re-usable equipment." he said.
I explained that this was not waste because Congress required that every piece removed from a retired ship had to be accounted for individually, in triplicate, and sometimes had to be removed at government expense. Thus, it was cheaper to sink it all rather than remove old useable parts and equipment.
His bill would NOT have saved billions; it would have cost billions. Thanks to that dinner conversation, the older law was amended to allow the salvage to occur paperwork-free. Close call, but it shows how pay4 has no bearing on costs.
You wrote: "the purpose of the tax is... to help us rebalance the distribution of wealth."
The idea that we need to tax in order to redistribute wealth relies on zero-sum "Household Budget" thinking. To redistribute, you must take from one person to give to another. But, as MMT folk constantly point out, that's not how taxes work. The redistributive view of taxes on high incomes or wealth also obscures the more equitable purpose for such taxes, which is not to offset inflation, but rather to discourage and offset the rent-seeking which produces high levels of unearned income.
The very rich are different from normal folk not only in that they spend much less of their wealth on consumption, but also in that a much higher portion of their income and wealth is derived from economic rent. Thus, while the offsetting of inflation may be the primary motivation for taxing normal people, the grounds for taxing the rich are two-fold: 1) Inflation offset, and 2) rent-recovery.
As Andrew Carnegie once wrote: "Where wealth accrues honorably, the people are always silent partners." Some taxes on great wealth or income should be intended to discourage the already wealthy from using their positions of advantage to take too much of the people's share. Such taxes should be motivated by equity, not either redistribution or inflation.
I am very sympathetic to your position but I do believe Dr Prof. Kelton is using the term "redistribute" quite literally to mean "alter the distribution", "distribute anew and differently". There's no implication that the quantity of what is being distributed anew or differently remains constant. What is being re-distributed remains the same (e.g. net worth, annual income) but the quantity thereof need not and usually does not. It is patently the case, and it is certainly logically possible, that different distributions of e.g. net wealth at time T1 are associated with different QUANTITIES of what is distributed AND how it is distributed at time T2 (with T2 being "later" than T1).
Tax the wealthy more. Tax the middle and poor less.
Cut loopholes and monetary supports for the wealthy. Let them support themselves.
Allow government to add support for middle class and poor in the way of jobs, which will aid the countries economy, thereby adding value to the country, the wealthy, and the overall economy of the middle class and poor.
I agree with your general notion and see how the term 'distribution' can trigger household associations. This is how I understand the term:
It is not about the redistribution of money that government issues, it is about the redistribution of money that remains in the private sector for the contribution of the individuals and firms to the whole society during the financial year. This money is called also deficit, the sum of the deficits of each year is called government debt (and this debt is all paid to the private sector for its contribution).
In the USA the government is not interfering much into how the issued money will flow and pool or drain in the economic environment. But when the government starts to collect taxes in order to remove the excess money from circulation to avoid inflation then it ought to take into consideration that after taxes are collected everybody deserves to have means to survive and prosper. You can collect taxes from where money is, not 'equally from everybody'. The rich people who happen to live in a financial 'wetland' should consider themselves lucky because there is not enough space for everybody in such 'wetlands', instead of getting defensive against the government's anti-inflationary 'melioration work' that protects these wetlands against floods like every other place.
As we don't need to tax in order to raise revenue, but we do wish to fight inequality, should we link taxes to inequality? That might look something like this:
As per capita income is roughly $36,000/year and the GINI coefficient for the U.S. is about 0.45, I think that would look like:
A person making $36,000/year or less paying $0 in taxes
A person making $50,000/year paying $6,300 for a12.6% effective rate
A person making $100,000/year paying $28,800 for a 28.8% effective rate
A person making $1,000,000/year paying $433,800 for a 43.4% effective rate
An advantage of this approach is that it makes income taxes very easy to compute. If we wanted to make this approach stronger, we tax all income generated from work and capital at the same rate - this would help put the tax prep industry out of business.
