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Max Gulker


American Institute for Economic Research, January 6, 2019, 6 pgs.


Reviewer comment:

The author creates a hypothetical futuristic situation in 2034 in which a 'neoconseervative' administration is conducting multiple wars with millions of soldiers and massive payments to contractors. It is funding all this by employment of MMT. The 'left' politicians are furious but unable to curtail all this because they, themselves, used the same MMT to fund their massive social projects including for public health care, renewableenergy and eliminating unemployment by putting everyone to work. He created this prospect to illustrate that MMT can function to fund anyone for anything. He refers to Frederich Hayek's 1945 article "The Use of Knowledge in Society". He offers descriptions of three ways in which government ability to spend generates additional social problems.


15 Years From Now
Dr Gulker sets a scene in 2034. By then America has a strong 'neoconservative' government. It is engaged i n4 wars and has 20 million individuals on active military duty. There are domestic conflicts between protestors against the huge government contracts and those claiming the protestors are 'unpatriotic'. Government is financing all the wars and domestic spending by unlimited creation of 'money' - MMT gone wild. Income and corporate taxes are near zero. Now the 'left' is protesting even though only 6 years earlier they had used the same concept to fund unlimited health care and renewable energy plus more. Now the election of 2036 campaign centers on right- left control of the unlimited federal budget


Modern Lovers
The author admits his scenario seems 'far-fetched' but maintains that it reflects this idea 'that governments who print their own money can spend as much as they want'. He notes that this idea is NOT new but was the basis for previous claims for such programs as Medicare and Medicaid, job guarantees and other welfare programs. So the subject of 'budget constraints or the ability to borrow' has been debated for years. But is that the only real issue? Rather than focusing on 'could' as the issue we might consider 'shoud' when evaluating govern spending.


Trouble with a Blank Check
His first question is about the real capacity of government bureaucrats to allocate resources effectively. He cites Fredrich Hayek's paper on the 'use of knowledge' - (von Mises made the same point, that it is impossible for central planners to have adequate knowledge.) His second point is that the more government spends the more it is subject to lobbying by special interests. His third point is that increasing power of a current government to spend and control will enable future governments to do the same, with possibly significantly different objectives in mind.


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