A Growth Strategy

A Growth Strategy
J. H. Moromisato
The Economist, a popular weekly magazine covering global economic and political affairs, manages to keep us abreast of the important news happening throughout the four corners of the world; and it does it with penetrating analysis on a wide array of subjects, and with a style of its own. The magazine’s main weakness, though, is that its editors are strong believers of supply-side economics—that slow, or lack of economic growth is mostly due to lack of investment; thus all their economic advises, which they push with undisguised passion, centers around more investment, especially that from governments, even those, as the U.S., that are already saddled with very high fiscal debts.
In one of its recent issues (May 24th-30th 2014), in its leader “In need of new oomph”, it shows concern about the ‘disappointingly weak… [world’s economy]’, and mentions the standard solutions, “”that the central banks loosen monetary conditions further and keep them loose for longer,” but only to add that “over-reliance on central banks may be a big reason behind the present sluggishness.” It ends up proposing two “more balanced growth strategies”: One, to “boost public investment in infrastructure”, and two, “a blitz of supply-side reforms.” That has never really worked anywhere it had been applied–Remember that the much vaunted U.S. economic growth following the supply-side policies of the Reagan and following administrations went almost exclusively to fill the pockets of the top 1%.
The glaringly obvious solution, to substantially increase taxes on top earners—the 0.5% in the U.S.—is never mentioned, even as a possibility. That would of course be contrary to the editor’s belief in supply-side economics—based on low taxes for the rich.
As I have shown in my recent book, “A Theory of Tax Fairness”, unfair taxation, especially in the U.S., is the biggest cause of reduced economic demand at both ends of the income scale: the very rich do not want to consume their income; and the poor lack the income needed to consume. In addition, insufficient taxes prevent the government from filling such demand gap. Higher taxes on the very rich will increase government spending, increase the level of employment, and provide the poor with sufficient income to increase their own demand; that is the virtuous cycle that leads to economic growth.

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My Review of Thomas Piketty’s “Capital in the Twenty-First Century”

I posted the first part of my review on Amazon.com:

Capital-My Review I

And here is the second and last part:

(J. H. Moromisato, 4/26/2014)

Part II.

Following on the convoluted footsteps of Adam Smith, after Karl Marx had pushed Smith’s ideas to the limits of their own absurdity, Mr. Piketty follows in his book the ups and downs of capital and income for a couple of centuries, and throughout four of the world largest economies (the U.S., France, U.K., and Germany), but including sporadic references from Japan, China, Greece, Netherlands, and the Scandinavian countries, to ‘universalize’ his findings—perhaps forgetting his own finding that “the history of income and wealth is always deeply political, chaotic, and unpredictable”. And in the process of describing the new data, he manages to resuscitate sundry ‘ad-hoc models’ that ‘explains’ particular sets of data—e.g. “our findings suggest that skyrocketing executive pay is fairly well explained by the bargaining model”. I found that part of the book somewhat illuminating, mostly for its detailed historical association.

The last of the four parts that make up the book is dedicated to taxation and fiscal debt. He concludes that taxes higher than 80 percent would be desirable (particularly in a large country as the U.S.):

“The evidence suggests that a rate on the order of 80 percent on income over $500,000 or $1 million a year not only would not reduce the growth of the US economy but would in fact distribute the fruits of growth more widely …

Nevertheless, it seems quite unlikely that any such policy will be adopted anytime soon.” (p. 513)

He is even more pessimistic that his proposal to solve the ‘fiscal debt’ problem—the application of a ‘wealth-tax’ of up to 20 percent, at a global level—would ever be adopted.

In Part I of my review, I revealed the basic flaws in the concepts of capital and labor; that ‘capital’ was invented—or more precisely, plagiarized from A. R. Jacques Turgot—by Adam Smith, only to avoid using the concept of money as an economic factor. Mr. Picketty toes the line on capital quite faithfully throughout 576 pages of his book; he even ‘explains’ why the mention of money, in the literature for example, which was in vogue in the 1800s, went out of fashion because of the bouts of inflation in the 20th century—that could have changed the perception of the currency, but certainly not that of money. Nevertheless, the very last six lines he wrote in the book go like this:

“Yet it seems to me that all social scientists, all journalists and commentators, all activists in the unions and in politics of whatever stripe, and especially all citizens should take a serious interest in money, its measurement, the facts surrounding it, and its history. Those who have a lot of it never fail to defend their interests. Refusing to deal with numbers rarely serves the interests of the least well-off.” [The End]

He seems, belatedly, to be following on the footsteps of John M. Keynes—who died before his break with capitalism was completed. There is still hope for Mr. Picketty!

