Sumner and I Achieve Dentente

      I went after Sumner a bit on some comments he made in response to my comments on Sunday on a recent post of his.

      Here was my response

      http://diaryofarepublicanhater.blogspot.com/2012/05/should-i-take-back-every-nice-thing-i.html

      Now the Sumner's original offending comments were this:

       "I don’t recall names (I studied public finance 35 years ago), but the progressive consumption tax is quite popular among public finance types. It’s also a popular idea in Europe, where taxes are more aimed at consumption than in the US."

      "With all due respect, instead of asking me to name names don’t you think it might make more sense for you to actually study public finance before blogging about it? Or do you think that actual knowledge is not important, just free floating opinions."

       I found these comments sort of uncharitable and also not very fair. What is this claim that I'm some how ignorant of  "public finance?"  And what is this claim that I'm somehow not interested in knowledge just free floating opinions? I don't think that's a very fair assessment of my writing-I'll let the reader be the judge as they peruse my archives.

       I found Sumner rather condescending, playing the tired game that some Macro guys do when the public questions their superior knowledge-if all else fails the credentiliast card is always available. "You lack the training to even understand me much less criticize me."

      Krugman himself at least in the 90s used use this unfortunate tactic in arguing with people like Robert Reich and James Gablraith, Jr. So I called Sumner on this. I mean he has admitted he doesn't have anything new to say about fiscal policy for instance:

    "I do occasionally post on supply-side issues, and agree that they are what really matters in the long run, what separates North and South Korea. But I have no special expertise in non-monetary areas of economics."

       http://www.themoneyillusion.com/?p=14217

     So by his premise he shouldn't blog about supply-side issues ever as he seems to be suggesting that I blog about things I don't have the requisite background in to discuss them at all. Again, is this credentialistm?

     I got a few comments back from people who wanted to defend Sumner. The one thing I should say is I owe Sumner thanks for this regardless as this post "blew up" as they say, I got a huge amount of readers to it.

      The reader Bonnie who often reads Money Illusion made her case that Scott didn't really mean to insult me and that she sees him as a mostly very positive force on the Internet.

      "I think Sumner tries to avoid getting into political debates, which is probably at the bottom of the reason he didn't take you up. It's just speculation, of course, because I don't know him personally. Everything has so much spin these days, it's hard to know what the truth is about anything."

     "As a life long Republican, it doesn't seem to me that he is really worth your energies. He has done more to persuade me that Republicans are far more rotten and self serving than I ever imagined, just by talking about the truth as he see it. He is largely the reason I've found myself on the outs with people I have associated myself with for years because they have thrown Friedman under the bus, the effects of which I see as clearly devastating to everyone, things that I cannot look past for the sake of expediency. I have taken up my pen toward the tight money people as a result. It is no small feat for Sumner to change my mind and there is a real hunger for basic truth in my party, like I've never seen. I can only see him helping, not hurting, if the proposition is sort of a synthesis of both right and left actually working together to improve our lot in ways we can agree agree on instead of being at each others throats and getting nowhere."

     I actually thing she is largely right. I wasn't really trying to start a political debate. The point is that he more or less opened it up when he made this comment:

    "My dream is that in a few more years I’ll be able to do a post entitled “We’re all zero fiscal multiplier, market monetarist, progressive consumption tax, supply-sider, neoliberal Yglesians now” so that I can retire to some place warm and sunny."

      http://diaryofarepublicanhater.blogspot.com/2012/05/should-i-take-back-every-nice-thing-i.html

      Let's face it, while I appreciate his levity, that is a loaded political statement. It makes a lot of political assumptions. So I questioned him on just one-the idea of a progressive consumption tax. To me that's a contradiction in terms.

     My question actually led to what I thought was a pretty good discussion with W. Peden. It had all the elements of what Bonnie had in mind:

     "the proposition is sort of a synthesis of both right and left actually working together to improve our lot in ways we can agree agree on instead of being at each others throats and getting nowhere."

