While I understand what assumption you’re running under no one said for only billionaires to pay. The idea is progressive tax brackets the less you make the less you pay percentage wise. We also need less loopholes for the people that can buy lawyers and manipulate their funds to get out of paying what they should. There is no reason companies and the extremely wealthy should be paying an effectively less tax percentage than the diminishing lower middle class.
It’s not about only billionaires paying, it’s about them not being a magical money source. A higher rate might feel better, but it’s not solving government revenue problems.
It will not suddenly balance the budget but it is funding that will either reduce the deficit, or reduce the burden on poorer people. We can’t fix decades of poor decisions with one good decision, it’s simply a good decision we can make now that will help.
Well, that’s a misleading title. All the countries in their list have some debt, just less than most.
All countries carry some debt, because they need to show a history of reliably making payments on that debt in case they need to borrow money in the future for whatever reason. Not all countries, however, run massive deficits every year.
I’m not the biggest fan of capitalism myself but the existence of debt does not mean it is broken. Debt is a mechanism to allow for solid investments, e.g. building infrastructure or schools that will create a net positive in the (far) future.
Germany for example has enacted a Schuldenbremse (debt-break) in 2009 and forbids our states to take on new debt and limits the debt taken on the federal level to a minisule percentage of the GDP. Our infrastructure is currently slowly but noticeably crumbling away, bridges are getting closed for heavy traffic and experts say many of them have become irreparable due to missing maintenance and need to be fully rebuild in a few years. The local military barracks are in such a desolate condition that the soldiers need to drive two towns over to shower. We might not take on financial debt, but an infrastructure debt that will demand an even bigger toll on us.
If 90% of the countries in the world are in debt and corporations have more money than god, then clearly the system isn’t ideal.
$34T is insane for one single country.
As for infrastructure, proper taxation of corporations would raise more revenue to fix such things. If Amazon is contributing to the breakdown of roads due to all the couriers then they should be paying more tax.
Look at the water companies in the UK. Paid out their shareholders for decades and did nothing to improve the infrastructure which is now likely to end up with them being nationalised after they’ve looted what they could.
I’m as much of a leftist as you are, and I’m sorry if I sound a bit pretentious here but the analysis you’re doing of debt is wrong.
States generally create their own currency, and generally get indebted (i.e. issue state bonds) in their own currency. You can see how a state that creates its own money doesn’t really need debt to be able to pay for stuff, debt is just a political decision, sometimes misguided by people who don’t really understand it properly, sometimes properly guided by experts.
A state doesn’t need taxes to fund itself either. If it needs to build roads, it can literally create the currency to hire the workers to extract the resources, plan the roads, and build them. Taxes have many purposes such as removing money from the private sector to prevent or reduce inflation, disincentivizing certain behaviours (for example tobacco taxes), lowering inequality (for example progressive income taxes), or even making people use your currency instead of another (people in the private sector will end up using your currency if they are forced to pay taxes in that currency).
Taxing companies and rich people is useful because you place the burden of reducing money for inflation purposes on them instead of on the lower income people, and therefore you reduce inequality, so I obviously support at the very least heavy taxation of income and wealth of private individuals and companies, but the state really doesn’t need taxes to fund itself since it creates its own currency and pays in that currency.
So I preface by saying finance isn’t my forte, but I would like to raise a few thoughts I had whilst reading this.
The first is that the state can just create more currency to pay for things, which to my understanding is not always the case, if you saturate the market with your currency it becomes less valuable and we end up with runaway inflation.
The other point is on the no need for taxes and that we tax the richest and the corporations to remove some of the money supply, clearly this isn’t something that happens as taxes for both of these is rarely raised at the same rate it is for regular people.
Finally, we have most people, in the western world at least, living literal pay check to pay check whilst the likes of Microsoft have gone from less than $2B to over $3B in a few years. The same can be said for Nvidia and many many more.
Edit: I guess my point is, just because this is how things work doesn’t mean things shouldn’t change. Clearly something is broken.
if you saturate the market with your currency it becomes less valuable and we end up with runaway inflation.
