Home > Main > Smells like…Victory

Smells like…Victory

November 14, 2011

I’ve been thinking about what victory looks like for the MMT crowd.

Long run – well, that’s obvious.

But short run…what does victory look like for us?

What compromises would we take?  Who would be good allies?

Any thoughts on this are welcome.  Please discuss!

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  1. November 14, 2011 at 1:17 pm

    The short run is to demonstrate that there is little or no difference between bonds and reserves.

    So when papers are published that attempt to show anything other than ‘bond yields went down a bit’, they need pulling apart by exposing the flawed assumptions.

    The short run is to reframe the debate. Whenever anybody mentions deficits we need to respond ‘you mean the shortage of jobs’ pointing out that is the only ‘deficit’ that matters since that is real suffering of real people.

    And try and put the numbers in a picture. I point out that the number of people who want work in the UK is the same as the populations of the 9 largest cities in the UK outside London. Getting people to think about all those cities without work puts the problem in context.

    We’ve got to get this debate focussed on the scale of the real suffering out there.

  2. TC
    November 14, 2011 at 1:48 pm

    I am with you on this. I’d like to hear your thoughts on potential partners. We’re friendly with the Public banking crowd.

    Who else?

    • November 15, 2011 at 3:37 am

      You may be looking at the horse at the wrong end. It’s not so much partners that you have to determine in politics but who the ‘enemy’ is.

      We need a ‘pantomime villain’ to ‘hate’. That’s what gets the lizard brain engaged and gets real political momentum. Most political campaigns demonize something.

      For there to be victory an enemy has to be defeated.

      • TC
        November 15, 2011 at 8:18 am

        50% with you on this. There can be “victory” without having an explicit enemy. For this little exercise, the word victory is closer to “a victory” per JKH or “what would advance getting MMT used as policy or making MMT become more visible”.

        I am not looking for total domination or vanquishing the Austerians to the deepest levels of hell. But rather something we might be able to accomplish in the next year, that would be movement in a direction we find agreeable.

        We might have to give something for this – say “using the coin” in exchange for “supporting QE III” as an example. I don’t think QE had much effect. But I’d support it in exchange for using the coin(s).

  3. JKH
    November 14, 2011 at 2:08 pm

    “But short run…what does victory look like for us?”

    Not sure about “victory”, but here is “a victory”:

    When Krugman writes another blog post on MMT – and Scott Fullwiler agrees with it.

    🙂

    • TC
      November 15, 2011 at 8:20 am

      Hey! that’s a good one. There is an ongoing debate about Krugman repeatedly mentioning MMT.

      I think it’s Overton Window game theory for Paul. He points us out to be the real economic left, so hes centrist as a result.

      Sooooooo?

      • November 18, 2011 at 2:16 pm

        Since when was putting people centred economics first left wing? (rhetorical, for effect 😉

    • Dunce Cap Aficionado
      November 16, 2011 at 1:00 pm

      I think that is an excellent example of a short term win.

      Nothing is going to ‘unseat’ people like Krugman and other types of pundits. But if they start saying the same things that MMTers have been saying for years (especially after first saying “I don’t know” then sparing with MMTers, THEN finally getting it right) that’s a short term victory in my book.

      • TC
        November 16, 2011 at 1:02 pm

        Good point. Just having people like Krugman repeating our talking points is a short term victory.

  4. November 14, 2011 at 4:59 pm

    Martin Wolf perhaps?

    • TC
      November 15, 2011 at 8:21 am

      Hmmm. Martin Wolf. Yes, we could easily find common ground with him. What do we have to offer? I keep coming back to this – what can/do we offer them?

  5. Clonal Antibody
    November 14, 2011 at 5:18 pm

    Find friendly Congressional critters and get them on board, particularly wrt Beowulf’s proposals. Sanders could be pushed to be on board. The Progressive Caucus of the House perhaps. Get some of the Berkeley economists on board. De Long did buy into the “Platinum Coin”

    • November 16, 2011 at 11:15 pm

      In regards to Sanders, is he really a Socialist/Democratic Socialist or is he just a socialist in the US sense of the word?

