Yves here. Any post that starts out by making fun of Matt Yglesias already has something going for it. But one bit I quibble with. Kervick suggests that Social Security might be excluded from a Grand Bargain. Don’t get too optimistic. His post mentions that the negotiations now are moving into a two-phased process, with a “down payment” now and the deep cuts later. Peter Orszag, chief Administration balloon-floater, had proposed having Social Security cuts be the in the first phase, even though he acknowledged they had no long-term budgetary impact. The word I hear from people with their ear to the ground is that Social Security cuts are still planned for Phase 2. I’d hazard they are being downplayed now to lull opponents to sleep. Don’t be fooled.
By Dan Kervick, who does research in decision theory and analytic metaphysics. Cross posted from New Economic Perspectives
Matt Yglesias is now hawking an initial White House budget proposal that is apparently being negotiated by Tim Geithner. Predictably, the two-stage proposal involves entitlement “savings” and cuts in both stage one and stage two, and backs off a bit on higher tax rates on the rich. In exchange, the White House gets some more stimulus spending. Yglesias advises Republicans to tell Obama:
… he can have his stimulus and he can even have higher tax revenue if he really wants it, but that the price is giving up his obsession with higher rates. Is he more interested in soaking the rich or in creating jobs? I don’t think Obama says no to a deal like that, and if he does lots of sensible liberals (like this guy) will call him out on it. Then we can put this sorry episode behind us, proclaim the Grand Bargaining Era done for, and hopefully move on to other things.
It seems strange to endorse a grand bargain in order to move on and proclaim the Grand Bargaining Era over. Maybe next week Democrats should propose the elimination of the minimum wage so we can then declare an end to the Era of the Fight Over the Minimum Wage?
Yglesias follows up today with a few more cautionary words for “sensible liberals”, and issues some implicit admonishments to the left. He instructs us on the true purpose of taxation:
The reason a sensible person might want more revenue rather than less in a budget deal is that more revenue might allow you to minimize cuts in spending on worthwhile causes. But at the end of the day the budget of a sovereign state that borrows money in its own currency is all about spending levels. The proper goals of a budget negotiator are to maximize cuts to bad programs and minimize cuts to good ones. When higher taxes helps achieve the latter goal, that’s great. When it doesn’t, then who cares?
The fact is, though, that our national government doesn’t just borrow in its own currency – it issues that currency. And so its ability to spend is not constrained by its tax revenues. We don’t need to tax the the rich – or anyone else for that matter – in order to spend. We only need taxes as a way of managing excess demand and preserving a stable currency while achieving other public purposes.
What are some of those other public purposes? Well if, like me, you are a person who thinks severe income inequality is both socially and economically disadvantageous, and that the differences in political power that always accompany differences in wealth undermine democracy and distort the social choices made by our political system, then the attempt to achieve some degree of economic leveling through the tax system is a worthy goal in itself, apart from whatever additional demand management benefits you think might come from collecting more revenues. Bringing the plutocracy down out of the Olympian, thunderbolt-raining heights and forcing them to live on Earth with the rest of us is good national policy – even if it just means throwing some of their money in the ocean. However, it would be even better to offset any demand drains created by increased taxes by more aggressive spending.
So here’s my proposal. This is what I think Americans should be calling for our government to do:
1. Allow the Bush tax cuts to expire but then enact a full middle class cut tax for folks under $250 K in order to offset entirely the impact of the expiration on that group of Americans. Also extend the payroll tax holiday.
2. Repeal of the Budget Control Act of 2011 – the “fiscal cliff” act. Just cancel it.
3. Dare Republicans not to pass this tax cut proposal, and thereby to declare themselves the eternal enemy of the American middle class.
4. Expand spending dramatically on efforts to rebuild our material and human infrastructure, extend and subsidize educational opportunities, and engage the citizenry – especially young people – in an effort to save our planet.
5. Propose NOTHING else – no additional cuts, no additional revenues. Walk away completely from budgetary grand bargaineering.
6. Continue to run a healthy-sized deficit, one even larger than the present one. That is the stimulus we need.
7. Stop lying to the American people about the nature of the US public debt and US government liabilities. Let them know that the US government can always pay its debts and operates under no solvency constraint.
8. Make it clear to the US public that a bond vigilante attack can only occur if the Fed permits and encourages it; and that the latter can only occur if the Congress permits the Fed to take that step. The debt crisis is The Big Lie of our time.
9. Pack folks like Bowles, Simpson, Johnson, Peterson, Rogoff and Reinart in a box and ship them to northern Europe, where all of them can, to their hearts’ content, hawk their socially paralyzing budgetary gloom and doom to an audience of priggish budget moralists who are apparently fond of intentionally destroying economies, creating voluntary recessions and sustained stagnation, inflicting pain for pain’s sake and throwing their unemployed young people out on the street to be devoured. (OK, this one is just a fantasy.)
Once these things are done, the American public will can finally wake up and understand the self-determining power it has in its hands to shape its future. Then we can declare an end not only to the Era of Grand Bargaining but the Era of Having Our Heads Up Our Asses.
My son is graduating from college in May, and I think frequently these days about the sorry world we are depositing on his generation’s doorstep. Most mainstream pundits, and the forces of austerity and public debt phobia, would have us believe that the problem we are creating for my son’s generation is a mountain of burdensome public debt. But that is simply false. Public debts are also public assets, and future generations will always be able to consume, in their own time, everything they can produce at that time. All this budget fussiness is a sideshow. It makes no sense to be trying to micromanage public expenditures for 20 and 30 years down the road. We need to go big on national investment projects, employ all our people and grow our economy. The budget will then take care of itself.
But here is my fear about the future: When our children and grandchildren look back to assess our performance during this era, they will bitterly note that during a time when we should have been aggressively expanding public investment to employ all of our many unemployed people, launch bold projects for national renewal and progressive development, save our planet and light a rocket under our massively underutilized productive capacity to build a prosperous future for our progeny, we instead chose to get bogged down in ridiculous and priggish bean-counting and budgetary hand-wringing. Right now, it looks like we will be known as the generation that chose stagnation, blinkered bookkeeping and fiscal tunnel vision over dynamic national progress – a weak, cowardly and unimaginative people – the Lamest Generation.
For me, a bold vision of nation progress and prosperity requires a new, aggressive commitment to social and economic equality. I believe democracy is an excellent thing and the only long-term political solution to social despair, stagnation and unfreedom; and that genuine political democracy requires a significant degree of economic democracy. There is no realistic way of moving toward these ideals in a reasonable time frame that does not require taking active steps to re-work the distribution of wealth and income in our society. I would like to see progressive-thinking Americans acknowledge these goals frankly, without embarrassment, and get to work trying to accomplish them.
Think of the anti-feudal land redistribution measures of the past as a model. The purpose of such measures certainly wasn’t to balance public budgets. It was to change the social order and build a more equal and prosperous future for all. That’s where we are now in our new struggle against the staggering inequality, exploitation, economic oppression and social dysfunction we face as we move into 2013. I don’t want some sort of “bargain” with plutocrats to preserve the neo-feudal order that has been delivered by four decades of neoliberalism. We don’t need a miserable bargain in which we sign off on plutocracy in exchange only for a few bits of additional spending that the plutocrats allow us to undertake so we might employ just a few more people out of the armies of humanity that they have driven into involuntary unemployment, and at the same miserable wages the rest of the folks at the bottom receive. And I certainly don’t want that bargain if we have to trade away even more of the social benefits that have already been eroding for decades.
I want to fight the plutocrats and lick them – not deal with them. After decades of having their standards of living decreased, and seeing a once-vibrant democratic political order replaced by a neo-feudal hierarchy that has frozen us all into socially immobile castes and political subordination, the US middle class, working people and the poor need to join forces to first draw a line in the sand on further cuts of any kind, and then get active in reclaiming a society based on shared prosperity, democratic citizenship and an egalitarian social contract.
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You might as well add repeal of the income and payroll tax on anyone earning less than $100,000, a limit on the annual private cost of higher education to an amount which an average student can expect to earn during summer vacation, Medicare for the entire population, regardless of age, stiff tariffs on manufactured goods of any kind imported from anywhere, a fifty-seventy percent tax rate on incomes above $1 million, limiting the total assets of any bank to $100 million, a transaction tax of 2% on financial derivatives…….
If we’re doing fantasy here, let’s do FANTASY!
Effortful. :).
jake, right: “FIRST ask for what you want, THEN negotiate.” Are we chumps?
The fact is, though, that our national government doesn’t just borrow in its own currency – it issues that currency. And so its ability to spend is not constrained by its tax revenues. We don’t need to tax the the rich – or anyone else for that matter – in order to spend. We only need taxes as a way of managing excess demand and preserving a stable currency while achieving other public purposes.
This is the most childish and irrspossible undestanding of economics and government I have ever seen. This is the fundemental problem with you collectivists: you live in a dream world completely detached from reality.
If you think that government can just manifature wealth by printing money and then borrowing it, or that the function of taxation is to maintain a “Stable currencey” you literally do not know how the world works.
Wait until the Marxist Leninists in the democrat party destroy the reserve status of the Dollar.
What is really comic is that you hqve not the faintest clue what the Obama’s Marxist puppet masters are up too.
This blog has descened to a point where it lacks even a semblance of seriousness and probity. What utter nonsense.
America is going broke. The illusions of wealth you see are around you are maintained merely by debt. Expanding “public employed” destroys wealth; it most certainly does not destroy it. This again is pure communism.
The modern collectivist State is alway a drain on wealth. Always. It is never productive. Never. It was not during the New Deal and it is not now. To claim otherwise is to lie.
To assert that “bold vision of nation progress and prosperity requires a new, aggressive commitment to social and economic equality” is to be completely at odds with reality; it is pure Communist hogwash. This leads to a totaitarin state. “Economic equality” means stealing from the productive and giving it to the productive. Social :eaulity means the abadanoment of all moral, intellectual and creative standards. You talkn like if it 1919. It is not. We know whre this leads: The gulag and disasters like “The great Leap Forward”. What you propose is a reaction back to the distant past. Civilization is in fact based on just the opposite principle: acheivement and qualities lead to distinction.
Our decendants will indeed look back with us in shame for we have tossed aside our great legacy for some Marxist and Peronist BS that was proved wrong years ago in one of the bloodiest centuries of human history.
(And as an aside, yes minimum wage should be done away with. It is not government’s business to regulate such things; it is the marketplace that should determine this. No one deserves 8 bugs an hour for flipping burgers. People need to be paid what they are worth in the market place, not what their votes are worth to a politician. The great wealth of the of this nation was built on these simple truths. We have just about destroyed it.)
As for the “lamest generation”, well, so long as enough of you run around thinking that pseudo-intellectual gobbledygook such as “decision theory and analytic metaphysics” requires even a nanosecond of the attention of th good the busy and the decent, then yes you will be accorded that title. “Analytic Metaphysics”? It anything shows how effete and decedanet monder philosphy is it is the sopistry around this movement, a movement for all I can tell was created to keep a pack of Boomer academics employed by thowing up a cloud of obscure mumbo jumbo. History will hold it in contempt as it will the traitors of the American neo-communist movement.
The ghost of Friedrich Hayek appears on Naked Capitalism. Minimum wage and the progressive income tax lead to the gulag. 68 years and still waiting.
Hearst and Graham’s crusade is with us still!
Skippy… 3 wks turned into 3 months and not a set empty…
Not nearly as moderate as Hayek was.
This one has gone full Bircher. The ghost of card carrying Commie Dwight D. Eisenhower is contaminating his precious bodily fluids.
Well known “Marxist” puppet masters like Tim Geithner, Erskine Bowles, Allan Simpson, Lloyd Blankfein, Jamie Dimon, and David Cote are secretly plotting to confiscate and redistribute the wealth of hard-working ‘Merikans like the local business parasite that collects a check while sitting on his ass as his workers do the actual work.
@whatfoolishness
As an actual Marxist (as opposed to the fantasy ones you’ve concocted in your mind), let me try to clue you in. First of all, you know absolutely nothing about Marxism. Zero. Zilch. Nada. You’re a total ignoramus on the subject.
Having an understanding of Marxism requires serious study. Serious study involves doing more than listening to Rush Limbaugh while you’re on the toilet stuffing your face with Ding Dongs. It means actually making an effort to study difficult material. Some libertarians, the serious ones, actually have made such efforts, even if the results are wanting. (See, for example, the erronious work of Bohm-Bawerk and his attempt to prove the inconsistency of Marx’s labor theor of value.)
Instead of making any kind of contribution, you simply come on here and give the intellectual equivalent of a couple grunts and beer farts. “Herp Derp Marxist Commie Obama Totalitarian Traitor!” I mean really, you didn’t even present the bare outlines of an argument. And you expect us to take you seriously?
By the way, the vast majority of people posting on Naked Capitalism are not Marxists, as you would know if you had the foggiest clue about what Marxism is. As a Marxist, I have plenty of disagreements, both practical and theoretical, with the kind of left-Keynesian approach that most on NC hold to. Though I do think we share some common values, it is in no way accurate to conflate the two different approaches.
There are libertarians who post here occassionally and, though they’re wrong, they at least try to focus on substance. I for one welcome such libertarians.
But coming here and herp derping about Teh Commies! and their Evil Minimum Wage Plot doesn’t really add a whole lot.
Heck Yeah!
Nice parody of idiotic Propertarian “thinking.” I expect to see your work in the Onion one of these days.
The folk’s at the Onion only accept satirists who can spell!
I thought this comment was a parody, at first. One question W.Foolishness, do you realize that banks create money out of thin air, and that bank money competes with and overwhelms your hard money fantasy, driving speculation in asset values, creating bubbles and crashes, whether government spends (or borrows and spends)or not? Do you think the Fed can save you from the inflationary future of which you appear to be so afraid? I guess that’s two questions, isn’t it.
do you realize that banks create money out of thin air, and that bank money competes with and overwhelms your hard money fantasy, driving speculation in asset values, creating bubbles and crashes, whether government spends (or borrows and spends)or not? @jake chase
This point applies to Dan’s MMT conception as well.