      W. Peden explained his reason for claiming a consumption tax could be progressive and why he favored taxing consumption over investment. I found it a good discussion:

      http://diaryofarepublicanhater.blogspot.com/2012/05/talking-taxes-with-w-peden.html

      Largely what it came down to is Pedennonrich-most Americans pay more in payroll taxes than any other tax. So in my mind this is how Bonnie's meeting of Left and Right could occur.

     Think of me as Harry Reid and W. Peden as Mitch McConnell. I'm willing to consider eliminating all investment taxes provided he's willing give us a totally progressive payroll tax. What my focus in negotiations would be is being sure in my own mind of Peden-McConnell's sincerity in truly giving us a real progressive payroll tax. If I were convinced of that then it would be time to do some of those PDF studies-from tbe CBO, or the Economic Policy Insitute, Peden-McConnell might have their's done by Cato or the American Enterpirse Insitute (AEI) or whatever.

    As long as it really did give us a progressive payroll tax-by lifting the cap, etc- and it proved revenue neutral then we would be very close to a deal. As a last measure I might do some study of whether or not there might be some kinds of negative externality for the larger economy or social welfare by perhaps over encouraging certain kinds of investment activities perhaps society as a whole may have an interest in not encouraging. However if it were a progressive payroll tax and the overall effect were tax neutral I'd be pretty close to signing on the dotted line.

   So it was a good talk-I had thought that gave us more light than heat. Then came Sumner's snarky comments. Now besides Bonnie's perfectly reasonable and largely correct take on things I think. I do think Sumner has a positive effect in many ways-though if he weaned her from being a life long Republican I wonder if this is what he had in mind!-I had a few more Sumner defenders-first Nick Rowe, then someone who calls himself  CalmRevolt:

  "Get over yourself and drop the victim pathology. It's not that Scott dismissed you (as if you're more special than any commenter) out of hand for not being an actual macroeconomist - you're beating a straw man. He shouldn't have to wade through specific citations on the academic literature just because you don't understand what a progressive consumption tax is."

   This of course is exactly the Right wing attitude that makes it heard to avoid what Bonnie wants to avoid:

     "of being at each others throats and getting nowhere."

      I mean guys like Calm always want to pop your balloon with the news flash they imagine you've never had in your whole life long till they get at you: "What makes you think your special?"

      My guess is that a guy like Calm feels most special himself when he's telling other people they're not special. But his talk about "straw men" is unfortunate as he attacked a straw men with me by claiming I had a "victim pathology."

     Again, Right wing guys go to that tactic first don't they? Always mocking the victim pathology that kind of obscures the crucial fact that there are real victims in this world. Recently his Republican party tried to mangle the Violence Against Women act by loading it with strange provisions about alerting the abusers of women if the woman reports him. Here we have real victims and we have the GOP doing more tan Calm who prefers to laugh at the pain of victims to actually arming their abusers legally. And the Republicans claim that the Democrats invented the War Against Women?

     For more about the GOP's brutally insesitive cluelessness about women see

     http://diaryofarepublicanhater.blogspot.com/2012/05/gop-bill-protects-abusers-of-women.html

     So Calm's tact rather rubs me the wrong way. But the real meat of is argument is very weak, that Scott:

     "shouldn't have to wade through specific citations on the academic literature just because you don't understand what a progressive consumption tax is."

     Well why not? He opened it up not me. Why is he incapable of defending his own views? Does it really take so long? Again W. Peden did it and he didn't even have to quit his job. What Calm seems to be suggesting is that the idea of a progressive consumption tax is a fact like the laws of motion or that the Earth revolves around the Sun are facts.

     This is clearly mixing up apples and oranges. Assuming there are any facts in economics that rise to the level of these examples from physics-and economics is not called the dismal science for nothing-this is just an opinion. Sorry Calm, but there's really nothing special about the belief in the progressive consumption tax it's not an agreed upon fact of nature the way evolution is a fact of nature.

