Trump's plan. Same old same old, only more so.

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[00:00:41] Here in New Jersey you're suffering under some of the highest property taxes and sales taxes in the nation.

[00:00:51] Just about the highest. And now Crooked Joe wants to massively raise your income taxes,

[00:00:56] promising that the Trump tax cut so I got you the biggest tax cut in the history of our country,

[00:01:02] bigger than the Reagan tax cuts years before. But they want to cut the Trump, he wants to get rid of the

[00:01:10] Trump tax cuts. Now they expire so instead of just renewing them he says going to expire

[00:01:17] and if I'm re-elected he doesn't even know what the hell he's saying.

[00:01:21] Don't forget he can't put two sentences together, he can't find the stairs off his stage.

[00:01:27] Let's see this stage when I'm finished. I got stairs there, I got stairs there.

[00:01:31] This is the Debunking Economics podcast with Steve Keane and Phil Dobby.

[00:01:38] I don't know what is he talking about, Donald Trump is in full pre-election mode right now

[00:01:43] rambling on stage but then you know if it looks for if you're looking for rambling presidents

[00:01:48] you've got a choice haven't you in the United States? In between court appearances he's playing

[00:01:52] to huge crowds in the national polls, Donald Trump is in the lead it's 42 percent of the

[00:01:57] vote for him against 40 percent for Biden so it's going to be close and he doesn't seem

[00:02:02] to be moving a great deal as according to the 538 polls and if you look at favorability

[00:02:07] according to YouGov and the Economist poll they're pretty much neck and neck,

[00:02:10] they're both unpopular. 57 percent of Americans have an unfavorable opinion for each of them.

[00:02:15] So if Trump wins we ask the question why and for that we look back at what made

[00:02:20] him so successful the first time around. That's this week on the Debunking Economics

[00:02:25] Podcast with Steve Keen, I'm Phil Dobby welcome along. Now Steve is in the States this week mainly

[00:02:38] on holiday, in fact you might have seen a clip of him brunching with Stephanie Kelton. I hope they

[00:02:42] paid for that brunch, I hope they didn't say look you know money's just a mere concept and

[00:02:47] just get your bank to create it for us but no doubt we will get the low down

[00:02:52] on that conversation on the podcast next week but this week for the first time

[00:02:56] we are going to delve into the Debunking Economics Podcast archives after all we've had

[00:03:02] well over 300 of them now so there's plenty to choose from. So let's go back to around the time

[00:03:06] when Trump was elected first of all here's a bit from a podcast from October the 25th 2016

[00:03:13] we didn't know at that stage that Trump was going to win but maybe some of his ideas made

[00:03:18] sense, some of them so we were talking about those but first of all what was Steve's take

[00:03:23] on Trump back then? A smart guy or just a populist? He's smart and a populist but he's

[00:03:29] also I mean they're just having this as a personal reflection but having watched his

[00:03:32] personality, his behavior, his reeks of what's called narcissistic personality just ordered to

[00:03:38] me. I have personal experience with somebody with that particular syndrome and they're

[00:03:42] exciting for a while until you realize they're bonkers and they cannot make a mistake,

[00:03:49] they cannot make an error, everything goes wrong is somebody else's fault and that's the

[00:03:53] last sort of personality I want anywhere near a red button so that's my main reason for being

[00:03:59] scared about the guy is what he might do if somebody annoys him. The old joke about

[00:04:04] I've forgotten how it goes but it's the one about what's orange and glows in the dark,

[00:04:10] it's supposed to be either Saudi Arabia or Iran, I'm rather worried he'll press a button

[00:04:13] and try to make that into a reality so that alone rules him out in my point of view.

[00:04:18] Even before he does that what's orange and glows in the dark sounds like Donald Trump

[00:04:22] to me really. It does yeah except around the eyes, it's strange around he doesn't get

[00:04:26] around the eyes properly but still yeah. Now does he understand economics though I mean

[00:04:30] and I asked that question because I remember the first debate on TV and he said he wanted

[00:04:35] to impose import tariffs on Mexico because they charged VAT on imported US goods, he

[00:04:40] didn't mention that they charge VAT on domestic goods and everything else but he said on that

[00:04:44] basis you know he wanted to introduce import tariffs so that would be presumably he'd

[00:04:50] charge a 20% import duty on goods from the UK because we've got a 20% VAT here so

