The Politics Thread 2020

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BJ
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Re: The Politics Thread 2020

Post by BJ »

This reminds me of The Goodies election special.

The advertising campaign for both parties run by Graeme Garden, was so enthralling that everyone except the two candidates themselves stayed at home watching the advertising campaign on TV instead of voting.

As the two candidates cast the only votes, the British election finished one vote each. Then you had the brilliance of the candidates demanding recounts and despite whichever order or whether it was automated or not, the result kept coming back the same.
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Re: The Politics Thread 2020

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Oh well as close to a concession as I expect to see, Trump finally allowing the transition team to do its thing.
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Re: The Politics Thread 2020

Post by greeneyed »

Manbush wrote:Georgia recount is done, drumroll.................. Trump loses again, can they recount every state watching Trump lose a 2nd time is even more entertaining than the first time.
Now counting a third time.


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Re: The Politics Thread 2020

Post by Manbush »

Trumps best ever speech

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Re: The Politics Thread 2020

Post by Mickey_Raider »

Question turns from "will Trump concede?" to "which of the Trump family will be going to prison first?"

My bet is on Ivanka.
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Re: The Politics Thread 2020

Post by Mickey_Raider »

I have seen reports about the national debt forecast to sit somewhere in the vicinity of 1.4 trillion, with 3/4 of it federal debt.

That number sounds pretty big. I also note that it sounded pretty dire in 2013 when we were in the midst of a debt and deficit disaster, however that disaster seemed to pass despite the debt growing by 400%.

Can someone qualified please explain to me what made the crisis ostensibly pass despite the debt situation worsening considerably?

Furthermore at what point we are at risk of a sovereign default and what will be the catalyst for that default?
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Re: The Politics Thread 2020

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Mickey_Raider wrote:Question turns from "will Trump concede?" to "which of the Trump family will be going to prison first?"

My bet is on Ivanka.
Can you lay out the odds for us?
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Re: The Politics Thread 2020

Post by gangrenous »

Mickey_Raider wrote: Can someone qualified please explain to me what made the crisis ostensibly pass despite the debt situation worsening considerably?
Murdoch getting what he wanted. Hope this helps.
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Re: The Politics Thread 2020

Post by The Nickman »

So I just see that Joe Biden is the first president in history to get 80 million votes... whoever would've picked THAT before the election kicked off?
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Re: The Politics Thread 2020

Post by Mickey_Raider »

It is quite amusing hearing the hand-wringing and ideological waffle coming from deficit hawks in the Murdoch media and certain neo-classical economists in response to COVID- induced fiscal activity by sovereign governments.

"We are maxing out our credit card"

"We can't afford this"

"Our grandkids will be paying this off for years"

"Living beyond our means"

"Every cent is borrowed money"

There is no "credit card". Stop trying to act as if governments are run like a business or a family dinner table.
We can afford it.
Budgets do not need to be balanced, in fact running surpluses is usually irresponsible unless you are running huge trade surpluses like Norway.
We aren't living beyond our means.
Your grandkids will not be paying it off any more than you and I are paying off debts from WWI and WWII.
And finally, monetarily sovereign governments do not go hat in hand begging for cash "from China" before they can deliver, for example, COVID relief. It is just not how it works.

People need to stop swallowing the kind of garbage I quoted above. We don't live under the Bretton Woods system. Our currency floats and is not pegged to any external currency. And we aren 't constrained by the gold standard, that ended long ago.

Unfortunately many neo-classical economists were trained under the above paradigms and have been sucked into a vortex of obsolete modelling coupled with ideological dross propagated by the likes of Thatcher and in modern times Tony "a government is like a household" Abbott.
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Re: The Politics Thread 2020

Post by The Nickman »

Ooooh, shots fired, Fergus.
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Re: The Politics Thread 2020

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No point.
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Re: The Politics Thread 2020

Post by gergreg »

Who bloody reads a Murdoch rag these days?

