A Plan to Save Democracy

Democratic governments have shown a propensity to spend and a reluctance to increase taxes. So,

1. How should they pay for growing expenditure?; and
2. Should it affect our relationship with government?

1) Modern Monetary Theory (MMT) says that governments should spend to benefit society and sees no spending constraints except inflation. That was great when there were downward pressures on inflation but was it ever realistic? We can create a better plan. I suggest a Real Monetary Theory (RMT) that says governments should invest to benefit society with a similar inflationary constraint and a requirement to earn returns above the level of inflation –-> profitable and purposeful non-inflationary investments. 2) Should governments see themselves as players rather than facilitators/regulators? Should they enter partnerships rather than providing grants? Should they create revenue rather than oligarchs? I argue that governments must create revenue to improve outcomes. In the limited time available, I propose; • A Wealth Creation Fund (to generate revenue beside the risk taking Sovereign Wealth Fund) • Default financial services that serve most of the population (that could generate $A20bn pa in Australia), • Home ownership solutions, • Improving capital allocation globally, • Freeing up risk capital to generate more wealth.
 
Find the Q&A here: Q&A on 'Challenging the Norm with Investments'