But it’s not accurate to say that banks create money out of thin air. They create it out of the ability to convey reserves, central bank money, to the banks of our payees. But because daily reserve conveyance is multidirectional among banks, and so much of it is intra-insitutional — because banking is concentrated and because the largest banks maintain accounts with one another — a small reserve can support a vast amount of commercial bank money.
So commercial banks do create the overwhelming preponderance of our money. But not out of thin air, or anything like it. USG, strictly speaking, creates and earns seigniorage only on the coins, some mere hundreds of millions of dollars per year.
Yes, I just want to second that point. The money banks create “out of thin air” when they create a deposit account for a borrower consists of bank liabilities: claims against their reserves which are a portion of their assets. When someone uses the balance in their account to make a payment to anyone who does not have an account at that bank, the payment ultimately triggers a transfer from the bank’s reserve account at the Fed to the account of the payee’s account.
Well, I’m relieved to know bank money isn’t a problem. Perhaps you can also explain why speculation isn’t a problem? I suppose when the Fed expands its balance sheet by twenty trillion to support fictitious bank assets that’s okay too? Don’t get too caught up in the banking mathematics. Figures don’t lie but liars figure. For all practical purposes it is thin air, and you and I and W.Foolishness aren’t getting any of it.
Yes, so long as one branch of the government, the Fed’s Board of Governors, is permitted to create US government dollars to purchase private sector financial assets, we should be asking why Congress doesn’t itself create dollars directly to make other kinds of purchases – for example the purchase of labor services from unemployed Americans who want to work.
“we should be asking why Congress doesn’t itself create dollars directly to make other kinds of purchases – for example the purchase of labor services from unemployed Americans who want to work.”
Yes, but it’s just as likely to use the dollars to create giant spy centers and a personal drone to spy on everyone. The problem of unaccountable and unrepresentative government has to be solved first.
EconCCX:But it’s not accurate to say that banks create money out of thin air.
No, it is entirely, unequivocally, unambiguously, precisely correct to say this. Banks create money “out of thin air”. That is the only way any money has ever been, will ever be, can ever be created.
Minsky: “Anybody can create money. The problem is getting someone to accept it.”
USG, strictly speaking, creates and earns seigniorage only on the coins, some mere hundreds of millions of dollars per year. Again, this is wrong. The entire value of a dollar or a government bond is “seignorage”, which is why it is basically a useless word, especially after the abandonment of commodity standards. One which has been misappropriated by moderns to spout nonsense.
As I’ve said before, you are pro-MMT. We already have the monetary system you propose. You just don’t understand it correctly, because you are doing it through the lens of and with the terminology of modern mainstream garbage-economics, which is not very old either. Look at older books. Dudley Dillard’s book on Keynes or Abba Lerner’s books are superb. They’re basically pure MMT, just update the language and the facts here and there.
Both you and Dan, I am sorry to say, are unknowingly taking steps backwards toward commodity money thinking.
The basic reason why bank-money is accepted is not its backing by bank reserves – but the fact that the government accepts bank-money from households and firms, but not banks, as settlement for taxes and other payments to the government. This implies the other powers of banks, implies that they must be supplied reserves on demand, and the value of bank money, and is an enormous privilege given to banks, making them a public-private partnership which can easily destroy economies if not regulated.
Dan:The custom of referring to that negative balance sheet figure as a government “liability” is misleading, since if you possess a dollar in circulation the government doesn’t still owe you anything. The Fed simply created that dollar and spent it into existence.
Dan, this is utterly wrong, is not MMT and that phrase is not in the least misleading and is entirely correct and necessary. Particularly “if you possess a dollar in circulation the government doesn’t still owe you anything” is very wrong. If the government did not owe dollar-holders anything, nobody would hold dollars. MMT academics have, very gently, criticized you for saying this kind of stuff. Yes, the Fed created the dollar (but the Treasury does the real dollar creation) and spent it into existence. NO, that does not mean the dollar-holder is not owed anything. The dollar holder is owed whatever the government is selling for a dollar.
Calcagus, if you think the dollar in your wallet is a genuine liability of the government, signifying that it owes you something, then I think the burden is on you to specify the good or service of positive value that the government owes you by virtue of your possession of the dollar.
The government can create demand for its dollars by demanding them for tax payment, but these tax obligations are themselves created by legislative fiat. The taxation-driven demand for some arbitrary entity is a mechanism that can be effective even if those entities are in no sense IOUs.
It’s like benchpressing in the gym.
If you’re a normal person, you’ve got two hundred pounds of idiocy on each end of the bar and you’re trying to keep it off your throat.
Each day you see the faces of normal people — just yesterday in fact I bought a scone and a cafe au lait from a normal person behind a cash register in a breakfast bistro on Third Avenue in the 40s.
She look harried and rushed and frazzled — she must have been 25 years old going on 55. There was a line and it was rush hour. The guy who made the Cafe Au Lait, he projected a sane aura. He handed it to me over the counter, in a gentlemanly gesture. He’ll be dead in 15 years even though he’s only 25,
Two hundred pounds on each side of the bar and they’re working there with the bar at their throats.
dozens of times a day. The faces with the bars at their throats. Each end of the bar, it’s 200 pounds.
How to lighten it? Each century goes forward and backward. Ask the trees and watch out for the machines. I’m sounding like kevinearick at this point.
People have always had this problem, except during about thirty years when anybody with a job could buy anything he wanted on credit. Of course the credit was a bit usurious, but they could get it. Until 2005 they could walk away from it in bankruptcy (unless it was student debt). This was called prosperity. It couldn’t go on forever. We could solve the problem with a one time bailout of the entire population. Let them pay off the debt and start over. This would even benefit business but business is too myopic to understand that.
Jake, “too myopic” – no, too greedy. They WILL not take a loss voluntarily. OK…
Pure genius.
“America is going broke. The illusions of wealth you see are around you are maintained merely by debt. Expanding “public employed” destroys wealth; it most certainly does not destroy it. This again is pure communism.”
It’s very obvious that we are in the company of Brillance and Truth. Please preach to us what the marxists are up to.
I would point out that there is a major contradiction in your statement above. I can only surmise that contrdiction equals “communism” in your Truth. But, again, I am left with another question- Are you a secret communist agent spreading contridction?
Very tricky.
“We only need taxes as a way of managing excess demand and preserving a stable currency while achieving other public purposes.”
———-
whatfoolishness, at least you call attention to the disinformation.
Let’s remove the MASKS. U.S. “Taxes” are TRIBUTE paid to the Empire. Let’s stop it right now.
Not sure where you are coming from, LBR. “We only need taxes as a way of managing excess demand and preserving a stable currency while achieving other public purposes.” This is correct, at least per MMT. Purchase of US debt by foreign governments is more analogous to empire’s tribute–per Graeber.
Lloyd? Loyd, honey, is that you?
Well, at least you’ve taken a suitable handle ….
That’s Sir Loyd to you;)
Oh yeah? Well, that’s not what Jamie told me to say ..
“Wait until the Marxist Leninists in the democrat party destroy the reserve status of the Dollar.”
This is the fundemental problem with you capitalists: you live in a dream world completely detached from reality. I mean Democratic party as Marxist Leninists, that’s pretty detached from reality.
This website is really hard to figure out. Sometimes people from the right come here and say things that requires thought. Sometimes people post and aren’t being serious, they’re doing parodies of the nutty right wing. Then there are people who just talk nonsnese. I am an American and I don’t always get irony. If this fool is serious there’s no point in really responding to any of his actual points, or whatever you want to call them. Glenn Beck’s B side crazy comments or whatever. A lot of the nuts on the right so resemble the John Birch Society, circa 1960, so you can never tell.
Obama, a MARXIST! My god, I hope this person is joking.
“‘Economic equality’” means stealing from the productive and giving it to the productive.”
Assuming the 2nd productive is a typo, it’s probably not a parody, and if not, this is as revealing as calling center right Obama a Marxist. Readers here and elsewhere are aware of the distortion that results in banksters and Wall Streeters devouring the productive as they consume an ever larger share of wealth. Instead of taking from these “productive” members of society, the Marxist Obama took from the poor to pay the bloated rich.
Still, it’s nice to see comments like this as a reminder that this expression of bile reflects the regretable understanding of many fellow citizens. Most here would disagree, but such expressions tend to justify Jacques Barzun’s lament that teaching reading universally undermines the public’s respect for education.
Perspective. It’s relative.
I am mid-fifties and have worked labor intensive jobs the majority of my life. Construction worker. My best year was 52k in the early nineties. I worked 7days a week for nine months in 1991, 10-18hr shifts. I mention this so it is understood that overtime played a large part in this highlight year.
I agree with re-building our infrastructure. Where I disagree is that deficits don’t matter. The fact that the government can print enough money to pay off its debt at any moment (while true) does not come without consequences.
I don’t want to get off course here. My point is that as a percentage of income, people at 40k and below are and have been paying a larger percentage of their total income for necessities (food, milk, gas) which have had their prices inflated by the madness we call an economy.
I do believe that anyone serious about correcting America’s course would support:
1. Repeal all of the Bush tax cuts.
2. Bring our military home. (Not anudda mudda fuppin bullet leaves our shores)
3. Use the savings from #2 to upgrade our power system.
4. Massive low/no cost educational opportunities. (No loans, but credits which are repayed by doing government service. (From picking up trash along the highway, to clerking at a DMV.)
5. No cost publicly available necessary medical care/treatment. (Medical school graduates who have taken advantage of ed programs in #4 will help offset costs to this program over time.)
My reaction to this initially was to a misconception I read frequently. I paid $4.35 for a gallon of milk yesterday. This has more than doubled while wages in my fields are still at 1991 levels, depending on the state and the rest are lower. So as a percentage of my income, just to survive, my group and below have already been “taxed” to survive.
Losing a little more income at this level is not going to matter to me. I will do what I have always done which is to adjust my diet and activities to make it through the month. Just the fact that I use “month” instead of “week” is telling, isn’t it?
There must always be a social safety net, a minimum standard of living no matter how undeserved. I do not believe “running *them over in the street” is a viable option and we are going to pay for *them anyway.
* The term “Them” as used in this response refers solely to the people on the government dole. Disabled, elderly, lazy, black, white, asian…don’t matter. We would have the cleanest neighborhoods in the world if every able check-getter was tasked with picking up trash and might instill some pride along the way.
I am also very concerned about the rich getting richer. It is not a problem when they play by the same rules as the rest of us. (Who doesn’t believe Corzine should be in jail?) It is also mostly meaningless to me their bitching about removing some of their wealth. They’re greedy bastards, they’ll figure out a way to make more. It is what they do.
TPTB has a sense of humor. The “Fiscal Cliff” debate currently raging is completely unrelated to the fiscal cliff we actually face.
p.s. Appreciate you Yves! I come here for a literary meal not a snack. :)
The fact that the government can print enough money to pay off its debt at any moment (while true) does not come without consequences.
While not true. The government is credited a few cents for each Reserve Note it prints, enough to fund the Bureau of Engraving and Printing. And FedBank’s vaunted repatriation of its profits to the Treasury is a rebate of interest the USG has already paid that year on those T-Bills the private FedBank owns. Some tens of billions rebated per year, compared to annual USG deficits in the $1T range. USG cannot print its funding except as it already does, through debt. And that debt fuels plutonomy, adding to commercial bank reserves as an institutionalized daily bailout.
The Federal Reserve is itself part of the government. Those notes it prints and reserve account balances it creates are liabilities of the United States government. When the Fed spends – by buying a financial asset from someone, or by crediting an interest payment to a reserve account – it does not need to acquire those financial assets from anywhere first. The problem is that that raw creation of base monetary financial assets is restricted right now to the financial sector.
We have a system right now, created by Congress, in which the Treasury generally only creates treasuries, which are interest bearing and take time to reach maturity, rather than the fully mature, non-interest bearing dollar notes the Fed creates. The Treasury then exchanges those treasuries with the private sector for base money liabilities which have been created by the Fed. The Fed buys a portion of the treasuries back from the private sector. But there are many other ways in which we could organize these operations. Instead of a system in which the Fed spends only into the financial sector, we could allow it to spend directly into Treasury accounts – perhaps start small by authorizing the Fed to pay interest on Treasury balances.
But there is also the proof platinum coinage option, which Lambert knows about.
If I’m understanding this correctly, I think you’ve hit the nail on the head with this: “The problem is that that raw creation of base monetary financial assets is restricted right now to the financial sector.”
The US goverment can print as much $$$ as it wants to pay for whatever it wants however simply flooding the economy with money isn’t going to solve any problems. To have a properly functioning economy there has to be some reasonable correllation between the money supply and the total goods and services being produced in that economy. The correlation became unreasonable quite some time ago and right now it is being made worse with the ZIRP combined with printing money only for the financial sector, designed to boost the price of flailing assets while keeping inflation down, which in turn causes wages to stagnate.
Wealth is created by labor, not by some trader deciding to take out a credit default swap. If a tree falls in the forest and noone is there to see it, from an economic standpoint it is worthless. If someone picks it up and makes lumber from it, with more labor you can build a house. Only at the point can a banker sell a mortgage.
Right now banks are still sitting on billions of non-performing loans which won’t perform until someone is able to afford them. If you already can’t make the payments on your mortgage from the wages you currently earn, a ZIRP isn’t going to help you. Funneling money to the banks so they stay afloat while waiting for asset prices to rise isn’t going to help you either.