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Re: The Politics Thread 2020

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You’re just an old school neo-classical economist with no idea about how the real world works, Ferg

From now on, I’m taking all my advice from random guys in Internet forums who act like they know more
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Re: The Politics Thread 2020

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The Nickman wrote: November 27, 2020, 5:47 pm You’re just an old school neo-classical economist with no idea about how the real world works, Ferg

From now on, I’m taking all my advice from random guys in Internet forums who act like they know more
Dude, why are you ascribing what I wrote with the one you call Fergus? :lol:

You don't have to take advice from anyone on the internet mate. Reducing internet guy to a caricature is cute, but I reckon either bring a substantive point to the debate or leave it to those who actually have the wherewithal to discuss the issues.
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Re: The Politics Thread 2020

Post by The Nickman »

Seems to me there’s one guy in this thread who is a known expert on the topic and then there’s someone else just throwing mud at him
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Re: The Politics Thread 2020

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The Nickman wrote: November 27, 2020, 9:32 pm Seems to me there’s one guy in this thread who is a known expert on the topic and then there’s someone else just throwing mud at him
As I said, you ascribed my criticisms of the neo classical school of economics at large to GE...that’s your mistake not mine.

I am not throwing mud at anyone. I welcome robust debate in a field I am passionate about.
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Re: The Politics Thread 2020

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I’m not any extreme neo-classical economist... I’ve got a strong streak of Keynesian economics in me. Ultimately I espouse policies that I see work around the world. And reject the ones that fail.

Anyone who thinks it’s possible to keep running massive fiscal deficits in the long run doesn’t understand the lessons of economic history. Or the basic realities of financial markets. When economies are strong, governments should be paying off public debt. Balance over the cycle, or a golden rule, are pretty good fiscal rules, as they allow you the scope to give fiscal stimulus when you really need to, like now. We should be going hard with fiscal stimulus, the automatic stabilisers and a whole lot more right now. Countries which have no fiscal credibility eventually go under. That’s because markets lose faith in the ability of those countries to stand behind their debts, through future taxation revenue. You can’t keep relying on perpetual devaluation of your currency to compensate for lack of sound fiscal and economic policy. It makes your country poorer, and your citizens poorer, ultimately.

The bottom line is, there’s no point trying to debate someone who isn’t prepared to listen when you try and explain basic economic concepts. The ones they’re not grasping. I’ll leave it at that.
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Re: The Politics Thread 2020

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greeneyed wrote: November 27, 2020, 9:54 pm I’m not any extreme neo-classical economist... I’ve got a strong streak of Keynesian economics in me. Ultimately I espouse policies that I see work around the world. And reject the ones that fail.

Anyone who thinks it’s possible to keep running massive fiscal deficits in the long run doesn’t understand the lessons of economic history. Or the basic realities of financial markets. When economies are strong, governments should be paying off public debt. Balance over the cycle, or a golden rule, are pretty good fiscal rules, as they allow you the scope to give fiscal stimulus when you really need to, like now. We should be going hard with fiscal stimulus, the automatic stabilisers and a whole lot more right now. Countries which have no fiscal credibility eventually go under. You can’t keep relying on perpetual devaluation of your currency to compensate for lack of sound fiscal and economic policy. It makes your country poorer, and your citizens poorer, ultimately.

The bottom line is, there’s no point trying to debate someone who isn’t prepared to listen when you try and explain basic economic concepts. The ones they’re not grasping. I’ll leave it at that.
Mate, I have listened to every word you have said. And offered some pretty comprehensive responses. You have legitimately got it all wrong if you think I have not grasped what you believe to be nothing more or less than explanations of basic economic concepts.

Providing a descriptive analysis of how monetary operations work under a monetarily sovereign is not tantamount to a policy prescription.

We keep hearing that the debt is unsustainable in the long run. That disaster is just around the corner etc.
And yet empirically, why haven’t the governments of the US, Australia, Japan, UK, Canada all packed up their bags and declared sovereign default?
Shouldn’t all their currencies be worthless by now instead of stable?
Shouldn’t all these countries be suffering inflation instead of actually battling deflation?
Why are all of these so called “truths” of mainstream economics failing to prognosticate correctly?

Japan is a brilliant case study. I look back and laugh at articles from 20 years ago hysterically forecasting Japans doom at the hands of the debt bomb as they are downgraded below Botswana by fraudulent credit rating agencies.
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Re: The Politics Thread 2020

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greeneyed wrote: November 27, 2020, 9:54 pm Countries which have no fiscal credibility eventually go under. That’s because markets lose faith in the ability of those countries to stand behind their debts, through future taxation revenue. You can’t keep relying on perpetual devaluation of your currency to compensate for lack of sound fiscal and economic policy. It makes your country poorer, and your citizens poorer, ultimately.
That's ultimately a really important point.

I'm all for Government investment in both infrastructure and social policies when the economy needs stimulus. I also think the deranged focus on debt, Tony Abbott style, is a very dangerous platform for a politician to set.