      • beowulf
        November 16, 2011 at 11:26 pm

        In the US sense, so he’d be part of whatever the right-wing party in Australia is (OK that might be a slight exaggeration). :o)

        • November 17, 2011 at 12:29 am

          Or a big one. The Right Wing party in Australia is called the Liberal Party but it is a Conservative party. It’s original foundations were on Classical Liberalism as opposed to the term liberal in the US which is based on Social Liberalism aka Modern Liberalism. 😛

      • beowulf
        November 17, 2011 at 6:24 am

        Ahh, you discount the possibility that since your liberal party would be called conservative in US, I had factored that in and so by “right-wing” I meant what Australians would call the Green party.
        :o)

        • November 17, 2011 at 6:51 am

          I thought you were playing some comic joke and now it has been confirmed. At least I was educational 😛

          Off Topic of this post but I’ve given your TC rule with GST some thought and after mulling over the mechanics of the GST as it operates here it is possible but improbable due to unilateral decision by the Federal government instead of cooperative with the States.

          And on topic scroll to the bottom – see my post that actually applies to this blog post.

  6. November 14, 2011 at 7:17 pm

    I think victory in the short run would be persuading the President to get the $60 T coin minted and to give a speech like the one: http://mikenormaneconomics.blogspot.com/2011/07/definitive-solution-to-debt-crisis.html stating plainly that there is no austerity problem, because there is no solvency problem.

    • Clonal Antibody
      November 18, 2011 at 6:40 pm

      Joe,

      You want to respond to a comment on the nycga site?

      Why do I say this story? ..because when I first read about coin seigniorage, my reaction was — this is just TOTALLY stupid– I’m not even going to read about it anymore. But as I thought….and pulled out some paper….made some flow diagrams….I’ll be damned if I can’t find big flaws. I’m still not convinced however as somehow I still have this gut feeling that some signifiant currency errosion would occur, or that you would have inflation as Congress simply started to spend all the breathing room it gained. Maybe they should try it though…..I just hope I have enough advance notice to convert to Swiss Francs and take a trip to Vaduz to wait it out.

      I hope I figure this out to my own satisfaction soon…..I have a big headache now.

  7. November 14, 2011 at 9:30 pm

    I’m with Neil Wilson. I think we have to keep making the case whenever and wherever possible. It’s impossible to predict who will pick up on it and be successful in bringing MMT to the forefront, but it will likely happen at some point…

    • November 14, 2011 at 10:09 pm

      Doesn’t answer the question, which is what would a victory look like in the short run?

      I guess I haven’t quite answered it either. So:

      What compromises would we take? A $30 T coin being minted.

      How about Congress giving the Treasury to authority to create money in the TGA to spend Congressional appropriations? Answer, that authority isn’t a compromise. That’s a bigger victory.

      Who would be good allies? The Web of Debt/No Debt money advocates. They don’t fully understand MMT, but they’ll support the same things we would in getting the Treasury to create money w/o issuing new debt.

      • November 15, 2011 at 6:59 am

        Good point, Joseph. I guess I would say that victory looks like MMT getting sufficient mainstream publicity to be taken seriously by politicians and more economists in positions of power.

        I’m not familiar with the War or Debt/No Debt money advocates. I’m skeptical, but will keep my eyes open.

        In that vein, what we don’t need, in my opinion, is to pretend that we agree with monetarists such as Nick Rowe and Scott Sumner. When we go down that road we lose clarity and usefulness. NGDP targeting is mush of the worst sort, which is exactly what MMT isn’t…

      • TC
        November 15, 2011 at 8:26 am

        Yes, the Public Banking is a natural ally.

        Senexx had a great facebook thread between Scott F and Louis-Philippe Rochon about how they could be more explicit about the minor differences in their schools – and be far more explicit about the continent-sized similarities.

        They are a natural fit.

        Good stuff.

