Bill Mitchell-ek zerga sistemaz eta euroguneaz
b) In More political interference from the central bank – oh but its independent!
http://bilbo.economicoutlook.net/blog/?p=45656
While the Modern Monetary Theory (MMT) literature does not broadly discuss tax systems in any structural way, although there is work being done on this question, MMT economists reject the basis of the decentralisation movement, which mainstream economists claim improves efficiency.
From an MMT perspective, pushing more spending responsibilities to the local level but then force the local units to rely on debt to fund the spending, exposes local communities to harsh variations in spending if bond markets work against a particular regime and also will lead to a lack of uniformity across the national space, thus undermining notions of a collective people.
It is better to have governmental structures where the large spending responsibilities are aligned with the currency-issuing capacity of the government.
The fiscal decentralisation idea, exploits the concept of ‘subsidiarity’, which dominated the discussions during the Maastricht process that created the Eurozone. And reflect on that mess.
The term, subsidiarity, a long-standing concept in political theory (as far back to Aristotle).
The Oxford Dictionary defines subsidiarity as “(in politics) the principle that a central authority should have a subsidiary function, performing only those tasks which cannot be performed at a more local level”.
The concept was popularised by the Roman Catholic Church in the 1931 encyclical, Quadragesimo Anno, which pronounced that “It is a fundamental principle of social philosophy, fixed and unchangeable, that one should not withdraw from individuals and commit to the community what they can accomplish by their own enterprise and/or industry” (Pope Pius XI, 1931).
The idea is thus generally taken to mean that in a federal structure, issues should be managed at the most decentralised level that is effective.
There is often an emphasis on the advancement of the ‘common good’.
British economist John Maynard Keynes used the concept of compositional fallacy to expose the flaws in conservative mainstream economics during the Great Depression.
Keynes demonstrated that the mainstream free market economics approach was prone to these fallacies, which are logical errors that arise when something is claimed to be true in general by dint of some specific part of the whole being true.
The important point in relation to the allocation of competencies across the levels of government is that there are some functions that have to be performed at the aggregate level in a federal system if the overall system and its components are to function effectively.
The fiscal policy capacity to offset major asymmetric private spending fluctuations is one such function and is intrinsic to the ability of the overall system to achieve common good, however, broadly that is defined.
When mainstream economists invoke ‘subsidiarity’ as a means of achieving common good, they also fail to understand the imperative for a federal fiscal or treasury competency.
Lower entities in a federal system cannot achieve desirable ends if they are denied access to support from the currency issuing level of the system and further constrained in the size of deficits they can run.
Think about the way this principle has been applied in the Eurozone system – the fiscal responsibilities were pushed down to the Member State level but the lack of trust (within a common currency) across those States, led to the introduction of unworkable fiscal rules, that biased those fiscal interventions to being procyclical (that is, destructive).
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Derek Henry eta Eskozia
(b) Derek Henry, in (http://bilbo.economicoutlook.net/blog/?p=45656#comment-69551)
Same thing is playing out in Scotland over the last few years.
One minute the SNP scream about being allowed to borrow then after they get bored with that they scream about being able to control taxes.
But they’ll never control taxes as they leak across borders. Tax does not stop after the payroll tax because your spending is someone else’s income which is then taxed. Spending flows into England, Wales and Northern Ireland and the SNP cannot measure that leakage because they do not have their own currency.
Nurses go on a hen night to Blackpool or the police On a weekender to Cardiff for the Rugby. Their spending which is then taxed as income will not show on the Scottish government accounts. The hotel and bars and restaurants in England and Wales will be taxed but HMRC. They have no way of knowing where the currency came from. The hotels, bars and restaurants will save some of their income so good luck trying to figure out what Scotland’s deficit actually is.
If they ever go down the borrowing route they’ll regret it big time. Borrowing in a currency they can’t issue always ends up badly as the politics means they end up even bigger serfs with less control.
To stop Scotland from handing everything over to Brussels and becoming another EU slave. Which is the SNP plan. You introduce MMT for the whole union.
All that needs to be done is London credits £10 trillion, nah let’s make it 10 quadrillion into the Scottish consolidated fund. Then says when that runs out we will credit another 10 quadrillion. Whenever you need it you can have it. Job done. To highlight the complete farce that it is and show that they are just blips that can be created at will.
If nothing changes and the charade continues. If I was [were] a right wing voter in Scotland I would fully support the SNP plan for independence. I would get everything I ever wished for. Brussels would hand me my right wing dream on a plate.
I would get the budget surpluses I’ve always wanted. I would get my low tax rates. I would get very low government spending and all the privatisations I ever wanted. Just by voting Yes for the SNP plan. It’s a good job the right wing voters in Scotland are as thick as mince or the SNP would win by a landslide.
Every time Scotland screams to borrow and screams to control taxes.
The London Gentleman clubs must be laughing their heads off and pointing up North playing a banjo.