However, national debt is fundamentally one proxy measure for the credibility of a government's ability to manage their economy, control inflation and make wise use of resources. There's no such thing as consequence free debt, whether the consequence is material or reputational, or both.

The government shouldn't be in the business of setting up some sort of public pyramid investment scheme, where borrowing and printing money is a substitute for sensible and sustainable use of resources.
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Re: The Politics Thread 2020

Post by BJ »

I love Mickeynomics.

Oprah. You all get a car.


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BJ wrote: December 8, 2020, 5:35 pm I love Mickeynomics.

Oprah. You all get a car.
Identifying that inflationary risks and real resource limitations are the correct metrics to measure public spending rather than an arbitrary figure on a central bank spreadsheet or a non-binding budgetary paper is not tantamount to prescribing free money for all. In fact in certain situations "Mickeynomics" would prescribe an increase in taxation if unemployment plunges and the economy is getting too hot. Unfortunately we are nowhere near this point at the moment and we won't be whilstever people unquestioningly accept, for example, that 5% is a "natural" rate of unemployment.

Not surprised by your insipid comment though, You would be in rarified air if you could produce a counter to any point I make which is actually grounded in an analysis of monetary operations and isn't just a lazy and reductionist nonsense. That is fine though. Not everyone has the capacity to properly debate these issues and you certainly wouldn't be the first to bring a stick to a gunfight.
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Re: The Politics Thread 2020

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Seiffert82 wrote: December 8, 2020, 12:02 pm
greeneyed wrote: November 27, 2020, 9:54 pm Countries which have no fiscal credibility eventually go under. That’s because markets lose faith in the ability of those countries to stand behind their debts, through future taxation revenue. You can’t keep relying on perpetual devaluation of your currency to compensate for lack of sound fiscal and economic policy. It makes your country poorer, and your citizens poorer, ultimately.
That's ultimately a really important point.

I'm all for Government investment in both infrastructure and social policies when the economy needs stimulus. I also think the deranged focus on debt, Tony Abbott style, is a very dangerous platform for a politician to set.

However, national debt is fundamentally one proxy measure for the credibility of a government's ability to manage their economy, control inflation and make wise use of resources. There's no such thing as consequence free debt, whether the consequence is material or reputational, or both.

The government shouldn't be in the business of setting up some sort of public pyramid investment scheme, where borrowing and printing money is a substitute for sensible and sustainable use of resources.
Interesting point, particularly about "material or reputational" consequences.

What you are essentially implying is that, in the absence of material consequences caused by rising public debt (see US, Canada, Japan, UK, Australia or pretty much any sovereign money country in the developed world) - that one also needs to worry about a non-material consequence in reputation.

What exactly are these reputational consequences pray tell and how do they manifest in the real world?

Sounds extremely vague and ideological to me.
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Re: The Politics Thread 2020

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Mickey_Raider wrote: December 10, 2020, 9:40 am
Seiffert82 wrote: December 8, 2020, 12:02 pm
greeneyed wrote: November 27, 2020, 9:54 pm Countries which have no fiscal credibility eventually go under. That’s because markets lose faith in the ability of those countries to stand behind their debts, through future taxation revenue. You can’t keep relying on perpetual devaluation of your currency to compensate for lack of sound fiscal and economic policy. It makes your country poorer, and your citizens poorer, ultimately.
That's ultimately a really important point.

I'm all for Government investment in both infrastructure and social policies when the economy needs stimulus. I also think the deranged focus on debt, Tony Abbott style, is a very dangerous platform for a politician to set.

However, national debt is fundamentally one proxy measure for the credibility of a government's ability to manage their economy, control inflation and make wise use of resources. There's no such thing as consequence free debt, whether the consequence is material or reputational, or both.

The government shouldn't be in the business of setting up some sort of public pyramid investment scheme, where borrowing and printing money is a substitute for sensible and sustainable use of resources.
Interesting point, particularly about "material or reputational" consequences.

What you are essentially implying is that, in the absence of material consequences caused by rising public debt (see US, Canada, Japan, UK, Australia or pretty much any sovereign money country in the developed world) - that one also needs to worry about a non-material consequence in reputation.

What exactly are these reputational consequences pray tell and how do they manifest in the real world?

Sounds extremely vague and ideological to me.
Consumer and business confidence metrics etc. Pretty standard indicators used to forecast economic activity and growth. Unemployment, interest rates, inflation, government spending and debt can obviously be used to gauge whether the economy is fundamentally healthy, but reputation of stable financial institutions and confidence in economic growth drives most market activity.

