Naked Came the Taxosaurus

[Todd]

You say that as though it's a bad thing. 

Now that drogulus has come out as an MMT guy, it is essential to remember what he means.  The central government of a monetarily sovereign nation that uses fiat currency (MMT types generally use the word "money" here) can basically monetize the debt ("print money") until all economic problems are alleviated. Inflation is not a problem, or at least is much less of a problem than unemployment.  (Stagflation cannot happen, either, it seems.)  Targeted government spending in various market sectors - MMT types are typically conscientious about using some variant of the word "market" - can and will drive the economy to full employment for advocates who prefer abstract concepts, or to hard targets for true believers.  The most ambitious hard targets I am familiar with is under 2% involuntary unemployment coupled with zero underemployment and zero hidden unemployment.  Debt levels don't matter.  Overproduction does not matter.  Currency devaluation is not a major risk.  Government choice will be, by and large, correct and efficient.  I'm not sure if your golf score will improve, though.

The economy is a bathtub with money in it.

You might want to work on your metaphors.  This one is static.  What if a bigger bathtub is needed?

[drogulus]

     Regarding any lingering perplexity over the concept of economic (sector) balance versus budget balance this chart will help (I hope):

     

     Dynamic sector balance is, as you see, unavoidable. Here you can see the Clinton boom ended by contraction imposed by budget balancing, Bush's fumbling attempt to right the balance with tax cuts (sound in principle but poorly chosen). Since the aim of economic management at the top is sufficient gov't liabilities to grow the private sector surplus, budget balance and sector balance can't be equally pursued as ends. Which takes priority? Most people treat the budget as imposing discipline on the economy, where I see the economy as the goal and budgets as records. That must be the case for a currency issuer in our system. Obviously at lower levels where everyone is a user, not issuer, of dollars, household rules apply.

     The economist who provided the chart is Stephanie Kelton. Here she is last Sept.:

     https://www.youtube.com/v/DbM3crOcmR0#t=1114

     My personal preference for explainer in chief is Warren Mosler. He's always been an outsider as economist, an insider in banking and finance. We're sympatico because we hate obfuscation and the role it plays in excluding and demeaning intelligent nonexperts. Convoluted explanation disguises wrongness, in the first instance from oneself, then others. Branches of philosophy, and all theology (religion for atheists), are devoted to this "noble" cause. Mosler doesn't endorse "divine deception" in economics, I don't endorse it anywhere. Most importantly he was born in 1949, like Hitchens, like me, and like That One Over There.

     So, here's a taste of the Moslersaurus:

     https://www.youtube.com/v/68vVlN3D80Q

     

[ibanezmonster]

I promised myself not to post in this thread, but I can´t help....

There is no genius stuck working at Wall-Mart. A genius either makes his way, or he is not a genius. 

Unless you have someone helping you, you are unlikely to make it. This isn't Northern Europe...

[drogulus]

You might want to work on your metaphors.  This one is static.  What if a bigger bathtub is needed?

     That's a big part of stock/flow regulation. What rate of expansion can proper regulation produce, where are the boundaries, how much inflation, etc.

[ZauberdrachenNr.7]

I promised myself not to post in this thread, but I can´t help....

There is no genius stuck working at Wall-Mart. A genius either makes his way, or he is not a genius. 

D'accord.  "L'homme n'est rien d'autre que son projet. Il n'existe que dans la mesure où il se réalise, il n'est donc rien d'autres que l'ensemble de ses actes, rien d'autres que sa vie."  - Jean-Paul Sartre.

[Karl Henning]

Unless you have someone helping you, you are unlikely to make it.

Your point does not really gainsay Andrei's, of course.  We all need a little help.

[Cato]

To return to the Taxosaurus: c. 100 years at the dawn of the Taxosaurus, it was the size of a novel, c. 400 pages.

Today, the Federal Income Tax code has (drum-roll) 74,608 pages.  It is an open secret that people working at the I.R.S. most of the time will contradict each other about what is in the code and what it means.

So-called "ObamaCare" added c. 3,000 pages by itself.

