Blog-Reference and Blog-Reference on Nov 23
In order to tackle distribution, it is certainly a good thing to have a valid Profit Theory. Economists, though, have to this day NO idea what profit is. Their multiple common-sense notions of profit stem from microeconomic observations that are subject to the Fallacy of Composition and therefore do not translate into macroeconomic profit.
The axiomatically correct macroeconomic Profit Law reads Q≡Qm+Qn with Qm≡Yd+(I−Sm)+(G−T)+(X−M). This Law tells one, among many other things, that Public Deficit G−T>0 = Private Profit Qm which means that the Oligarchy’s financial wealth and public debt grow in lockstep. This explains, as a first approximation, why the “One Percent have gotten $21 trillion richer”. As it happens, the public debt stands currently around $22 trillion. Needless to emphasize that this back-of-the-envelope comparison can and must be greatly refined but it is good enough for now. The Profit Law explains the extremely skewed distribution of income and financial wealth. The primary distributional effect via profit is reinforced by the interest on public debt.
Public deficit-spending/money-creation is a free lunch program for the Oligarchy. The fact is that the so-called market economy is already for a long time on the life support of the state. Profit is in the main produced by public deficits. The Oligarchy, in turn, uses the opulent free lunches to corrupt the state’s legislative, executive, judiciary institutions in its favor. This constitutes a positive feedback loop and this, in turn, explains the exponential deterioration of distribution.
MMTers claim that public deficits are a good thing because they increase “private” financial wealth. This is not quite correct because, on closer inspection, public deficits increase the financial wealth of the one-percenters and NOT of the ninety-nine-percenters. The weasel word “private” obscures this distributional fact. The MMT policy of permanent deficit-spending/money-creation amounts to a permanent self-alimentation of the Oligarchy to the detriment of the ninety-nine-percenters.
Of course, MMTers are Progressives and vehemently against the unequal distribution of income and wealth. They identify the Neoliberals as culprits and their greed-is-good philosophy and their austerity policy. It is important to note that bad philosophy and bad behavior cannot explain the amount of overall monetary profit Qm which is measurable with the precision of two decimal places and is determined by simple balance mechanics.
The economic fact of the matter is: so-called free-market economies like the USA have long been on full life-support of the state. The continuous creation of financial wealth has become the first and foremost economic task of the state. The Oligarchy is continuously fed by deficit-spending/money-creation. From the perspective of society, though, the Oligarchy’s financial wealth is roughly equal to public debt which means that the net financial wealth of society as a whole is zero. People think that public debt is the business of the state and forget that the state is only an intermediary which, in turn, means that economically they own the debt. So, when a private household calculates its net financial wealth it has to deduct its share of public debt. This is not done, of course, which means that private households are poorer than they think.
Economists in general and MMTers, in particular, deceive the general public about the distributional effects of deficit-spending/money-creation. This is their job as useful idiots of the Oligarchy.
► Why economists always seem to lose the fight against inequality
► Dear idiots, government deficits do NOT fund private savings
► Quick MMT 101 refutation
► The surefire way to abolish billionaires
► Keynesianism as ultimate profit machine
► Keynes, Lerner, MMT, Trump, etc. and exploding profit
► Is MMT good for WeThePeople or for the Oligarchy?
► Stephanie Kelton’s legendary Plain-Sight-Ink-Trick
► The decisive reason to worry about government debt
► For details of the big picture see cross-references Profit/Distribution
* Intelligencer ** CommonDreams
You ask: “Do you support the welfare state?”
The realization or elimination of the welfare state in the United States is the business of the Legitimate Sovereign of the United States. Nobody has to interfere in the process. Least of all science.
To recall, the principle of the separation of science and politics holds also for economics. It is self-evident and borne out by history that science cannot improve politics but politics always corrupts science.
The economist as scientist figures out how the economic system works. As a scientist, I neither support right, center, nor left politics but have proved with the help of elementary logic/mathematics that the major approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism, MMT ― are proto-scientific garbage and that, by implication, Walrasians, Keynesians, Marxians, Austrians, MMTers are either stupid or corrupt or both.
Note that the abuse of science for political purposes comes always in the cloak of the do-gooder, world-saver, philanthropist, welfare improver, and heroic fighter for WeThePeople. Real do-gooders do good and do not talk much about it while false do-gooders do much troll-talk on social media but nothing else.