Re: [Marxism] Behind the Money Curtain: A Left Take on Taxes, Spending and Modern Monetary Theory - CounterPunch.org

[MM via Marxism]

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> On Feb 14, 2020, at 10:51 AM, Daniel Lindvall  
> wrote:
> 
> I hope to be proven wrong and I support any serious attempt at pushing 
> through real reforms, but I can’t see it happen without a mass movement 
> threatening the hell out of the ruling class.


Who said it will happen without a mass movement? You didn’t watch the video of 
Raul Carrillo, did you? The entire MMT activist base — and there are many 
thousands of people involved, in countries around the world, as well as several 
recurring podcasts, blogs, conferences, and a very active publication scene — 
are completely focused on building a mass movement — radical mass movement. 
Much of the entrenched left is making itself deeply irrelevant by refusing to 
engage with this body of ideas and this emerging movement. You see all those 
people at the Sanders rallies? What about the Sunrise Movement occupation of 
Pelosi’s office? Those are significantly due to the work that’s been done 
around MMT over the past 20 years. It isn’t an odd coincidence that Stephanie 
Kelton is a close advisor to Sanders. It also isn’t an accident that he is 
still committed to showing how things can be paid for — because he knows that 
even many people on the left aren’t prepared for the radical truth that “budget 
discipline” for a monetarily sovereign government is a ruling class fiction.

I don’t think there’s anything more tedious than engaging with people who “hope 
to be proven wrong”; what a dreadful spiritual condition that must be. Roll up 
your sleeves and start helping — filling the gaps in your knowledge and 
alleviating your doubts, or sharpening your critique if you still have one — or 
get out of the way. Nobody owes you “proof” of anything.
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Re: [Marxism] Behind the Money Curtain: A Left Take on Taxes, Spending and Modern Monetary Theory - CounterPunch.org

[Daniel Lindvall via Marxism]

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Btw, this all makes the Corbyn debacle doubly sad. If a second wave of social 
democratic/welfare capitalist reforms were thinkable at all, then surely a 
situation where Corbyn led the UK and Sanders the US simultaneously would have 
been that moment of possibility.

> 
> 
> I’m sorry, I must be expressing myself very clumsily, English after all is 
> not my first language. My question was purely about campaign strategy, I get 
> the rest of it. But it’s not like a candidate is going to get around the 
> screams of ”inflation, inflation, inflation”, so how could s/he get around 
> discussing higher taxes as part of what is needed to curb it eventually? I 
> can’t see that question going away until x years later when people see the 
> great new infrastructure. Just as ruling class resistance via financial 
> warfare won’t go away just because many of them understand that their 
> purported theory defending this warfare (”budget balance” etc) is a crappy 
> excuse.
> 
> I hope to be proven wrong and I support any serious attempt at pushing 
> through real reforms, but I can’t see it happen without a mass movement 
> threatening the hell out of the ruling class. The limited (in time and space) 
> successes of social democracy after all came about through an almost perfect 
> storm: a vibrant labour movement, a successful revolution in a major country 
> that threatened to spread, two world wars and a depression within the space 
> of 30 years destroying massive amounts of capital, the war economy and the 
> collective effort needed to win the war, and on top of that took place in 
> countries that benefited from centuries of globally highly uneven 
> industrialization ultimately fed by the spoils of colonialism. 
> 


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Re: [Marxism] Behind the Money Curtain: A Left Take on Taxes, Spending and Modern Monetary Theory - CounterPunch.org

[Daniel Lindvall via Marxism]

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I’m sorry, I must be expressing myself very clumsily, English after all is not 
my first language. My question was purely about campaign strategy, I get the 
rest of it. But it’s not like a candidate is going to get around the screams of 
”inflation, inflation, inflation”, so how could s/he get around discussing 
higher taxes as part of what is needed to curb it eventually? I can’t see that 
question going away until x years later when people see the great new 
infrastructure. Just as ruling class resistance via financial warfare won’t go 
away just because many of them understand that their purported theory defending 
this warfare (”budget balance” etc) is a crappy excuse.

