Ed Oscuro wrote:+/- Monetarist push - the note about Milton Friedman is strange here, but if the author is just using this as a synonym for quantitative easing, then this doesn't seem like it goes in the - side of the ledger. But that apparently isn't right. I also originally read this as including a clear reference to the rather disastrous austerity policies popular in Europe at the moment - but now that I read it again, I realize I don't know my righty lingo well enough to figure out what Europe is doing that's supposedly contrary to monetarism. So probably I read this as juxtaposing totally different economic theories than the ones the author intended. Talking about monetarism seems to be strange when the issue hasn't been "do governments influence national output negatively by issuing currency" but rather "do governments influence national output positively?" I thought this was the stark contrast between the US (which still has plenty of "deficit hawks" and other white knight types seeking to enact austerity policy) and the European situation.
Oh to be fair I think the author was hinting at austerity type measures when he referred to Europe as going the opposite direction, and I don't disagree with the premise there. Many people have written similar things. I don't disagree with that idea in the article.
Ed Oscuro wrote:+/- Cutting the corporate tax rate: Overall bad. The realist in me has to admit that everybody wants to defect in this prisoner's game, putting neighboring states / nations at a disadvantage for corporate profits. On the other hand, it still seems the big picture is that this doesn't serve much of a purpose other than shifting the burden for paying for government away from the wealthy, so it should still be opposed.
One of the difficult things to get across is that actually taxes do not pay for government. Money is created by government(the central bank) and then injected into the economy. Taxes come afterwards. It's like a football stadium, they get the tickets out there and then collect them. It's impossible to do it the other way around. If anyone can explain to me what the Central Bank is for and where the money comes from if it is not created by government, I would be amused to read. But the actual fact is that, unless it's counterfeit, money comes from government, another words government finances itself.
The purpose of taxes is to regulate demand/control for inflation and to regulate in other ways(such as to de-incentivize particular types of behavior). And also, in the initial stages, taxes are what force people to work in the first place(otherwise those paper bills are useless, they only acquire value when a coercive entity, a government another words, creates incentive for people to want to hold on to them), or more succinctly: to create unemployment. As Warren Mosler would say: "The purpose of taxes is to create unemployment." Without taxes, no one needs to have a "job" that pays them money. They're still busy doing things of course, as survival would dictate, but they're not working for money.
From the inflation standpoint, if you think the behavior of corporations is more conducive to inflationary tendencies than the general populace it might make sense to tax them more. If you want to eliminate money from corporations in favor of other elements in the economy corporate taxes *might* accomplish that. But mostly I think corporate taxes are a matter of regulation. If you want to limit the power of corporations(something I do not necessarily disagree with doing), taxes are a way to do that. From my perspective the issue tends to be overblown on both sides. Abe cuts the tax rate for corporations, but he also eliminated some exceptions and deductibles that certain businesses were able to employ. How significant the difference is, is not clear to me. What's most important to me is regulating how corporations behave. Tax systems that encourage investment but discourage large accumulation of wealth by individuals of a corporation, which the United States used to have, and most OECD nations have in some form or another, I think is generally a good idea.
Ed Oscuro wrote:Looking at the rest of the paragraph that begins with corporate taxes: Deregulation, privatizing the national pension fund, TPP - kind of funny to see the author talking about "red meat" issues earlier and then trotting out all these horrible and mostly uniquely right-wing causes. So yeah, agreed on those.
Anytime a news story from the United States comes up describing Japan's efforts to "privatize" a particular industry in Japan(and East Asia in general), one should immediately apply air quotes and be skeptical of the information being communicated. Free marketers have spilled much ink about the 80s privatization of the Japan railways for example. Except when one digs a little deeper(here's a summary:
http://www.jrtr.net/jrtr27/s48_ter.html), one finds a better word might be the "splitting" of the Japanese railways rather than some more fundamental changes. One major government owned railway gets split into multiple railways that are distributed and contracted to various "private" companies. A few railways closed, but for the most part the structure of the Japanese railway is unchanged, you just had some private companies adding some features and whatnot. But these are highly regulated entities is the point, they are not private companies with the power to do what they like. They're government partnerships.
This is basically the reality of much of the Japanese economy, and places like South Korea for example as well. When U.S. writers want to write about how awesome they are, they resort to the "free market" myth. When they're feeling down about them, they forget about free markets and talk about something else like demographics or how the "markets don't work there" or lack of "innovation" or whatever the story of the day is. But the reality is that these are all highly regulated countries. South Korea is an example almost to the point of comedy. Their great national companies like Samsung used to be government owned until relatively modern years. This is a country who creates government programs to help export animated films and K-Pop to other parts of the world. But this sort of thing gets little attention in U.S. and British media, which credits development in East Asian countries to buzzwords like "free trade" without caring to investigate further. Of course I don't know, but I suspect the pension fund issue in Japan is mostly more of the same.
The Trans Pacific Partnership example might be that writer's biggest failing though. Namely because its adoption seems to have been a failure so far, and also because it's not even clear to me that the Japanese government are "supporting" it for any reason other than to placate the United States.