Wednesday, 8 January 2014
I suggest a small change to Mosler’s law.
I like aphorisms: short pithy sayings. As to “economics aphorisms” Keynes produced a good one: “Look after unemployment and the budget will look after itself”.
And Mosler’s Law is also a good one. It actually says much the same the above Keynes aphorism. It’s to be found at the top of Warren Mosler’s site in yellow (see image below). It goes “There is no financial crisis so deep that a sufficiently large tax cut or spending increase cannot deal with it.” However I suggest a slight change.
It should start “There is no recession so deep….”. I.e. the word recession replaces the two words “financial crisis”. That is, and to be accurate, tax cuts or spending increases deal with RECESSIONS. They don’t really deal with financial crises as such. Put another way, tax cuts or spending increases deal with recessions regardless of whether they are sparked by financial crises or other factors.
Now aphorisms are supposed to be short and accurate summaries of some idea or other. And I’ve shortened Mosler’s law by one word and made it more accurate. Warren really ought to send me a bunch of flowers..:-)