For the charts of growth over the past 100 years:

http://www.washingtonexaminer.com/guess-how-many-pages-in-the-tax-code/article/2563032

[Todd]

Here you can see the Clinton boom ended by contraction imposed by budget balancing,

The problem with your analysis is that it focuses on the wrong facts.  The Clinton budget surpluses relied (too) heavily on tax receipts of asset sales during the dot com bubble, and were not notably contractionary.  Of far more importance were the rate increases by the Fed in 2000 and the fact that some European nations entered recession in 2000.  In the US, GDP peaked in March 2001, before the Bush fiscal policies were implemented.  The Bush tax cuts were modestly expansionary, and an appropriate policy response to the recession, though they were not sold that way.  You are attempting to blame the wrong bogeyman for the 2001 recession.  And this is not just my opinion.

I'm not quite sure who your charts are intended for.  Some people, often politicians, are very fixated on balanced budgets, it is true, but generally only when the deficits are very large and even more often during election cycles.  I don't care about deficits by themselves.  I'd be fine with permanent deficits provided they average less than GDP growth over time.  I'd also be fine with occasional or even frequent surpluses, provided they didn't slow economic growth or impinge the efficiency of financial markets.  This is markedly different than adopting an MMT outlook.

[Todd]

     That's a big part of stock/flow regulation. What rate of expansion can proper regulation produce, where are the boundaries, how much inflation, etc.

It's still a very poor metaphor.

[San Antone]

I promised myself not to post in this thread, but I can´t help....

There is no genius stuck working at Wall-Mart. A genius either makes his way, or he is not a genius. 

Albert Einstein was stuck working at a state patent office for years.  Had he been killed by a bus before he could publish his theories, according to you he was not a genius.

[drogulus]

     

Government choice will be, by and large, correct and efficient.

     Yes, I favor that. I want it to be the right size and pursue appropriate policies. But I'm advocating improvement from better understanding of what the government will do in any case, and pointing out what pervasive misunderstandings hamper it. I'm not really interested in arguing the practical feasibility of perfection. Improvement is always opposed with the sneer that "you think perfection is possible". I'm content to do the best that can be achieved, the other stuff is a waste of my time, which Uncle Sam has decided is super valuable. I agree, so I'm here, doing the Lord's work.*

   * Lord Keynes, don't you know.

[Florestan]

Albert Einstein was stuck working at a state patent office for years. Had he been killed by a bus before he could publish his theories

Well, he hadn´t. Contrafactual history does not an unkown genius make. 

[San Antone]

Well, he hadn´t. Contrafactual history does not an unkown genius make. 

We, well except for you who apparently possesses all knowledge, will never know how many geniuses have suffered that fate.

[Florestan]

We, well except for you who apparently possesses all knowledge, will never know how many geniuses have suffered that fate.

Why don´t you trust my knowlledge, then? 

By all means, feel free to come up with a genius who died leaving no trace whatsoever of his genius. I´m holding my breath, actually. 

[San Antone]

Why don´t you trust my knowlledge, then? 

By all means, feel free to come up with a genius who died leaving no trace whatsoever of his genius. I´m holding my breath, actually. 

Oh, now you're moving  the goal post.  Before it was the no genius is working at Walmart, now it is they have to have died leaving no trace whatsoever of his genius. 

Walmart employs 1.4 Million Americans - I'm guessing at least one of them could qualify as a genius.

[drogulus]

To return to the Taxosaurus: c. 100 years at the dawn of the Taxosaurus, it was the size of a novel, c. 400 pages.

Today, the Federal Income Tax code has (drum-roll) 74,608 pages.  It is an open secret that people working at the I.R.S. most of the time will contradict each other about what is in the code and what it means.

So-called "ObamaCare" added c. 3,000 pages by itself.

For the charts of growth over the past 100 years:

http://www.washingtonexaminer.com/guess-how-many-pages-in-the-tax-code/article/2563032

     Probably most of the lines of code are there to lower someone's tax. How much evil lurks in the cracks undiscovered? I'll wager not much. The people in change of being a pain in the ass about these things never sleep. Just in case, do me a solid and watch for me.

