Joe Doakes from Como Park emails:
Modern Monetary Theory says the government can borrow and spend as much as it likes without consequences. If we can afford a gas tax holiday, why not an income tax holiday, a social security tax holiday, a liquor tax holiday?
Or is MMT a lie and the gas tax holiday simply at attempt at buying votes with taxpayer money?
Joe Doakes
It is, of course, a purely academic exercise, like so much of the policy big left has been foisting on this country for the past hundred years and change.
MMT neuters the institution tasked with controlling inflation, demands unimaginable levels of wisdom and competence in Congress, advocates more government spending, minimizes the costs of inflation, and views talk of fiscal discipline as gibberish.
https://www.bloomberg.com/opinion/articles/2022-02-10/inflation-continues-to-surge-what-would-mmt-followers-do
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Not sure what everyone is panicked about. MMT worked wonders for Greece.
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The MMT cure for inflation is to raise taxes to take $ out of the economy.
My own 2 cents:
MMT is a gross oversimplification.
It’s basic claim is that governments can print money (true) without constraint (true) or ill-effect (false) or any inflation until the economy is at full capacity (false).
By using an incredibly basic model for inflation, which is just a step function and ignores sectors of the economy it allows them to ignore inflation as a by product of money printing and growth. They literally state that you won’t see any inflation if an economy is not at full capacity. It’s almost like they’ve never heard of stagflation. This allows MMT to claim that government can essentially do what it wants without worrying about debt.
They then say that should inflation arise, tax can be used to control it. Which sounds plausible, barring the fact that academic studies have shown tax to be a very poor lever for this process, given the many interactions and behavioral aspects. Or the political aspects, or the physical limitations of taxation. Not that MMT actually has bothered to furnish anyone with a practical explanation of how they would use tax to manage inflation anyway.
MMT is also based on a closed economy. No leakages and externalities. This is a problem should import prices rise, and given MMT thinks that it is taxation which imparts value to a currency, quite a big issue when those currencies are freely convertible and can leave the system for large periods of time — which is what people will do if they suspect devaluation by government and high inflation.
MMT makes a number of other mistakes, like explaining an economy with simplistic accounting identities, confusing how the banking and financial system works to name but a couple, but the crux of it it this:
Would you entrust a politician to use MMT to manage the economy when MMT doesn’t have a proper model for inflation or a proper model for how to use tax to control inflation?
Of course all this is going to accomplish is to enrich retailers and oil companies further and create a paperwork hassle for those of us who have to report to the govt how much fuel we buy and where to make sure we pay our fair share of hwy taxes.
I received an email from Betty(!) McCollum today. Betty(!) is mighty upset with the Supreme Court, but she’s happy as a 90IQ gint can be about the millions her committee has passed to fund various leftist programs.
“As we collectively process all of the news from this last week – especially the Supreme Court’s extreme decisions impacting reproductive freedom and environmental rollbacks, among others – I also want to take this opportunity to update you on some positive developments in my role as a senior member of the House Appropriations Committee.”
“In addition, my office worked together with leaders from around the Fourth District to advance funding for community projects that will have a direct and tangible positive impact in our community. This is a big step forward in meeting these vital community needs! In total, I’m proud that more than $35 million for priority projects are included in the funding bills that now move to the full House of Representatives for approval.”
They’re all bs, of course, but this one caught my eye:
Penumbra Theatre Positive Racial Identity Development for Youth ($1,000,000)
This funding will support the development, testing, and early implementation of Penumbra Theatre’s PRIDE (Positive Racial Identity Development & Empowerment) curriculum, supporting children of all races as they learn about concepts and experiences of race, identity, and social justice at developmentally critical stages.
If I understand Betty(!), she’s endorsing the inculcation of racial PRIDE among children of all races. That’s swell.
I wonder if they might like to have Jared Taylor come to speak to the White kids about positive racial identity; it’s his specialty.
The contours of the gas price problem are simple. We have very high demand for oil but constricted supply.
The 101 answer: Constricting demand while increasing supply would reduce prices.
Biden’s proposal is the opposite: stimulating demand and doing nothing to increase capacity.
If you were going to optimize for reducing gas prices rather than optimize *talking about reducing gas prices,* you’d meet with oil companies to discuss stimulating short-term exploration + production, raise interest rates, and come up with ways to get people to drive less.
I appreciate MP’s evaluation of the mechanics of MMT, but how it works is probably more significant. It’s in effect to do the same thing that they did in the Weimar Republic, but hope that you don’t get to the stage with wheelbarrows. The only thing that saves them is shyness, really.