AT Deficits CP - Michigan 7 2023 STARTER

Aff
Perm – Do The CP
“Redistribution” is agnostic on the tax question
Alonzi 18, Professor of Law at U British Columbia (Erez, “The Marital Wealth Gap,” Washington Law Review, Lexis)//BB
Redistribution is defined as "the act or process of distributing something again or anew." Redistribution, Black's Law Dictionary (10th ed. 2014). This Article: adopts a broader meaning, expanding on Nancy Fraser's definition, which follows: The remedy for economic injustice is political-economic restructuring of some sort. This might involve redistributing income, reorganizing the division of labour, subjecting investment to democratic decision-making, or transforming other basic economic structures. Although these various remedies differ importantly from one another, I shall henceforth refer to the whole group of them by the generic term redistribution. Fraser, supra note 20, at 73.
It's merely a reduction in inequality
Dimick 16, Professor of Law at SUNY Buffalo (Matt, “SHOULD THE LAW DO ANYTHING ABOUT ECONOMIC INEQUALITY?,” 26 Cornell J. L. & Pub. Pol'y 1)//BB
This Article challenges the double-distortion argument from a law-and-economics perspective. In particular, the Article contends that legal rules should be used to redistribute income, in addition to taxes and transfers. Two main reasons justify this conclusion. 7 First, there is no a priori reason why a legal rule that redistributes income should always be distortionary - a necessary condition for the double-distortion argument to be true. Indeed, it is easy to devise examples where a change in legal rules will both redistribute income and increase efficiency. More generally, there is nothing inherent in the concept of redistribution that requires such a change to be accompanied by an efficiency loss. Within economics, redistribution is defined simply as a reduction in inequality. Consistent with this definition, it is possible for a redistributive legal change to be either inefficient or efficient - even in the Pareto sense, where no one is worse off and at least someone is better off. 8 Since a legal change that meets such conditions both reduces inequality and not only is nondistortionary but increases wealth, it is unambiguously superior to redistribution through the tax and transfer system, which is always distortionary. 9
It just requires a reduction in the incentive to accumulate wealth, but is agnostic on “taxes”
Rehme 7, Professor of Economics @ Technische Universität Darmstadt (Gunther, “Economic Growth and (Re-)Distributive Policies in a Non-cooperative World,” Journal of Economics, 91.1)
Following Alesina and Rodrik’s paper redistribution is defined here as any policy that reduces the incentive to accumulate. Taking growth maximizing policies as a benchmark has its virtues since people appear to have difficulties disentangling the relationship between utility enhancing income growth and the distribution of income at each point in time. See, e.g. Amiel and Cowell (1999). Thus, any policy s5^s redistributes and lowers growth in the model.19
MMT = Hogwash
MMT lacks models and is academic hogwash – do not trust any of their math because it can’t pass rigor.
Smith '22 - PhD in econ @ UM [Noah; 2/7/22; "The NYT article on MMT is really bad" https://www.noahpinion.blog/p/the-nyt-article-on-mmt-is-really]
The New York Times just came out with a big glowing writeup of MMT, entitled “Time for a Victory Lap*”. This article aroused the anger of just about every macroeconomist on Twitter, and with good reason — it demonstrates very little understanding of the issues at play or the state of the policy debate, and it rhetorically elevates a fringe ideology to a position of importance and centrality that it neither occupies nor deserves.
Please consult macroeconomists before writing about MMT!
The NYT article on MMT, written by Jeanna Smialek, is mostly a puff piece about Stephanie Kelton, MMT’s most well-known proponent. In glowing tones, it describes Kelton’s clothes, her office, her house, her neighborhood, her blog, her manner of speaking, her personal story, and so on, calling her “the star architect of a movement that is on something of a victory lap”. Very little is written about the background of the macroeconomic policy debate, and what does appear is highly questionable:
In economics, there’s a school of thought sometimes called “freshwater.” It’s the set of ideas that became popular at inland universities in the 1970s, when they began to embrace rational markets and limited government intervention to fight recessions. There’s also “saltwater” thinking, an updated version of Keynesianism that argues that the government occasionally needs to jump-start the economy. It has traditionally been championed in the Ivy League and other top-ranked schools on the coasts.