    • TC
      November 15, 2011 at 8:23 am

      I agree with this 100%. But this doesn’t mean we can’t partner to get our message out a bit more.

      Frankly, I am thinking about actual implementation of something like the coin. What does it take, and how does it happen?

      • November 15, 2011 at 1:26 pm

        I think it happens by all of us writing about and echoing the $60 T proposal and doing everything we can to get it into the White House and under consideration. As well as emphasizing its good effects on getting rid of the austerity mind set, we have to emphasize how advantageous it would be politically for Obama to take very strong and dramatic action to clear away the austerity mind set, pay the debt, and get on with proposing policies that will solve the nation’s problems.

        As the political race gets tighter, which it probably will, the issue will be in doubt. Obama may become an underdog to Romney, and if OWS continues to grow, the conditions may be right to get him to abandon austerity.

        On the pure aspect of implementation. We have:

        1. The President orders Geithner to order the Mint to issue the 1 oz. proof platinum coin and deposit it into the Mint’s Public Enterprise Fund (PEF) at the NY Fed. If Geithner refuses then the President fires him, and orders the acting Secretary to perform or step down.

        2. The Treasury Secretary conveys the order to the Mint

        3. The Mint carries out the order

        4. The Fed credits the PEF with $60 T. If it will not, then the Treasury orders the Fed Chairman to do his duty as the Treasury’s banker, pointing out that the coin is legal tender and that also in cases whether the Treasury Secretary and the Chairman have a differing interpretation of the Law, the Bill authorizing the Fed states clearly that the Secretary’s interpretation shall prevail.

        5. Once the PEF has been credited, the Treasury “sweeps” the PEF account of profits from the ‘sale” of the coin to the Fed. Those are roughly $60 T minus the $3500 cost of minting the coin. This results in nearly $60 T going into the Treasury General Account (TGA).

        6. The Executive can use the $60 T to spend Congressional deficit appropriations and repay Federal debt, including both principal and interest.

  8. November 15, 2011 at 4:15 am

    I just want to get the phrase “get the banks lending again” removed from our language.

    As soon as we figure out that banks love loaning lots of money for lots of interest over a long time (their dream mortgage 15% over 100 yrs) maybe we’ll figure out that its not unhealthy bank balance sheets we need to worry about but unhealthy citizen balance sheets.

    • TC
      November 15, 2011 at 8:24 am

      Good point. We could be very aggressive on this. If the Austrians were sane, we could be partners with them on this. But they are not sane.

  9. Oliver
    November 15, 2011 at 9:29 am

    Get all Post-Keynesian fractions, UMKCers, Levy chaps etc. to come up with a common message (and name) to market themselves together?

    ERC (Economists for Responsible Capitalism)

    or

    PPP (Public Purpose Project)

    1. Occupy Congress for public money for full employment and zero tolerance on corruption
    2. Occupy the Fed for permanently low interest rates, full transparency and complete control of the financial sector.

    or something like that 🙂

    Btw. where can I follow that conversation between Scott Fullwiler and Rochon? Do i subscribe to Scott’s public feed?

    • Dan Kervick
      November 15, 2011 at 11:25 am

      I like this. I thought the discussion of Marc Lavoie’s paper at Heteconomist on differences between MMT and circuitists was very constructive. For me, the goal is to defeat 30 years of neoliberalism, with all its ideas about the perfection of markets, it monetarist leanings and its pooh-poohing of fiscal policy. Just get people to read and appreciate Keynes, Minsky, Lerner, and don’t worry too much about other details. I want people to rediscover the potential of a fiscally active government.

      I’d like as many people as possible to go to the Levy Institute site once a week, and check out all of the latest downloadable.

      • Oliver
        November 16, 2011 at 5:02 am

        I like heteconomist too. He should go by the motto ‘fair and balanced’ :-).

  10. Oliver
    November 15, 2011 at 9:32 am

    or substitue Congress for Politics and Fed for Central Banks to keep it global.