[00:04:55] in cases like that was he being disingenuous or is he just plain dumb? No in fact I think

[00:05:00] he's a skeptic about globalisation even though he's made a fair bit of personal money out

[00:05:05] of it by the way if you look at where the toys for Trump, I don't think the toys for Trump

[00:05:09] shops are made in America somehow. No. What's actually gone with the whole thing,

[00:05:14] it's been sold on the idea of comparative advantage, specialisation, you know the

[00:05:19] Mexicans specialise and some stuff Americans specialise and others were all better off,

[00:05:23] it's a myth, it's a myth, it's the longest running myth in economics going back to David

[00:05:27] Ricardo and that's a topic for another day but on this particular case because he's saying

[00:05:33] these things are undercutting American job and so on he's right and the mainstream cannot

[00:05:38] admit that because that goes against this model of comparative advantage which is a

[00:05:43] hallmark religious belief in mainstream economics. I can see that, I can see that because when you

[00:05:49] talk about and you're right it is for another episode where we talk about whether free trade

[00:05:54] is a good thing or not because he wants to abolish the Trans-Pacific Partnership

[00:05:57] and other free trade deals get that that you can argue that maybe he's right on that but

[00:06:03] when you start talking about VAT I mean that's not a tariff which is being placed on

[00:06:08] imports that's just another form of taxation, it's a direct taxation versus an indirect

[00:06:13] taxation and it applies to everything whether it's imported or not so he's so Mexico is not

[00:06:19] disadvantaging US goods any more than it's disadvantaging goods from anywhere else in

[00:06:24] the world including domestic goods. Yeah, he's got he's one of saying his gut sentiment to be

[00:06:28] anti-globalisation locks him with where his electoral support's coming from, his ideas on

[00:06:34] top of that can be crazy but what he's actually identifying is something that actually

[00:06:39] hits the gut of the people who are going to go and vote for him and that's the way you get

[00:06:44] electoral success it's the emotional appeal you make and it works in this particular instance

[00:06:49] because these people have been told for decades now that is free trade and globalisation

[00:06:54] and moving your jobs offshore is good for you and they're looking around at their depressed

[00:06:59] towns and looking at their you know casualised work role and the fact that they're now

[00:07:04] saying would you like fries with that rather than pass me the wrench, they are now feeling

[00:07:10] debilitated by that and suddenly somebody's expressing what they're feeling and that's where

[00:07:15] this fanatical support for him actually originated so in that sense his economics

[00:07:19] his intuition is right, his ideas are wrong but his intuition is right. Right and but I mean is

[00:07:24] the fundamental let's forget about the VAT argument but I mean just the free trade argument

[00:07:28] is he right that you know the collapse of middle America and you know around the world

[00:07:34] as well people there being underemployed is that the result of too much global free trade should

[00:07:42] we have a bit of protectionism? Yeah it's part of an effect of it and I'll backtrack a bit

[00:07:47] this when you look at the empirical data on free trade and whether it leads to growth or not

[00:07:52] the overwhelming result of that argument is does not I'm not the expert in any empirical work

[00:07:58] here but there's a guy called Danny Roddick who is and looking at the story about how

[00:08:02] does the economy grow the free trade cases where you liberalize everything specializing

[00:08:07] what you put out and you'll grow faster he said if you look at successful countries like Japan

[00:08:11] that would mean that if that actually had worked Japan would now be the world's leading

[00:08:14] exporter of silk. Right. Okay it's nonsense what they actually do is they tend to protect

[00:08:19] their industries for a while so you can only buy Japanese bikes and motorbikes in Japan

[00:08:25] they then put you under great pressure to start developing cars, B make your things

[00:08:29] cheaper and better quality all the time driving down the barriers that are keeping out the

[00:08:34] foreigners to keep the pressure to make sure the manufacturers continue innovating

[00:08:38] with the intention at some stage of exporting cars to America. Right once you've got the

[00:08:42] economies of scale so you protect it to get a get up to scale and then the incremental cost

[00:08:47] makes it cheaper to export. And then you get to the stage where you end up wiping out American

[00:08:51] companies so just to go back to historically why that happened with Japan there was a

[00:08:56] brilliant industrialist called Deming who made an argument what he called just in time

[00:09:00] manufacturing so rather than having a whole bunch of stocks outside the factory and a

