-----Original Message----- From: [email protected] [mailto:[email protected]] On Behalf Of Doug Henwood Sent: Monday, May 18, 2009 4:01 PM To: Progressive Economics Subject: Re: [Pen-l] Vulnerable logic in Dean Baker's argument?
On May 18, 2009, at 3:34 PM, Max B. Sawicky wrote: > MBS: You were talking about no-crowding out and the increased wealth > of the rich. > Now you're talking about the increased wealth of foreigners. You were talking as if there were just two options for "the rich" - gov debt, and other securities. But if gov debt is an add-on, then it's not an either-or. ************* The either-or in question is save or not save. I doubt the availability of gov debt induces extra saving, rather than portfolio readjustment. With no savings effect, the rich are not arguably richer by buying more gov debt and less of other assets. > O.K. let's sail to Open Economy Land. > I claim, with no deficit finance, public spending in the present > decreases, > to the net disadvantage of the non-rich. Really? In the actual world we're living in, the expanded deficits of the 1980s and 2000s came from tax cuts for the rich and increased military spending. If that's to the benefit of the non-rich, I'm Marie Queen of Romania. ******************** In this context I don't buy the formulation 'deficits finance tax cuts.' I've used it in other contexts. Deficits finance spending. Under Dems the spending tends to be less rotten. If spending was always uniformly and profoundly rotten I would oppose deficits, nay, I would oppose spending. > I also claim there is little > impact > on future non-interest spending because future interest payments for > any given, > fixed increase in debt are an ever-decreasing share of GDP and tax > revenue. But they're not. By any reasonable projection, debt and debt service are going to rise as a share of GDP for a long time to come. ********************** More deficits means more spending now. > MBS: You example goes to GOP policies, not deficit finance in > general. > This year and next year we'll see a big non-defense spending surge. Yeah. And a lot of it is going to Goldman Sachs. And, as you say, Afghanistan. ****************** The non-Goldman Sachs piece is big too. I'm not saying that the stim bill is bad - it's the best we could do under the circs. And the bailout, as botched as it is, is necessary in some sense. But if we want to talk about ideal worlds, why not be really serious? Tax the rich, don't borrow from the mofos. Doug ******************** Taxing them is fine, to the extent possible, certainly more possible than presently practiced. Deficits are a fall-back. Obama has locked us into it, seeing as how his worst pronouncement was to assure everyone that they wouldn't pay more taxes if their income was less than $250K. Would he have gotten elected otherwise? I don't know. If I was advising him I'd have urged him to assume a position with more wiggle room, so to speak. _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