You might call the school of thought Ms. Kelton is popularizing, from a bay that feeds into the East River, brackish economics.
The brief description of freshwater and saltwater economics is fine, but to describe MMT as being “brackish” — i.e., some sort of fusion of freshwater and saltwater, or a middle ground between the two — is absurd. MMT doesn’t take its inspirations from either of those schools of thought — its ideas (to the extent that such exist) are rooted in things like functional finance and Post-Keynesian macroeconomics, which split off from the mainstream long before it divided into freshwater and saltwater. MMT doesn’t even use formalized mathematical models of the economy like freshwater and saltwater econ do (or like Post-Keynesian macro does), so it’s pretty impossible to compare these schools of thought. In terms of policy prescriptions, MMT is far, far more sanguine about government borrowing than either freshwater or saltwater.
The article then demonstrates that it has little notion of what separates MMT from mainstream thinking:
M.M.T. theorists argue that society should feel capable of spending to achieve its goals to the extent that there are resources available to fulfill them. Deficit spending need not be constrained to recessions, even theoretically. Want to build a road? No problem, so long as you have asphalt and construction workers. Want to feed children free lunches? Also not a problem, so long as you have the food and the cafeteria workers.
In fact, this is also a feature of all freshwater and saltwater models of the economy. Those models deal only in real variables — asphalt and construction workers and food and cafeteria workers and so on. In fact, those models’ lack of attention to financial constraints of any kind is exactly why they failed to predict the Great Recession!
These passages — and the lack of any other engagement with non-MMT theories, research, or ideas — make it clear that Smialek’s main source on all of these topics was Kelton herself. She does briefly quote Jason Furman, a Harvard economist and former CEA chair under Obama:
“M.M.T. was already pretty marginal,” said Jason Furman, a Harvard economist, noting that, in his view, most policymakers and prominent academics ignored it already. Even if policy in the pandemic effectively embraced the idea that you do not have to pay for your spending, that idea, he said, was also Keynesian.
And the M.M.T crowd, while dismissing the Fed’s role, has not come up with a clear and obviously workable idea for how to stem inflation, he argued, adding, “If you were open-minded, this would discredit it still further.”
But even though Furman notes that Kelton did a bad job of characterizing the difference between MMT and Keynesian thinking, the NYT writer doesn’t follow up on this at all; she makes no effort to clarify where MMT actually does differ from other forms of economic thought. Nor does she quote any other macroeconomists.
This is important because any attempt to engage with the actual substance of MMT quickly finds that such substance is curiously lacking. MMT proponents almost always refuse to specify exactly how they think the economy works. They offer a package of policy prescriptions, but these prescriptions can only be learned by consulting the MMT proponents themselves. There is no model here — no set of equations or definite formal statements that a layperson could use to generate their own MMT policy prescriptions without appealing directly to the gurus.
Every economist who has attempted to engage seriously with MMT literature has concluded the same. When Drumetz Françoise and Pfister Christian of the Banque de France read Kelton’s book and tried to comprehend the essence of MMT, they concluded:
Overall, it appears that MMT is based on an outdated approach to economics and that the meaning of MMT is a more that of a political manifesto than of a genuine economic theory…As Hartley (2020) notes, MMT “is not a falsifiable scientific theory: it is rather a political and moral statement by those who believe in the righteousness – and affordability – of unlimited government spending to achieve progressive ends”.
And in a working paper analyzing MMT, economist Giacomo Rondina writes:
I believe that the big merit of MMT scholars is to have opened a large crack in the “how do we pay for it” line of defense to economic policies by pushing a liberating narrative that promises a society where well-being, abundance, and social justice are finally possible for everyone. I admire and applaud their effort.
At the same time, my reading of the MMT academic literature suggests that MMT has not yet provided a fully coherent theory of the macroeconomics of government intervention that can persuade genuinely interested mainstream academic economists and policymakers. To my knowledge, there are no scholarly works that offer clear assumptions and explicit results of when the deficit of the public sector (surplus of the private sector) can be welfare improving, taking into account the behavioral response of the economic actors involved, and specifying a transparent mechanism of price determination. As a consequence, many macroeconomic practitioners “peeking under the hood” (cit.) of MMT cannot help but feel a sense of frustration in understanding how exactly the engine is supposed to work. I believe this has limited the ability to find a common ground on which constructive progress can be made.