[00:09:07] production line which just went on relentlessly without ever stopping even when there were

[00:09:12] mistakes. Deming production lines had a stop button you could stop the production line at

[00:09:17] any point any worker could do it this isn't working well let's fix it up then the line

[00:09:21] starts again ultimately the line never stops and what happens is stuff comes in one end as

[00:09:27] input goes out the other side as product and you're much much more efficient that somebody's

[00:09:31] got to send stuff to get it reworked all the time so that idea was ignored by the Americans

[00:09:37] but Deming was invited to Japan taught the Japanese manufacturing industry that particular

[00:09:44] approach and they then were relentlessly getting more efficient at production behind

[00:09:49] these projection walls that guaranteed them part of the market to begin with but that pattern's

[00:09:53] been repeated around the world so the argument that free trade leads to growth is wrong.

[00:09:57] Right so he's got a point on that okay the next one because we've got a few here we're

[00:10:02] going to work through very quickly now. One of them is manipulating exchange rates so

[00:10:05] he's been saying look you know they're keeping the value of the wine down in order

[00:10:08] to make exports from the country cheaper I'm not sure they've been doing that haven't they

[00:10:13] been doing the opposite haven't they actually been trying to keep their wine strong because

[00:10:16] they you know think it's going to be a sign of economic confidence and so they you know

[00:10:19] they've been dipping into their reserves to try and boost the wine hasn't he got that wrong?

[00:10:23] No in fact a lot of the time they have been trying to keep it under the rate it would reach

[00:10:27] if they simply let the the dollars that they're making from export surpluses turn up as

[00:10:33] wine circulating in the Chinese economy. This is a bit of a double entry story to work out

[00:10:41] what the hell happens but if you have a Chinese manufacturer and they sell a computer to an

[00:10:46] American purchaser then they get American dollars sent to them and what they do is they take those

[00:10:51] American dollars to the bank and the bank swaps them free for Yuan. Now that mechanism gives

[00:10:58] the central bank which is actually the one that gets the dollars in and then hands the

[00:11:02] Yuan back it gives it a choice about what to do with the surplus of American dollars it

[00:11:06] accumulates and what it's been doing is buying American bonds. Now part of that therefore you're

[00:11:11] buying American bonds as a cash flow back from the Chinese into the American economy driving up

[00:11:16] the value of the American dollar right but they're saying here's here so see you have or you

[00:11:21] have all these various effects that there is a certain role and and the extent to which

[00:11:26] the central bank intervenes in the in the money market can also change the value of their

[00:11:33] currency and particularly running a huge trade surplus as China is doing. They've got a lot of

[00:11:37] freedom to do that countries like England had a trade deficit back when they were trying to do

[00:11:41] the same thing maintain a high value of the pound or manipulated they get they get done in

[00:11:46] but China can get away with it so he is right again his intuitions seem to be right his ideas

[00:11:51] seem to be wrong. All right the next one is he's basically saying that the Federal Reserve

[00:11:55] the the Reserve Bank in the United States is in cahoots with the government because

[00:12:00] they're holding back on interest rates because President Obama doesn't want to have a recession

[00:12:04] or a depression during his administration so we had not quite getting this but would there be

[00:12:10] a recession if if we were to see the Fed push interest rates up? Yeah well then that

[00:12:15] we would yeah if they put rates up there would be a recession pretty rapidly for reasons

[00:12:19] the Federal Reserve itself doesn't understand but Obama really the think about the political

[00:12:27] relationship between presidents and central banks the one of the when inflation was running

[00:12:32] at 15 and 20 percent those such a huge levels back in the 70s and 80s it meant that if the

[00:12:38] politicians responsible for setting the rate they got the negative jarred from the public

[00:12:43] about putting up rates they were very happy to give in to the economists who are arguing there

[00:12:48] should be central bank independence and say you guys said it not our problem anymore please

[00:12:52] take it off our hands so in that sense 20 or 30 years ago politicians handed control of setting

[00:12:59] rates over to the economists in the central banks so Obama's got zero capability to tell the

[00:13:06] central the Reserves what to do and again what he's obviously implying that they are

[00:13:12] in each other's pockets or they have some sort of cozy relationship but and to this then if

[00:13:17] he's saying well you know if they if they push interest rates up is going to it's going