When confidence in the economy is high, consumers are spending, businesses are investing and inflation is under control, it's usually a pretty good sign that the government is doing something right and not excessively borrowing to stimulate the economy.
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Re: The Politics Thread 2020

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When talking about this stuff you can't selectively use the examples of the USA, Japan, and Australia with regards to running budget deficits, without talking about the extremes in places like Venezuela and Zimbabwe where money printing becomes a substitute for proper economic and financial management.

I would never seriously suggest that governments should always aim to run a balanced budget, but I equally don't think it's fair to suggest that governments should just borrow (or print) money in lieu of setting a sustainable taxation regime.
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Re: The Politics Thread 2020

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Seiffert82 wrote: December 10, 2020, 5:03 pm When talking about this stuff you can't selectively use the examples of the USA, Japan, and Australia with regards to running budget deficits, without talking about the extremes in places like Venezuela and Zimbabwe where money printing becomes a substitute for proper economic and financial management.

I would never seriously suggest that governments should always aim to run a balanced budget, but I equally don't think it's fair to suggest that governments should just borrow (or print) money in lieu of setting a sustainable taxation regime.
Before I address any points do you realise that "printing money" is a deliberate rhetorical device deployed in literally every editorial which is critical of "deficit-dove" economic thinking. And there is a reason for this. The intention is to instantly evoke the intuitively absurd imagery of wheelbarrows of paper money in the likes of post WWI Germany.

The cold hard truth now is that "printing money" has incorrectly been applied as synonymous with deficit spending, as if deficit spending is a separate monetary operation to surplus spending when it is not.

Firstly, paper cash is only printed based on demand in society for same. If tomorrow society declared that there would be no more paper or coin money, then money printing would stop completely. I wonder if the silly " money printing" trope would stop at this hypothetical point too. I have my doubts.

Secondly, as alluded to above, government spending is a homogenous monetary operation irrespective of whether the budget sheet of paper says that we in in surplus, balance or deficit. If Treasury wants to inject 1 billion dollars into (say) the mental health sector tomorrow, it simply directs the RBA to credit the account balances of the participating financial entities who have accounts at the RBA (CBA, Westpac, NAB and so on). Said entities will then credit the account balances of the recipients of said money. In this example, perhaps 500 million is going to builders and tradies who are building a state of the art public mental health facility and 500 million is going to employ government mental health officials. None of these recipients be it people or businesses get paid by big sacks of money which they redeem from the the Treasury building in Canberra.
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Re: The Politics Thread 2020

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It’d be great if people commenting on economic policy actually understood the difference between fiscal and monetary policy. Or basic economic concepts. I guess we’ll press on regardless!
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greeneyed wrote:It’d be great if people commenting on economic policy actually understood the difference between fiscal and monetary policy. Or basic economic concepts. I guess we’ll press on regardless!
Righto Mr Treasurer over here..

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Re: The Politics Thread 2020

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Mickey_Raider wrote: Secondly, as alluded to above, government spending is a homogenous monetary operation irrespective of whether the budget sheet of paper says that we in in surplus, balance or deficit.
This seems entirely beside the point. Me spending money is a homogenous operation as well, same process whether I have 1M in the bank or $1000 and a $1M debt. The homogeneity of the operation does not in itself imply equivalence, the context is the important aspect.

P.S. please don’t respond with “personal finances are not the same as federal finances”. If that’s what you’re taking from the above, that’s not my point.
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Government spending is not a monetary operation at all. It is a fiscal operation. Government spending is a real transaction, not a financial one. It produces real goods and services, or provides transfers to people who can spend them on real goods and services.

The system of money facilitates transactions in the economy. But ultimately it only maintains value because it is backed by the real economy, the product of a country.

Government borrowing or paying back debt is a financial transaction. That’s the tool which allows it to run at a deficit. Government bonds hold value because lenders believe there’s a future stream of taxation revenue which will allow governments to pay them back. If they don’t, the bonds are worthless.

The Reserve Bank is properly independent in its operations of monetary policy. It’s operations affect the supply of money, and the therefore the price of money (interest rates). It can make credit easier or harder to get. Governments are not “spending” money when it is supplied by the Reserve Bank.
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gangrenous wrote: December 11, 2020, 6:01 am
Mickey_Raider wrote: Secondly, as alluded to above, government spending is a homogenous monetary operation irrespective of whether the budget sheet of paper says that we in in surplus, balance or deficit.
This seems entirely beside the point. Me spending money is a homogenous operation as well, same process whether I have 1M in the bank or $1000 and a $1M debt. The homogeneity of the operation does not in itself imply equivalence, the context is the important aspect.

