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Views (cont'd): Government spending
Sep. 1st, 2017 10:07 amI generally buy the modern variety of Keynesian economics that allows for stimulus spending when wages are stagnant and many prime-age workers are unemployed or underemployed. A poor economy causes real present suffering and inflicts long-term damage: better to incur the debt now and have tax revenues rise sooner for paying it off. Conversely, when the economy is doing well, the national debt must be aggressively paid down.
Generous welfare benefits fit well for stimulus spending: those who receive them tend to spend the money to help keep others in jobs. While the goverment can incur long-term debt cheaply, economic downturns are also an excellent time for infrastructure investment, anything that is of lasting benefit such as education, transportation and communications. In the service of keeping the economy moving, I am fine with a few percentage points of inflation, focusing specifically on the non-commodity items: if oil is more expensive but wages are not rising then I doubt we are about to turn into the Weimar Republic.
More speculatively, I am all for trying to keep things simple. For instance, I wonder if it would be practical to tax investment and employment income the same and, rather than means-testing benefits and fussing about percentage increases, simply give everybody a sufficient universal basic income as the Finns have been trying, especially if government also guarantees the provision of affordable basic food and shelter for those who ask. If neither the food nor shelter are generously lovely then I suspect that both the US and the UK are wealthy enough to meet citizens' basic needs, the real problems being challenges like mental health provision that require well-qualified staff. These thoughts feel to me like I am moving too far into foolish amateurism, like when I play an unusual chess opening and in the coming moves my opponent then illustrates that my opening is unusual because it is a bad idea.
Generous welfare benefits fit well for stimulus spending: those who receive them tend to spend the money to help keep others in jobs. While the goverment can incur long-term debt cheaply, economic downturns are also an excellent time for infrastructure investment, anything that is of lasting benefit such as education, transportation and communications. In the service of keeping the economy moving, I am fine with a few percentage points of inflation, focusing specifically on the non-commodity items: if oil is more expensive but wages are not rising then I doubt we are about to turn into the Weimar Republic.
More speculatively, I am all for trying to keep things simple. For instance, I wonder if it would be practical to tax investment and employment income the same and, rather than means-testing benefits and fussing about percentage increases, simply give everybody a sufficient universal basic income as the Finns have been trying, especially if government also guarantees the provision of affordable basic food and shelter for those who ask. If neither the food nor shelter are generously lovely then I suspect that both the US and the UK are wealthy enough to meet citizens' basic needs, the real problems being challenges like mental health provision that require well-qualified staff. These thoughts feel to me like I am moving too far into foolish amateurism, like when I play an unusual chess opening and in the coming moves my opponent then illustrates that my opening is unusual because it is a bad idea.