     

   

[Jo498]

Einstein was only 26 in his "annus mirabilis" 1905 and he had been about three years at the patent office. It should also be noted that he entered this office job with a "mere" teacher's diploma. This probably was a decent job for the qualifications he had in 1902. For whatever reasons he had not distinguished himself so clearly at university to get a doctoral assistant position or something like that.
He receiced his PhD in 1906 (submitted the thesis in 1905, parallel to the papers that made him famous) and before those papers hardly anbody could really know how brilliant he was and offer him better jobs.

(FWIW I agree that the Gates, Jobs and others receive absurd renumeration for their quasi-monopole on what's often basically expensive toys. And of course it' the customers that pay them and "create the jobs" of the normal Apple employees. The only jobs rich people create directly are their maids, gardeners, drivers etc. But the real jobs are always "created" by the customers.)

[North Star]

https://www.youtube.com/v/kGknlEWjxZc

[drogulus]

The problem with your analysis is that it focuses on the wrong facts.  The Clinton budget surpluses relied (too) heavily on tax receipts of asset sales during the dot com bubble, and were not notably contractionary.  Of far more importance were the rate increases by the Fed in 2000 and the fact that some European nations entered recession in 2000.  In the US, GDP peaked in March 2001, before the Bush fiscal policies were implemented.  The Bush tax cuts were modestly expansionary, and an appropriate policy response to the recession, though they were not sold that way.  You are attempting to blame the wrong bogeyman for the 2001 recession.  And this is not just my opinion.

I'm not quite sure who your charts are intended for.  Some people, often politicians, are very fixated on balanced budgets, it is true, but generally only when the deficits are very large and even more often during election cycles.  I don't care about deficits by themselves.  I'd be fine with permanent deficits provided they average less than GDP growth over time.  I'd also be fine with occasional or even frequent surpluses, provided they didn't slow economic growth or impinge the efficiency of financial markets.  This is markedly different than adopting an MMT outlook.

     Overtaxation and underspending can each contribute their component to a deficit shortage, throwing the private sector into an unsustainable overleverage. A small deficit was regarded as an emergency while private overextension, the real problem that finally took us down, was just fine. It doesn't matter much which negative particular of Clinton contraction was the last straw, the net result was to amplify the business cycle rather than absorb the shock that would come. That's basic economic dumbth.

     About budget fixation, the big problem is not between the budget hysterics and other who don't panic. That dialog is what consumes the editorial page because most people adopt a position along a hawk/dove axis, the range of opinion is between a a lot of poison now and a little less poison later. You know, like "should we impose more unemployment now, or should we wait to impose it at full employment?" Keynes and the New Keynesians like Dr. K are all about that. MMT is more skeptical of poison. They (OK, we....) think measures to promote full employment delivers more of other goods in its train than other goods bring full employment in its. Employment and the higher wages on offer when its full mean more sales and as Dr. Kelton and Mr. Mosler both say, capitalism requires sales. How persnickety of me to insist that any economy runs best when the people who produce the goods have enough income to buy them! I must a a Marxist!! A super pro capitalist Marxist, maybe.....

[San Antone]

Walmart employs 1.4 Million Americans - I'm guessing at least one of them could qualify as a genius.

Definitions of genius in terms of intelligence quotient (IQ) are based on research originating in the early 1900s. In 1916 the American psychologist Lewis M. Terman set the IQ for "potential genius" at 140 and above, a level exhibited by about 1 in every 250 people.  Leta Hollingworth, an American psychologist who studied the nature and nurture of genius, proposed an IQ of 180 as the threshold—a level that, at least theoretically, is exhibited by only about one in every two million people. Her work in this area was published posthumously as Children Above 180 IQ, Stanford-Binet: Origin and Development (1942).

Odds look pretty good for there to be well over 5,000 people currently working at Walmart with an IQ of 140 and it is even possible for someone with an IQ of 180 to be working there.  Cumulatively adding up all the people who have ever worked at Walmart, and the odds get much better. 

Whether any of these people become an acknowledged genius is different matter.