Aff - Inflation
The counterplan causes massive inflation.
Smith '22 - PhD in econ @ UM [Noah; 2/7/22; "The NYT article on MMT is really bad" https://www.noahpinion.blog/p/the-nyt-article-on-mmt-is-really]
MMT and inflation
Smialek’s NYT piece does leave room for a very mild, hesitant skepticism of MMT (hence the asterisk in the title). This isn’t based on any of the fundamental issues described above, but on the uneasy sense that MMT has little to say about inflation:
The bad news: Some economists blame big spending in the pandemic for today’s rapid price increases. The government will release fresh Consumer Price Index data this week, and it is expected to show inflation running at its fastest pace since 1982…
[A]s inflation surges, the headlines declaring that the theory had “won” need some caveats…Many economists, both mainstream and M.M.T. ones, did not think that the March 2021 package would be inflationary…
In Washington, the [MMT] suite of ideas has clearly been dealt a setback. Deficit concerns have returned…[There are q]uestions like: “Did Congress ‘experiment’ with MMT, and does the run-up in inflation mean that MMT has ‘failed’?
But in the end, the NYT article dismisses those concerns, based on nothing more than Stephanie Kelton’s personal force of conviction:
Has the M.M.T. experiment failed? “The answer,” it declares, in bold face, “is an unequivocal no.”
Why let someone else shape your narrative, when you could shape your own?
The real question, in my mind, is why the NYT let MMT’s advocates do all the shaping of their own narrative.
The fact is, MMT is a meme whose star is already falling, and inflation is almost certainly the reason why. Google searches for the idea have cratered since June 2021:
Interest surged in 2019 when the writers of the original Green New Deal used MMT as their justification for not finding ways to pay for all the new spending, then fell as econ writers from across the political spectrum — including some hardcore socialists closely aligned to the Bernie Sanders movement — rose up to caution the world against the idea. Sanders had probably already parted ways with Kelton, and after this fracas, Alexandria Ocasio-Cortez and her allies stopped championing the idea as well.
But the econ writers’ warnings about the potential harms of MMT — that unrestrained deficit spending could cause hyperinflation — seemed a bit far-fetched at the time, since inflation was still quite low, and had remained low despite the stimulus of 2009 and various rounds of tax cuts. Interest resurged in 2020 as Covid relief spending exploded.
Then in the spring of 2021, inflation started to rise to levels not seen for decades, and by summer it seemed clear that it wasn’t just a blip.
That rise in inflation was exacerbated by supply chain inefficiencies and disruptions, but it was almost certainly propelled to some extent by Covid relief spending and the Fed’s extremely loose monetary policy. That was a reminder that aggregate demand has a limit — that you can only boost the economy with fiscal and monetary policy so much before costs start to appear. (Those costs, as any orthodox macro theory will tell you, are due not to any issue with government financing, but to the economy’s real constraints — the limits of real resources available.)
To most people, who correctly recognize that MMT is a set of political memes to push for more deficit spending, this inflation represented a reason to be less enthusiastic about MMT itself — we finally seemed to have reached our limits. Proponents of austerity and/or tighter monetary policy began to use “MMT” as shorthand for the policies the U.S. had already undertaken.
Of course, MMT proponents themselves didn’t see things that way. They did indeed attempt to take a victory lap. But this is always what they were going to do, no matter what! If Covid relief efforts hadn’t been sufficient to produce inflation, they would have also taken a victory lap. If interest rates on U.S. government bonds had risen, causing a contraction in economic activity, they would have taken a victory lap, arguing that the Fed should have used monetary policy to lower those interest rates. Even if the U.S. government had defaulted on its sovereign debt, throwing the economy into chaos, the MMT people would have taken a victory lap, arguing that this was a mistake.
In other words, there was no conceivable state of the Universe in which MMT people would not have taken a victory lap. They always take victory laps, all day long, rain or shine. When you have an unfalsifiable meme complex instead of a concrete and falsifiable theory, it’s easy to claim that your ideas cannot fail, they can only be failed.
