Lars Syll – MMT and the need for taxing the rich

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

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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.

Matias Vernengo

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.

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  1. Sorry but this article completely misrepresents MMT. The political/social uses for taxation are well known to and explained by the advocates of MMT, including the value of taxing the rich. Give it a break please.

  2. Lars Syll is bound be genuinely engaged in this, but the nostrums advanced by academics are rarely of practical use, and if they are, they are rarely implemented because the establishment does what is good for the establishment. If such things as taxing the rich are indeed accepted, these days it is a fudge, by and large, because the government makes the rules so as to allow the rich to pay no or little tax. In the event that the rich pay more tax than before, it is usually or almost always the case that they can pass on the cost down the chain of financial and economic relations.
    There is absolutely very good analysis and general commentary from some academics, but the more incisive analysis and solutions on offer come from within the trade of high finance and economics. Of course, the heart of the matter does not get taken up by the mainstream. That is reserved for the alternative and radical elements.
    The problem is political, but few would like to stick out their nexk to enumerate the facts of life which have a bearing on the lack of overall improvement in the inequity of the abuse of legitimate power in the western democracies.
    As in politics, so in high finance and economics. Governments have so many levers at their disposal, if they appear to do the right thing and give the disenfranchised more, it will simply be a sleight of hand. If people get to frustrated, a period of Left or Centre-Left rule is engineered. The economy is run down and soon people will vote in the other, more visible part of the establishment; the part of the establishment which actually controls affairs.
    Democracy means people are responsible for their political participation, and lack of. It’s all theatre, even international high finance commentary and economists analysing and offering solutions which appeal to the disenfranchised.
    People are divided, hence they are ruled. There is an obvious answer, but impossible to implement. People need to wizen up, cooperate honestly and make the society they wish for. Politics is much like religion, indeed, very much related and intertwined. How many religions are there? How many Christian denominations? Every next person has different ideas about what is right. Honest dealing would solve a lot of problems. Right thinking many more. Wise counsel would do the rest of what is possible.

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