Notice how I didn’t say that the state should create infinite currency, I’m just saying that the limit isn’t based on taxation. And funnily enough, if you look at basically all inflationary episodes in developed countries over the past century, they’ve happened as a consequence of problems with the supply of goods, not as a consequence of excess currency creation. 2022 inflation? Energy prices and supply chain bottlenecks as a consequence of Ukraine invasion and post-covid effects on production. 1970s inflation? Fuel prices… Really, I encourage you to look up a graph of inflation for, say, the USA, over the past century, to look at the inflation peaks, and to make a Google search “crisis of 19XX”. You’ll find that the inflation was in basically all instances prefaced by a big external event, and not by money creation. Moreover, many of these inflation events happen simultaneously in countries such as the US, UK, Japan and Germany, all of which have different central banks, different currencies, and different rates of currency creation.
Also, there’s countless examples of vast increases in money supply without inflation. In the decade of 2010-2020, the EU has created VAST amounts of euros with basically no meaningful inflation. You can look up the Euro monetary mass M2 or M3 over the past decade, you’ll find a huge boom, without any effect on inflation. Again, all of this isn’t to say there isn’t a practical limit to how much you should create before destabilizing the economy, just that the limit is absolutely not imposed by how much you’re collecting in taxes, and it depends a lot, for example, on which part of the capitalist boom-bust cycle you are. Another argument for this, is that money creation doesn’t have to be just that, it can imply an increase in the amount of available goods and services. As a stupid example, the US government could open a state-funded iron mine and a refinery, hiring all the employees with newly minted currency, and that would effectively increase the total amount of goods and services in circulation, which can balance out the supposed inflationary effect of the currency creation.
About taxes not being currently used practically to reduce inequality, I agree, but that’s not a point against the nature of taxation, that’s a point against the current decision of who we’re taxing, what for, and how much. I absolutely agree with ramping up the taxes of huge multinational companies and their directives. It’s just, if we see taxes not as a necessity to fund the state’s activity, but as a necessary tool to reallocate money in the economy from rich people to poor people and to create a welfare state and a great infrastructure, it’s much easier to explain why Amazon should pay 90% taxes and your average low-paid worker only 10%.
As for your last point with inequality between companies’ income and that of people, I couldn’t agree more, I’m a hardcore leftist and I want to reduce wealth inequality extremely, again, I’m not arguing for lowering taxes “since they’re not necessary”, I’m arguing for reallocating the taxes in a much more progressive way to disincentivize certain behaviors such as speculation, and to reduce inequality between the richest and the poorest.
Thanks for the civilized discussion, it’s good to be able to actually discuss this stuff.
No. Thank you for giving me some food for thought and areas to research to further my understanding, rather than talking down to me due to my lack of knowledge on the macro economics of the world.
To be fair, it’s not you lacking knowledge, it’s a fundamental problem in the field of economics, which because of political reasons, has been dominated for the past decades by neoliberalism. The problem is that neoliberalism reaches conclusions that have been falsified by experimental data in several occasions, but since it serves the ideology of the elites, it’s peddled constantly in media by prominent “economist” propagandists. If you’re interested into the topic and this modern, more empirical vision of the economy, the field is called “Modern Monetary Theory” or MMT. There’s a documentary released recently about the basics of it, applied to the US, called “Finding The Money”, and I can also recommend the YouTube channel called “Unlearning Economics”, which isn’t MMT per se but it’s very keen on treating economics through empyrism.
You missed the biggest flaw in the “money creation = inflation” argument. That would be Japan. They’ve been printing money full tilt for the last couple decades, and are just barely staving off deflation
That sort of thing can happen in extreme situations. Zimbabwe and Weimar Germany are the most prominent examples. Both examples involved not having enough stuff. When there aren’t enough necessary goods to buy and people have plenty of money you’re going to get inflation. Using the right combo of subsidies, government run production, purchase quantity limits, reserves, vouchers, and price fixing you can ensure the supply is stable and eliminate inflation even if there’s lots of money.
That’s true. That happens because people are stuck in the narrative of the government needing a balanced budget, just like a household. It also happens because the owners and the corpos use all their money and power to ensure workers pay taxes and thus decrease worker money and power.
Yeah, if the population was educated on MMT the ability to bring corpos to heel would be significantly increased. People arguing for it are fundamentally arguing for a change in how we think about money.
No, if anything it shows capitalism is working. When you can increase or tighten money supply (ie when you can print and shred money) debt isn’t what you think it is. A state with money issuance powers is not a household.