However, if wages actually kept up with the increasing cost of living and you start earning more at your job, then you can pay back your mortgage and those bad assets start to become a safer investment again. Yes, this would cause inflation, but for those who owe money, this isn’t a bad thing at all. It will take a little skin back from the bankers which is why they are fighting it tooth and nail.
They would like to continue fighting to keep all that money they have that was created out of thin air and is not well correlated to any underlying goods and services produced by people who actually work for a living.
I believe it was here that I read that the Fed can and has in the past made loans directly to the sectors that need it rather than funneling money through the biggest banks and hoping for the best. Time to start doing that again, with conditions attached to the loans so that they benefit morte than just a select few. The government has stipulated in the past that only those who pay a certain wage level can receive government contracts. Couldn’t the Fed do something similar with direct loans? Say to a massive infrastructure project?
Yes, I think we are on the same page. A dollar confers purchasing power. The government can create dollars and spend them into the economy, and it can also extract dollars from the economy via taxation. Ideally, it seems to me, it should spend them into the economy in exchange for some kind of productive work, something that is generating additional value. And its net spending should stimulate more productive activity than it inhibits.
Right now, the chief method of spending new net dollars into the economy requires a lot of central bank asset purchases in the financial sector, where those dollars have tended to pile up, doing little work for us, but giving finance sector players abundant opportunities to devise new clever ways of extracting purchasing power from the dollar flows.
The Federal Reserve is itself part of the government. Those notes it prints and reserve account balances it creates are liabilities of the United States government. @Dan Kervick
But here’s the thing:. That -$1 balance on the Fed’s balance sheet is a bookkeeping convention created only to communicate Fed operations to the public in an accounting language people understand, because it is the language ordinary firms speak. But the Fed did not have to “get” that dollar from anywhere in order to spend it. The custom of referring to that negative balance sheet figure as a government “liability” is misleading, since if you possess a dollar in circulation the government doesn’t still owe you anything. The Fed simply created that dollar and spent it into existence. @Dan in October
Dan, the term “the Fed” reeks of propaganda. Are you referring to the Board of Governors (a govt. institution implementing monetary policy) or the privately owned Reserve Banks? (Dividends, shareholders, liquidation provisions.) Do you agree that my local bank’s reserve account of, say, $14B, is a liability of its district’s reserve bank? If so, thence the ability to convert some of those liabilities to hand-to-hand Reserve Notes at my bank’s request.
Are you thinking this shows up somewhere on USG’s balance sheet? Through the Treasury? The Board of Governors?
I’ll agree the “government” part is misleading, but you had “liability” in the scare quotes.
EconCXX, I’m saying that liabilities of Federal Reserve Banks (not the commercial banks in the Federal Reserve system) in the form of either paper Federal Reserve notes or electronic balances are, under law, obligations of the US government. Any entity that is entitled to issue obligations of the US government is clearly acting as an agent of that government. One needs to look at the Fed’s balance sheet and the Treasury balance sheet combined to get a full picture of the financial assets and liabilities of the US government.
Dan, you clearly understand this stuff but you are not explaining in a way ordinary non experts can understand it. Communication is a big problem. You have a mountain of propaganda to climb and you have to climb faster.
Gotta agree with Jake, on this one .. :)
Fair enough, but in this case I was trying to talk a language that I think EconCCX understands.
Basically, I was just saying here that the Fed was created by Congress and is authorized to issue US government IOUs. Officially, that’s all a dollar is. If an agency has been created by Congress, it’s leadership is appointed by the government, and authorized to create and issue IOUs of the government, then I would say it is part of the government.
EconCXX, I’m saying that liabilities of Federal Reserve Banks (not the commercial banks in the Federal Reserve system) in the form of either paper Federal Reserve notes or electronic balances are, under law, obligations of the US government. Any entity that is entitled to issue obligations of the US government is clearly acting as an agent of that government. @Dan
USG’s obligation to honor these notes and balances, to the extent of FedBank’s “collateral” — the trillions in USG debt the Reserve Banks own — is not in dispute. But MMTers claim the USG has the ability to issue these Reserves, to fund itself by them.
How do you propose to persuade a privately-owned bank to honor USG checks without recompense? The USG could easily mint and deposit a coin; that at least would recognize the corporate relationship you’re attempting to elide.
The ultimate problem is leverage. For any X the USG or Reserve Bank creates, private financial institutions can create 50X the money, and 100X the compounding debt. But MMTers don’t call for a restoration of money sovereignty through the Soddy proposal of a 100% reserve requirement. They call for USG to indebt itself ever the more to private financial institutions. Claim that the government’s deficits are the private sector’s surpluses. Seek to double down on the existing engineering of money, under which debt issuance, money-printing, and FDIC “backstopping” all put the nonbank sector — USG, states, institutions and individuals — in deeper bondage to the financial sector.
Econ, the only problem with your 100% Reserve idea is the enormous depression it would create. They would have to change the name of the old Great Depression. Maybe call it the Temporary Relapse.
The same way they are induced to honor base money now. I don’t understand the issue.
One of the ways a national government makes sure that its base monetary liabilities are honored is by imposing tax liabilities that can only be paid via the return of that government money.
I think you are overestimating the role of the private market in our banking system. The whole thing is a very hierarchical public-private system with the USG sitting at the top.
Econ, the only problem with your 100% Reserve idea is the enormous depression it would create @Jake
It’s Soddy’s and AMI’s proposal, and I don’t support it at all. I support service backed-and-denominated currencies such as digital bridge and train tokens and Forever Stamps that circulate as money. Money that doesn’t depend on scarcity but on utility, where the debt that drives it is a debt in kind, and where the institutions that issue it must deliver essential services and industrial employment in order to give it value.
Imagine a service-backed Drachma where exchangeable and checkable tokens that allow folks to cross a bridge are thereby exchanged as parcels of value, enabling Greeks to build Greece for themselves rather than compete globally to earn a medium of exchange from afar.
Dan Kervick: “One of the ways a national government makes sure that its base monetary liabilities are honored is by imposing tax liabilities that can only be paid via the return of that government money.”
Prof. Kervick, your “Globalist” .01%DNA+.99%Agency Reich Fealty is showing. Your necessity to speak of “honoring” tax “liabilities” without revealing either the Counterparty Cartel to which we are HELD “liable” or the “legal” means by by which We are HELD “liable”–i.e. through deceit and treason. Your concern for our “liabilities” to the “International” Cartel is almost touching, Prof. Kervick. O, say, what would happen if We started printing our own debt-free currency as is our DUTY by our Constitution, and EXTRACTED ourselves from “ONEROUS DEBT” by default and our Declaration of Independence from the Infernal TYRANNY of the “Central Bank of Central Bankers”–an Absolutely Despotic Empire based in a Foreign Land–and its Coven of Absolute Despots who by their *fiat* place themselves ABOVE Our” Law of the Land” within Our Land? Pray, tell us this plainly, Prof. Kervick, but NOT as to your captive students.
“One needs to look at the Fed’s balance sheet and the Treasury balance sheet combined to get a full picture of the financial assets and liabilities of the US government.” — “Liabilities” made by hook and crook: We the People the Nation can change the law at any time, nullifying this spurious “contract.”
“The Federal Reserve is itself part of the government. Those notes it prints and reserve account balances it creates are liabilities of the United States government. When the Fed spends – by buying a financial asset from someone, or by crediting an interest payment to a reserve account – it does not need to acquire those financial assets from anywhere first. The problem is that that raw creation of base monetary financial assets is restricted right now to the financial sector.” — TELL it to the troops, Prof. Kervick. They are used to eating CC Cat Food on a Shingle, but We the People with Free Minds are not. For writing this Master Class Party Line you should bow your head in shame. This is canned crap from Elite Propaganda Central. WHO SENT YOU?
“It will take a long time to fight back.” Go ahead, catapult the Reich meme, to have us feel TINA to our long-term slave status that your handlers deem it “meet and right” so to be.
Prof. Kervick, your Mind of the Master Class thesis is so canned, with so thin a shell of “respectability,” so far from truth in substance, that it is an affront to LIVING Humankind. But, well, it is CERTAIN that your Academic Honors and even Tenure itself depend upon your utmost subservience to the Will of your Gods: The .01%DNA+.99%Agency constituting the Fourth Reich. “NICE JOB!”
Kervick’s “soft-shoe shuffle” for the Reich is waaaaay old. “Get the hook!”
Why would a 100% reserve requirement cause a depression?
The actual implementation of this new paradigm, is described in the kucinich bill.Hr2990/last congress
It is not as if anyone is suggesting this happen overnight, and with a stroke of a pen.
banks would just become the domain of bankers. they would still continue to do regular banking,get money at cheap rates,lend it out,make a profit.
yes, this diminished margin will likely curtail much of the money put into wild speculation and manipulation of markets.but hey!that would be good.the free market system will still provide the incentive that people will pool their monies,and create banks,lend that money, which is still allowed to grow,but with dollars of the us treasury in a full reserve system..a safer system.
something like this might turn banking into an honest profession.
and Obviously, I know”this can’t work” that is not how things are done….this will derail the whole train….and all that….. I say GOOD! I haven’t heard any reasons why this won’t work, that are just purely reasoned.
people, the system is dying.it is rotting out from the inside.All we need from the old systems is everything that works, and to learn from everything that didn’t.My paycheck doesn’t have anything to do with saving this system.I say It is time for a change. And aside from the top of the money chain, these new bill proposes something that would radically deny the perverse incentive structure that is wall st. Let people use real money for a change… and let that real money be made up…..just like it is today, but in the name of the people
USG’s obligation to honor these notes and balances, to the extent of FedBank’s “collateral” — the trillions in USG debt the Reserve Banks own — is not in dispute.
The USG’s obligation & ability to honor these notes and balances has nothing to do with the Fed’s “collateral”, the gov debt it owns. Fed ownership of T-bonds is close to meaningless – it’s one pocket of the government pretending to owe another pocket, as Abba Lerner said. The cult of the independent central bank is a very recent, very crazy fairy tale. Everytime anybody uses a note or balance to pay the federal government, the USG is honoring them. The real world extensiveness and power of USG operations is what gives them value. Nothing else. Not some complicated monetary BS.
But MMTers claim the USG has the ability to issue these Reserves, to fund itself by them. Because the USG does issue these reserves, all the time. Created out of thin air. Or if you want, it creates bonds out of thin air. Same thing.
How do you propose to persuade a privately-owned bank to honor USG checks without recompense?
Huh????? The USG check IS the recompense. USG checks are hotly sought after items! A USG check for 1 dollar = 1 dollar bill = $1 of bank reserves.
The ultimate problem is leverage. For any X the USG or Reserve Bank creates, private financial institutions can create 50X the money, and 100X the compounding debt.
Yeah, sure. But it doesn’t happen overnight. It took a lot of hard work and destructive stupidity to take the 1945 USA’s stable, well-running, well-designed monetary system & recreate the 1929 crash & Great Depression in 2008. A lot of trash from academia. Massive brainwashing to destroy ordinary peoples’ hard-won economic & financial knowledge.
But MMTers don’t call for a restoration of money sovereignty through the Soddy proposal of a 100% reserve requirement.
MMTers don’t call for restoration of money sovereignty – because you can’t restore something you already have. No government in the history of the world has been more “monetarily sovereign” than the USA now.
They call for USG to indebt itself ever the more to private financial institutions. That’s what monetary sovereignty IS – a government freely able to indebt itself to the private sector, and the private sector happy to be its creditor. MMTers are in the forefront of calling for stringent regulation of the institutions handling this government debt – which are financial institutions by definition. Some, like Bill Mitchell, call for nationalization of all banks. All are for definancialization of the economy, and far tighter regulation.
*************
Dan:I think you [EconCCX] are overestimating the role of the private market in our banking system. The whole thing is a very hierarchical public-private system with the USG sitting at the top.
Absolutely right, Dan. Expanding on this: And why does the USG sit at the top? Because of its enormous fiscal power. Its spending & taxing, its buying and selling. That’s why the question is whether a US bank or US money market dollar trades at par with the USG dollar, not vice versa. In the crisis there was one MM fund that traded at 97 cents on the dollar. When USG-issued dollars trade at a discount to private bank dollars, then the banks are on top – and that could only derive from banks’ greater FISCAL power. Otherwise, not.
Fed ownership of T-bonds is close to meaningless – it’s one pocket of the government pretending to owe another pocket, as Abba Lerner said.
Yes, I think this is absolutely correct. And the same is true of dollars, which are the same thing as T-bonds. They are government bonds that do not bear interest and are fully mature at issue. Even if you think the government’s dollar is in some meaningful sense a government IOU, it makes no sense to think of a dollar possessed by the government as a genuine asset of the government. If I possess an IOU that I have written to myself, I haven’t acquired any wealth.
There are no private banks. They were abolished with the Federal Reserve Act of 1913 and are now government-sponsored enterprises (GSE’s). Our corrupt politicians only treat them as private so they can rack up wealth at public expense without public responsibilities.
“USG cannot print its funding except as it already does, through debt.”-EconCCX
Treasury can have the mint create platinum proof coins of any arbitrary amount already, so that is not technically true.
And then there is the fact that the current mechanics of the Fed/Treasury system can be adjusted at any time by act of Congress. That the USG chooses not to fund itself except through debt should maybe tell us something about that debt (and the people who are buying it).
This is my point. Congress can abolish whatever institution that would/could get in the way of them printing dollar bills and pay off this debt. That they have abdicated this function is a choice..of the rothschilds.
Treasury can have the mint create platinum proof coins of any arbitrary amount already, so that is not technically true. @diptherio
Yep, that’s why I stipulated “print” rather than “mint.” In October, I walked through the catastrophic, plutonomic consequence of implementing the proof-platinum coin mechanism to pay off bondholders. Always interested in MMTers’ depiction of how they think this would play out. Not through bumper-sticker incantations, but step by step.
