I have read and thought a lot about Warren Mosler's, “The 7 Deadly Innocent Frauds of Economic Policy.”
I am a fairly well educated person with average intelligence and I would like to comment on that essay. It was indeed easy to understand and I am grateful for that.
I believe that economic theory is merely a construct of “man” (not woman) and that there are alternative views of economics (all purporting to be an answer to something or other) but these concerns are not necessarily mutally exclusive. Man makes the theory; man makes the rules that govern the theory; and man changes the rules as he sees fit. Economics is not scientifically based in the way that the theory of evolution is. If it were (scientifically based) it would take into account the economic value of a woman who stays home and looks after her children. In fact, a good economy would pay that woman a living wage.
I do not think it matters if the average person like me thinks that if the deficit is huge that future generations will have to pay more taxes or that my check to pay my health care taxes is actually torn up by the government when they receive it. In fact, I get a great deal of satisfaction thinking that I am paying my health care expenses through the earnings from my own labor and by paying my taxes. I am also, incidentally, helping society as a whole as my tax dollars will assist those less well off to receive health care too. It is my commitment as a citizen of my country.
It may be true that “government deficits equal increased monetary savings” but the question is Who gets those savings—the banks who have trillions of dollars obtained by borrowing from the Fed which now sit in their accounts (p. 42)? Right now most of the market that is thriving is the financial market. Manufacturing has moved to cheaper labor overseas.
I was disappointed to realize that there was an ideological agenda evident at the end of the article. Low or no taxes came through loud and clear and the economic theory espoused by Mosler supports that belief. The support of the military came through loud and clear also! What paranoia when the US has hundreds of bases all over the world; it fights wars whenever it wants to; it has a record of warfare unsurpassed by any other country in the world. But that really has little to do with economic theory and more to do with fear and trembling about what might happen. The most belligerant country in the world is afraid that someone is going to invade it. With less belligerance comes less fear for everyone and more admiration from the rest of the world. Few people envy the culture of the US as it is now, in my humble opinion.
Economists are terrible predictors of future events--about 50/50 on any topic (i.e., chance is as good an indicator).
What I noticed about this discussion of economic theory, and which is probably true of all theories of economics, is the absence of the one thing that all economics is based on, the things that fill that department store with all its goods and services and which are essential for all life, as a matter of fact, and that is the earth and the natural world that lives upon it. That part is taken for granted--that the earth and nature will always be here, but I think it should be taken into consideration in economic theory, especially now that climate is changing so rapidly and the depletion of resources is surely to be the future. Eonomics should be concentrating on sustainability of nature and not how “consumers” will be able to buy all the goods and services in the department store. In fact, there could be just as many jobs created by husbanding the natural environment as by reducing taxes.
That is what I think. I arrived at this place on the web when I became interested in Goldman Sachs's ability to corner the money market by creating derivatives from sub-prime mortgages, selling them to investors, having the securites become junk, shorting the sub-primes, and making money on both the upside and downside of market making. There is something fraudulent about that kind of money-making and it requires a good deal of scrutiny by everyone. The economy of the US in the last 30 years has been one of de-regulation for the benefit of the richest which in turn creates more poverty for the poorest. Mosler's piece promotes less regulation (p.29). It is obvious to me that self-regulation has not worked!
There is something wrong with any economic theory that supports such inequality and allows such disparity. Economists make the rules so maybe they should include benefits to all of society in those rules. It is not the innocent frauds we should be tackling but the guilty frauds committed by the financial system in the past few years and I include Goldman Sachs in that description.
End of sermon.