Post by Iain Dooley on Aug 20, 2016 6:20:53 GMT
As detailed in the "email to the RBA" thread I've been trying to get a straight answer out of branches of government about the "real constraints" on government spending.
The closest I've gotten to a straight answer was a discussion on the phone with Colin Brown from the Parliamentary Budget Office.
Where we got to was basically that if the government doesn't discipline it's spending "somehow" then spending can be inflationary.
This is kind of where the Positive Money folks arrive at too, but their proposal is crazy (some unelected money supply committee or something ... )
Basically what we've done is set things up so that, over the long run, government needs to balance all spending with taxation, and that when it "borrows" or issues debt it will eventually have to transfer that to reserves, which needs to either come from more "borrowing", or from taxation.
All this amounts to is unnecessary austerity.
We don't actually need to balance the budget at all ever.
But we do need a system that prevents the government from overspending, and reduces the amount of "decision making".
Can anyone find anything written by economists about a different model for the parliamentary budget process?
For example: define training, disability, aged pensions, the job guarantee and housing as "automatic stabilisers" -- the government doesn't need to make any decisions about that.
Then we define a series of things that are considered in the national interest that should be federally funded, such as health, education and R&D in to food and energy security and sustainability/conservation.
Then anything that is a natural monopoly such as the NBN or roads and stuff like that should be govt funded.
The "discretionary" element of that spending is then quite small, ie. the discretionary part of spending should be eclipsed by "automatic" spending.
The budget for health and transport etc. could be determined by the states and then requisitioned from federal government, with checks in place to ensure that each state does not run itself in a corrupt or inefficient fashion relative to other states (Mosler style incentives!).
Has anyone read anything that discusses this process in detail or is there any MMT literature on this topic that we could use as the basis for a policy around budget process reform?
The closest I've gotten to a straight answer was a discussion on the phone with Colin Brown from the Parliamentary Budget Office.
Where we got to was basically that if the government doesn't discipline it's spending "somehow" then spending can be inflationary.
This is kind of where the Positive Money folks arrive at too, but their proposal is crazy (some unelected money supply committee or something ... )
Basically what we've done is set things up so that, over the long run, government needs to balance all spending with taxation, and that when it "borrows" or issues debt it will eventually have to transfer that to reserves, which needs to either come from more "borrowing", or from taxation.
All this amounts to is unnecessary austerity.
We don't actually need to balance the budget at all ever.
But we do need a system that prevents the government from overspending, and reduces the amount of "decision making".
Can anyone find anything written by economists about a different model for the parliamentary budget process?
For example: define training, disability, aged pensions, the job guarantee and housing as "automatic stabilisers" -- the government doesn't need to make any decisions about that.
Then we define a series of things that are considered in the national interest that should be federally funded, such as health, education and R&D in to food and energy security and sustainability/conservation.
Then anything that is a natural monopoly such as the NBN or roads and stuff like that should be govt funded.
The "discretionary" element of that spending is then quite small, ie. the discretionary part of spending should be eclipsed by "automatic" spending.
The budget for health and transport etc. could be determined by the states and then requisitioned from federal government, with checks in place to ensure that each state does not run itself in a corrupt or inefficient fashion relative to other states (Mosler style incentives!).
Has anyone read anything that discusses this process in detail or is there any MMT literature on this topic that we could use as the basis for a policy around budget process reform?