And then there is the fact that the current mechanics of the Fed/Treasury system can be adjusted at any time by act of Congress. –diptherio
The provisions to disentangle USG from the Federal Reserve System are onerous indeed. At a very minimum, pay off every bank with a reserve account, every FedBank shareholder, every commercial bank depositor and every bondholder, in sovereign coin, then start from scratch with a new banking system. The destruction of the currency.
From the Federal Reserve Act:
Should a Federal reserve bank be dissolved or go into liquidation, any surplus remaining, after the payment of all debts, dividend requirements as hereinbefore provided, and the par value of the stock, shall be paid to and become the property of the United States and shall be similarly applied.
FRB: Federal Reserve Act: Section 7
I see no real advantage to retiring the debt in some massive way prior to maturity. Why give bondholders some up front liquidity windfall to spark a new bubble of asset purchases?
On the other hand, those securities are already highly liquid and risk-free. So it’s not as thought they are not already being traded and rehypothecated and exchanged for real assets, just like other kinds of dollars. Treasuries are effectively another form of money. In other words, it’s not as though the people who own them do not have a liquid financial asset until we pay them back. Effectively, they already have the money. When the treasuries are redeemed, the government just swaps one form of money for another.
To me, these are the salient facts:
Despite a bit of recent Congressional grandstanding, the US government pays its debts – and is constitutionally bound to do so under the 14th amendment. All of those Treasury securities will be paid off. We might regret that there are so many of these securities in the hands of so many wealthy people. If we don’t like the distributional outcome, then we should just tax a lot of it back.
We could do various things with the balance generated by the PPC. I suppose one thing we could do is put in in a special dedicated account – the Debt Retirement Fund – and use it to pay down debt. I don’t see why that would be especially beneficial, but maybe it would give the public some comfort, so we could at least put the debt hysterics to bed with a glass of warm milk and then go on to do something else.
Or we could also just put it in the general fund as a massive ordinary surplus, and just hold it there with no significant change in tax and spending policies, as it is spent down very gradually.
Or we could pass a bunch of new spending initiatives, or broad-based tax cuts.
The point is that as the issuer of the dollar, the US government can, at any time, augment its own dollar balances in its own accounts.
The chief concern about this, I would argue, would be in the international reaction, and possibly in its effect on domestic inflation expectations.
EconCCX: One question: WHO has a monopoly on platinum? WHO has cornered the “platinum market?” Are we Chumps Unto Death?
And, of course, the source: WHO has a monopoly on platinum mines?
They added another negotiation item to the fiscal cliff. Permanently repeal the debt ceiling. So now that QE of long maturity treasuries has become fashionable, there is no more obstacle in the machine keeping the Fed * from Our Dream of creating infinite money for Comrades Tim and Barry to spend if Comrade Ben is willing. Comrades Tim and Barry can distribute infinite money as they see fit, instead of re-distribute wealth – which seems so difficult always seems to cause all this screaming. When the Treasuries come due the Fed can now just roll them over since there is no debt ceiling.
The Fed still probably has to go thru the bank primary dealer bond flippers to buy the new treasuries, but that’s just for show and allows us to say interest rates are market determined (ha ha). It also means the Fed has to make the dealers profitable so they don’t go out of business.
No problem for a reserve currency, especially if you’re the last one left. And if we get inflation (doesn’t matter if it’s in milk, gasoline, financial assets or the derivative market goes to 10^20 dollars), then we raise taxes on the 99% – many of which are living paycheck to paycheck and have no “disposable” income to pay taxes. Or raise interest rates, but the Fed has no market mechanism to do that now except dump long term treasuries below par (could be a accounting worry for some), or pay interest to banks – which it really has monetized at this point – so another thing to get used to if we want to pretend this is a market.
And just for good measure, everyone should face East towards the Good Witch and say “There is nowhere like Weimar. There is nowhere like Zimbabwe. There is nowhere like Argentina….”
*slang term – I think most people who are not working as Fed accountants think it means Board of Guvs (Chief Bernank) and the FOMC, which resides geographically at Timmy’s old job in NYC, but I digress.
Nice job, the most reasoned comments in this entire string! krb
Hey, i like your idea about mobilizing people with government benefits into litter brigades. Let’s expand that to include oil and bank executives getting billions in federal subsidies, real-estate developers and anyone claiming a mortgage interest deduction. Man, the streets would be clean! And think of the improvment in the work ethic and skilz! Excellent!
cripes, the “Oil-Depletion Allowance” STILL is in effect. Scandal of the Century.
I’m trying to figure out the market value of that government asset, the US military. Maybe 10, 20 trillion?
Good Idea. Let’s start selling all the useless nuk’ler missiles we’ve got lying around for scrap (after de-activating them, of course) and “fund” our spending that way.
b4real: “1. Repeal all of the Bush tax cuts.”
You have bought the lie. There is NO need to “repeal” Bush tax cuts. The QUID PRO QUO of the original “Bush Tax Cuts” bill signed into law was: On a DATE CERTAIN–a DEADLINE–the Bush Tax Cuts would EXPIRE: this was the QUID expressed in the bill signed into law, in order for the QUO, the Bush Tax Cuts, to pass the Congress and be signed into law by the Traitor George W. Bush. The Traitor Obama conspired with the Congress to PREVENT the AUTOMATIC EXPIRATION of the Bush Tax Cuts on that DEADLINE, and to “extend and pretend” there was no EXPIRATION DEADLINE, by “extending” the Bush Tax Cuts until the NEXT DEADLINE, which today is at the heart of the BOGUS “FISCAL CLIFF” ISSUE. This was the SUBVERSION of the ORIGINAL LAW.
NO “repeal” of the Bush Tax Cuts is required. The Bush Tax Cuts are CERTAIN to EXPIRE ON DEADLINE, on an expressed DATE CERTAIN, if Obama and Members of Congress DO NOTHING. Obama must LET the Bush Tax Cuts EXPIRE, and THEN NEGOTIATE for a better “Quid Pro Quo.”
“The term “Them” as used in this response refers solely to the people on the government dole. Disabled, elderly, lazy, black, white, asian…don’t matter. We would have the cleanest neighborhoods in the world if every able check-getter was tasked with picking up trash and might instill some pride along the way”.
b4real, I see things very differently. Disabled citizens don’t need to pick up trash in the streets; many disabled Americans are eager to work and contribute to our society. They want only desire work with dignity to the best of their abilities.
Our Elders don’t need to pick up trash in the streets. The vast majority of American Elders have worked hard their entire lives. It is time for them to rest and contribute their wisdom and experience to our communities in a dignified retirement.
There are millions of able bodied citizens who are long term unemployed and underemployed through no fault of their own. Some have desperately sought work for years now. There are other citizens who you refer to as “…lazy, black, white, asian…” (I’m sure it’s no accident that the words ‘lazy’ and ‘black’ are next to each other), who are scraping by on two or even three minimum wage McJobs. They don’t need to pick up trash in the streets to get a check from the government. No one in our society needs “make work” tasks to avail themselves of our very thin safety net.
I see a robust and publicly funded social safety net as our ethical responsibility to those persons who cannot take care of themselves as they would like; and that would include the very young, the old, the disabled and fellow citizens who have fallen on hard times.
The numbers of truly “lazy” citizens are a tiny minority in every society. I suspect that their numbers are miniscule in this country because Americans see “hard work” as such a prime virtue and badge of honor.
It was unsurprising to me that “Disabled, elderly, lazy, black, white, asian…” were listed as “able check-getter(s)” while the the minority group that is “on the government dole” in a major way, the One Percent, was not mentioned at all. They have had their grubby hands in the public treasuries of every level of government for decades now. Their avarice is so intense that they want to swallow our whole society: public schools, libraries, the prison system, roads and bridges, the military, the media, the healthcare system, even the postal service! For a deeper discussion about the larceny of the One Percent, read David Cay Johnstons book, ” Free Lunch: How The Wealthiest Americans Enrich Themselves At Government Expense (And Stick You With The Bill).
Yet, well meaning, intelligent persons are so focussed on the monkey that they ignore the organ grinder. Kiss up, kick down by another name.
I don’t even want to see the One Percent pick up trash in the streets. A well paid union sanitation worker can do that job with pride and professionalism. I just want the One Percent to give us our money back so we can rebuild our beloved country.
Matty forgot to put neo- in front of liberal.* I don’t mind, I’m used to it, I know what Yggles is trying to say.
But the kid is sloppy that way, and it’s one reason why Matt’s commentariate is always screaming at him to get a proof reader. And they have a point. Readers, especially newbies, could easily get confused.
Matt has stated on numerous occasions, that he is a proud and unapologetic NEO-LIBERAL, and we all know, you can’t be a both neo-liberal and liberal (“sensible” or otherwise), as no two political philosophies have ever been more mutually exclusive.
Walt Whitman said, “Do I contradict myself? Very well, then I contradict myself, I am large, I contain multitudes.”
What Walt is saying is that he’s an incredibly complex organism, capable of understanding –and having empathy for– both the good and the bad, and the possibly the ugly too, which is cool, but what he is not saying (metaphorically), is he has the ability to make like a bird slash fish, a weird being capable of winged flight and simultaneous deep water breathing through gills.
* “Sensible” liberal! Giggles for Yggles. MattY is taking pot shots at people like me, old school New Deal Liberals who refuse to sell out, because we are soft, impractical retards who will likely die broke. And deservedly so!
Note: Sorry Dan. Couldn’t help myself. Excellent piece. Beautifully written. Couldn’t agree more.
Max, they’ve done a Good Job of corrupting the word “liberal” through the creation of the “neo-liberal” label. This is why I’ve taken to using “progressive” instead of “liberal.” But this is lame also. A Whole New Way of thinking, doing, and labeling for what thinking persons are trying to say and do now is in progress. Dispensing with labels altogether might be the best way to move adventurously.
Right on, Yves! This post is why I read your ‘blog every day. Economics has to serve society, not the other way around. The liars, cheats, morons, and fascists who run our economics departments, business schools, and economy have to be stopped. We need to replce the power-mad with those who strive for justice.
We’re all only here for an unpredictably short time. Love (and a good meal) are the only things you can take with you.
He mentions SS as being set aside for part 2. But what about Medicare? Personally, that scares me more than a few points off SS. If I am told I have to wait until I am 67 for Medicare, and I get cancer at 66 and 9 months (cuz I am 36 now, and in 30 years they will know that I waited 3 months to claim I ‘just got sick’ AFTER my Medicare kicked in), I don’t want to be tied to $3 million in medical bills at that age, after working my whole life to see that flushed down the toilet.
Ep3, you’re right, and Jamie Galbraith expresses his dread of this also.
If you’re that age, personally I’d worry more about SS. I suspect this patchwork aweful medical system will have collapsed completely by then and something will have replaced it. Maybe I’m optimistic though :)
Medicare will not be there in 30 years. You will have a worthless voucher instead. It has been written.
Seriously, if the plutocrats see themselves losing the Medicare/SS fight they will gin up another fake war to distract everyone, then pass it overnight when no one’s looking. And the American sucker keeps falling for it, over and over.
They do it again and again because it works. Look how they used 9/11 to pass the Patriot Act, a wishlist they’d compiled years before. I used to think I was cynical, but I wasn’t nearly cynical enough.
I used to think I was cynical, but I wasn’t nearly cynical enough.
Exactly!
“Medicare will not be there in 30 years. You will have a worthless voucher instead. It has been written.”
That will be up to us ….
I don’t know.
We may not really have that choice. It seems as though we have bumped into some sort of evolutionary brick wall; stunted emotional and social capacity vs. technological drag races and their results; population explosion and global warming to mention a couple. Like Indian tribes that used up their water, or their trees on Easter Island – say, we may simply not evolve fast enough to deal with it.
BB -” .. we may simply not evolve fast enough to deal with it.”
ISTM that that, too, will be up to us ..
I was addressing your point about, “That will be up to us”
This all sounds nice but lets get real. We live in a deeply divided country, especially ideologically. How, pray tell, would one ever hope to implement such a grand plan? You think the opposition is just going to slink away without a big fight? And our opposition is not just the plutocrats. They are merely a fraction of what stands before this overhaul. Heck, an incremental approach to change such as this would be tough enough (although it’s the only way short of violent revolution you’ll get any substantive change), but pinning for the whole ball of wax here in America is delsusional and very likely couter-productive. Of course one could always employ force to achieve their economic end, which is the only way it will be achieved, by the way, on this side of the pond. But we’re talking economics here, so no matter whose plan wins, whether it be left or right, somebody gets to do something to someone else. As Kropotkin once intoned (or was it Ellul?), where economics begins freedom ends.
No, I don’t think anyone is going to slink away without a fight. But I do want to fight. I’m not just talking about what to do during the lame duck in December, or over the next two years or four years. I’m old enough to remember when the American right was a small group of cranks. But they succeeded over a period of decades in creating a more conservative, socially Darwinistic and unequal society, and now a weakly regulated corporatocratic plutocracy runs both parties. It will take a long time to fight back.
I’m all for fighting back, but on different terms than the typical economist envisions, whether left or right in orientation. For example when I read a plan such as you’ve proposed that desires growth and at the same time wants to save the planet, even if in the noble name of egalitarianism (I do desire an egalitarian society), I see an obvious contradiction. Does America really need more growth? How about a vision of egalitarinism through a steady state economy? I think Tim Jackson did a wonderful job in explaining how orthodox economic models of the left or right are sorely wanting if saving the planet is one’s goal. His might be a pipe dream to implement, but at least as far as America is concerned, it has as much chance for success as a New Deal 2 does, and would be a far more productive step in saving the planet than the status quo ante.
There is no contradiction between growth of output and the environment. Growth in output (income) and growth in inputs are not the same thing. If you want to save the planet (efficient natural resource use) and have growth in output, you tax environmentally sensitive inputs . A carbon tax would be great start.