I can thoroughly recommend “The Deficit Myth” book by Stephanie Kelton, if you wish to understand modern monetary policy better.
And to answer your specific question, there are countries with very low debt, but that’s usually due to either not being able to “borrow” money (again, borrowing doesn’t always mean what we would think as borrowing when you can issue your own money), being locked to another currency (Denmark is a great example - amazing economy and locked to the euro) or having a large generation of wealth (typically oil). Larger countries can issue debt more easily.
Yeah. It’s another form of creation of money. It’s a useful tool for some things, like the central bank being able to control interest rates in the economy, as shown during the recent inflationary episode.
Yes more or less, that is indeed how the central bank creates money most of the time; the government creates a piece of paper that says “IOU 100k and I’ll pay you 5% interest on it for 20 years and then I’ll return your original 100k to you in 20 years” (that’s a bond), which they sell on the open market, at auction (where the variable element is the interest rate someone is willing to accept). When the central bank wishes to increase the money supply they buy government bonds on the open market (ie from other holders, rarely from the government directly) by materialising money out of thin air.
When they wish to shrink the money supply they sell their government bonds and destroys the money that they receive from the sale.
Denmark has not introduced the euro, following a rejection by referendum in 2000, but the Danish krone is pegged closely to the euro (with the rate 7.46038±2.25%) in ERM II, the EU’s exchange rate mechanism.
So if euro gets stronger, so does the krone. If euro drops, so does the krone.
Not really. They’ve got a version of the euro, called kroners, which allows Danes to believe they have their own currency. They are locked into an exchange rate band (extremely tight) which means the Danish central bank has to follow every decision the ECB takes within minutes). And this makes complete sense, in that it’s a compromise that’s edible by voters (maintaining the illusion that Denmark didn’t adopt the euro) and edible by business (allowing businesses in Denmark to participate fully in the common market).
And that’s one of the reasons Denmark has such small national debt and runs a government surplus - they can’t really invent new money because it would break the bond with the euro. So the Danish budget is sort of a “household budget” in that in contrast to, say, Sweden, they cannot create money (meaningfully) and the books have to balance (which they do; lots of oil, Novo Nordisk, Maersk, Vestas and a few other big international plays who still pay a majority of their tax in Denmark obviously helps a lot).
Where did they say the government handed out credit scores? The meme was pointing out a double standard, not saying the government hands out credit scores.
This entire comment is just you admitting you have below average reading comprehension.
Yes FOSS is communism, spontaneously arising under capitalism, requiring zero bloody revolutions.
Marx was right about the need for people to be nice and give things to each other, but he was wrong about it being necessary to destroy capitalism before this happened.
he was wrong about it being necessary to destroy capitalism before this happened
I thought it was more that (using modern terminology) he viewed socialism as an emergent phenomenon that would arise due to the unresolved contradictions within capitalism. So socialism doesn’t require the destruction of capitalism in order to start, it’s more that once it emerges, it’ll supersede capitalism. The Leninist approach of destroying the old order, then building the new one at gunpoint didn’t work all that well (to vastly understate), leading to a long period of totalitarian state capitalism, where workers had no control over the means of production (which is the main attribute Marx ascribes to socialism) and degeneration into nationalism, imperialist nostalgia and cronyism.
But so far, along with failed revolutions hijacked by totalitarians, the main thing we’ve seen is that spontaneous emergence of working, non-coercive socialist organizations such as co-operatives has been met with strong and sometimes murderous opposition from the incumbent capitalists.
Marx believed this unresolved phenomena would lead to violent revolution, Lenin only added his analysis of Capitalism’s evolution into Imperialism, and his theory of Revolution, which focuses on the idea of the most radical workers forming a vanguard to bring the other workers up and help direct them. Marx believed the Revolution would happen and from it Socialism would emerge, hence him advocating for “siezing the Means of Production.” He also pointed directly to the Paris Commune, a hostile takeover of government aparatus, as the Dictatorship of the Proletarait he advocated for in action.