I hope to be proven wrong and I support any serious attempt at pushing through 
real reforms, but I can’t see it happen without a mass movement threatening the 
hell out of the ruling class. The limited (in time and space) successes of 
social democracy after all came about through an almost perfect storm: a 
vibrant labour movement, a successful revolution in a major country that 
threatened to spread, two world wars and a depression within the space of 30 
years destroying massive amounts of capital, the war economy and the collective 
effort needed to win the war, and on top of that took place in countries that 
benefited from centuries of globally highly uneven industrialization ultimately 
fed by the spoils of colonialism. 

> 
>> On Feb 14, 2020, at 9:26 AM, Daniel Lindvall > > wrote:
>> 
>> It sometimes feels as if people here are determined to make the worst 
>> possible interpretations of comments. It was a straight question, asked 
>> precisely out of curiosity, not the lack of it. I’m not dismissing the 
>> general importance of understanding money, but the text left me wondering 
>> what difference it makes to someone in an electoral campaign if s/he has to 
>> argue that we need to raise taxes to avoid inflation rather than to pay for 
>> progressive policies as such? 
> 
> Yeah, I don’t think that would be a very effective campaign strategy. If 
> you’re a campaign advisor to anyone, I’d suggest not using that approach.
> 

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Re: [Marxism] Behind the Money Curtain: A Left Take on Taxes, Spending and Modern Monetary Theory - CounterPunch.org

[MM via Marxism]

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> On Feb 14, 2020, at 9:26 AM, Daniel Lindvall  
> wrote:
> 
> It sometimes feels as if people here are determined to make the worst 
> possible interpretations of comments. It was a straight question, asked 
> precisely out of curiosity, not the lack of it. I’m not dismissing the 
> general importance of understanding money, but the text left me wondering 
> what difference it makes to someone in an electoral campaign if s/he has to 
> argue that we need to raise taxes to avoid inflation rather than to pay for 
> progressive policies as such? 

Yeah, I don’t think that would be a very effective campaign strategy. If you’re 
a campaign advisor to anyone, I’d suggest not using that approach.

One of the things you learn when teaching university students is how to spot 
the guys — and they are always guys — who are committed to not learning things, 
or who expect to be spoon-fed insights, or who think they can trick you into 
doing their thinking for them. At least, I did. They lack even a modicum of 
healthy shame. And they get defensive when you point that out.

But I’ll indulge you one last time.

You’re asking what the difference is between a government whose spending is 
constrained in advance by its ability to raise funds from taxes, and a 
government that isn’t so constrained in advance, but may have to tax what it 
spends into the economy back out at some point.

Can you see now where this is headed?

When a government uses its spending power to build useful infrastructure, 
productive economic capacity and good social programs — which, gosh, sounds 
like something even a socialist government would want to do — then what you 
have at the end of that process is… wait for it… useful infrastructure, 
productive economic capacity and good social programs. You also have a bunch of 
liquidity circulating through the economy, which the government injected into 
it by hiring all of the people it hired to build and do all of those things.

Now, it might become necessary to tax some of that liquidity back out of the 
economy in order to prevent overheating. My guess is people are less likely to 
mind paying some taxes now that they’ve got useful infrastructure, productive 
capacity and good social programs. But there are other options. For instance, 
you could do what the US government did during WWII and issue savings bonds at 
a modest interest rate in order to tie up some of that liquidity for a few 
years until the productive capacity can catch up to the point where it can 
satisfy the extra demand. (And if anyone is under the impression that the 
purpose of those bonds was to raise funds to “pay for the war,” I would *urge* 
you, in the strongest possible terms, to read Sam Levey’s piece before 
responding and making an absolute ass of yourself.)

Obviously, this whole time you’re going to be working towards an industrial 
strategy to decarbonize the economy and prioritize for sustainable forms of 
economic activity, at least if you have any sense. But I digress.

