A little inflation surely wouldn't hurt, but neither would a little de-indexing of the individual income tax brackets. This would be a huge revenue raiser over time.
On Fri, May 7, 2010 at 1:59 PM, Jim Devine <[email protected]> wrote: > This is fine, but it should be mentioned that the "public" debt (what > should instead be called the "public sector's debt" or the > "government's debt") represents an _asset_ for the public (outside the > government), though much of that "public" is outside the US (in China, > for example) these days. After WW2, the existence of treasury bills in > a lot of peoples' savings helped create a cushion which significantly > moderated the post-war US recession. > > The debt also should be compared to publicly-owned assets, so that we > should be looking at the government's net worth instead. Even that > should be compared to the total GDP (as an indicator of the potential > tax base). The US "grew its way" out of the extremely large (and > extremely larger than now) debts at the end of WW2. > > We should also remember that Greece is in a very different situation > than the US. It's not a hegemonic power; it can't devalue its > currency; etc. Finally, the US government's debt is the basis of much > of the US and world financial systems, since almost all banks and > other financial institutions use T-bills and the like as safe assets > that allow they to take risks. > > By the way, a relatively easy solution to excessive debt of any sort > is to "inflate it away" (something that Krugman's column today > suggests is preferable to deflation, depression, and destruction). > This would represent a redistribution away from those who own a lot of > assets denominated in money terms. > > On Fri, May 7, 2010 at 10:37 AM, Julio Huato <[email protected]> wrote: >> (My stupid blog is not working well. But here's a few and rushed >> thoughts on the public debt.) >> >> Media pundits, economists, and politicians claim that the current >> level of public indebtedness in the U.S. and its further expansion are >> "unsustainable." >> >> Seemingly, "our" profligacy is catching up with us. The day of >> reckoning approaches. We should either prepare for a drastic decline >> in social welfare tomorrow or accept a worsening of the economic >> situation today -- e.g. the government should limit its meager >> "stimulus" spending and allow the economy to slip into greater >> joblessness to prevent the looming catastrophe. The crisis in Greece, >> that many commentators attribute to a borrowing binge by the Greek >> government, is now being alluded as exhibit 1. (Let alone the fact >> that the sudden increase in Greek public debt may have resulted from >> the financial crisis and the attempt of the Greek government to >> salvage banks that are now downgrading its debt, as Costas Lapavitsas >> claims here: http://bit.ly/cMQeMn.) One of the latest additions to >> this parade of nonsense is Arianna Huffington's "Life in the Age of >> "Much Worse Than We Thought It Would Be"" (http://huff.to/bu0txF). >> >> Economists, of course, will pretend that fundamental scarcity -- i.e. >> the fact that society's total labor time and its productive force are >> never infinite -- is at the root of the dilemma. Society's cake is >> finite, and one cannot eat it and have it at once. Except that this >> is a false premise. The public debt (or the private debt, for that >> matter) has absolutely nothing to do with the finiteness of society's >> resources and productive possibilities. It's not nature but social >> convention or, more precisely put, social structure. >> >> Public debt is not about the limited production possibilities of our >> society. Public debt is about how the wealth that exists (or will be >> produced) is (or will be) held -- by whom and at whose exclusion. In >> other words, it is about how the ownership over existing wealth is >> distributed. It's about who owns today's wealth and, hence, holds the >> enforceable claims over future production flows. It is not about how >> large these flows can be with existing resources and productivity. >> Wealth distribution is a social condition, not a fact of nature. It >> is entirely within the reach of human capabilities to alter the form >> in which wealth ownership is distributed. >> >> Of course, the smuggled pretension here is that the only conceivable >> or legitimate way in which wealth ownership can be reshuffled in our >> society is via the market mechanism: that private ownership is sacred. >> But, any thought about it shows that the pretension is exactly >> contrary to the very (contradictory) institutional framework and modus >> operandi of modern capitalist societies. No modern capitalist society >> would last long without a massive state -- tasked with enforcing and >> protecting ownership rights, disciplining labor, undertaking social >> programs to preempt unrest, waging wars, regulating commerce, and >> plain taking from the poor (and the out-of-favor rich) to give to the >> rich (and better connected). A massive state requires taxation and >> the allocation of expenditures outside of the market mechanism. >> >> Furthermore, historically, under capitalism, high levels of public (or >> private) indebtedness have always been resolved, partially or >> entirely, through politically-sanctioned or politically-induced >> processes of wealth redistribution -- from land reforms and outright >> expropriation to price management to relatively benign inflationary >> processes. >> >> The McKinsey Global Institute (http://bit.ly/8bQV8z) estimates that >> adjusting the imbalances that led to the ongoing crisis will require a >> (on average) 6-7 year long process of "deleveraging," which should >> wind up reducing the ratio of debt to GDP by 25%! How can such a >> massive transfer of wealth ownership ever happen anywhere without a >> politically sanctioned process or carnage? Can any society today >> accomplish this feat by heeding Andrew Mellon's dictum alone -- >> liquidate, liquidate, liquidate? At what human cost. (Isn't the >> point of an economy supposed to be "human welfare"?) >> >> Again, unless they are willing to see themselves reduced to chop >> liver, working people are going to have to take matters on their own >> hand. The Greek people are showing the way. And this is not an >> endorsement of the methods of small groups of anarchists or >> professional provocateurs. It's simply the notion that working people >> will need to take action, rather than wait for the powers to decide >> how to allocate the cost of the "adjustment." >> >> Just like the spike in public indebtedness in Greece followed the >> financial panic and the government's effort to prop up its banks, >> public indebtedness in the U.S. has next-to-zero to do with welfare >> queens on Cadillacs or poor people getting over their heads with >> subprime mortgage borrowing. It has mostly to do with war making, tax >> cuts for the rich, the secular decline in the real income and economic >> security of working people since the 1970s, the financial blowout, all >> rooted in traits inherent to capitalism. >> >> There's nothing inevitable here, but the struggle. It is a class struggle. >> >> [Note to economic theorists: I am not claiming that distribution and >> efficiency are independent variables under an abstract, pure, and >> functional capitalist economy. Those theoretical constructs assume >> that capitalism functions smoothly. In other words, they assume that >> working people are reduced to perpetual political submission. I'm >> referring to the fact that things do not have to be that way.] >> _______________________________________________ >> pen-l mailing list >> [email protected] >> https://lists.csuchico.edu/mailman/listinfo/pen-l >> > > > > -- > Jim Devine / "Segui il tuo corso, e lascia dir le genti." (Go your own > way and let people talk.) -- Karl, paraphrasing Dante. > _______________________________________________ > pen-l mailing list > [email protected] > https://lists.csuchico.edu/mailman/listinfo/pen-l > _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