Lenin wasn’t just “hey, let’s ignore Marx and do this at gunpoint,” it was more “hey, let’s listen to Marx, and do this at gunpoint.” Lenin actually addresses this utter de-fanging of Marx in bourgeois society in the opening section of The State and Revolution:
“What is now happening to Marx’s theory has, in the course of history, happened repeatedly to the theories of revolutionary thinkers and leaders of oppressed classes fighting for emancipation. During the lifetime of great revolutionaries, the oppressing classes constantly hounded them, received their theories with the most savage malice, the most furious hatred and the most unscrupulous campaigns of lies and slander. After their death, attempts are made to convert them into harmless icons, to canonize them, so to say, and to hallow their names to a certain extent for the “consolation” of the oppressed classes and with the object of duping the latter, while at the same time robbing the revolutionary theory of its substance, blunting its revolutionary edge and vulgarizing it. Today, the bourgeoisie and the opportunists within the labor movement concur in this doctoring of Marxism. They omit, obscure, or distort the revolutionary side of this theory, its revolutionary soul. They push to the foreground and extol what is or seems acceptable to the bourgeoisie. All the social-chauvinists are now “Marxists” (don’t laugh!). And more and more frequently German bourgeois scholars, only yesterday specialists in the annihilation of Marxism, are speaking of the “national-German” Marx, who, they claim, educated the labor unions which are so splendidly organized for the purpose of waging a predatory war!”
As for the USSR, it wasn’t totalitarian. Workers did have control, there were no real bourgeois elements, no competing markets, and the state was not an “other” compared to the Workers. They had democratic measures in the form of Soviets, and the consequences of this were free education, healthcare, high home ownership rates, and so forth. Was the USSR perfect? Absolutely not, but it was history’s first major attempt at Marxist Socialism, and we can study it for that. The revolution wasn’t “hijacked,” it was led by the Workers and continued to be until corruption took hold over time and the USSR collapsed, being hacked up and sold for parts as a part of “Shock Doctrine,” plumetting life expectancy, GDP, and causing 2 million excess deaths.
Co-operatives are met with hostile action because it’s easy to crush them when you have the state and monopoly on your side, hence why they will never likely be a leading force for Socialism within Capitalism, even if they should still be supported by Socialists everywhere.
FOSS isn’t communism, Foss hasn’t eliminated class relations. Using an free open source library to make more money for your boss isn’t communism. While I love FOSS, it’s definitely not communism.
Marx never said people aren’t nice and don’t give things to each other under capitalism as far as I know, where are you taking that from?
And the existence of FOSS is reliant on a few key sectors which capitalism could very well destroy or mutate into something much different than what they are now. I don’t see far-fetched the idea that the entire physical infrastructure of the internet will one day be privately owned, and companies will be able to decide who takes part and who doesn’t, what kind of content is allowed… The fact that the capitalist overlords still haven’t eliminated it, doesn’t mean they possibly can’t.
You mean the system that makes it illegal to have an abortion or to marry the person you love if they happen to be the same sex as you? Sign me up then cause, yeah, only bad people suffer in that system
Ugh… Here we go again with the social credit… It’s been debunked so many times that it’s not even funny anymore. You can ask any Chinese person about it and they don’t even know what it is because it’s really not a thing. Financial credit scores on the other hand…
Yeah, it might have been funny the first time 10 years ago, but repeating the same joke over and over again, often makes it annoying and unfunny, as is the case with your comment, especially when it’s not even accurate.
The current American debt is more than the current GDP. That would be fine, if we were paying it down, but it’s growing faster than ever.
It would also be fine if it was healthy debt. Debt taken to improve infrastructure in meaningful ways, improve education, shit, even a war debt to create an old school tributary state (economically speaking).
And it would all be fine if everyone in the room were adults, and there wasn’t a significant portion of America actively and willfully trying to cause governmental collapse.
The American citizen, on average, will spend $37,000 in the next decade to pay the interest on that debt, $12.4 trillion in total.
All without universal healthcare mind you. Or, on average, a reasonable retirement age.
You need to start asking yourself whether the people who keep assuring you not to worry your pretty little head about the APR on your loans, and they are ultimately partly your loans as a citizen, are actually acting in your interest.
Your comment stems from a fundamental misunderstanding of public institutions and how money works.