[00:13:20] to cause a recession and you say yes he's right on that and yet he wants them he wants the Fed to

[00:13:24] push up interest rates he criticized them for keeping them on hold last time so where's he

[00:13:28] standing on all of this well and in both sides of a crack obviously you know he's he if he

[00:13:35] actually got what he's talking about there'd be a recession very rapidly on his watch and

[00:13:38] if he became president and he'd wear the opprobrium for it yeah and then of course

[00:13:43] he'd say he didn't say that at all i mean the guy one the one thing about him he says

[00:13:47] so many things he's he gave him complete liberty to whatever he likes when you get

[00:13:50] if he got into office now a lowering tax is one of the things as well across the board

[00:13:55] especially he says for working and middle income Americans who receive a massive

[00:14:00] tax reduction massive tax reduction and also wants to lower it was huge but anyway well

[00:14:05] i know i've overwhelmed maybe you know it's probably changed to enormous it's going to be

[00:14:10] large anyway whatever it is and so cutting taxes at a time where you know the government's carrying

[00:14:17] so much debt is that is that a smart move again yes this is the crazy thing he's in

[00:14:22] juitions are right his ideas are wrong because what this is exactly what Regan did people

[00:14:27] don't seem to remember this but Regan came in believing what's called the Laffer curve

[00:14:31] and i could think of a better named economist than Laffer i used to laugh at him a lot

[00:14:36] but Laffer said that there's a sort of sweet spot where if you have if you lower taxes you

[00:14:41] actually increase tax revenue because the economy grows more than you cut the taxes

[00:14:46] and this little fantasy was something that Regan you know it looked like some of the

[00:14:51] cartoons he used to read so he went for it and what actually happened was the idea

[00:14:56] was that if you cut taxes you actually increase government revenue therefore the government

[00:15:00] budget would tend towards balance in fact what happened was it was a huge increase in the

[00:15:05] deficit and that's what stimulated the american economy back when Regan was president so

[00:15:12] his idea about and the reason it does it can work is that the government's the only institution

[00:15:17] in society that owns its own bank and therefore when it pays its debts it's paying it with

[00:15:21] its own bank's capability to print the stuff indefinitely so and particularly you're either

[00:15:27] running a trade surplus or you're the reserve currency of the world you don't you aren't

[00:15:31] bothered by there's nothing that can stop you continuing to do that so you do it you get an

[00:15:38] increase in the government debt it doesn't really matter because you're paying it with your own

[00:15:41] you know what you can call funny money if you like and and therefore it boosts the economy

[00:15:46] at the time so if he did it he would actually cause a huge boost to the economy it would also

[00:15:51] cause a huge blow out in the budget deficit and he'd then have to wear that politically

[00:15:54] but he'd wear it quite successfully so but his understanding is why it would work

[00:16:00] again it's like the laffer curve and it's as laughable as laffer right okay so basically

[00:16:04] if you're cutting taxes giving people more money to spend therefore they buy more which

[00:16:08] helps for growth and then that growth ultimately might help to to reduce that the government debt

[00:16:14] that's blown out in the meantime that's basically what he's saying yeah that's basically

[00:16:18] it would cause a boom it would also cause a blower that he's not expecting in the budget

[00:16:21] deficit that wouldn't matter as much it would stimulate the economy drastically yeah so again in

[00:16:27] some ways given how on i mean in this sense remember that even though america is in the

[00:16:32] heart of capitalism we know that capitalism's on the nose for most of uh trump supporters in that

[00:16:37] way because they're very similar the people who are supporting bernie sanders who caught on

[00:16:41] self a democratic socialist so the idea of the government doing something to boost the economy by

[00:16:45] cutting back what it takes out of our pockets and then printing the stuff anyway that's got

[00:16:49] more of a pin appeal in the anti-establishment world that trump and bernie sanders were

[00:16:56] successful then than people in washington appreciate yeah they've actually got more

[00:17:00] in common those two than they probably would like to admit haven't they anyway yeah now

[00:17:04] cutting immigration stopping this reliance on foreign workers because the foreign workers

[00:17:09] obviously are taking all of our jobs we've got to stop them if they stop coming into the

[00:17:13] country uh then there's more jobs to go around but of course there's also less

[00:17:17] people consuming goods and paying taxes so is he right on this no i think i think i think