Aff – Dollar Collapse
MMT will collapse the economy and the dollar.
Lacale '21 -PhD, economist and fund manager; prof of global economy @ IE Business School [Daniel; 3/15/21; "MMT Is Fake Economics" https://mises.org/wire/mmt-fake-economics]
Most governments will try to cover their fiscal and trade imbalances by devaluing and making all savers poorer.
“A country with monetary sovereignty can issue all the currency it needs” is also a fallacy.
Monetary sovereignty is not something the government decides. Confidence and use of fiat currency are not dictated by the government nor does it give said government the power to do what it wants with monetary policies. Citizens all over the world have stopped accepting the government-issued and denominated currency when confidence in its purchasing power has been destroyed after increasing the money supply well above its real demand.
That is why the Sucre in Ecuador or the Colon in El Salvador collapsed or why the Argentine peso and the Venezuela bolivar or the Iran Rial are widely rejected by local and international citizens. There are numerous fiat currencies that have failed or disappeared. As Michael Sanibel writes, “a nation’s currency is not exempt from the laws of supply and demand, so the more that is printed, the less it is worth“. Currency collapses and failures are frequent, but, more importantly, even if some survive, its domestic and international demand is irreparably damaged.
Given that the world of currencies is a relative one, the average citizen of the world will prefer gold, cryptocurrencies, US dollars or Euros and Yen despite their own imbalances rather than their own currencies.
Why is this? When governments and central banks worldwide try to implement the same mistaken monetary policy of the US and Europe or Japan but without their investment security, institutions and capital freedom, then they fall into their own trap. They weaken their own citizens’ trust in the purchasing power of the currency.
The MMT answer would be that all that is needed then is stable and trustworthy institutions. Well, it does not work either. The first crack in that trust is precisely currency manipulation to finance bloated government spending. The average citizen may not understand monetary debasement but certainly understands that their currency is not a valid reserve of value or payment system. Because the value of the currency is not dictated by the government, but by the latest purchase agreements made with such means of payment.
Governments always see economic cycles as a problem of lack of demand that they need to “stimulate”. They see debt and asset bubbles as small “collateral damages” worth assuming in the quest for inflation. And crises become more frequent while debt soars and recoveries weaker.
The dollar is strong, but could be dislodged - goes nuclear.
Day ‘22 - Chief Foreign Commentator @ iNews [Michael, "Russia and China are out to undermine the US dollar, and if they succeed it will change the world for ever," https://inews.co.uk/news/long-reads/russia-china-us-dollar-undermine-change-world-cryptocurrency-1548200]
There is only one true superpower. Since the end of the Second World War, we’ve seen the United States bestride the world like a colossus.
What makes the US such a potent ally and formidable adversary? Its nuclear arsenal? This helps. As does its incomparable navy and huge, hi-tech army. The soft power from its ubiquitous contributions to culture is clearly important. But none of these really explains America’s unique ability to project power globally. This is conferred by the mighty US dollar.
Its status as the undisputed reserve currency (it accounts for around 60 per cent of world reserves, compared with just 20 per cent for its nearest rival, the euro) means that Washington’s tendrils extend into almost all banks and financial institutions.
Few, if any, major companies are safe from its influence. As a result, the US can slap crushing financial sanctions on foreign firms or governments anywhere in the world.
Look closely at a dollar bill, however, and you’ll see there’s a target on its back – a target brought into sharper relief by events in Ukraine and the West’s reaction to them. Russia and China are gunning for it. If they can end the dollar’s primacy with a mix of digital and cryptocurrencies and alternative payment systems, US supremacy will end, too – and the world will change for ever.
A golden opportunity
The dollar has been the world’s reserve currency since 1944, when the US and its allies, planning for post-Second World War construction, agreed at the Bretton Woods Conference to peg the American currency to the rate of $35 per ounce of gold.
The next inflection point arrived in 1971 when Richard Nixon allowed the dollar’s value to fluctuate; its extraordinary popularity meant America no longer had enough gold to back it, and Japan’s and West Germany’s exports soared on the weakness of their own currencies.
The dollar’s primacy among currencies

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