Another “Lens” from which to view these issues is to start with the most fundamental of fundamentals for any going concern, and that is, what is the purpose of our government? Without an agreed upon purpose, economic debate becomes a waste of time. I suggest that we use the one found in the Preamble to the Constitution and then contemporize it a bit to reflect what’s been learned since it’s ratification. For example, to paraphrase Alexander Hamilton’s summary of the Preamble, our government’s purpose should be to abolish the oligarchs and unite for the general welfare using best practice-based solutions. In other words, we need to first agree what our government should be doing and then figure out what is the best way to get it done. MMT can give us the justification and strategy for investing in a role model public education system, a role model healthcare system, and role model management of all of our other commons (for e.g., our parks, police, military, and myriad infrastructures). There are no good reasons why we cannot do this, just a bunch of bad ones.
Thank you to Stephanie Kelton, once again, for giving me another perspective of MMT and the issues that confront our nation.
Spam alert.
Finally a model that makes logical sense!!
It's about how money gets accounted for and why........(I am thinking....).
I am confused you are promoting MMT which puts masses of money under the control of politicians but at the same time you are going to great lengths to point out the deficiencies of these same politicians.
Where is the logic?
MMT doesn’t put anything anywhere.
MMT is an analysis of currency, federal finance, monetary-bank operations, and macroeconomics.
Certainly MMT analysis of one monetarily sovereign country is essentially true of all monetarily sovereign countries albeit differences in scope of economic industries/sectors, resources. Monetarily sovereign countries are fundamentally characterised by floating their national money of account aka currency, not pegging the currency to a foreign currency or commodity (eg gold), and spending by fiat aka decree i.e. political will in govt. Some examples of monetarily sovereign countries are 🇺🇸, 🇯🇵, 🇨🇦, 🇨🇭, 🇨🇳, 🇦🇺, 🇬🇧
These same politicians are not the same politicians, these are Congressmen and -women elected by different people. The different parties debate over financial policies in the Congress and this is how the economist describes it.
It is possible to make economic reforms in the same political system. MMT is not imagining a different political system nor situation. When we imagine a different political system with different economics, and it can be a useful exercise, then the model of the financial system of that imaginary system would be an Imaginary Monetary Theory, IMT. Implementing it in the real world would require a political reform or a revolution. If this succeeds then the IMT has a chance to become an MMT. But this is not the case now, at the moment the whole discussion is about the reality the Americans live in.
Andri as I read and understand your comment you are pointing out that in our present system MMT is unworkable. Thank you!
When we have perfect human beings and a perfect political system we can take another look at it.
In the interim let's get real with policies that take into account the fact that perfect humanity isn't here yet.
George
No, George, although I am not an English native speaker, I expressed my view clearly and your response is a semantic game. It is only you who is talking here about perfect humanity and commenting on imaginary situations, not me, although you are trying to impress the opposite. It would be nice to refrain from doing this kind of things.
Thank you for your answer, it confirms my original suspicion that you did not come here for serious discussion. Like the same George in Twitter I have noticed. And sorry for not answering your further comments, I am not playing these games. The last word is yours.
Sublimely written per usual. Thank you, Prof. Kelton.
Thanks for the great post! (I think you've misspelled the word 'winning' in the sub-head)
The pay4 scam is so obvious. Alas, because both sides of the aisle play this hoax, voters and the MSM, never get woke to the fiscal gaslight.
In my over 4 decade of government service, I observed that it is often the budget-neutral or even positive bills that are the ones with the most unintended fiscal consequences. I recall several decades ago over dinner one night a senior congressman boasted to me that he was introducing a bill to require the Navy to provide access to private sector salvagers prior to using the hulls for artificial reefs. "Navy is sinking billions every year in re-usable equipment." he said.
I explained that this was not waste because Congress required that every piece removed from a retired ship had to be accounted for individually, in triplicate, and sometimes had to be removed at government expense. Thus, it was cheaper to sink it all rather than remove old useable parts and equipment.
His bill would NOT have saved billions; it would have cost billions. Thanks to that dinner conversation, the older law was amended to allow the salvage to occur paperwork-free. Close call, but it shows how pay4 has no bearing on costs.
You wrote: "the purpose of the tax is... to help us rebalance the distribution of wealth."
The idea that we need to tax in order to redistribute wealth relies on zero-sum "Household Budget" thinking. To redistribute, you must take from one person to give to another. But, as MMT folk constantly point out, that's not how taxes work. The redistributive view of taxes on high incomes or wealth also obscures the more equitable purpose for such taxes, which is not to offset inflation, but rather to discourage and offset the rent-seeking which produces high levels of unearned income.