  11. studentee
    November 15, 2011 at 5:53 pm

    mmt needs to get to the top of the google rankings 🙂

  12. November 16, 2011 at 10:14 am

    Its possible that the best we can hope for right now is a simple win by default (perfect for these times huh?). In other words if we successfully expose the bankruptcy (so many double entendres) of certain crucial neo classical notions we can be the best one standing.

    The two that are the most ripe for the taking, I think, are the notion that a bank is just an intermediary between savers and borrowers and that keeping banks balance sheets healthy keeps them lending.

    I take a stab at destroying them both here in this short and simple thought experiment.

    Imagine ten people who are all consuming every bit of their income. They have nothing to save because they spend everything to live. Now imagine that only one guy finds a way to consume less and can therefore accumulate savings. At this point could a bank (Im going to take a cue from neo classical econ and “assume” a bank into existence) take his savings and lend them to any of the other nine people?? Of course not. Everyone else is consuming all their income, they have nothing to borrow. A bank could however loan the saver some money against his future disposable income. That loan is created out of thin air and is an addition to present money supply. Once each of the other nine people in that economy are able to accumulate savings by not using all present income for consumption, they can then become a borrower against THEIR OWN potential income stream.

    It requires no one elses savings for me to get a loan, only my own potential future income beyond consumption.

    Banks make claims on each borrowers own savings and future income and no one elses.

    This realization makes it clear that all efforts to restore lending which focus on the banks side while ignoring the income of average Americans is destined to failure.

    • TC
      November 16, 2011 at 1:04 pm

      I’ve been using the idea “nothing left to strip mine from the middle class” for a while in conversations and writing.

      This is something that most monetarists dont’ easily understand – there can be limits to borrowing, and we are at those limits. They do not konw what the word leverage means in real life.

      • November 16, 2011 at 2:02 pm

        Im commenting at Nick Rowes place today and I use this thought experiment and he replies with this:

        “simplify. 10 people all consuming all their income, and saving nothing. Then one guy appears with a printing press. He prints off some money and lends it to one of the 10. Now we have a monetary hot potato, because the guy that borrowed the money (presumably) wants to spend it, not leave it sitting in his pocket. Standard monetary disequilibrium analysis.”

        ????????

        So he is saying that we could accomplish the same thing and keep everyone consuming all their income just by having a guy with a “priniting press” LOAN one of the guys the money.

        So I politely ask him. “Why would anyone who is consuming ALL their income take on a “loan”, even at zero percent?”

        I’m waiting for his answer.

        I guess he doesnt understand that loan payments come out of extra income……..that which you do not need. If you live hand to mouth you can make no loan payment.

      • beowulf
        November 16, 2011 at 2:15 pm

        “I’ve been using the idea “nothing left to strip mine from the middle class” for a while in conversations and writing. ”

        Did you see the cover story of this week’s Businessweek?
        In the wake of Alabama’s requirement that all employers check employee’s work authorization via E-verify (an excellent idea, BTW), its amusingly absurd to see journalists shamelessly taking the side of Alabama business owners who fear they’ll never find Americans willing replace illegal immigrants in working dirty jobs at minimum wage (Actually paying ag jobs “per basket” sounds suspiciously like a ruse to pay sub-minimum wage). The thought of, I know this is crazy, raising wages to attract labor occurs to no one.
        http://www.businessweek.com/magazine/why-americans-wont-do-dirty-jobs-11092011.html

        • Clonal Antibody
          November 16, 2011 at 4:59 pm

          On the minimum wage, median wage, as I noted in response to another of you comments:

          If you look at my post on gini coefficients of the US, the gini coefficient went from 35 in 1968 to 45 in 2008. This may not seem like much, but let me put a perspective on this, and show what this difference implies.

