February 22, 2018

MMT: Academic snake oil for the people

Comment on Bill Mitchell on ‘The ‘tax the rich’ call bestows unwarranted importance on them’

Blog-Reference and Blog-Reference

MMT is a selection of trite slogans that have NO scientific support of any sort.

MMT’s key message for the people is: “A consequence of the fiat system is that governments that issue their own currencies no longer have to ‘fund’ their spending.” (Mitchell)

True, the government can replace taxation and in addition increase spending at any time for any purpose by deficit-spending/money-creation. This has two effects:
  • The household sector = ninety-nine-percenters is taxed in real terms by an almost imperceptible price hike (NOT inflation). Open taxation turns into stealth taxation, and in real terms, NOTHING changes.
  • Because Public Deficit = Private Profit, the one-percenters enjoy an immediate profit boost. In addition, part or all of the increased public debt can become a long-term source of interest income depending on whether and how the public debt is consolidated.
The replacement of taxation by deficit spending clearly benefits the one-percenters. The benefit is proportionally greater if the income tax is progressive. To replace progressive taxation with deficit spending is the non-plus-ultra of inverse redistribution.

So, from the standpoint of simple self-interest, the one-percenters and their useful academic/journalistic spokespersons should consistently argue FOR deficit spending, and the ninety-nine-percenters and their academic/journalistic spokespersons should consistently argue AGAINST it. This, of course, does not happen in the political realm.

MMTers as champions of deficit spending for the people are in effect agenda pusher for the one-percenters, no matter what they are saying or what they are thinking of themselves.

Bill Mitchell, for example, argues elsewhere: “A rising fiscal deficit is neither good nor bad. It all depends on the saving and spending desires of the non-government sector and the state of capacity utilisation. A rising deficit associated with a growing economy and full employment with stable prices is to be desired.”#1

Bill Mitchell’s mistake/error/fraud lies in the word “non-government sector”. There is NO such thing as the “non-government sector”, there are TWO sectors, the business and the household sector. And the business sector does NOT save. Saving/dissaving is the balance of the household sector, profit/loss is the balance of the business sector. The word profit, though, does not appear once in Bill Mitchell’s analysis. That is too bad because the macroeconomic Profit Law says Public Deficit = Private Profit which means that Bill Mitchell and his academic colleagues ― wittingly or unwittingly does not matter ― argue on behalf of the one-percenters.#2

Whether MMTers are in a state of self-delusion or know full well what they are doing is at anybody’s guess. Objectively, all of MMT is provably false proto-scientific garbage.#3

Bill Mitchell is politically consistent. He not only promotes deficit spending but also downplays the idea of taxing the rich and closing their tax havens: “Do we need the rich’s money?” "No".

No, because “we”, the ninety-nine percenters, pay for the social goodies that MMTers promise “us” through stealth taxation and transfer the newly printed money, which we do not need, via deficit spending and increased profits directly into “their” tax havens.

No, “we” do not need the rich’s money. The rich need it and Bill Mitchell and the MMTers are pushing their agenda in academia, in the econblogosphere, and in the social media.#4

Egmont Kakarot-Handtke


#1 billy blog “Oh poor Britain …
#2 Down with idiocy!
#3 For the full-spectrum refutation of MMT see cross-references MMT
#4 Are MMTers stupid or corrupt or both?

Related 'Deficits matter for distribution' 'MMT, money creation, stealth taxation, and redistribution' and 'Full employment through the price mechanism' and 'MMT: miscommunication, mistakes, misdirection' and 'Forget Keynes' and 'MMTers are NOT Friends-of-the-People' and 'Cryptoeconomics ― the best of Bill Mitchell’s spam folder'.

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Twitter Feb 2 (Don't) Tax the rich

Source: Twitter

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 “The time for pussy-footing with new taxes to extract a little more from the rich is yesterday’s news. There is no time for that. This is the time to create money for change.” (Richard Murphy)