The very rich are different from normal folk not only in that they spend much less of their wealth on consumption, but also in that a much higher portion of their income and wealth is derived from economic rent. Thus, while the offsetting of inflation may be the primary motivation for taxing normal people, the grounds for taxing the rich are two-fold: 1) Inflation offset, and 2) rent-recovery.
As Andrew Carnegie once wrote: "Where wealth accrues honorably, the people are always silent partners." Some taxes on great wealth or income should be intended to discourage the already wealthy from using their positions of advantage to take too much of the people's share. Such taxes should be motivated by equity, not either redistribution or inflation.
I am very sympathetic to your position but I do believe Dr Prof. Kelton is using the term "redistribute" quite literally to mean "alter the distribution", "distribute anew and differently". There's no implication that the quantity of what is being distributed anew or differently remains constant. What is being re-distributed remains the same (e.g. net worth, annual income) but the quantity thereof need not and usually does not. It is patently the case, and it is certainly logically possible, that different distributions of e.g. net wealth at time T1 are associated with different QUANTITIES of what is distributed AND how it is distributed at time T2 (with T2 being "later" than T1).
Tax the wealthy more. Tax the middle and poor less.
Cut loopholes and monetary supports for the wealthy. Let them support themselves.
Allow government to add support for middle class and poor in the way of jobs, which will aid the countries economy, thereby adding value to the country, the wealthy, and the overall economy of the middle class and poor.
It's a win, win,win for all.
I agree with your general notion and see how the term 'distribution' can trigger household associations. This is how I understand the term:
It is not about the redistribution of money that government issues, it is about the redistribution of money that remains in the private sector for the contribution of the individuals and firms to the whole society during the financial year. This money is called also deficit, the sum of the deficits of each year is called government debt (and this debt is all paid to the private sector for its contribution).
In the USA the government is not interfering much into how the issued money will flow and pool or drain in the economic environment. But when the government starts to collect taxes in order to remove the excess money from circulation to avoid inflation then it ought to take into consideration that after taxes are collected everybody deserves to have means to survive and prosper. You can collect taxes from where money is, not 'equally from everybody'. The rich people who happen to live in a financial 'wetland' should consider themselves lucky because there is not enough space for everybody in such 'wetlands', instead of getting defensive against the government's anti-inflationary 'melioration work' that protects these wetlands against floods like every other place.
As we don't need to tax in order to raise revenue, but we do wish to fight inequality, should we link taxes to inequality? That might look something like this:
[Your Income]-[Per Capita Income]xGINI Coefficient
As per capita income is roughly $36,000/year and the GINI coefficient for the U.S. is about 0.45, I think that would look like:
A person making $36,000/year or less paying $0 in taxes
A person making $50,000/year paying $6,300 for a12.6% effective rate
A person making $100,000/year paying $28,800 for a 28.8% effective rate
A person making $1,000,000/year paying $433,800 for a 43.4% effective rate
An advantage of this approach is that it makes income taxes very easy to compute. If we wanted to make this approach stronger, we tax all income generated from work and capital at the same rate - this would help put the tax prep industry out of business.
Another “Lens” from which to view these issues is to start with the most fundamental of fundamentals for any going concern, and that is, what is the purpose of our government? Without an agreed upon purpose, economic debate becomes a waste of time. I suggest that we use the one found in the Preamble to the Constitution and then contemporize it a bit to reflect what’s been learned since it’s ratification. For example, to paraphrase Alexander Hamilton’s summary of the Preamble, our government’s purpose should be to abolish the oligarchs and unite for the general welfare using best practice-based solutions. In other words, we need to first agree what our government should be doing and then figure out what is the best way to get it done. MMT can give us the justification and strategy for investing in a role model public education system, a role model healthcare system, and role model management of all of our other commons (for e.g., our parks, police, military, and myriad infrastructures). There are no good reasons why we cannot do this, just a bunch of bad ones.
Thank you to Stephanie Kelton, once again, for giving me another perspective of MMT and the issues that confront our nation.