- MMTers might dislike like the comparison, but their model is the lefty version of the Laffer Curve, the beloved economic construct of GOP tax-cutting "supply-siders." Like MMTers, the most ardent supply-siders take a simple economic observation — about tax rates and tax revenue — to make a big conceptual leap — that tax cuts pay for themselves. Also like Lafferistas, MMT don't much sweat deficits and debts. (In a bit of cheeky cosmic coincidence, it was Arthur Laffer himself who played matchmaker among some early MMT theorists.) And although that may not be how leading MMT-loving academics, such as former Bernie Sanders economic advisor Stephanie Kelton, see things — they stress MMT does have financial limits — the nuances may get lost on politicians and #Resistance folks.
- Modern Monetary Theory – which is neither modern nor a theory – is a post hoc rationalization of political expediency and power-expanding action.
It makes us feel better about all the bad stuff we’ve done with money and debt for the political efficacy of Team Elite.
And all the bad stuff we’re going to do.
Eyes on the ball here - we've gone from "70% marginal tax rate" to "Laffer Curve" in the space of a week. There's a fair amount of messaging going on and the message is fundamentally "people who want big social programs are delusional."
The note under the note, however, is interesting. We're experiencing a big shift in the thinking on "how money works." At the end of the day, economics is a ledger we all choose to believe in. This whole "capitalize the gains, socialize the losses" approach to capitalism might be running aground.
Hold onto your butts.