It doesn’t matter that the debt is higher than the GDP if it’s debt in the currency that the state creates. Japan has a debt of 250% of the GDP and it’s always going to pay for it. Why? Because it’s in Yen, and the Japanese public sector is the ONLY institution in the world capable of creating Yen. If they wanted, the Japanese central bank could quite literally perform 100 keystrokes on a keyboard, and repay all debt early tomorrow, at a cost of exactly 0 yen to the taxpayer.
Taxes aren’t the way a state funds itself. Again, the state creates its own currency, why would it need tax collection to get that currency if it can create it at will at a keyboard’s stroke? Taxes serve many purposes, such as forcing people to use your currency in the private sector (they will need that currency to pay for the taxes so it’s the one they will use), such as disincentivizing certain behaviours (tax on tobacco for example), or such as reducing inequality (progressive income taxes), or also importantly, removing money from the private sector to reduce or prevent inflation. But the one thing taxes don’t do is funding the state budget, since the state’s budget is unlimited in theory. There are practical limits, but availability of currency really isn’t one of them.
The American citizen won’t spend a single dollar paying back state debt, in fact it’s exactly the opposite. The state creates the currency with which it pays back the debt, and it’s private citizens and corporations who the state owes the interest rate to. If you buy a bond for $1000 at an interest rate or 3%, next year you’ll have $1030. The state, through debt, literally creates money for the private sector. It makes people and companies wealthier. Taxes make people and companies poorer, but taxes and debt are completely unrelated to one another, since the state really doesn’t need taxes to pay the debt.
I fully agree with your analysis of the poor usage of the state budget and people not getting the welfare state they deserve by right, but that’s not something that has to do with debt, it has to do with the government representatives not acting for the benefit of the majority but a select elite of capitalist owners. Debt is purely a financial tool that serves purposes such as creating money, or controlling the interest rates of the country so that people and companies will take more or fewer loans, which has an effect in the economy.
The other person who responded to me made a very all written post but it gets a core assumption completely wrong.
They seemed to think that tax revenue in some way has to happen for spending to happen. That’s why they think GDP has anything to do with our ability to service debt. But the federal government creates money ex nihilo.
Money has to be created before it can be destroyed through taxation. Spending and back stopping creation of money by private banks through the reserve system comes first. You can’t destroy something you haven’t created.
It’s sad, really. Economists and politicians have blinded everyone with what I think of as “the money delusion”.
It doesn’t matter if the money can be “gathered up” to be spent on things we need. We do not rely on the money of the wealthy. What matters is actual, real resources and services we can provide.
The national “debt” is a misnomer. That’s the amount of dollars left in circulation that have not been destroyed through taxation, as well as the “dollars” that pay interest which we call bonds.
I’m glad to see at least a handful of other people who understand. Fight the good fight, fellow human.
I get your point, but they cant just “print” currency so we could actually not be able to pay when people/countries stop buying the bonds or lose faith in the system.
Then stop selling bonds and start investing directly (build schools, repair bridges, pay your employees, etc.).
Countries don’t have to take the detour through state bonds because they can make money out of thin air. State bonds are a self-imposed and there’s no law of nature that mandates using them.
Serious question? Money today is nothing more than a number in an account. When a country needs more of its own currency, it can increase it’s account by that amount.
Why would that happen? There’s no proof that printing money (while considering the boundaries of the real resources like available work force) automatically leads to hyperinflation.
I guess there is no proof, but thats not really possible to prove. But what we can see is how much inflation the US has gotten just under the Fed, and then look at examples in the past like germany that used printing of the mark to pay of debts.
Okay, but even if the USA can’t change the law regarding states bonds, it is virtually impossible that people stop buying US states bonds since the US Dollar is kinda like the most established currency in the world.
I hear what you are saying, but that is changing, america is losing its strangle hold on the world. That became most evident with what we tried to do with Russia after their invasion and the cracks in our system are starting to become more obvious. Unless you think that the US will be the worlds reserve currency forever, there will be a time when it falls.
I see what you mean, but this is not about having a strangle hold on the world or being the world’s reserve currency. This is about having your own currency and collecting taxes in this currency. As long as a country collects taxes in its own currency there will be demand for that currency.
The economist ewww. The limits to how much money you can print is defined by the productive capacity of your country. If you print more money to increase productive capacity then it’s generally not a problem. The debt is simply an accounting fiction at that point.
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