Friday, December 28, 2012
Wonkblog — Wonk of the year: Grover Norquist
The Washington Post | Wonkblog
Wonk of the year: Grover Norquist
Ezra Klein and team
The ironic thing this that Grover Norquist is right — taxes are higher than they need to be, as evidenced by the long unemployment lines.
But he is correct for the wrong reason.
The debate is framed as if taxes were needed to fund government. Which is not the case for a currency sovereign like the US.
The dual purpose of taxation is 1) to withdraw down consolidated nongovernment aggregate net financial assets in order to control inflation at full employment, when effective demand threatens to exceed the capacity of the economy to meet it, and 2) to discourage socially undesirable behaviors.
The issue then become deciding the size of the government relative to the economy based on public purpose. This is a political decision based on balancing personal responsibility and social welfare.
The issue is providing the appropriate amount of funding to generate effective demand resulting in optimal use of national resources, taking externalities into account.