[00:17:23] there's the uh the worry over mexico um it's racism pure and simple in many ways but uh there

[00:17:32] is an excess level of migration happening right now and it is overwhelming a lot of wealthy

[00:17:37] national economies what you've really got is is not the sort of um episodic immigration where

[00:17:42] somebody like you know i don't know this bloke called phil dobby decides to move from

[00:17:46] astray to england or this guy called steve keen does the same thing uh it's everybody in

[00:17:51] the country wanting to get out because there are no jobs and that is the pressure that in

[00:17:57] some senses you see from mexico to america but it's far more important over in europe

[00:18:02] where that's the major major reason why brexit occurred because you had european countries

[00:18:07] which were literally suffering and actually being depopulated because people ain't nobody

[00:18:12] wants to have a child on the situation of greece and spain right now but be anybody who's old

[00:18:16] enough to find a job somewhere else and leave does so and goes to where it's easy to get

[00:18:20] into which of course becomes in england and germany in that in that country um so that

[00:18:25] there's the the ep the systemic cause of immigration that trump's talking about

[00:18:31] um that is that's that's a reasonable factor right but he can't he's not worried about

[00:18:36] the depopulation of these countries though he's worried about these people uh taking jobs

[00:18:40] away and is he easy right on that no i think i think well they take jobs away they create jobs

[00:18:45] it's yeah but what you get is is what's called uh capital broadening rather than capital deepening

[00:18:52] when you get these people coming in you've got to therefore provide more schools more

[00:18:55] roads more cars etc etc you don't necessarily provide smarter schools uh smarter roads and

[00:19:00] smarter cars and uh focusing upon population growth as a source of of economic growth

[00:19:09] doesn't necessarily get you to technologically develop and become you know produce better

[00:19:16] per capita growth over time so in like in australia's case for example it's a strong

[00:19:20] argument that we've uh if australia's passed the level of population it should have it

[00:19:24] should be trying to reduce this population and a similar thing could be said for america i

[00:19:28] don't honestly know but there is an interesting set of studies which take us from economics to

[00:19:32] ecology called the human ecological footprint and that says if you converted all the all the

[00:19:38] needs we have of goods and services in acreage how much acreage is america using of its current

[00:19:45] acreage and like most countries in the world the answer is about 1.5 times as many acres as

[00:19:50] it actually has so we covered a few things didn't we that actually came to pass uh since donald

[00:19:55] trump became president he did go hard on immigration uh well he was building the wall

[00:20:00] wasn't he don't know if that actually stopped the migrants in fact the number of unauthorized

[00:20:03] immigrants in the u.s has actually been declining since 2007 when there were 12.2 million of them

[00:20:09] that fell to 10.7 million before donald trump became president one of the biggest causes for

[00:20:14] illegal immigration in the united states was people who arrive legally but overstay their

[00:20:18] visas so obviously the wall is not going to be doing too much to stop that but it was a

[00:20:23] good show piece wasn't it and that's what he is all about showmanship and interesting how

[00:20:28] he was talking about protectionism back then and still is but then so is joe biden it's

[00:20:33] actually joe biden who's going to get in there quickly with his 100 tariff on imported electric

[00:20:38] vehicles from china and then also that question about over currency manipulation that is there

[00:20:43] is much more discussion about that now than there was pre trump days on tax cuts well we

[00:20:50] saw them but really they only helped the high income earners rather than the low income

[00:20:55] earners because of the argument around the laffer curve and the benefits would trickle down

[00:21:00] yeah and the fed well they did of course push up interest rates because of inflation which was as we

[00:21:07] know more to do with supply side problems post-covid than anything else but there wasn't that

[00:21:13] rapid recession that steve talked about and now trump wants those rates to come down he wanted

[00:21:19] them out before so he doesn't seem to have a coherent story on how he wants central banks

[00:21:23] to behave except doing what donald trump wants them to do so there we are well look we've

[00:21:27] got more on this when we come back after the break on the debunking economics podcast steve

[00:21:32] is away we're filling in with some old stuff join us again in just a second my business used

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[00:23:03] this is the debunking economics podcast with steve keen and phil dobby now perhaps the biggest

[00:23:12] shock of a return to trump is going to be the shock to the environment there are already

[00:23:16] questions around how much funding he is going to take from the energy industry and how is

[00:23:21] he going to water down regulations aimed at getting to net zero i mean he already sees

