Adam Smith, progressive hero.

Community (This content is not subject to review by Daily Kos staff prior to publication.)

Monday April 14, 2014 · 8:04 PM PDT

2014/04/14 · 20:04

After listening to all the "invisible hand" bullshit from the Tighty Righties, I had assumed that Adam Smith was something of an asshole. Apparently, not so much, according to an article by Deborah Boucoyannis in the British Politics and Policy Blog:

A fair distribution of taxation was key to the soundness of the English economy in Smith. The rich, he claimed, should be taxed “something more than in proportion” to their wealth. “The inequality of the worst kind” was when taxes must “fall much heavier upon the poor than upon the rich.” The reasons were not moral. Bad taxes were simply bad economics.

How's this for a progressive policy prescription?

In Smith, profits should be low and labor wages high, legislation in favor of the worker is “always just and equitable,” land should be distributed widely and evenly, inheritance laws should partition fortunes, taxation can be high if it is equitable, and the science of the legislator is necessary to thwart rentiers and manipulators.

Capitalism puts the interests of Ownership and Labor into direct conflict, as from the point of view of Ownership, Labor is a cost to be minimized. They therefore have an incentive to use their economic power to influence outcomes:

Smith believed the interests of profit-seekers were structurally and thus permanently “directly opposite to that of the great body of the people,” because “the rate of profit does not, like rent and wages, rise with the prosperity, and fall with the declension of the society. On the contrary, it is naturally low in rich, and high in poor countries” (with a few exceptions, especially new economies). Accordingly, when the economy is sound, wealth concentration should not occur. Only when profit-seekers have rigged the system through legislation do concentrations occur. [emphasis by diarist]

In Boucoyannis' view, Adam Smith believed that the recipe for maximizing the Wealth of Nations was very similar to the one modern Progressives believe will bring the greatest good to the greatest number. I wonder if neo-liberals will ever tire of being wrong.

Real Fiscal Responsibility

telebob1

Community (This content is not subject to review by Daily Kos staff prior to publication.)

Tuesday April 08, 2014 · 2:55 PM PDT

2014/04/08 · 14:55

no image description available — But... it's a REALLY big number!!!

But... it's a REALLY big number!!!

I've recently joined DKos after almost a year of lurking. My thanks to kos and all of you who contribute diaries, comments, and other resources to this fantastic laboratory space. Early on in my lurking, I came across several references to Modern Money Theory (MMT) that piqued my interest, and set me on a new journey of learning.

I am not an economist, but after months of study, I am convinced that MMT provides an accurate description of the nature of modern fiat currency.
I'm equally convinced that in understanding this nature, we can create much more meaningful and effective strategies to make market economies better serve the needs of the people.

This, my first diary, will be a little MMT primer using Joan McCarter's diary "Senate passes unemployment insurance extension" as a jumping off point. Joan quotes #WGDB, from which I'll focus on this snippet:

House action is uncertain at best. Speaker John A. Boehner, R-Ohio, has said repeatedly the Senate bill does not meet his test of creating jobs and being fiscally responsible.

Creating jobs? Of course it creates jobs. Government spending always creates jobs.

Sometimes it creates them directly: We pay contractors to build roads and bridges, they hire workers. BAM! New jobs!

Sometimes it creates them indirectly: We send out SSI checks, recipients go buy stuff, stores hire employees to ring them up and restock the shelves, vendors hire workers to make more stuff. BAM! New jobs!

While some types of spending create fewer jobs than others, the only way spending could fail to create any jobs is if there were no unemployed job seekers out there. In that case, workers could only move from one job to another, probably (but not always) leading to inflation, but no net creation of jobs. Of course, there have been plenty of unemployed for the last 40 years, so it has been a while since this problem could have come up.

Until we reach full employment, government spending CREATES jobs.

Carry on below the fold for a discussion of the real meaning of fiscal responsibility. Read More

RSS