          Today

          Minimum Wage $7.25
          Median family income $ 50,000
          Median Hourly wage $16.25
          Hours worked per median family per year 3077
          per capita GDP $47,200
          CPI 650

          1968
          Minimum wage $1.60
          Median wage $2.60
          per capita GDP 4,491
          CPI 100

          So, from 1968, if the minimum wage had kept up with CPI, which went from 100 to 650 the minimum wage today should be $10.40

          If the income inequality had stayed the same, since per capita GDP went from 100 to 1050, the minimum wage would have been $16.80 and the median wage would have been $26.70

          The median family income would have been $26.65 x 3077 = $82,000

          This clearly shows the difference between a gini coeff of 0.35 and 0.45

          Another useful site Data from W-2′s allow closer look at income

          If you look at the W-2 earnings from 2009, 55.14% of wage earners earned less than $30,000 per year

        • TC
          November 17, 2011 at 7:02 am

          I sometimes can’t believe how poor we’ve allowed ourselves to become.

          $16/hour minimum wage would put many businesses out of business. Keeping wages low forces wages to be low.

  13. November 16, 2011 at 11:13 pm

    I’ll go back and read the comments shortly but I would like to paraphrase some things.

    MMT is often called Copernican. Copernicus was not wrong but was laughed at. Copernicus’s ideas really caught on when Kepler and Newton got hold of them.

    So the question becomes who are MMT’s Kepler and Newton?

    • TC
      November 17, 2011 at 7:00 am

      Nice one – good to remember for many years the earth centric model made more accurate predictions, because of the centuries of work and observations within that models paradigm.

  14. Clonal Antibody
    November 17, 2011 at 9:11 am

    TC :
    $16/hour minimum wage would put many businesses out of business.

    Maybe those businesses should not be in business — that is like saying that slave holder plantations needed slave labor to survive. Hence, slavery should never have been abolished.

    However, if there is a public purpose to be served by having those businesses be in business, then a subsidy through the job guarantee program, or an outright subsidy may be in order. It is then clearly a case of a failed market, or possibly a market externality.

    • November 17, 2011 at 10:12 am

      Or those businesses should be eliminated and replaced with volunteer/charity operations doing the same thing but with JG labour.

      You shouldn’t be able to make a profit out of slave wages. Those firms need putting out of business so that those with a better business strategy can thrive.

    • November 17, 2011 at 10:53 am

      I agree. The $16.00 per hour minimum wage is decent and in line with the prosperity and strong aggregate demand we had in 1968. Also, we may be surprised how many businesses would be able to afford that wage once they experience the increased sales resulting from an increase like that in the miniwage, coupled with an FJG program pegged to that level. I also think that if businesses can’t afford to pay a decent wage in America then they should not be in business. I have absolutely no fear that the market won’t supply companies that will pay the wage. It will because the demand will be there to justify other companies coming into the market.

      We have to remember that no one thought that the miniwage would work when it first was passed in the 1930s and that objections such as the one that companies will have to go out of business was raised then. We’ve been through this before. We know that the lowering of the real minimum wage over time wasn’t due to an inability to pay. It was due to the general trend to privileging the desire for larger and larger profits over all other human interests. The relative minimum wage should have been increasing, not decreasing since the 1960s. The fact that it did decrease is due to the political victory of neoliberalism, not to the real economic needs of business, And as a result of the relative decline we are all less well off; not simply the poor who are suffering on $7.25 per hour.

      • TC
        November 17, 2011 at 11:14 am

        I don’t agree on this. The economy isn’t robust or stable and raising the minimum wage to a much higher level would not be good right now.

        I’d focus on moving the economy to a higher track first, with more infrastructure jobs, before implementing a min wage increase.

        It’s not a matter of not wanting a higher min wage – read my other comment for more details on what I think about the economics of it.

        • November 17, 2011 at 7:47 pm

          I wouldn’t raise the miniwage, first. First, I’d do an SS payroll tax holiday, followed by revenue sharing to the States of $1200 per person, then when demand increased, a couple of months later I’d do the JG at $10.00 per hour, let the economy adjust to that, then depending on the results observed, I’d gradually increase to the 1968 levels relative to GDP over 18 months or so.

