[imgabe]

> Taxes don’t fund government spending.

Cool, then let's just do away with them altogether. This is great news. All those people saying I needed to pay taxes so I can have roads and schools and a military and everything must be wrong.

[amrocha]

Again, go read up on economics. You have no idea what you’re talking about.

[imgabe]

Smugly insinuating that you’re right without providing any sort of reasoning does not make you look as cool and smart as you think it does.

[amrocha]

You arguments so far have been “the number is too big” and “let’s get rid of all taxes” so I don’t feel like you’re very serious about having a discussion.

[imgabe]

Look, if you actually knew what you were talking about you would be able to explain it in a few sentences. I'm guessing you're misremembering something you never really understood from the econ elective you took in college ten years ago and so all you can do is say "go read a book" because you don't really understand it beyond a vague notion that taxes are somehow unnecessary to fund the government.

Like, just as a basic common sense test, if it were possible for the government to spend as much as it wants without taxes, why wouldn't a politician implement that, eliminate taxes, and immediately become the most popular politician in the history of the world? If it were as easy as you say, surely that would have happened. Since it hasn't happened, it stands to reason that maybe you don't know what you're talking about when you say the government doesn't need taxes to fund spending.

[amrocha]

Ok, I’ll explain it in a few short sentences.

Assume you have a new country with no money. How does anything get done? The central bank needs to issue capital that the government then allocates first.

Eventually this money makes it down to the citizens of the country who spend it. Then the government can tax that money, and that gives it non-inflationary spending room to reallocate those resources.

For example, there’s a car company that’s using up most of the country’s steel supply. But the government wants to shift the country’s manufacturing from cars to other green industries. What the government can do is tax the car company so that it’s not able to use up as much steel, which frees up resources for other industries to utilize.

The same goes for people, since people are a country’s most important resource. Through taxation the government can influence the resource allocation of the country. That doesn’t mean that the government can’t spend without taxes though.

If you want to learn more there’s plenty of resources out there, you can start with Keynes, skip anything from chicago, move on to MMT for the latest theoretical thought.

[imgabe]

> Then the government can tax that money, and that gives it non-inflationary spending room to reallocate those resources.

Hmm, why might it be important to have a non-inflationary means of spending? I wonder. Of course, the government can print money. They can't just print all the money they want forever with no consequences.

> For example, there’s a car company that’s using up most of the country’s steel supply. But the government wants to shift the country’s manufacturing from cars to other green industries.

A car company is not "using up" the steel supply. They are meeting consumer demand for cars. If consumers found green technologies more useful than cars, they would buy that instead, then the green technology companies would be able to outbid the car companies for steel and they would buy it. If they aren't it's because people find cars more useful than whatever "green technologies" are.

Also, if there's a high demand for steel, new steel suppliers can enter the market and increase the supply of steel. There's no need for the government to manage this and it's generally harmful for them to do so, since they are allocating resources away from something people have demonstrated they find useful and towards something they don't find useful. This is not optimal. We should want the resources to go where they are most useful and valued, not where some bureaucrat decides he or she likes them to go.

[tptacek]

I do not think "skipping to MMT" is the right plan for understanding mainstream economics, or any kind of economic theory likely to govern decisionmaking in the near future. I think some of the core ideas in MMT took a real bruising over the last couple years.