P.S. please don’t respond with “personal finances are not the same as federal finances”. If that’s what you’re taking from the above, that’s not my point.
Did you skim over or miss the part where my post is about the phrase "money printing"?
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Seiffert82 wrote: December 10, 2020, 5:03 pm When talking about this stuff you can't selectively use the examples of the USA, Japan, and Australia with regards to running budget deficits, without talking about the extremes in places like Venezuela and Zimbabwe where money printing becomes a substitute for proper economic and financial management.

I would never seriously suggest that governments should always aim to run a balanced budget, but I equally don't think it's fair to suggest that governments should just borrow (or print) money in lieu of setting a sustainable taxation regime.
No it is not fair to suggest that at all. Thankfully I am yet to read of one economist who actually suggests this. What many do suggest, however, is that taxation be looked at through its correct lens.

taxation is not a means to provide the government the ability to engage in public spending, but a means to control aggregate demand in the economy.

The above is actually obvious if you pay attention to the actual REAL WORLD application of what happens when the government engages in public spending.

Very simple exercise for you - If we were plunged into war tomorrow - what is it that would prevent us from being able to defend ourselves? Is it the availability of real resources? Or the availability of a pot of "taxation revenue" or bond buyers in order to pay for those resources?

Could you actually imagine a scenario whereby we are being invaded, all of the resources are there (labour, hardware etc.) but we cannot act because we haven't collected enough taxes or conducted the requisite bond auction to pay the weapons and capability manufacturers to defend ourself?

It is absurd.
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Re: The Politics Thread 2020

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Taxation doesn’t exist without the need for governments to provide public goods. The goods from defence to park benches that wouldn’t be provided by the market (because, by their nature, and once provided, everyone can consume them... without paying). The idea that taxation is not designed to fund government spending is fanciful. No reputable economist would agree with that proposition.

Taxation can be used to influence aggregate demand in the economy, but it isn’t that well suited to it. Tax rates are difficult to change, except if you’re cutting them. You could use the tax system to inject cash into the hands of consumers in an economic emergency... like a global financial crisis. But it is best to manage your tax system in a medium term context... to support sustainable fiscal settings. The key objective of the tax system is to raise revenue to fund public goods... and as a tool of redistribution. You can also use taxes to affect the relative prices of particular goods... and affect relative demand for products... but it’s not a good idea, unless you are correcting a clear market failure (like carbon pollution).

In a war, governments expand their spending in defence. If they need to go into deficit, or expand the deficit to do so... borrowing is precisely what they do to fund it. They might look for non market solutions too, like rationing or other means of acquiring property. But these are last resorts in market economies.
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Re: The Politics Thread 2020

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greeneyed wrote: December 11, 2020, 9:09 am Taxation doesn’t exist without the need for governments to provide public goods. The goods from defence to park benches that wouldn’t be provided by the market (because, by their nature, and once provided, everyone can consume them... without paying). The idea that taxation is not designed to fund government spending is fanciful. No reputable economist would agree with that proposition.

Taxation can be used to influence aggregate demand in the economy, but it isn’t that well suited to it. Tax rates are difficult to change, except if you’re cutting them. You could use the tax system to inject cash into the hands of consumers in an economic emergency... like a global financial crisis. But it is best to manage your tax system in a medium term context... to support sustainable fiscal settings. The key objective of the tax system is to raise revenue to fund public goods... and as a tool of redistribution. You can also use taxes to affect the relative prices of particular goods... and affect relative demand for products... but it’s not a good idea, unless you are correcting a clear market failure (like carbon pollution).

In a war, governments expand their spending in defence. If they need to go into deficit, or expand the deficit to do so... borrowing is precisely what they do to fund it. They might look for non market solutions too, like rationing or other means of acquiring property. But these are last resorts in market economies.
Interesting. I'll give the economics professor at the University of Newcastle a message and let him know "some guy on the internet" (to use the great Nickman's quote) thinks he isn't reputable. Don't know why the government of Japan (one of the largest economies in the world) would cop advice from such a disreputable crank.
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Re: The Politics Thread 2020

Post by BJ »

Didn’t the University of Newcastle give Andrew Johns a Doctorate.

Wait a minute, is Japan taking economic advice from Andrew Johns?
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