R U a T&S Liberal

["John Gelles" <johng@xxxxxxxxxx>]

        ARE  YOU  A  TAX  AND  SPEND  LIBERAL ?

    Bob Kuttner, an editor at The American Prospect, offered
    this opinion (6 May, page 2 TAP,):

            "most Americans say they would pay higher taxes
             to support things like universal health insurance,
             high quality child care, and prescription drugs for
             all."

    Kuttner would agree that most Americans would also like
    to receive these benefits without paying higher taxes.

    He would also agree most Americans would like to pay
    no visible taxes and file no tax returns--and they would
    be glad to pay invisible taxes ONLY if they believed that
    their own earnings were increasing yearly on account
    of the invisible taxes (which were a last resort element
    in a system that used inflation-protected money to
    support democracy, human rights, the environment
    and a guaranteed fair share of the economic pie for all
    those who baked it.).

    Kuttner would also agree that the system of money and
    price, as we know it, does not require government to spend
    only from moneys borrowed or received from taxes. The
    system can tolerate a great deal of government spending
    that is divorced from any "resevoir of money"--provided
    spending by the private sector leaves slack in the markets
    where things are sold and bought.

    In fact Kuttner knows that the metaphor "resevoir of
    money" is incomplete. There is wealth that is not money,
    but can become money by borrowing against it. Such
    wealth is far larger than any resevoir of money.

    There is also potential wealth that can be produced very
    rapidly to further augment "demand" when "supply" is
    increased and the "system" connecting demand, supply
    and price is functioning in the public interest.

    Now Kuttner (and everyone on the PKT list) wants the
    above system (call it the money-price system) to
    function in the public interest.  But politicians and bankers
    want the system to function first in their own interests
    and, only after that, in the public interest.

    The great middle class, of course, has no time to learn
    how to do its taxes--much less how to improve the
    system. How about Kuttner and all of us?  Do we think
    we can continue to be seen as tax and spend liberals
    and still move the middle class to vote for necessary
    reform?

    If taxes had never been invented, but fiat money had,
    the price of non-money wealth (capital assets) would
    rise as inflation-protected savings played the role of
    taxes relative to hyperinflation.
            In such a world, lawmakers as money-creators
    (spending money into circulation) would be balanced
    by money-makers as political campaign contributors.

    No doubt the reforms implied above are not easy. But
    they are necessary.  Until they are made we have not
    enough money to protect us from avoidable disaster.

    Until we admit they must be made the logic of our
    positions on the budget surplus or deficit and on the
    trade surplus or deficit and on interest rates, foreign
    exchange rates and tax rates, is tragically flawed.

    Milton Friedman believes the ad hoc nature of mass
    decision making in the market as it is (with undue
    advertising allowed and crooked business tolerated)
    is superior to the ad hoc nature of lawmakers as
    money-creators (instead of money-stealers--their
    current role).
                I think it is time to look away from the
    mindless mass of gamblers in the market and
    toward rational political compromise--if we
    want better results.

    Many on PKT believe there is a "theory" to be
    found that finesses ad-hocracy. If there is, perhaps
    it is "a nation can afford whatever it can produce."
                That is the 1944 theory recognized by the
    ILO (International Labor Organizaion), in Montreal,
    to have set the stage for winning WW II.
                If we would win a war today we better
    remember that theory.

        John Gelles