January 27, 2019

Stephanie Kelton on how to become fabulously wealthy

Comment on Tom Hickey on ‘Stephanie Kelton on “makers and takers”’


The macroeconomic Profit Law reads Q≡Yd+(I−S)+(G−T)+(X−M) and this boils down to Q=(G−T) and this says that Public Deficit = Private Profit. As a rule of thumb, the financial wealth of the Oligarchy grows in lockstep with the public debt. In other words, fabulous wealth is the counterpart of fabulous public debt ($21.5 trillion). Never in history was the debt so fabulous as in the present-day USA.

Of course, this can be seen only from a considerable analytical height. It’s a bit like the Nazca lines which form shapes that can only be seen from high places. Most economists, though, do not rise above the micro-level. From the ant perspective, it seems obvious that profit comes from exploitation, hard work, innovation, productivity, greed, wage-cutting, risk, smart deals, monopoly power, patents, union weakness, etcetera. These microeconomic factors, though, are IRRELEVANT for macroeconomic profit and affect only the DISTRIBUTION of macroeconomic profit among firms but NOT the overall volume. The common sense micro explanations of profit and rent are simply false.#1, #2, #3, #4, #5

Tom Hickey maintains: “Under pure capitalism, an unattainable ideal, there would be no rent extraction since all gain in addition to that which is needed to bring goods to the market would be competed away.”

It is an ancient and still unproven assertion that competition drives profit towards zero. This, of course, shows only that the philosopher Tom Hickey has no idea what profit is. Overall profit does NOT AT ALL depend on competition but alone on deficit spending of the household and the government sector. Macroeconomic profit does NOT vanish with competition. Only its distribution at the micro-level changes.

With her propagation of MMT policy, Stephanie Kelton sees to it that the “makers and takers” get their permanent free lunch from the government and become even more fabulously wealthy.#6

The differentiation between the good profit of makers and the bad rent of takers is a deception of the general public because profit and rent are the same thing and given by the Profit Law.#7

No group of political economists pushes “fabulous wealth” more than Stephanie Kelton and the MMTers.

Egmont Kakarot-Handtke

#1 Capitalism, poverty, exploitation, and cross-over exploitation
#2 For details of the big picture see cross-references Profit
#3 The Profit Theory is False Since Adam Smith
#4 Economists: scientists or political clowns?
#5 Ricardo and the invention of class war
#6 Stephanie Kelton’s legendary Plain-Sight-Ink-Trick
#7 When Ricardo Saw Profit, He Called It Rent: On the Vice of Parochial Realism

Related 'A clueless MMTer explains macroeconomics to clueless beginners'.

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