Your’s is a hetrodox view of growth that would not necessarily lead to greater production of goods and services, as long as inputs are taxed accordingly. If that’s what Dan is driving at then the two aren’t necessarily in contradiction.
Yes, a country can grow by using brain power to produce output more efficiently from existing inputs, without increasing the amount of inputs employed. Just because our natural resources are constrained does not mean we have to stop making progress.
ftm, if you’re not a troll, know that the “carbon tax” scheme was and is a racket from start to finish. Connect Bush Sr. – BCCI – Luxembourg – Clearstream. You’ll find a few videos on YouTube connecting these dots for the expose of the racket and whom it profits – if they have not been censored, that is; for surely they could never qualify for Google’s *Imprimatur* or “Nihil obstat” for the Reich.
Mr. Kervick – methinks that this is a point you should be repeatedly explicitly making if you want to get the folks who give a damn about the planet on board – after all you DO need to make a bigger tent ….
“Yes, a country can grow by using brain power to produce output more efficiently from existing inputs, without increasing the amount of inputs employed.”
Gotcha, Bucky Fuller’s “ephemeralization”. That may be possible, I think Herman Daly may disagree, but definitely worthy of a lot of thought. But isn’t it the case that currently when GDP (I know, but GDP is the usual measure for economic growth) grows, resource use also grows? So if there are currently coupled, we’d need measures to break the coupling (carbon taxes maybe etc.). Basically all we really need is global sane economic policy!
Yea, I think these points should be made explicitly if you want environmentalists on board because we just hear “blah blah economists blah blah growth blah blah the planet’s resources are unlimited”.
There is no reason the environment can’t be part of the economy. Rather silly to leave it out, when you think about.
It does get included now in various ways. The simplest being residential trash collection. We pay trash collectors to come in their capital equipment truck, pick up the mess we made and drive it to the landfill resource. We pay them and it gets added to GDP. Most people are happy with this economic service.
The trick is to do it just as well on other things, and still be reasonably happy with the overall result.
“There is no reason the environment can’t be part of the economy. Rather silly to leave it out, when you think about.”
You’ve got it backwards. The economy is part of the environment. It draws on the environment for natural resources. There is no economy, or anything else, without the environment and natural resources. The economy also uses the environment as a sink for wastes. The environment is not part of the economy, the economy is a subsystem of the environment. The problem is that the human economy has grown too large relative to the environment. The economy is drawing on too many resources and using the environment too much as a sink for wastes.
Sorry, had to throw that in there.
Me – Bingo, don’t apologize for that, that IS the bottom line. We are in trouble because we forgot precisely that – that the economy is a subset of the environment and not vice versa – we can do without CDOs and CDSs and XYZs and even, if push comes to shove, dollars – but we cannot do without food and water and shelter. It amazes me to realize we seem to have “forgotten” that ….
You would be better off fighting for the seccession of those sections of the country where there is a chance of implementing your program.
An emphatic NO! to incrementalism. That’s what got us the anti-FDR, hopium change artist, the Chicago hustler and flim-flam man. FDR delivered the bold, persistent experimentation that Kervick calls for. Bravo, Dan Kervick!
Kervick for Treasury! (in Yves Smith’s administration!) (Or … CIA? SecDef? State? Okay, DEA then.)
You’re asking far too much from our technocratic president and congress. If you believe all this can be achieved in short order (under his reign) then I think you’ll be very disappointed. I would start by deep sixing the debt fret arguments with sound MMT analysis. Then I would piece by piece work my way from there, as the opportunities allow.
You are right, as in correct, there is no way we will get any of that from the duopoly that is and has been running the show. Which is why we must replace them lickety split – we had a chance to make a huge dent a few weeks ago and blew it …
It cannot be achieved in short order. In the immediate term, all we can do is try to spread understanding, and dissatisfaction with the existing plutocratic domination.
Hi Yves, I just wanted to mention that I did note in the first paragraph that entitlement reductions are apparently included in both Stage I and Stage 2 of the plan floated by Geithner.
“Kervick suggests that Social Security might be excluded from a Grand Bargain. Don’t get too optimistic.”
Yves, Jamie Galbraith confirms that SS is off the table in his interview w/ Paul Jay.
Yves, Jamie Galbraith confirms that SS is off the table in his interview w/ Paul Jay.
So What?
Surely you don’t imagine that means SS is off the table. You are talking of huge – vast – amounts of money that beasts of boomer burden put together over the course of decades and which the 1% has really really got a fixation on now that it’s ripe, low hanging, irresistible fruit, in the form of booming, blooming accounts coming due for boomers. Hell, it’s just begging to be taken up into its rightful place, by it’s rightful owners – those who can appreciate it, who know how to handle it, and not squander it on cheap food and shelter and immoral indulgences like heat in winter. Quelle surprise! – Simpson and Bowles would be just such candidates for such a reasonable, responsible upward transfer! With such a moral imperative, not to mention such amounts when they start getting added together, the pretty people are not going to give up that kind of scratch just cause Galbraith says so!
Oh, yea, almost forget the most obvious reason. Those pretty people? They are the ones that Obama feels he is part of, (he was told so over and over again for four years in a town and a university that’s got a humanistic scale but that’s slicker and has more cliques and nepotism than Wall Street if you scratch a little). It’s natural selection, aristocracy by personal merit and Obama loves it; he basks in it, but still he really really wants to be sure he belongs; he never stops trying. And he’s going to bend over backward to make sure they know it.
Right, they will keep attacking it, because:
1. All of the monetary flows that make up the Social Security system are flows that take place inside the public and outside the rent-collecting sector of capitalist finance.
2. The plutocrats hate anything that is socialized. If a son raises crops and gives some of them to his elderly father, the repetition of an act that the father did for his father, that act is an expression of an inter-generational social bond that capitalists hate. The anti-social egoists people who run our economy think the father should have jarred up enough crop during his lifetime to live on, and the son should just keep his whole crop to feed himself and save for his future. This is the atomized self-reliance American individualists love.
So they will keep attacking, because in the end they are demended balls of lonely ego, driven by sheer malevolent hatred of sharing, cooperation, social bonds, mutual obligation and all of the things that bind people together.
It’s amazing how many people think Emerson was talking about the temporal world of federation wrestling, so to speak, and not about relying on self rather than establishment for spiritual truth.
Absolutely in bullseye center, Dan. The part you’ve left out is that that rentier pov has been inculcated in well more than 70% of the USA public by the time we reach voting age.
As a culture that small bit captures our truly core religious belief. What began as a New England/New Amsterdam Calvinist quirk has become the founding tenet of American established dogma.
Eradicating that kernel will take three to four generations beginning now and it’s difficult to see how that begins to be the case among any of the generations currently alive. True USA dogma is passing both children AND parents through the Chemosh-fires of Moloch.
Our choices run the gamut from A to Z. Which will it be going Forward! Argentina or Zimbabwe?
“We owe it to ourselves” as an excuse for deficits makes about as much sense as “we stole it from ourselves” makes for inviting armed robbery.
You really need to try and develop a better analogy, because that one falls flat.
Clearly, We the People need a “parallel” or “alternate” Real Economy and Currency. We need to do what Iceland did and more. Are we so pathetically weak, unimaginative, and cowed, that we cannot stand up to bullies, or–better yet–just walk away from them and not “play” their rigged game any more? Are we Charlie Brown, thinking Lucy will change her ways? There Is Some Alternative. TISA! Where there’s a will, there’s a way.
We need to make our C.21 Real Economy and Currency without the intermediation of Central Bankers and the “Central Bank of Central Bankers” in a Foreign Country that has set itself and its members up Above Our Law of the Land. We the People must “eliminate the middleman”–the anachronistic Central Banking Cartel of Cartels addicted to the GAIN they derive from their rigging of Our Sovereign State’s “Economy” by means of programmed inflation, interest charged on Our Sovereign State’s Currency, and from Tribute/Rent/”Tax” Extraction of We the People’s Wealth, through the treason of their Shills in Office, via BIS-created Scheme/Racket of “GOVERNANCE” which is FOREIGN to Our Constitutional GOVERNMENT of/by/for the People of the United States.TISA! If Iceland, Argentina, and Syria can find Some Alternative to being PREY to Central BanksterBangers, why can’t We? Are We ALL idiots? ALL chumps? Are we ALL TURKEYS trapped in a BAITED FIELD *in saeculae seculorum*?
Who will turn on the Heidelberg Presses for We the People and OUR OWN NATIONAL DEBT-FREE CURRENCY? Why can’t We the People start our own Alternate “Shadow Economy” with our own We the People’s Greenbacks (or Sky Bluebacks) designed for Our C.21 by a Master Engraver of/by/for We the People the Nation? On the obverse, let’s feature American Indian Chieftans. On the reverse, instead of the eagle, let’s feature the TURKEY that Benjamin Franklin elected–to remind us always that we ever are PREY to Debt/Death-Dealing Banksters–featuring Franklin’s motto: “Neither a borrower nor a lender be.” And on the reverse, let’s ditch the Pyramid Scheme Logo *TELL* of the Central Bankster Elite, replacing it with the image of “Fields of Wheat”–to remind us of our original agricultural purpose: that We the People can and will produce “Our Daily Bread”–and with joy! We can be self-reliant again!
There Is Some Alternative! TISA! TISA! TISA! We can choose it. Let’s do it!
Call me crazy… thats all.
Taxation is a powerful tool and, it’s effect is to curb or slow down certain activities that are harmful to someone else’s rights. – Like if you want to prevent dogs from running free around town that risks public safety to neighborhood kids you impose a fine (tax) for not leashing your dogs.
Take the example of the gambling going on with our currency – something most people would agree needs major curbing because it led directly to our current economic impasse and directly to the false choices given to the public from which to choose a medicine. Why else would large swaths of the population be given to believe provably false medicines from economic physicians who nearly killed the patient.
If you believe (I am thoroughly convinced) that income inequality is a problem and it was caused by financial activity deemed detrimental to our nations economy – then I suggest incomes derived therefrom should be taxed at a high enough rate to curb it’s damage – put it on a leash (tax) like a dangerous dog. Hey, you can still do it but, it will not pay back to the public the damage it does to the public through taxation.
What are those financial products that caused so much harm – a short list – derivatives, lending for currency and commodity speculation, making takeover loans and other predatory financial practices, gambling schemes fueling the international carry trade (computer-driven interest rate and currency arbitrage) that has no linkage to the production-and-consumption economy….simply casino capitalism. Tax these and other products that are not linked to the production-and-consumption economy….tax em high – 90% is not out of question. (a hedge fund manager making 4 billion a year can certainly get by at making 400 million because of a 90%tax.
Finally – the absurd (crystal ball) claims made by our politicians need to be outed by the fourth estate. President Obama needs to be laughed at, ridiculed and lambasted against the facts regarding the ‘deficit and this fiscal cliff bullshit’ – not only Obama but everybody else who espouses economic and structural fallacies and misinformation contrary to the facts (facts do exist).
Next – this country has seen and experienced these issues before – again and again – Deja Vu all over again. Do not let snake oil salesmen poison your kids.
In spite of the ingenious methods devised by statesmen and financiers to get more revenue from large fortunes, and regardless of whether the maximum sur tax remains at 25% or is raised or lowered, it is still true that it would be better to stop the speculative incomes at the source, rather than attempt to recover them after they have passed into the hands of profiteers.
If a man earns his income by producing wealth (money is not wealth), nothing should be done to hamper him. For has he not given employment to labor, and has he not produced goods for our consumption? To cripple or burden such a man means that he is necessarily forced to employ fewer men, and to make less goods, which tends to decrease wages, unemployment, and increased cost of living.
If, however, a man’s income is not made in producing wealth and employing labor, but is due to speculation, the case is altogether different. The speculator as a speculator, whether his holdings be mineral lands, forests, power sites, agricultural lands, or city lots, employs no labor and produces no wealth. He adds nothing to the riches of the country, but merely takes toll from those who do employ labor and produce wealth.
If part of the speculator’s income – no matter how large a part – be taken in taxation, it will not decrease employment or lessen the production of wealth. Whereas, if the producer’s income be taxed it will tend to limit employment and stop the production of wealth.
Our lawmakers will do well, therefore, to pay less attention to the rate on incomes, and more to the source from whence they are drawn. —Written around 1925
The only reason I mention the above is that: If we go ahead to fund grand infrastructure problems and allocations of money for same: those being addressing global warming, poverty, health care for all (imagine the new mobility that would create and the benifits that would bring to a society), fairness, etc.etc.
If we go ahead without first addressing the economic structure in terms of ultimate benefit allocation – then we will only perpetuate the same manifestations to a greater degree that we all seem to perceive as bad – manifestations like income inequality, reductions in freedoms, reductions in mobility, resource wars, bubble blowing, starvation, mis-allocations of wealth, ability to live above simple survival mentality, reductions in creativity, habitability of planet.
Excellent thoughts, Tom.
Tom, can’t we call a spade a spade? The “gaming” rackets were instated just as the MERS racket was instated: because We the People were becoming more and more impoverished. How is it even thinkable that a CEO would “earn” annual insured “compensation” with “benefits” and “bonus/options” totaling in the MILLIONS of USdollars per year, replete with Golden Parachutes, while Joe Sixpack, Janetorial Juanita, and Nurse Jackie could barely make ends meet?
Low “minimum wage” or NO minimum wage (restaurants/bars), the destruction of unions, the wholesale firing of workers, the theft of benefits and pensions, TOGETHER with “lotto” – “electronic gaming machines” – gambling/sports betting – MERS for turning Residences into ATM machines, demonstrates that these RACKETS worked IN TANDEM. We the People’s poverty was the QUID for the QUO-du-jour of the Master Grifter Class.
Written around 1925 – what and by whom? You must have been a whiz kid ..