    It's just an opinion about fiscal policy. While I found W. Peden's idea interesting, really as he explains it it's little more than a progressive payroll tax-so why call it consumption at all? W. Peden admitted that most sales taxes-which is what I and most people think of first when a consumption tax is mentioned-are regressive.

    So Sumner and Calm are wrong in acting like I'm somehow imposing on the Great Sumner in some way by asking elaboration of some very elementary and universally agreed upon fact of science.

    Nick Rowe even jointed the fray-who is usually so unfailingly and impeccably polite and charitable. He had left his usual thoughtful comments on my W. Peden post.

    "1.  Start with a proportional consumption tax. Everyone pays (say) 20% tax."

     "2. Increase the tax rate to (say) 30%."

      "3. Take the extra revenue from that 10% tax hike, and divide it up equally among the population and give each person an equal share, so it's a negative tax."

     "If your income and consumption is very low, your total tax bill is now negative. So your average tax rate is negative. As your income and consumption increases, your average tax rate rises to a positive number, and eventually asymptotes to 30%. So it's progressive."

      Another commentator, Nanute, argued that:

      "Nick, If you income is very low, is it likely your consumption will be low? I don't think so. A 30% consumption tax? That will stimulate demand? No disrespect intended, thank god it's only a theory."

        I did agree Nanute's view is basically mine so I responded:

       "Yeah of course I'm with you Nanute. Sumner played the "your not qualified to talk to me game"

       Evidently this criticism of Nick Rowe's Dear Leader got him fired up:

       "Mike: "But what is your consumption tax? Is it a sales tax? If so how do you tax some people 30% and the rest 20%?"

       "That's what I just explained!"

       "You tax everybody 30% of sales of consumption goods, then give everybody a lump sum."

       "Google the difference between "marginal tax rate" (a constant 30% in this case) and "average tax rate" (increasing from a very negative number and rising towards 30% for the very rich in this case)."

       "How much time do you really expect Scott to spend explaining stuff?"

       Well he actually had spent no time explaining it before. I don't know that it takes very long to explain as Nick himself was able to do it in a couple of sentences. Evidently to criticize the Great Sumner in his presence turns the mild mannered polite Nick Rowe into a snarling, snarky MMTer-while I agree with a lot of MMT some of them have the bad reputation of being very short and snarky with anyone who they feel hasn't gotten their point in more than 4 seconds.

       Again, I wasn't asking anything so egregious from Scott and again he's the one who made the comment about a progressive consumption tax which no matter how much Nick Rowe, Calm, or Sumner himself claim that it takes too much time to explain, the fact is many people agree with Nanute and I-that a consumption tax is a contradiction in terms. It has noting to do with some mythical "ignorance of public finance" that Sumner tries to ascribe to me.

      However, in fairness to Scott, we have buried the hatchet. He made a generous move to do just this and I give him credit for it:

     "A progressive consumption tax is where the more you consume the higher the percentage rate of tax on consumption. I did not take a cheap shot at your knowledge of public finance, you’ve admitted you know little about it. Nothing to be ashamed of, I know very little about opera, or particle physics. But I don’t blog on those subjects."

     "As for my “complaint” about Krugman, I thought it was obvious I was joking–I guess not."

     "I agree with you on one point. One can find lots of people on the internet who like your blog."

       http://www.themoneyillusion.com/?p=14210#comments

       Ok, so he wins me back over for now. He's talked me off the ledge! Don't get me wrong, I see very clearly that he hasn't necessarily changed what he said-he's still suggesting that I shouldn't blog about "public finance" as I lack the knowledge for it. I don't actually remembering saying I lacked this knowledge-actually I'm not too sure what he means here by "public finance" does he mean simply fiscal policy? If he does I will say that I'm at least as qualified as he is to discuss it as his supply-side policies are mostly wrong.

      But he does allow that lots of people like my blog. I'll hang my hat on that for now!