[00:23:26] climate change as a fraud he's said so many times so obama is talking about all of this

[00:23:32] with the global warming and a lot of it's a hoax it's a hoax i mean it's a money-making

[00:23:37] industry okay it's a hoax and he said before he was voted in the first time that he wanted

[00:23:41] america to become energy independent not importing just using their own fuel with oil

[00:23:47] gas and clean coal so i asked steve ahead of the vote for trump's first presidency

[00:23:52] whether he'd be able to do that yeah if he's going to do with oil and shale and gas forget

[00:23:55] it this is we are running into into carbon limits which are becoming more and more obvious

[00:23:59] the time is not not going to work but you could become energy independent by focusing upon

[00:24:04] renewable energy it's not it's not easy this is another thing which is ignored by the

[00:24:08] ecological lobby again a topic for another another time around but there's a much higher

[00:24:11] return if the energy you put in to get energy out of oil is much less than the energy you put

[00:24:18] in to get energy out of solar power and that's becoming a real issue for us as we have to go

[00:24:23] with literally a force to go from relying upon fossil energy to relying upon renewable energy

[00:24:28] but in the meantime that the possibility of america being uh energy independent on oil and

[00:24:35] shale there's no way it can be done or the world oil output's been falling since 1980 that's

[00:24:40] another interesting area the what's called peak oil so you can't do it on oil it's impossible

[00:24:47] shale beyond again it just doesn't give the yields that are necessary so he's not going to

[00:24:54] do that right certainly won't do it in Saudi Arabia is keeping the prices down like ours so

[00:24:57] that one is also ain't going to happen but irrespective of what the means is of energy

[00:25:03] the idea of yes let's make ourselves energy independent is that uh is that a noble aim

[00:25:09] again it's I guess it's now we talked about it before it's an element of protectionism isn't it

[00:25:13] but isn't it also I mean if you deny yourself cheap oil for example aren't you pushing up your

[00:25:19] local fuel prices if if oil on the international market is a lot cheaper it is it is an issue

[00:25:24] that the economies need to worry about particularly in the running trade deficits

[00:25:27] so most of that deficit in America's case is importing energy so um it is a it is

[00:25:32] something that matters economically ignored by the mainstream but it does matter so again uh

[00:25:39] the fact that choice trump's talking about it hits a chord with people who have been told this stuff

[00:25:44] doesn't matter uh America can get away with the trade deficit because it's the reserve currency

[00:25:48] that makes life much easier for it but nonetheless being energy dependent can be a

[00:25:53] real problem now of course Japan's made that problem into a strength but it's done it by

[00:25:58] until it hit its own debt crisis back in 1990 it did it by dramatically having

[00:26:05] incredibly good manufacturing and very high rate of technological growth and then exploiting cheap

[00:26:11] energy that they brought in from overseas America has done without the industrialization

[00:26:17] for the ship that overseas in taking advantage of free trade agreements and free trade zones

[00:26:23] so it's the same time it's also been importing the energy so it has been a

[00:26:27] a limitation for them but they his solution can't work uh you're not going to do it with

[00:26:35] with oil that's just physically impossible in America's case and you're not going to

[00:26:39] do it with shale because that's ecologically impossible in the medium term although in

[00:26:43] fairness carbon emissions per capita actually did fall under trump in America just as they

[00:26:48] have been falling since the turn of the century although since trump crude oil production

[00:26:54] in America has increased from about nine million barrels per day in 2016 to 13 million barrels in

[00:27:00] 2023 so that's America's answer to the supposedly fake climate change fraud drill more oil but the

[00:27:07] other thing we can be saying of with trump is even though he talks about helping the workers

[00:27:12] it's the rich who get richer but the trump argument is of course the wealthy invest and

[00:27:17] that helps the workers they get jobs and they get paid and everyone wins but as Steve has

[00:27:22] said many times that money tends to be invested in the share market which doesn't create jobs it

[00:27:28] just creates more wealth for other shareholders but what if there were checks and balances in

[00:27:33] place to make sure that the rich invested their money in productive purposes so they did

[00:27:38] grow companies and they did create jobs well the turnover theory of capitalism would work

[00:27:43] and not so much trickle down as turnover you have to force that money to circulate

[00:27:47] and if you let it accumulate just in the wealthy then the rate of circulation slows down