Another from around same time frame – these items were published in a newspaper series – some of the articles are not signed by author. The articles can be found on Google books. Its called Tax Facts – published in the interest of sound economics and American Ideals. It is quite interesting in that, the basic concepts can be transmuted directly into the contemporary economic vocabulary – (IMO – today’s vocabulary has been (intentionally IMO) complex-ified in an effort to hide-from-view (three card Monty, distract and lift, snatch and grab, basic hold-up, breaking and entering–you get the idea) basic economic facts.
The scary part is that it so closely resembles and, time tracks current events – it’s relevancy is astounding to this individual. It makes ya think:
However, the evolutionary process by which monkeys made men of themselves was considerably slower than the reverse process.
or
He isn’t really a big time crook unless you must let him alone to prevent the loss of public confidence.
Anyway – another:
Laborers knowing that science and invention have increased enormously the power of labor, cannot understand why they do not receive more of the increased product, and accuse capital of withholding it. The employer, finding it increasingly difficult to make both ends meet, accuses labor of shirking. Thus suspicion is aroused, distrust follows, and soon both are angry and struggling for mastery.
It is not the man who gives employment to labor that does harm. The mischief comes from the man who does not give employment. Every factory, every store, every building, every bit of wealth in any shape requires labor in its creation. The more wealth created the more labor employed, the higher wages and lower prices.
But while some men employ labor and produce wealth, others speculate in lands and resources required for production, and without employing labor or producing wealth they secure a large part of the wealth others produce. What they get without producing, labor and capital produce without getting. That is why labor and capital quarrel. But the quarrel should not be between labor and capital, but between the non-producing speculator on the one hand and labor and capital on the other.
Co-operation between employer and employee will lead to more friendly relations and a better understanding, and will hasten the day when they will see that their interests are mutual. As long as they stand apart and permit the non-producing, non-employing exploiter to make each think the other is his enemy, the speculator will prey upon both.
Co-operating friends, when they fully realize the source of their troubles will find at hand a simple and effective cure: The removal of taxes from industry, and the taxing of privilege and monopoly. Remove the heavy burdens of government from those who employ labor and produce wealth, and lay them upon those who enrich themselves without employing labor or producing wealth.
It is interesting indeed, but in the interests of disclosure as well as for those interested in further pursuit, I would strongly suggest you put anything that isn’t your own words in quotes and provide a specific source where possible … It would make your posts more valuable, IMO …
This all goes back to Henry George, Progress and Poverty, 1879. It’s a real eye opener. George and Veblen remain the greatest American economists. Nobody else even close.
Jake – are either of those “traditions” being followed/evoked in any contemporary “schools”?
Frankly it’s getting too confusing for folks like myself who start out not knowing a CDS from a COD from a CD-ROM and who, in the process of trying to figure it out get faced with “Here is how it works” “No, that’s not how it works” – a veritable he-said, she-said, literally, in many cases, and who, frankly, when all is said and done don’t really give a damn about all the theory but just want 1) a system that facilitates providing us all with a means for “life, liberty and the pursuit of happiness” in a world that will be stable enough to provide the same for our offspring and 2) a plan for how to make such a system …
Apparently we can’t even agree on how the system works – so, in my tendency to favor Gordian Knot solutions (heh heh, what else can you expect from surgical training ..) why can’t we a) admit we can make whatever economic system we want and b) proceed to designing one we can agree is most likely to, as the ole DoI would say, “effect (our) safety and happiness…”, regardless of whether it’s from columns A,B,C or somewhere out in the south 40, and then c) get together and make the damn thing …
ISTM there are too many folk with too much personally “invested” (and i don’t mean money wise) to critique their own system – take some things out, add some stuff from another system, kick the tires. maybe change the tires etc. etc
My Dad was a pretty clever guy – he’d start by looking at something he wanted/needed to do and would proceed to make something (in his “work smarter, not harder” way of thinking) to help him do it – he didn’t have a lot of money so he used whatever he had at hand – whether the object was originally “designed” for what he wanted to do or not. His inventions often looked like hell, but they worked. One could make them simpler or more elegant later on – but the point was to make something that got the job done without waiting around for the “theory” of the thing to manifest …
Why can’t we do that here?
Tom, yep, “Deja vu all over again.”
“THE BUBBLE THAT BROKE THE WORLD” by Garet Garrett (1936).
The Lamest Generation. Or perhaps the Flamest Generation, when the Millenials stack us up and strike the match for fuel and/or revenge.
The notion of economic democracy deserves much more publication and propagation. Americans have been trained, like so many lap dogs, to abjure socialism, even though over 90% of them would fare much better, materially and spiritually, in a society organized under the principles of justice and equality. Socialists, like communists, liberals and union organizers, are our enemies, of course. Only the rich, brimming with merit and vision, can save us.
The power of the brand around this Plantation is beyond dispute. Even conservative workers could get behind the concept of economic democracy, if it were smartly sold.
If the American people’s failed experiment with self rule shows anything, it is that a political democracy requires economic democracy. How we ever came to believe the converse will be a mine for future historian interest.
//”I want to fight the plutocrats and lick them – not deal with them. After decades of having their standards of living decreased, and seeing a once-vibrant democratic political order replaced by a neo-feudal hierarchy that has frozen us all into socially immobile castes and political subordination, the US middle class, working people and the poor need to join forces to first draw a line in the sand on further cuts of any kind, and then get active in reclaiming a society based on shared prosperity, democratic citizenship and an egalitarian social contract.”//
—————————————
OK, let’s get brutal with bullshit. Just read aloud the paragraph above. Do you hear the ring of truth, or the ring of academic bullshit? Really, if Prof. Dan Kervick got this canned crap from a .01% Elite Handler, shame on him. If he cooked up and canned this crap himself, double shame on him.
Aren’t we Sick to Death of canned crap–condescending canned crap at that–from the Halls of Academe? Bring us Prof. Michael HUDSON’S VITALITY born of red blood, bone, and sinew and REFUSE this crooked canned Cat Food! Basta!
What exactly do you object to? The absence of machine guns? Don’t you understand which way they will be pointing? Who was the guy who said, ‘I can always hire half the working class to murder the other half?’ Sounds like Andrew Mellon.
A couple of things –
Did you forget raising the minimum wage? For folks who don’t make enough to tax, forgiving taxes won’t help any … And if it is about justice and fairness, don’t you think it about time that the worker started getting a bigger share of the productivity gains made in the last several decades? A living wage should be way up there on the list ..
I have raised this before, but i really do think it bears honest consideration – the issue of the payroll tax. I realize that according to MMT it is unnecessary for the funding of SS, Medicare, et.al but i posit that it IS necessary for another, “metaphysical” reason, if you will, and that is a very “practical”, and, i would posit, close to “fundamental”, aspect of human nature – the fact that having “skin in the game” makes an enormous difference when it comes to how fiercely folks will defend a program and, considering that all these programs depend for their survival on political will, such defense makes all the difference as to the survival of that program. That is why SS has lasted as long as it has, why it it was, ’til now, considered a political 3rd rail – because folks of all political stripes said “let the gov’t keep its hands off MY SS/Medicare”. Folks have a strong “property” sense about these programs that will be removed if that payroll tax is abolished; make it more progressive, remove the cap, but keep the “tax” – that is their personal investment, that is why, in fact they have a right to BE “entitled” …. FDR was a shrewd fellow – he understood this quite well when he set it up
I suggest to you that TPTB are well aware of this dynamic – that is why, of all the mechanisms that could have been chosen to “put more money into people’s pockets” they chose this. They have been heretofore unable to convince folks to privatize the program – so they chose to starve it – with decreased input it is much easier to convince folks that the program is “broke” if you, in fact, break it. Once again, i realize the MMT position – BUT that will only work once a majority of folks buy into it and we are a lonnnng way from that. In the meantime – if you want these programs to survive – DO NOT eliminate the payroll tax – tweak it so it is more progressive, but do not eliminate it …
As one can see from comments here – folks have a sense of justice and fairness, but that is tied very deeply to a concept of “effort” and “participation” however that is conceived …
MMt apparently accepts the idea that taxation CAN serve a useful purpose, and indeed may NEED to be used to achieve certain ends even though it is “unnecessary” for revenue – i strongly suggest you incorporate the idea of a “metaphysical” need for personal, individual “investment” among these useful purposes …
You’re absolutely right about the payroll tax. They could have just sent out rebate checks again, or any number of things, but making the treasury pay payroll tax provides soooo much more ideological ammunition.
And in the fiscal cliff negotiations O wants to extend the payroll tax cut again.
Yes, Aquifer, but you should realize that the current SS system is not the one FDR set up. It is one intentionally modified to destroy SS by incorporating economic quackery into it.
FDR set up a pay-as-you-go system. Even earlier, the original plan was to pay it like any other government expense. This is the ideal, because any other way can cause immediate economic problems, as FDR recognized, as had happened already. The institution of SS taxes but not payments, and the cessation of Army bonus payments was part of the cause of the 1937 recession. But the taxes were put in purely as political protection. Worked fine for 50 years. Could have worked fine forever, with no changes.
it IS necessary for another, “metaphysical” reason, if you will, and that is a very “practical”, and, i would posit, close to “fundamental”, aspect of human nature – the fact that having “skin in the game” makes an enormous difference when it comes to how fiercely folks will defend a program and, considering that all these programs depend for their survival on political will, such defense makes all the difference as to the survival of that program.
I’m all for “fundamental” “metaphysical” thinking and reasoning and terminology. There is nothing more “practical” and true and intelligible and clear than this “metaphysics”. But you gotta do it right!
Yes, people should feel that they earned their SS. But how did they earn it? What did they do to earn it? It was by their work during their working lives, being part of a productive economy that entitled them to be supported in their old age by their generation’s children. Just as their generation supported these children as they grew up. That is all a “pay-as-you-go” SS program is – younger generation taking care of older one, as the older one took care of it. Worked for countless millennia. The intergenerational scary tales are the most ludicrous nonsense produced in these countless millennia! People’s labor, something real they did, which they were taxed for in real terms by accepting money for this labor, was their real SS contribution.
All that their payment into the SS Trust Fund, the SS tax did was (perhaps) raise the value of the payments made to the retirees way back then. Disinflated the retirees dollars. A pay as you go system can work forever, because it is just an efficient government transfer, which doesn’t add or subtract to the money the public holds. But if this payment is made in a time of high unemployment, like now – all it does is cause more unemployment, more misery, more poverty, more wealth-destruction – with no positives whatsoever.
But since 1983, we’ve had a pay-more-than-you-go system. This is insane. It cannot work. It is designed NOT to work, and has one and only one purpose – to destroy SS, by robbing the poor to give to the rich. The idea was to use FDR’s political protection to destroy the program. It creates government surpluses, which are enormously destructive to the economy.
FDR’s Pay-as-you-go is the highest feasible tax rate, not the lowest, which the quackonomists think. 30 years of excessive taxation, the Giant Trust Fund, has to go along with deficit spending elsewhere – or where will the workers get the dollars to pay their excessive SS taxes with? Since SS is running a surplus, the dollars the retirees receive and spend can’t be enough. So since Reagan, welfare for the rich – tax cuts and military spending (welfare for the rich) went full steam. And since the rich have a smaller propensity to consume, you have to spend a lot more on them to make up for the damage done by overtaxing workers. But you have to remember – the mainstream gets everything backwards – it was the welfare for the rich deficits & dollars which funded the SS Trust Fund, not vice versa.
So overall, the payroll tax holidays are a very good thing. A shrinking Trust Fund is an even better thing – all it has been is an accounting record of the destruction of the US working/middle class.
How many damn times must people pay for their Social Security? They paid for it once, by working – infinitely the most important way – which is why you never hear it explained. They paid for it a second time by the disinflation / pay-as-you-go to retirees / political protection part of the tax. Not so important, not so good, but OK. For 30 years they paid for it a 3rd time by disinflating welfare-for-the rich. Utterly unconscionable, pure theft, insane. Destabilizing and unsustainable. A good part of the reason that what has been called the Great Moderation 1980-2010 or so has really been the Great Stagnation – the worst economic record for any 30 year period, including any period with the Great Depression, in US & even colonial history!
If you want to have a Giant Teddy Bear Trust Fund, rather than getting rid of it & re-teaching real economics to everyone, then there is a much much better way to do it than raising taxes or cutting benefits: Robert Eisner’s idea: just have the Trust Fund T-bonds pay a higher interest rate. Problem solved. All the dough in the Trust Fund you could want, and no “actuarial” (hah) problem.
“Will we be the lamest generation?”
Yes. We already are. And a large part of it is the utter collapse of journalism in the United States. The mainstream press is populated with self-promoting power-whores like Yglesias, Sargent, Drum, Benen and Marshall (among others), who are little more than White House propaganda shills. This is just the Obama version of the phony journalists who made careers suckling at Bush’s presidential teat.
One of the primary reasons our political system has descended into rank corruption is that the press has abdicated its responsibility to keep our politicians honest and responsive to the People. Now the press seems to think it works for the government. These self-aggradizing media-whores receive special Constitutional protection by virtue of their positions but they no longer serve the function the Constitution demands. Yes, one might argue this is a result of the corporatization of the media but that is no excuse for any individual so-called journalist. If this country is going to emerge from darkness each American must do his or her share to put things right. To whom much is given much is demanded.
The individual journalist/reporter has to be paid to make a living from journalism/reporting. Otherwise he/she can only do it as a very part-time hobby so as to have the majority of herm’s time available to earn a make-money living with.
So are those people who want honesty from the individual reporter prepared to pay the individual reporter enough to make a living while doing honest reporting? If the Rolling Stone decided to start a daily newspaper called The Rolling Stone Times . . . with Matt Taibbi or Mark Ames or somebody
as Editor In Chief . . . to hire honest reporters to do honest reporting – – would enough people buy that paper to give that paper enough money to hire reporters at a living-making rate of pay?
Well? Are there?
