'All deficits are good for someone': Visiting economist shrugs off debt concerns
The Morrison government has received praise from an unlikely source following its decision to set up a $2 billion fund in response to the bushfire crisis.
Stephanie Kelton, a senior economic adviser to United States presidential candidate Bernie Sanders, said moves to put bushfire recovery ahead of the budget surplus were “a good indication they’ve chosen to prioritise the correct things”.
“The good news appears to be that there is recognition that what matters is human outcomes and climate outcomes, not budgetary outcomes,” she said.
Kelton, a professor of economics at the State University of New York at Stony Brook and a former chief economist on the US Senate Budget Committee, was last year named on Bloomberg magazine’s list of the 50 people who are most influential on global markets.
She is in Australia for a series of events, including engagements with PricewaterhouseCooper in Sydney and Melbourne this week. Her book The Deficit Myth will be published this year.
A proponent of modern monetary theory, which suggests budget deficits do not matter in a country with its own currency unless they cause inflation, Professor Kelton said governments should use the federal budget to achieve “real goals” in the economy such as full employment.
The Morrison government was warned in November that major fiscal stimulus would risk the country’s AAA credit rating, but leading economists such as Olivier Blanchard, the former chief economist of the International Monetary Fund, have softened their opposition to debts and deficits.
Professor Kelton said the focus on achieving a budget surplus came from a mistaken belief that a government should run its finances like a household or, in the words of Margaret Thatcher: “The government should do what any good housewife would do if money was short - look at their accounts and see what was wrong.”
But Professor Kelton said the government’s finances were fundamentally different because it had the power to issue currency.
“It’s normal and customary for governments to run deficits,” she said. “The deficit is nothing more than the government’s financial contribution to some other part of the economy.”
Professor Kelton said President Trump’s tax cuts, which have been estimated to add US$1.9 trillion to the national debt over 10 years, had delivered a financial windfall to high-income earners. “All deficits are good for someone,” she said.
0 Comments:
コメントを投稿
<< Home