Not to give away the ending too quickly, but my guess is it wouldn't look much different from what we've seen over the last 30 years. If you like the current status quo, you'll love Sumner's Market Monetarist world.
First and foremost, my assumption is that a Sumner economy is also one run on supply side principles. I've had a number of arguments at The Money Illusion on this point-that part of MM is a belief in fiscal austerity. I've spoken with commentators at MI that seem to think that you don't necessarily have to believe in fiscal austerity to be a MMer. Yet I believe my good friend Morgan Warstler and he's pretty sure that the real virtue of NGDPLT is to devastate the 'unprodutive government sector.'
I think that any flexibility is more illusionary than real. The idea of MM is to force us into a SS straitjacket. A Sumner economy-is a SS economy-is gong to be one with very low taxes for the rich, along with possibly higher taxes on the nonrich-Sumner calls for cutting the payroll tax for employers but not for employees
http://www.themoneyillusion.com/?paged=4
and many more low wage jobs. Sumner is usually contemptuous when liberals complain that though many jobs have been created in say Germany-or the U.S. during the Bush years-they are mostly low wage service sector jobs. He argues that there's no reason for concern as with the drop in wages prices will get so low that this will equal out for workers with the increase in corporate profits enabling more innovation leading to even lower prices, in a virtuous circle.
Such an economy will be demand constrained as even if employers increase profits through lower wages they sell less to these employees so it's at best a wash-in truth they may actually do worse.
Again, to cite my friend Morgan-I honestly do like him as he's honest unlike Sumner-inflation is expected to be lower under the NGDPLT regime than the current Taylor inflation fighting regime. Will I at least concede that Sumner's society will have lower unemployment? I'm skeptical of that as well. For one thing the Fed hasn't demonstrated any ability to control either inflation or NGDP.
http://www.levyinstitute.org/pubs/ppb15.pdf
For more on the weakness of the low wage model see here
http://diaryofarepublicanhater.blogspot.com/2013/11/michael-lind-on-mirage-of-sensible.html
To recap: I begin with the assumption that MM and supply side econ (SS) are a package deal. If you buy his argument that only monetary policy has any right to deal with demand policy all this leaves for fiscal policy is supply side policy which means low taxes on the rich higher on everyone else, lax regulation, and a low wage economy were workers need to be subsidized via credit and wage subsidies-as Sumner indeed calls for. If NGDPLT were ever tried I suspect that it would be as least as big a disaster as the first Monetarist experiment of the 80s was-possibly more.
The fiscal policy would be just old wine, new bottles-more Reaganism. If you love where we are now, then you'll want a second double helping of it.
P.S. The very idea of SS theory is itself really just old wine, new bottles. It's just Say's Law repackaged where all saving is assumed to be future expenditure-by assuming a constant amount of output.
SS is just microeconomics once again-that is to say pre Keynesian, ergo, MM-as is true of all Monetarism-is just a counterrevolution to return us to the pre-Keynesian era. Like all counterrevolutions no new ideas emerge, merely, old ones are repackaged.
First and foremost, my assumption is that a Sumner economy is also one run on supply side principles. I've had a number of arguments at The Money Illusion on this point-that part of MM is a belief in fiscal austerity. I've spoken with commentators at MI that seem to think that you don't necessarily have to believe in fiscal austerity to be a MMer. Yet I believe my good friend Morgan Warstler and he's pretty sure that the real virtue of NGDPLT is to devastate the 'unprodutive government sector.'
I think that any flexibility is more illusionary than real. The idea of MM is to force us into a SS straitjacket. A Sumner economy-is a SS economy-is gong to be one with very low taxes for the rich, along with possibly higher taxes on the nonrich-Sumner calls for cutting the payroll tax for employers but not for employees
http://www.themoneyillusion.com/?paged=4
and many more low wage jobs. Sumner is usually contemptuous when liberals complain that though many jobs have been created in say Germany-or the U.S. during the Bush years-they are mostly low wage service sector jobs. He argues that there's no reason for concern as with the drop in wages prices will get so low that this will equal out for workers with the increase in corporate profits enabling more innovation leading to even lower prices, in a virtuous circle.
Such an economy will be demand constrained as even if employers increase profits through lower wages they sell less to these employees so it's at best a wash-in truth they may actually do worse.
Again, to cite my friend Morgan-I honestly do like him as he's honest unlike Sumner-inflation is expected to be lower under the NGDPLT regime than the current Taylor inflation fighting regime. Will I at least concede that Sumner's society will have lower unemployment? I'm skeptical of that as well. For one thing the Fed hasn't demonstrated any ability to control either inflation or NGDP.
http://www.levyinstitute.org/pubs/ppb15.pdf
For more on the weakness of the low wage model see here
http://diaryofarepublicanhater.blogspot.com/2013/11/michael-lind-on-mirage-of-sensible.html
To recap: I begin with the assumption that MM and supply side econ (SS) are a package deal. If you buy his argument that only monetary policy has any right to deal with demand policy all this leaves for fiscal policy is supply side policy which means low taxes on the rich higher on everyone else, lax regulation, and a low wage economy were workers need to be subsidized via credit and wage subsidies-as Sumner indeed calls for. If NGDPLT were ever tried I suspect that it would be as least as big a disaster as the first Monetarist experiment of the 80s was-possibly more.
The fiscal policy would be just old wine, new bottles-more Reaganism. If you love where we are now, then you'll want a second double helping of it.
P.S. The very idea of SS theory is itself really just old wine, new bottles. It's just Say's Law repackaged where all saving is assumed to be future expenditure-by assuming a constant amount of output.
SS is just microeconomics once again-that is to say pre Keynesian, ergo, MM-as is true of all Monetarism-is just a counterrevolution to return us to the pre-Keynesian era. Like all counterrevolutions no new ideas emerge, merely, old ones are repackaged.
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