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Saturday, 12 September 2015

The way to beat MMT and enforce fiscal discipline

There is a very simple way to beat MMT, when you think about it. It is a very simple flaw.
It is the "savings are Voluntary Tax" bit.
And the flaw is thus...
The government cuts taxes for the rich. Yeah, so what? You say.
The rich save the money.
The govt then makes an explicit quid pro quo that if taxes are to be cut, rich people must spend (some of the) money on a variety of things including the things poor people buy. The poor people are then crowded out.
You can make this a condition of a Labour government being elected (or austerity ended.) Or just do it all the time.
The money saved from the tax cuts can be shuffled to various tax havens.
Rich people are too worried about saving money and don't realise the power they actually have - spending the money.

EDIT: What is this post about? Am I trying to be evil? No. This is about rent seeking. You have to end rent seeking. Rent seeking is not a problem because they save the money, right? Well yeah but what if they don't. Most of the time you save but you spend when there is any action to stop rent-seeking.