Since CPI (inflation) has gone up 30%+ since 2018 this seems eminently reasonable- in fact Inwoukd think inflation linked salaries would work quite well (unless governments will buy into the MMT idea and actually tax the wealthy)
One might want to tax the wealthy for other reasons, but I'm not sure it can be easily motivated by MMT reasoning.
a) Governments printed money massively to handle 2008/covid (on the order of tens trillions dollars)
b) MMT says governments print money to spend it buying the services they want (ie roads, nurses, etc) then tax back the same amount thus having net no inflation and able to print the same amount again next cycle / year.
c) if people can take the system so that they don’t pay tax but instead keep the money then governments cannot print same amount of money / end up causing inflation
c) wealthiest in society are pulling away, tax rates for capital vs labour are not equal, the massive QE has ended up in hands of capital owners and as we don’t tax Wealth then each cycle of spend-tax means more is staying in private hands, it getting destroyed so more government spending must either be cut or raise inflation.
So my limited understanding says “money is just tokens, tokens should equal productive capacity (multiplied by some thing something velocity), and if governments want to spend more tokens than are being destroyed through tax, either raise tax rates n those paying tax, or tax those not paying tax (ie tax wealthy)
In the end it all comes back to rentierism- and that comes back to a land tax
It should not be seen as a mechanism primarily used to finance government spending (that's what debt is for). For a country the size of the USA, balanced budgets (tax inflows = government spending outflows) create currency issues, since there's demand for government debt as a store of wealth. What can Apple do if the government decides to stop issuing t-bills? They'd pay a dividend, but then that leave the receiver of the dividend with the same problem. Or maybe they'd purchase an existing t-bond for over market value (effectively increasing interest rates).
The government will issue as many bonds as the market has demand for as a store of wealth, but the government also decides the interest rates it is willing to pay. The idea being, the government has better control over inflation, since government spending drives inflation, but high interest rates curb it (though, I believe this is still an active area of research).
The core point of MMT is that monetarily sovereign states should primarily consider the resources available to buy with little to no consideration of the financial side, since such states are never financially constrained. The focus of the government then is all about making sure such resources are properly managed. That means the primary role of taxation is to free resources (read people) that can be purchased. It recognises a potential cause of inflation is a lack of things the state needs being available to purchase by the state leading the state to out-compete the private sector using its greater financial power.
Conversely, if things are available to buy, then the state can use its financial might to buy up those things. This is most notable in the primary policy prescription of MMT of the Job Guarantee - acting as an employer of last resort and providing a job to anyone that wants one (and in the process, rendering the minimum wage somewhat moot). The JG is especially interesting when you realise what you're actually doing is anchoring the value of the currency to X units per hour of unskilled labour. At that point, spending is all relative to that price anchor. Things can and should float relative to it in response to supply and demand, but that fundamentally the JG wage is the financial control point.
It's kind of funny how little consideration is given in the mainstream to establishing a proper value for the currency given how much hand-wringing is performed over inflation fears.
It's an infinite money glitch - computers can do many unskilled labor tasks autonomously. I have an AWS account and am happy to sell.
Despite your protests, people manage just fine to compare labour based on how much the provider of said labour is paid using the single measure of quantity of currency.
Since money is a social construct with a social purpose (and indeed, is the reason people are unemployed) it's perfectly reasonable that we define it's value to provide a social purpose, which has the added benefit of providing price stability.
Moreover, it provides a buffer stock of employed that can easily transfer to and from the private sector.
We haven't had real deflation since bretton woods, when we gave up the gold standard.
Wouldn't that be the other way around?
If I take out a $30K loan to buy a new car, and I'm paying $500/month, then if the economy happens to go through an extreme amount of deflation a year later and now brand new cars are only $10K, then as the payer, I'm still paying $500/month and $30K total, except that amount is worth a lot more.
Whereas if massive inflation happens, the payer gets a huge benefit, assuming their salary keeps up with the inflation.
Minimum wage is currently €12.41, 12% higher than in 2017 after inflation.
[0] https://www.in2013dollars.com/europe/inflation/2017?amount=8...
January 2023, every white collar worker in Belgium got a 11% rise
(Why not blue collar …)
I lived in a country with CPI of 5% and the inflation was 25% same month. Not even close!
The most conservative folks are resource extraction industry folks, and they are against anything, wages, tax, regulation, etc that reduces their margin. Don’t listen to them unless you’re in their business.
With respect to 2020, there’s a weighing of evils. You either increase the monetary supply and trigger moderate inflation, or allow a deflationary death spiral. The economy halted — gasoline prices went negative regionally for a bit.
It's a constant battle, highly classified by category, called Commission paritaire (CP). For example, for the coming year, the CP200 will obtain an indexation of all salaries of 3.6%, which doesn't mean you can't ask for a pay rise, although some employees take advantage of the vagueness created to put their employees on the fixed scale (and fabricate nonsense in their employment contracts, indexation is not an increase).
It should also be noted that when you change jobs, you can both pass on your experience in the same CP, but if you change jobs (unless you negotiate hard), you fall back to zero experience (or the experience you already have in that CP).
It's almost become a survival mechanism for the lower and low-middle classes of the population. It's a system that the right-wing parties, currently in the majority in this country, are keen to reform, and it's not going down well (which explains, in part, why we can't seem to form governments quickly). They're using every trick in the book to discourage the people from giving up the advantages painstakingly acquired through centuries of unfortunate industrialization, which have benefited from including external countries.
The index system will soon be celebrating its 105th anniversary. It's a vector of social peace and proof that, when properly implemented, it has no effect on hyperinflation: https://www.cgslb.be/sites/default/files/aclvb/Documenten/Ar...
If you hire someone to do a basic job like say sweeping your drive or cleaning or whatever and the cleaner used to cost 15/h and now costs 17/h that's directly linked, 100% of the minimum wage increase goes straight into price increases.
You can argue about what percentage feeds through to various products - not everything is fully linked to local labour costs - but I don't see how anyone can pretend otherwise, it's about as close to mathematically defined as you can get.
I'm in the later category so I wouldn't suffer but the entire concept sounds a bit evil tbh and an encouragement for inflation because corporations will get away paying their low ranking slaves less.
This year it got back to 2% where pre-pandemic it was as low as 0.25%. Somehow banks are not that quick to make interest higher- unless you pay interest to them