    • TC
      November 17, 2011 at 11:11 am

      Good point. I’d say they are good businesses. I was thinking more along the lines of “there are many equilibrium points for any economy. Low wages – legally enforced – have created an equilibrium where low wages are necessary to compete in many business areas.

      Raising the wages higher and higher wouldn’t do us much good right now – it would probably hurt businesses quite a bit.

      But over a decade, it could be done.

      It’s strange, because shocks to the system have impacts that last beyond where they should. I think this is why people argue about sticky wages and things like that – if you take what you see seriously, it becomes dang near impossible to figure out. If you just say “We’re at full employment” then it becomes much easier to think through.

      So, to be clear, I think raising the minimum wage today would be a bad idea because we’re at an equilibrium that cannot support a higher minimum wage.

      But this doesn’t preclude pushing the economy to a different equlibrium. I don’t know the conclusions that well, but when I look at this

      http://en.wikipedia.org/wiki/Sonnenschein%E2%80%93Mantel%E2%80%93Debreu_theorem

      What’s been sticking with me is this phrase ” Its main implications are that with many interdependent markets the economic equilibrium may neither be unique nor stable”.

      It’s slightly mis-stated, because it should read “the observed economic equilibrium” . This would better capture the idea.

      Then, each equilbrium can be Pareto efficient! It’s like we can find ourselves in a neverending depression or path to flying cars, and they both are viable “solutions”

      Separating the concept of Pareto efficient from the equilibrium conditions we see out in the real world is quite subtle – and most of the freshwater economists build their careers on ignoring the distinction.

      But this is very much what Keynes was saying – we can be stuck somewhere we dont’ want to be, it will look like its “right”. but its not the only solution for our question, and we have the ability to drive a new solution anytime we want.

      And this is very much a refutation of Tyler Cowen and his ilk. He’s a “throw your hands up – we can’t do anything” kind of guy.

      So I am not disagreeing with you at all Clonal in one aspect – right now, it’s possible these jobs shouldn’t be done.

      But in another way, I was trying to make a point we should have these jobs done at higher wages and it could still “work”.

      It’s crazy how all of this fits together, but I think this idea – there is no reason to believe what we see is all we can get – is so dang important.

      Totally off topic! What’s a victory for you, Clonal? Higher minimum wages? Who would you “make a deal” with to get this done?

      • Clonal Antibody
        November 17, 2011 at 11:38 am

        The way to do it is through deficit spending, the JG and pegged subsidies. Neils idea of non profit/charities using JG labor would work well.

        I am now talking particularly of agricultural labor that relies on minimum wage labor. There is a public benefit to affordable food, and for food to be a smaller proportion of the household budget. Field crops like wheat, corn, soy bean, peas etc. use machinery for harvesting. So do orchard crops like apples peaches, pears, nuts. For those type of crops, minimum wage labor should play absolutely no role at all.

        Soft body fruits and vegetables are harvested using minimum wage labor for back breaking work. However, there is a public benefit to their consumption, and a market price for those products, based on a “fair price” for labor, would make them less affordable, and cause their consumption to go below what would be needed for the maintenance of good health, especially in segments of society that lie in the bottom quartile.

        Here, non profit organization or could use JG labor to sell that labor at a market price for harvesting. The excess income from that sale could be used for socially appropriate purposes, or even given back to the harvest labor above the JG minimum wage to compensate for the back breaking nature of the work. And I honestly think that the back breaking nature of harvesting deserves more than a minimum wage.

        You can think up of many other scenarios.

        • TC
          November 17, 2011 at 12:01 pm

          This is very good. If I am seeing this correctly, it’s creating an employment agency that could contract out laborers.

          The upside for people in the JG? It’s a JG! They’ve got a job even in a slack economy.
          The upside for businesses? Hiring without long term contracts.
          The upside for govt? They can make money on it and distribute to programs as they see fit.

          This is very good.

          Thanks!