Can you see how much difference it makes now? On one approach, you don’t end up 
with useful infrastructure, productive industrial capacity and good social 
programs. On the other approach, you do. I feel silly having to point out to 
someone on the left that we should be fighting to have them.

Honestly, there’s a lot of excellent material out there for anyone who’s even 
mildly curious. There’s also a lot of willful misrepresentation from mainstream 
economists (many of whom do understand it, and thus understand what a danger it 
poses to the continuation of the ruling hegemony) and witless misrepresentation 
from quite a few Marxists (who don’t understand it, and are committed to making 
sure they don’t start to — because that would require them to admit they’ve 
gotten some things badly wrong).
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Re: [Marxism] Behind the Money Curtain: A Left Take on Taxes, Spending and Modern Monetary Theory - CounterPunch.org

[Daniel Lindvall via Marxism]

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It sometimes feels as if people here are determined to make the worst possible 
interpretations of comments. It was a straight question, asked precisely out of 
curiosity, not the lack of it. I’m not dismissing the general importance of 
understanding money, but the text left me wondering what difference it makes to 
someone in an electoral campaign if s/he has to argue that we need to raise 
taxes to avoid inflation rather than to pay for progressive policies as such? 


> 14 feb. 2020 kl. 13:19 skrev MM :
> 
>> On Feb 14, 2020, at 4:01 AM, Daniel Lindvall > > wrote:
>> 
>> But, if you have to rise taxes, not to fund the spending as such, but to 
>> offset inflation, how much difference does it really make?
>> 
>> Kavanagh: ”…surtaxing the rich does not transfer funds directly to pay for 
>> another activity like healthcare, but it does help configure the money 
>> supply on a macro level to enable more social spending. It averts the 
>> inflation that would occur if both a lot of spending on healthcare andthe 
>> infinite appropriation of money by individuals were tolerated. Taxes don’t 
>> raise funds; they do help control the money supply.”
> 
> If you can read that piece and be left with that question, and without any 
> curiosity to pursue any of the ideas mentioned in it, there’s nothing 
> whatsoever I can do to help you. 

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Re: [Marxism] Behind the Money Curtain: A Left Take on Taxes, Spending and Modern Monetary Theory - CounterPunch.org

[MM via Marxism]

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> On Feb 14, 2020, at 4:01 AM, Daniel Lindvall  
> wrote:
> 
> But, if you have to rise taxes, not to fund the spending as such, but to 
> offset inflation, how much difference does it really make?
> 
> Kavanagh: ”…surtaxing the rich does not transfer funds directly to pay for 
> another activity like healthcare, but it does help configure the money supply 
> on a macro level to enable more social spending. It averts the inflation that 
> would occur if both a lot of spending on healthcare andthe infinite 
> appropriation of money by individuals were tolerated. Taxes don’t raise 
> funds; they do help control the money supply.”

If you can read that piece and be left with that question, and without any 
curiosity to pursue any of the ideas mentioned in it, there’s nothing 
whatsoever I can do to help you. 
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Re: [Marxism] Behind the Money Curtain: A Left Take on Taxes, Spending and Modern Monetary Theory - CounterPunch.org

[Daniel Lindvall via Marxism]

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But, if you have to rise taxes, not to fund the spending as such, but to offset 
inflation, how much difference does it really make?

Kavanagh: ”…surtaxing the rich does not transfer funds directly to pay for 
another activity like healthcare, but it does help configure the money supply 
on a macro level to enable more social spending. It averts the inflation that 
would occur if both a lot of spending on healthcare andthe infinite 
appropriation of money by individuals were tolerated. Taxes don’t raise funds; 
they do help control the money supply.”