[00:27:51] and you have a slump in the economy but it would be feasible to to invert that by saying okay well

[00:27:56] the wealthy are going to accumulate all this money by not paying their taxes we'll just pay

[00:28:00] more in direct government payment to the poor and let this trickle up in that sense and

[00:28:06] cause inflation which would then reduce the value of the money being accumulated by the

[00:28:10] capitalists but still provide a decent level of cash for the for the workers so

[00:28:17] there are other ways to attack it and partly our problem is in seeing but that would be a

[00:28:20] cycle that would continually increase inflation it could be yeah it could do but um that's that's

[00:28:26] the dilemma we we really and this is where i think the the work that um that george cooper

[00:28:31] has done and arguing that a democratic system which taxes and transfers the money back to the

[00:28:36] working class and enables the money to circulate rather than coagulating is a good argument a

[00:28:41] good interpretation of how we could think about capitalism we have to maintain that circulation

[00:28:45] and there's always a temptation for the wealthy in particular who's about the capability to do it

[00:28:51] to accumulate that money rather than spend it right and look often when we hear the argument

[00:28:56] that we should be we should be taxing the rich more and you know the argument is given well

[00:29:00] you know it's not actually going to create that much money for the economy we you know

[00:29:03] we might be talking millions or certainly not talking billions but from what you're saying

[00:29:07] that doesn't matter too much because actually the only reason you want to tax the the rich

[00:29:11] more is because you want to try and maintain this sense of balance where they're just not

[00:29:18] getting a preposterous amount of money which is which which is inflicting pain on the rest of

[00:29:22] the economy yeah yeah it's it's not it's not necessary to finance government spending but

[00:29:28] it's necessary to stop the money stopping slowing down and not circulating anymore which

[00:29:33] of course is another issue i've talked about earlier we still so finally though i mean people

[00:29:37] still do talk about trickle trickle down the effect of the trickle down and a lot of government

[00:29:42] policy still seems to be based on this idea in fact increasingly seems to be based on this idea

[00:29:47] of trickle down even though there's no evidence that it actually exists or has ever existed

[00:29:51] now there's much better to think in terms of gush up rather than trickle down yeah

[00:29:56] well if you put money in hands of people who don't need to spend it they're going to

[00:29:59] accumulate it you put in the hands of people who who have to spend it then it will be spent

[00:30:03] so gush up is a much more effective economic model than trickle down which gets down to that

[00:30:08] fundamental question doesn't it about economics is it is it actually that if you produce stuff

[00:30:13] people will buy it and then that gets the economy moving or is it a question of if you

[00:30:17] give people money then they'll but they'll want stuff and therefore it'll have to be produced

[00:30:21] well and capitalism is a monetary system and if you don't think about money you're going

[00:30:25] to get capitalism wrong and in an essential sense that idea about trickle down was based

[00:30:31] on an ignorant notion about where money comes from and how it turns over and and you know

[00:30:37] trickle down if you rely upon the spending of the wealthy for its own sake their own

[00:30:43] they're spending for their own consumption needs you're not going to get as much turnover

[00:30:47] occurring as if you if you pump the money into the bottom of the system where people have

[00:30:50] to spend and and that's in many ways that's the fundamental weakness of that logic it

[00:30:55] won't trickle down to the people at the top don't need to spend it in the first place

[00:30:59] well donald trump is talking tax cuts again he re-elected he said at a rally in new jersey

[00:31:03] this last week instead of a biden tax hike he's going to give you a trump middle class

[00:31:09] upper class lower class business class big tax cuts gonna be fabulous you wait

[00:31:15] but did the 2017 tax cuts help well the tax cuts jobs act predicted that there'll be

[00:31:21] so many more people who'd be working as a result of the tax cuts that the total revenue

[00:31:26] the government received would rise from 3.4 trillion to over 3.5 trillion in 2018 but in reality

[00:31:33] revenue fell to closer to 3.3 trillion so less revenue from the tax cuts not more

[00:31:40] so the laffer curve didn't work but maybe better luck this second time around if it goes to

[00:31:45] everybody and if it gets more money moving faster that was steve's point and that is it

[00:31:50] for today steve is back from his holidays normal service resumes next week thanks for

[00:31:54] listening this week i'll see you next week thanks for tuning in the debunking economics podcast

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