      • Clonal Antibody
        November 17, 2011 at 11:44 am

        Mike,

        For me a small victory would be to see a trend towards a declining gini coefficient. I would declare a total victory if and when the gini coefficient hits a level of 0.3 (this is substantially higher than what has been achieved under socialist regimes – which I think achieved a gini coefficient breaking the 0.2 level)

        • Clonal Antibody
          November 17, 2011 at 12:38 pm

          This says it all

        • Clonal Antibody
          November 18, 2011 at 7:52 pm

          I was playing around with numbers, and if I assume that the tax brackets/surcharges remain the same as they did in 1968, index the tax brackets to inflation, and index the minimum wage to per capita nominal GDP. Seeing the results, I believe that US would have been a much happier place than it is today. With or without SS/Medicare taxes.

          My personal preference is that SS/Medicare come from general funds — SS being indexed to per capita GDP, while Medicare being indexed to CPI

          After much analysis, I have also come to the conclusion that the inflation of the 1970’s was purely because of the oil prices. Wages and Quantity of Money played absolutely no role in that inflation. I also believe that the Fed/Treasury accord of 1951 allowed the monetarists to gain an upper hand, and when, a generation after the accord, inflation hit, it was interpreted in monetary terms, as opposed to resource limitations. This interpretation led to monetary policies that inevitably led to bank deregulation.

        • beowulf
          November 19, 2011 at 3:54 am

          Clonal,
          Interesting stuff (dialing back the hot tub machine to 1968 and all), I’m curious what you came up with. I wouldn’t be surprised if the income tax alone would bring in more than income tax plus FICA brings in today. I do need to back off the wonkery, I just woke up thinking about… tax reform!

          1. Add a consumption surtax after the first $1
          million of income. Robert H. Frank has plugged the idea in the NY Times. Use whatever revenue that comes in to increase size of income tax personal exemption.
          http://www.nytimes.com/2010/03/21/business/economy/21view.html

          2. Add a new excise tax on business gross margins of firms (small businesses exempted) that exceed their industry sector’s average gross margins. That would be rather disinflationary (since it would target, some would say unfairly, cost-push inflation :o) ). Use whatever revenue that comes in to cut corporate income tax rates.
          “This creates a new trade off for firms between a low tax‐burden and the exercising of market power. Welfare for society increases since firms with market power choose a lower price and produce a quantity closer or equal to social optimum.”
          http://www.economics-ejournal.org/economics/discussionpapers/2008-28

        • Clonal Antibody
          November 19, 2011 at 5:00 pm

          Beo,

          Pretty close I would say. Two things happen. Everybody pays more income tax, as the real GDP rises – tax brackets being indexed to inflation. Also, the top will pay a lot more than they do today.

          The rate of inflation from 1968 to 2009 was ~4.5% My feeling is that the inflation would have been closer to 5 – 5.5% in my scenario. That would have pushed up nominal gdp higher, leading to higher taxes as well. These simulations may be better run using the modelling of the type being attempted by Fred Decker

          I attempted to use the W-2 data from remappingdebate.org Using that attempted simulation, I think the gini coefficient would have dropped to 0.3 from 0.35 in my scenario by 2009.

    • November 18, 2011 at 2:30 pm

      But higher wages would mean higher demand for those businesses, the paradox of paying monkeys peanuts?

  15. November 18, 2011 at 2:49 pm

    The root problem is a demand famine creating a jobs famine, so the solution is to level up effective money backed demand; we are overtaxed and underpaid so let’s invert this by cutting taxes and increasing pay…

    It seems to me the way to do this, short of a JG, is to have proper negative income tax of say $5 for the minimum waged (totalling $12 ish) tapering off up the income scale to $2.50 at $12 ($14.50) an hour wages and stopping at $16. This could be gradually increased.

  16. November 21, 2011 at 1:20 pm

    Something else I would consider a victory (a post at Cullens made me think of this), is for the Euro situation to be correctly called “bailing out the German and French banks” not bailing out the Greeks. This 180 twist would crystallize some things I think.

  17. Dunce Cap Aficionado
    November 22, 2011 at 9:43 am
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