And since facts have a well-known liberal bias as Steven Colbert has noted, what if such a newspaper were to call itself The Biased Liberal Press? Thereby revealing a sense of humor and a sense of truth at the same time? Would enough people buy it to allow it to support a stable of biased liberal reporters earning a biased liberal living?
If people won’t buy it, then they won’t get it. Nothing in life is free for anyone except rich people.
Whores make more money than non-whores. That’s why they become whores.
Lots of nonwhores are satisfied with the subwhore income they make by nonwhoring. But they have to make some sort of income to even survive at all. So would enough people buy a nonwhore newspaper to allow that newspaper to pay a stable on nonwhore reporters to make a nonwhore living? If not, then those nonwhore wannabe-reporters will go into something else like maybe shoe repair or back-to-the-land organic farming or something. And people will continue to go without the nonwhore reporting they don’t want to pay for.
I would gladly pay for a year subscription to The Rolling Stone Times if they were to set it up. Would enough other people gladly pay for it to allow the Rolling Stone to even dare to try it?
There are nonwhore writers writing for the tiny little nonwhore newsletter Acres USA. Maybe if a million people bought Acres USA instead of the 12,000 who buy it today, it could hire more nonwhore reporters.
Well, I’m not sure where you’re going with this so I’ll just give this example of my point and leave it at that. Greg Sargent is a writer at the Washington Post. I followed Sargent’s writings for quite a while before he began writing for the Post and he was a committed Progressive. Now that he’s at the Post, Sargent COULD write columns critical of the Obama Administration’s Great Betrayal but he doesn’t because — I suggest — it furthers his personal career goals not to do so but rather to align himself with the Obama Administration. Make of that what you will. I’ve said my piece.
And even when we have a relatively straight shooter like David Dayen we get naive pap like this:
“Mitch McConnell laid out his wish list for the endgame in the fiscal slope negotiations, and it’s basically the kinds of social insurance benefit cuts that the White House offered up in 2011 (which is again a reminder why you don’t offer those up as a bluff, because they will come back to haunt you), in exchange for revenue without a tax rate increase.”
http://news.firedoglake.com/2012/12/01/fiscal-slope-time-to-go-to-conference-on-taxes/#comments
As if Obama was bluffing. Good grief.
I caught that as well this morning. Dyden is amazing. He will be dead on for weeks, and then say something like this. Poor Obama, that nice guy who got mixed up with a bad crowd.
The other possibility. FDL has been shamelessly trying to straddle the fence for months now. Perhaps Dyden is given directives not to dump too much on fearless purse O-SS-natcher for the time being. On second thought, nah…
Since the election Dayen has been downplaying the possibility of the Great Betrayal because it too complicated to get done fast. He doesn’t entertain the possibility of a bag job and Kabuki Dance, which is the most likely explanation for what we are now witnessing.
Frankly, I’m not so sure Dayen’s political acumen is all that sharp. When it gets to insider stuff like what’s really happening behind the scenes on the Great Betrayal one must either have great connections in the WH (like Sargent, e.g) or one must pay very close attention AND be extremely cynical. Dayen doesn’t have any connections as far as I can tell and he simply isn’t cynical enough to see the truth. As his above statement illustrates, Dayen still subscribes, at least in part, to the Obama-the-Victim meme, which is a telltale sign of cluelessness.
It is difficult to get a man to write something when his salary depends upon not writing it. Newspapers contain stories in order to attract eyeballs to the advertisements. The papers can be useful for wrapping and wiping, just don’t read them. I haven’t read a newspaper in more than ten years. What have I missed except propaganda?
The grafter generation.
Generation sucker.
The self destructive generation
The special privilege generation
The shortsighted generation
The me Generation
The IBGYBG generation
I am part of this generation and I don’t disagree with these well earned pejoratives as they are thoughtful and accurate.
Now, we do have a choice – do we continue to support our titles by inaction or shall we disprove them by action.
It is not the wickedness of predatory wealth, but the weakness of progressive economics which keeps special privilege in the saddle in the United States.
No financial wizard would look so much like a wizard if all the suckers didn’t look so much like suckers.
All the struggles that have been made for human liberties since the world began, have been made “against the protests of vested interests,” and old man vested interests is a mean boy.
As someone noted above, people feel owed a program that they pay for through taxes . . . like Social Security.
And as someone else up above noted, money is not wealth, and freely emitting money is not creating more wealth. Zimbabwe under Mugabe was an MMT government. Did all the trillions of Zimbucks they printed create trillions of Zimbucks-worth of wealth?
MMT strikes me as a diversionary mental tinkertoy indulged in by people who want to pretend they are smarter than the rest of us. It is a diversionary waste of our time and a demand that we think about the abstruse theories that the While E. Coyote SuperGeniuses among us demand that we think about . . . instead of thinking about how to save our tax PREpayed for benefits from the social class enemies
plotting to destroy them.
Economic growth is the process of turning “more” energy into waste heat in order to turn “more” matter into waste crap. Economic growth is a Ponzi pursuit at the most basic biophysical level. Believe it now or believe it later. Hopefully I will get myself survivalistically dug in and bunkered up to the point where I don’t have to worry about the future of people who are too stupid to believe it now OR later. That is one thing that Steve From Virginia and Dmitri Orlov and Kurt Saxon and Ran Prieur and Sharon Astyk and so forth are completely right about.
Unlike the US, Zimbabwe’s debts are not in its currency. So it can not pay off its governmental debt by printing more money. MMT does recognize that inflation is a constraint on money creation. But inflation does not happen simply if more money is created. Look at all the trillions in the bailouts and the lack of inflation which they produced. In the current environment of high unemployment and low capacity utilization, we can actually run substantial deficits for a very long time without sparking inflation. And of course there are ways of fighting inflation, encouraging savings, raising rates, raising reserve requirements, raising taxes, increasing capacity, etc.
The US is not Zimbabwe. It isn’t Greece. It isn’t a household. Its problems stem from a kleptocracy which loots the public and its institutions and concentrates this ill-gotten wealth in the hands of a few.
We have till Jan. 1st to stop the Catfood Conspirators from passing the Catfood Plan. That’s not enough time to analyze the intricacies of MMT and fight the Catfood Conspiracy both. If we can prevent Congress from passing anything at all whatsoever this session, and force them and us and the whole country to go over the so-called fiscal cliff to demonstrate to all and sundry just how non-existent it really is . . . then we will have time to consider this other high faluting intellectual theorization.
MMT will still be a waste of time anyway. Besides Russia and China will nuke us if we keep financing a defense budget equal to the rest of the world combined using unlimited MMT money electrons. Ya, I know we can nuke ’em back, but that was sooo Cold War, and I don’t think going there again will help our retirement plans. I just wanted to play golf and tennis.
Just because there is nothing real about the coming fiscal cliff,that doesn’t mean there won’t be some real problems, after our “scum rises to the top” congress gets done.MMT has nothing to do with what is happening. It is a concept. This is a mental exercise at this point.not to be confused with the business of the day.real world austerity.is what they are contemplating, the words are being written by lobbiests for the financial industry…real people will suffer the consequences….I’m just saying these multiple tracks are not connected at this time.Lets deal with each issue,seperately.right now.And not doing anything , I’m sure has already been “gamed “in to a myriad of possible scenerios, all leading down the same shit-covered brick road.
We have till Jan. 1st to stop the Catfood Conspirators from passing the Catfood Plan. That’s not enough time to analyze the intricacies of MMT and fight the Catfood Conspiracy both. If we can prevent Congress from passing anything at all whatsoever this session, and force them and us and the whole country to go over the so-called fiscal cliff to demonstrate to all and sundry just how non-existent it really is . . . then we will have time to consider this other high faluting intellectual theorization.
It is good to see the emphasis on wealth inequality. This gets to how resources are distributed throughout our society not just the total amount of them. How resources get distributed in our current society is basically through theft and looting. There is nothing sacrosanct about today’s great private fortunes and historically high corporate profits just as there is nothing legitimate about the bank robber’s ownership of the money he has stolen. Yes, I know we have been indoctrinated to think otherwise but then who has been doing this indoctrinating other than elites owned by these same interests? It is important to add in the element of criminality. The massive wealth inequality we see did not just happen. It came about through an unholy alliance of the rich and the elites to steal it.
To the 99% – “Take what you can get – and we will tell you what you can get”
To the 1% – “Get what you can take – and we will help you take it all”
Nicely done, Dan Kervick —a passionate and eloquent essay.
I don’t see where you suggest that Security might be excluded from a Grand Bargain, though, perhaps elsewhere. But Beware! For Wall Street moneychangers and their Trojan horse, Social Security is the most coveted and lusted-for of Holy Grails. It’s not only seen as their potential salvation from the nuclear derivatives about to detonate, and a rich new vein of loot, but it is essential for the “balance of power” — that is, the concentration of absolute power in worthy claws.
There is plenty of evidence that this has been Obama’s primary goal and/or directive from those who hired him — shred the safety net and implement Shock Doctrine. The MSM clearly has this in its cliff-note talking points: Social Security is always targeted for fixing. Then there’s Obama’s well-worn pattern of “now you see it; now you don’t” shell-game pledges. But the most recent evidence is Obama in the last debate on Romney’s position, “I suspect that on Social Security, we’ve got a somewhat similar position.”
No kidding. Just Wow!
Although not in the debate itself, Romney “called the budget produced by his running mate, Rep. Paul Ryan (R-Wis.), ‘marvelous.’ That budget calls for shifting the Social Security fund to private retirement accounts. Romney’s campaign has threaded that needle by saying that he supports voluntary individual retirement accounts.”
A good number of Obama’s voters fell victim to selective, wishful listening. But when it comes to the Grand Betrayal, we should never again assume this man is honest or well-intentioned … not ever.
Yes but the generations after will be the ones who accept and embrace stagnation, corruption, and decay. The US is slowly morphing into a country like Mexico, Brazil, or India. Your generation may be lame, but the ones coming after will be straight up slackers by comparision.
“There is no realistic way of moving forward towards these ideals in a reasonable time-frame that does not require taking active steps to rework the distribution of wealth and income in our society.”
In the historical period from 1870 to 1896 there was a grass-roots populist movement which did indeed “…take active steps to rework the distribution of wealth and income in our society.”
But unlike the progressive of late 2012, who largely seem content to make minor adjustments to the huge apparatus of public and private power which has ruled since the beginning of the 20th century (see the above debates on the intricacies of modern technocratic management of fiscal and monetary policy)–the populists of the late 19th century had the gumption to take a series of active steps which called for the destruction (not the adjustment) of this emerging structure of national power(both public and private).
They actually created a series of cooperatives(ivolving regular citizens) across a significant portion of the country and developed a subtreasury plan where, at a network of warehouses, farmers could store their crops in return for legal tender certificates equal to current market prices. The originators of this plan clearly intended the it would supplant the entire system of currency and credit then in existence and would hopefully eliminate the national banks as well. This people’s currency would then send money back to the local community.
But when the populists were defeated in 1896 the logic of progressive reform took over. It seemed based on a new set of loyalty’s which accepted the emergence of national public and private bureaucratic power and was satisfied with simply correct administration and continuous management of a centralized apparatus (perhaps the foundation of MMT’s political theory).
The national progressive movement of the early 20th century was predicated upon the existence of big capital which, with its move towards national markets and national centralization, then laid the foundation for the construction of a national public bureaucracy with its growing expertise in sheltering and regulating the emerging national corporate structure.
The place of the average citizen in the progressivism of 2012 is to observe from a distance( as either a passive consumer or a state-dependent citizen) the battle of the experts and professionals to properly manage an administrative apparatus which protects the plutocracy and turns itself into its own predatory social formation.
Great comment!
“Religion often partakes of the myth of progress that shields us from the terrors of an uncertain future.” – Frank Herbert
“… the genesis of the myth of progress is to be found in the happy delusion of omnipotence of the infant. Mankind unconsciously longs to return to this condition of megalomania. Thwarted by the external world he turns to his imagination to alleviate his unhappiness, the wishes he fulfils there are then projected more or less modified into the external world as political theories and philosophical systems.” http://www.pep-web.org/document.php?id=IJP.014.0399A
“Further, the omnipotent child can brook no denial of its wishes and frustration can only come from a hostile mother; so the adult sees in the failure of his hopes the hand of a hostile force. He understands no more than the infant does that the hostile force is his own projected aggression.”
Hmm – seems like MN is finally deciding to “frustrate” her “omnipotent child” by projecting many fold his own aggression back at him …
Back in the time period that paper was written, Freudian analysis was a huge pre-occupation of the intellectual elite of the day and was applied to everything. Intellectual fads happen! Today’s intellectual fads will also fade away and be replaced in turn with the next wave. And so it goes…
I suppose that is why I am such a fan of Joseph Campbell’s stuff – making the links/cross connections over time and space and culture to tease out the enduring themes/archetypes that run through human history/experience ….
There really is nothing new under the sun, ISTM, only variations on themes – the trick is to figure out what those themes are …
PS – I guess that is why i would take exception to what I saw as the author’s contempt/derision for “Mythology” – the means by which folks have tried to make sense of the universe and their place in it ..