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Complete Text of “A Theory of Tax Fairness”

Editorial Description

The “A New Theory of Tax Fairness” stipulates that the only fair tax allocation is a fully progressive one; where tax rates are progressive—increase gradually—from 5% for middle income taxpayers, all the way to 99% for extraordinarily high income taxpayers—those in the top 0.5% of income.

The justification for higher tax rates on higher incomes is the following: If everybody had more or less the same income, everybody would be obliged to pay at the same tax rate; but, since the income distribution in the U.S. is highly skewed, those in the lower income brackets cannot be asked to pay anywhere near the average tax rate, which is close to 20% of gross income. Therefore, those making incomes larger than average, are required to pay a rate higher than the average, in order for the fiscal budget to be balanced.

A second reason to impose a higher tax rates on the rich is the realization that they constitute a social cancer, which grows and grows at the expense of the rest of the population; causing unemployment and a slowdown in the economic activity. Such accelerated growth is clearly unsustainable. Only an extended period of higher taxes on the rich—comparable to those prevalent during the post-war era—may succeed in slowing down such malignant growth.

A Theory of Tax Fairness

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New Book Announcement

It is not Inequality, It is A Social Cancer What is Consuming Our Nation and Only Higher Taxes on the Very Rich May Slowdown Its Growth, Claims a Denver Economist

Press Release for “A Theory of Tax Fairness”

 

 

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New Beginning

I haven’t posted anything in the last several months: I was busy working on several new books–One, “The Money-Sovereignty Recovery Act (A Bill Proposal)”, is already on sale, on most online bookstores, while the second one, “A Theory of Tax Fairness”, is awaiting for the printer’s proof.

The New Beginning of the title is my commitment to begin periodic posting on this website–at least once-a-month.

I believe, strongly, that a good understanding of true economics–as opposed to conventional or mainstream economics–is crucial for the well-being and prosperity of our country, and indeed for that of the entire world. If you agree with me on this, or would like to know more about it, please leave your comments, I promise to reply promptly.

Thanks,

Dr. Jorge Moromisato

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Announcement of New Website

I’ve just started a new website at  great-ideas.us

It will contain ideas–mostly my own–about politics, democracy, economics, weather-control, space-exploration, energy, transportation, and any other that may strike my fancy in the future.

If you are looking for inspiration, or are just bored with the same-old, same-old, check it out.

J. M.

 

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ALL Our Fiscal Problems Can Be Solved FOR GOOD, with NO Tax Raises, Spending Cuts, or ‘Sequester,’ Says Denver Economist

Summary: By the simple exercise of its constitutional power to create money, exclusively, government could increase its revenues and decrease its interests spending by a total near $2 trillion per year. Currently, this power is being usurped by the private financial system that has created almost the entire stock of money that circulates in our economy—around $50 trillion. There are no plausible excuses anymore to delay our government’s recovery of its money creating constitutional power.

PRF201302-f1

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Cover Letter to the MSR Proposal

It includes quotations from John Adams and from Abraham Lincoln.

MSR Cover Letter

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The Money-Sovereignty Recovery Act (Jan 30, 2013)

A Civilization-Changing Legislation

The Money-Sovereignty Recovery (MSR) Act, if and when enacted, could be the most important and transcendental piece of legislation ever produced in our modern world. It will solve in few years the most serious problems facing the nation today: the continuous fiscal deficits, the enormous national debt (Federal and States), the very dangerous accumulated trade deficits–over $6 trillion and growing by half a trillion per year–and the serious and growing income inequality–the “1% problem”–which are the central causes of unemployment and slow economic growth, in the U.S. and elsewhere.

Please, read the MSR Act proposal (by clicking below) and tell your Congressmen about it. Only you, the People, can make it possible.

money-Sov-Lg-2.pdf

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Announcement (Jan 2, 2013)

The complete version of the MSR Act Proposal will be posted here before Jan 9.

Its 70 letter size pages contain the following:

Table of Contents

 

PREFACE  5

One Page Summary  7

Expected Effects of the Bill  9

Proposed Text of the Bill  21

Economic Analysis of the Bill  29

APPENDIXES  43

A1 – Monetary Principles  43

A2 – Principles of Taxation  50

A3 – Balanced Trade  56

A4 – The Economics Discipline  59

Annotated References  67

JHM

 

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