Lars Syll on taxing the rich as a political tool to reduce inequality, not simply as an economic instrument as seen by Modern Monetary Theory.
Lars P. Syll is an economist at the Faculty of Education and Society at Malmö, Sweden, not to mention a prolific blogger on his own website.
Cross-posted from Syll’s blog
Some inflation might be good, in particular if it allows for higher real wages, something sorely needed. How much inflation? Difficult to say, but the structure of the Fed is not going to vanish, and higher rates would be used to discipline the labor class, with the support of many neoliberal Dems … The limits to fiscal expansion would be political, not economic, and there is no reason for the left to be up in arms against an imaginary enemy. Hyperinflation is like the the windmills for the Quijote. The giants to attack are actually the ones pointed out in the progressive agenda, like lack of spending on health, education and the environment, and MMTers have been instrumental in getting these ideas in the political discourse, and moving the Dems to the left.
But taxes matter too. Here is where the MMTers refusal to acknowledge that taxes on the wealthy are necessary is a political mistake … Tax increases on the wealthy should (and is) be part of the progressive agenda (here MMTers make a political mistake). It has an important distributive effect, and it makes the spending politically acceptable …
But the crucial point is that overall MMTers have been helpful in moving the Dems in the right direction (the right direction is to the left), and that is a good thing … The problem is the vast majority of neoliberals that still dominate the party. The same could be said about MMT. The problem is not the exaggerated propositions of MMTers, but the excessive fear of inflation when there are too many relevant problems to be concerned with.
Important and far-reaching questions indeed. Taxing the rich is not only a question of raising revenue or counteracting potentially increasing inflation.
Inequality that undermines democracy is a dangerous thing. Without a conscious effort to counteract the inevitable forces driving our societies towards an extreme income and wealth inequality, our societies crackle. It is crucial to have strong redistributive policies if we want to have stable economies and societies. Redistributive taxes and active fiscal policies are necessary ingredients for building a good society.
What we have seen happen for decades now in the US, the UK, Sweden, and elsewhere, is deeply disturbing. Societies where we allow the inequality of incomes and wealth to increase without bounds, sooner or later implode. The cement that keeps us together erodes and in the end we are only left with people dipped in the ice cold water of egoism and greed.
The tax issue is an important issue. Refusing to acknowledge that put us all in dire straits.