> 
> 
> 
> This is quite a useful piece by Jim Kavanagh on the Counterpunch website from 
> a couple of years ago. It’s lengthy; I’ll post a few key passages but it’s 
> worth reading in full:
> 
> 
> 
> 
> 
> https://www.counterpunch.org/2018/01/22/behind-the-money-curtain-a-left-take-on-taxes-spending-and-modern-monetary-theory/
>  
> 
> 
> 
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[Marxism] Behind the Money Curtain: A Left Take on Taxes, Spending and Modern Monetary Theory - CounterPunch.org

[MM via Marxism]

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This is quite a useful piece by Jim Kavanagh on the Counterpunch website from a 
couple of years ago. It’s lengthy; I’ll post a few key passages but it’s worth 
reading in full:


The argument of the common-wisdom economic paradigm is that the government must 
collect taxes (or borrow money—we’ll get to that) to spend on whatever programs 
it wants to fund. In this paradigm, the government extracts money from an 
external, economically prior source, and uses it to pay for government 
programs. For both the left and the right in this paradigm, taxes are for 
funding government spending: money first flows into the government through 
taxes collected, and is then spent into economy in various programs and 
purchases. The arguments that ensue are over how much money to collect in 
taxes, from which sources, and which government programs to fund with the money 
collected.

Most leftists take their stance within this paradigm. Bernie Sanders, for 
instance, says his Medicare-for-all plan would “raise revenue” from various 
taxes such as income and capital gains, and from limiting “deductions for the 
rich.” Dean Baker suggests a 4% increase in payroll taxes to “fully fund” 
Social Security and Medicare.

These kinds of analyses, typical of the left, make points that are helpful in 
immediate political fights, and they’re also grounded in the conventional 
paradigm about, money, taxes, and government spending. That paradigm not only 
informs most thinking—whether conservative, liberal, or left-radical—about 
money in our society, it also informs the legal and institutional policy 
framework. It’s the paradigm of the household.

We’re comfortable with the household paradigm because it reflects everyday 
reality. The household has to get money from somewhere to spend it. It’s 
obvious. But, also obvious, the household (or business or state) does not 
create money. That teensy little huge fact makes the household-government 
finance analogy wrong and wildly misleading. Unless we take that fact as of no 
significance—And how could we?—we need another paradigm. Analyses and 
critiques—no matter how radical—of government financing as if it worked like 
household financing are based on false premises, and false premises lead down 
meandering dead-end paths to wrong conclusions.

We have to reject the household analogy whenever it comes up from any source, 
including our own minds, where it will sneak in. Most leftists, I’m afraid, do 
end up assuming it, and ignoring the huge little fact that it cannot be right. 
We need another paradigm, one that’s more truthful and therefore opens more 
effectively radical paths.

…

This brings up another core insight of MMT, a corollary of the fact that the 
government creates money to spend into the economy: The government’s loss is 
the economy’s gain. The government’s deficit is equal, to the penny, to our 
surplus—the amount of dollars the government has spent into and left in the 
economy. With due consideration for how the “government” and “we” are 
constituted—A political question that MMT makes increasingly visible as the 
important question underlying the economics!—the government’s deficit is “our” 
net savings after taxes, dollars that haven’t been zeroed out, points we can 
use to buy our seats. As Robert Bostick puts it, in a scathing critique of Paul 
Ryan’s deficit hawkery:

It’s essentially interest-free money for us to spend as we choose. That’s why 
the financial sector/commercial bankers hate deficit spending. Americans 
benefit from deficit spending and therefore, don’t need to go into debt to 
maintain living standards.

Our surplus from deficit spending is what keeps the economy growing… When Ryan 
and company tell us they’re going to cut the deficit, it automatically means 
they are going to reduce the amount of interest-free money available to us. 
That eventually will, in short order, force us to use our savings, retained 
earnings or borrow from banks at interest just to maintain current spending.

Note that it’s not the government deficit that’s pernicious here, but citizens’ 
indebtedness to the banks, which grows in inverse relation to the government 
deficit. Too little government deficit makes for too much citizens’ debt.

This is why “austerity” policies are ridiculous, self-defeating, and immensely 
harmful. This is why the last thing we want is for the government to have a 
“balanced budget” policy, let alone for the government to run a surplus, which 
would be our deficit. For a healthy, growing economy, the government should 
avoid retrieving as much in taxes as it has spent into the economy. And there 
is no economic need to do