Every people, every time, has its own and, IMO, suffers if it lacks a coherent one. One can argue with/lament the particulars, but each, in it’s own way, ISTM, has it’s method for incorporating those enduring themes – and will persist until its particulars fail to work for a crucial % of folks. Methinks we are in such a time now – we need a new mythology that “works” better for us; but to be successful It will have to incorporate those same enduring themes …
Ain’t it interesting how often the “mother” image appears …
My mom starting teaching me about mythology when I was 3 or 4 and since then I have enjoyed learning about the many various facets of mythology, old and new. That includes the fact that there are intellectuals who are contemptuous of it, and see all mythology as a type of lie or human delusion/excuse. Well, IMO, some kinds of myths are lies and/or delusions and/or propaganda and worthy of dissection. So even though I did not completely agree with the author’s point of view, he did make some good points about some of the delusionary aspects of the myth of progress (IMO,the Myth of Progress is complex and has it’s plusses and minusses).
we need a new mythology that “works” better for us
There is no shortage of mythologies in our time, new and old, although I think people have a hard time seeing that. A few years ago I went to a conference called Mythic Journeys and although it was great in many ways, I ended up being annoyed at the academic mythologists who were so stuck in their ivory tower mindsets they were mostly who incapable of seeing all the living mythology in the world around us. I remember asking one of them about television as one of the sources of modern mythology, and analagizing the modern family and friends sitting in front of a tv with the older traditions of storytelling around a campfire. I mean let’s face it, the ancient folktales that people loved were also quite fantastic, violent, and unrealistic, as most tv is. But he just couldn’t grok that. ISTM that for him, mythology was what ancient people did (and way better than us) and was a topic for modern academics to psychoanalyze and pontificate about.
I suppose I have this fantasy that, in order to serve its proper function within the context of our time, the new myth be very much like the ancient one of Gaia – a living world that, indeed, needs to be “placated” or She will not continue to provide for us – our heroes will be the Prometheii (sp?) of our day – instead of stealing fire, they will “steal” photons, e.g. for us to use as MN has been doing for eons, and we will redevelop the necessary humility that understands that our salvation lies in being part of, instead of fancying ourselves “lords” over, creation –
Why do we keep on insisting that we have the smarts and the authority to order the universe?
Our predominant modern day myth of the market is rather shabby, IMO, and never able to bear the weight of an honest myth – a sham
Aquifer, have you ever really studied mythology? Do you have a spiritual path/practice that has a mythological component? Are you familiar with the Greek concepts of Mythos and Logos as different modes of apprehending reality? Because if you really want to understand mythology in deeper way, you have to learn to see and experience it for yourself.
The reason I ask all this is that the way you are talking about Gaia IS a modern myth. And ISTM that you are talking about mythology in an idealized and abstracted intellectual new agey fashion. Ecopagan types resurrected Gaia from the old creation stories and made her a goddess reborn for the mdoern world, but as far as I can tell from my research the Greeks, Romans, etc, did not worship Gaia specifically though they certainly did worship other goddesses that were associated with plants, animals, crops, harvest, etc, but not a personified Nature the way modern westernized intellectuals now look at it. The whole separation from Nature thingy mostly evolved *smirk* out of Christianity (and monotheism in general), and even then it took over 1000 years for people to get that abstracted from the natural world. This was mostly due to higher education and universities becoming the basic mode of education, and in those realms Nature was subservient as the rural peasants were.
The belief that “that we have the smarts and the authority to order the universe” is also mostly a modern myth which combines aspects of Scientism, aspects of Christian/monotheistic thinking, and aspects of the Myth of Progress (also a ‘modern’ myth).
Apologies in advance if this seems overly critical. but it’s a subject of some importance to me.
Yes,that is a good point.
We need to go back as far as we need to go back, to undo the rules for corruption,no matter how long they have been enshrined in law,supreme court decisions,practice,etc.
That period was a special time, the US after the brink of destruction.The 1870’s, after the 14th amendment. the first one that made corporations people.the begining of the new concept of corporate power. throw into that, the like of the JP morgans, unbridaled control of the economy…by the time of the crash of 1895,the new federal reserve system was not yet a thing,but I do think that MMT was just being written of, by keyens. By the time of the morgan manipulated crash of 1907, the road was paved for the need for a federal reserve system….this was a time when the two hundred or so JP morgan companies accounted for about 1/6 of the US GDP.so you throw in the rockefellers, oil and banking cousins, the carnegies,whitneys,mellons,etc.. the blue bloods who were yet to create the systems of control through groups like the council on foreign relations, to take over the legal,financial,academic,social direction of the thoughts and practices of every generation since…That was even before the first koch was making his fortune building pipelines for stalin.
I do agree, we must look at the past, and take what is good and toss the rest.Even if for now this is a futile exercise, we must not include anything just for expedience.We need to go for broke,because that is where we are going anyway.
A critical difference: the populists owned land and farmed it. Today’s progressives cling to a job and prostitute themselves to keep it. Nothing will change so long as people seek personal salvation in a job. Can you imagine Marx writing, ‘job holders of the world unite, you have noting to lose but your 401ks?’
How true.
“For me, a bold vision of nation progress and prosperity requires a new, aggressive commitment to social and economic equality. I believe democracy is an excellent thing and the only long-term political solution to social despair, stagnation and unfreedom; and that genuine political democracy requires a significant degree of economic democracy.”
No you don’t.
As in . . . ” no, he doesn’t believe it. Not really.” . . . ?
Someone find a carrier pigeon to send Pete Peterson word that taxes are not necessary to fund government expenditures. What would The Third Way’s response be? While taxes on the rich should be eliminated, taxes on middle and low income people should be increased to help them avoid the “moral hazard” of choosing to be poor.
“Lame generation”? The root cause of the apathy we see is fear, fear of taking our future into our own hands. Once we overcome our fear, we can establish political and economic democracy. And it can happen fast. We are dealing with a house of cards.
“Someone find a carrier pigeon to send Pete Peterson word that taxes are not necessary to fund government expenditures. What would The Third Way’s response be? While taxes on the rich should be eliminated, taxes on middle and low income people should be increased to help them avoid the “moral hazard” of choosing to be poor.”
That’s exactly what I think the Finance guys will respond. That’s why Bush’s economists maintained that “deficits don’t matter.”
Saving the safety net even from this iteration of rape seems bound to fail because the greed is so intense and concentrated on one hand and the machinery or apparatus supporting it is just so overwhelming on the other.
And even if you succeed in slowing it, each time by a gargantuan, society exhausting effort, the nightmare just starts all over again. It’s groundhog day, with the internet and the MSM and the giant multi-national corporations and absolutely unlimited funds and technology and the politicians from both sides and from all nations, over and over, until they succeed.
Or – doing it over and over until WE succeed – but, man, there are SOME things we have to stop doing over and over …
Before this thread goes to ad infinitum… I just want to say i dislike this whole notion of “greatest generation” to lamest generation….the whole construct is false.
the greatest generation, just lived in a different time, they lived on the upward side of a curve. we are living in a time when those chickens have come home to roost. people have always done what they could. people of the greatest generation were able to do whatever they could, there were no constraints,imposed,like not haveing a degree to do what one is competent to do. with an eight grade education and ten years experience, you could be anything you wanted in that field,if you knew your stuff. Now you could have twenty years experience , and have some inexperienced turd from some school become your new boss, while another inexperienced turd is running your financial future at some bank who your business has thirty years experience with,telling you you no longer qualify for credit…while betting on pie in the sky investments….this is the system as it is. Knowledege no longer counts.spending at institutions counts.journalists are just as lame as ever. they know how to construct a sentence, and that is about it.back in the days of ida tarbell, or of george seldes, the people who were right were just as attacked, and ridiculed. now, those who fight the good fight, like greg palast or amy goodman or the countless others who are out there, getting no coverage whatso ever, except at real organizations like link tv, or project censored,or on bill moyer’s program or maybe here….are voices in the wilderness.But now, the propaganda industrial complex is so good, and the tracking of individuals so extreme, the game is seriously rigged against anyone now who has a good idea.
history will surely cast a bad light on the current leaders/media whores,corporate debutantes,etc,who are all on the wrong side….but that can be remedied because history will be written that the wrong side was the right side…. and the last generation to remember it wasn’t,will be dead.
i dislike this whole notion of “greatest generation” to lamest generation….the whole construct is false
Agreed. I don’t like these types of constructs either. But they are catchy because they appeal to people’s need to BLAME in simple terms. One thing that has surprised me as I’ve gotten older is just how much people (even seemingly very intelligent people) want to have simple overgeneralized targets of blame to be righteous about.
Rob,
“the greatest generation, just lived in a different time, they lived on the upward side of a curve. we are living in a time when those chickens have come home to roost.”
I couldn’t agree more!
Then the “LEFT” – primarily LABOR – had a message that was POSITIVE and INCLUSIVE, even though it was largely caucasian and male dominated. Now the “NEW LEFT” – environmentalists, feminists, gay rights, and civil rights activists – have gone NEGATIVE and DIVISIVE. LABOR is prostrate and seen largely as just another special interest grabbing for the scraps still left on the table often at odds with the NEW LEFT.
For me LABOR is the broadest, most general, group into which WE all fall. Gender and environment also figure into my thinking. But dare I say that LABOR has taken the big hit as the NEW LEFT has garnered the attention of most progressives, with many of the latter lukewarm to unions, if not vehemently ANTI-LABOR with predictable consequences. In Western Europe LABOR still has a “voice” at the table. But it too is swimming against the crimson tide of neoliberalism – AUSTERITY.
I have written elsewhere on this blog about how the NEW LEFT and LABOR often found themselves at odds with different goals, thereby pitting one against the other in a divide-and-conquer scenario. But this “conflict” took place in a rapidly changing set of historical conditions over the course of the past 40 years or so that have brought US to the present HOLE. The event horizon of this HOLE has at minimum 5 SECULAR developments, each of which is worthy of book, if not a library. These are:
1) [late 60s onwards] DECLINE OF MANUFACTURING in all advanced political economies and the transition to a service “knowledge-based” [whatever that means] economy with a subsequent absolute decline in employment in this sector in all of these economies; most heavily unionized, blue-collar, male dominated segment of the electorates that voted overwhelmingly for “social democratic” political parties that created the welfare state; the SO-CALLED good ole days of the New Deal in this country!
2) increasing FEMINIZATION of the labor force with a subsequent downward pressure on wages overall; [WOMEN work for less and still do not because they want to but because they have to]; let’s not even traverse the patriarachal structure that has many a white male blaming women, minorities, and/or immigrants for their declining standard of living. Anyone recall “Reagan Democrats”? And didn’t a majority of white, working class males still vote for Mitt Romney?
3) IMMIGRATION [both legal and illegal] from the periphery to the center; Hispanics in the US; Turks in Germany; Commonwealth countries to England; North African Arabs in France; Moloccans in the Netherlands, etc;
4) PRODUCTIVITY INCREASES throughout advanced political economies via CAD/CAM, JIT, AI, Robotics, – automation in general that renders labor increasingly superfluous.
5) PROLETARIANZIATION of upwards of two BILLION human beings in the “periphery”, former peasants thrown off the land, as a consequence of the ongoing “green revolution” and agribusiness, added to the GLOBAL labor force exerting downward pressure on wages for unskilled, semi-skilled labor in advanced political economies with compliant, largely authoritarian regimes in this periphery only too willing to catch mice for the larger capitalist enterprise.
Add to these five SECULAR developments NEOLIBERAL policies – fiscal [tax cuts intended to starve the beast over time], trade [NAFTA], deregulatory [Glass-Steagall], i.e., the Washington Consensus – in this country to facilitate the larger economic process coupled with the credit spigot and the result is:
2011 US FAMILY MEDIAN INCOME = $44,000 and leveraged to high heaven! Adjusted for inflation, income has stagnated for MOST Americans since this “great transformation” began. And we all know how the 1% have done. And more significant perhaps is the antipathy to politics and government – depoliticization – by an electorate traumatized by these secular headwinds often blaming its victims.
If we factor in the social dislocation, psychological dissociaton, decreasing social mobility, etc., resulting from these developments, is it any surprise that the populace has been ATOMIZED and ANOMIZED by the “rabid individualism” and “greed is good, I got mine you get your’s” messaging from the MSM reinforced by institutions in civil society [religious, cultural, academic, nationalist…] trumpeting MARKET TOTALITARIANISM?
Yet even more disconcerting is the piling on and BITCHING by the lamest generation! That’s is what is lame. If history is a continuum on which the wheel of progress can roll forward or backwards, then the question to be answered is what are the consequences of these 5 secular developments? Do they not contain the seeds of their own undoing? Perhaps…
Recall when Mitt Romney uttered his infamous comment about the 47%. Remember his audience: members of the upper class [1%] who are ALWAYS class conscious. Did it occur to anyone else that he was telling them that 47% of the electorate were now voting in their rational economic self-interest and would continue to do so? That they – the upper class – would have to get used to it because the very conditions that made and keep them wealthy resulted in the creation of that 47%? Isn’t rational economic self-interest just another way of saying class-consciousness for those who want to bury the ghost of Karl Marx? Imagine that – a member of the ruling class – pointing out that the working classes – at least 47% of them – were now voting their economic self-interest for “free stuff”. Two things occurred to me: 1) American Exceptionalism was dead and neolibralism killed it – not by failing – but by succeeding; and 2) the MAKING of the American working class was a fait accompli with 47% of its membership now voting on the basis of CLASS.
Many of you will disagree or be a bit skeptical and that’s a good thing! But it doesn’t surprise me that amidst the “doom and gloom” evinced by the LEFT over the course of the past 40 years, some of us failed to see what was occurring in the “other America”. Class formation is a historical process difficult to document, yet alone understand, when it’s occurring right under your nose, especially when the dominant paradigm – American Exceptionalism – denies its very existence. It is also a learning process! It remains to be seen if this “CLASS CONSCIOUSNESS” will deepen in scope and breadth, attaining the critical mass in civil society requisite to the transformation of the political landscape. Right now it does appear atomized and more anger and frustration than anything resembling a strategy for LABOR in the broadest sense. But so long as the 5 secular developments identified above continue, their consequences for this country will intensify this class consciousness and it too, will NOT be reversed. Suppressed by the iron heel is another thing!
If I’m wrong I’ll leave it to those of you so inclined on NC to correct me or flush out the consequences of these 5 secular developments. For it is the latter that are driving this wheel of progress. It remains to be seen whether it rolls forward or backwards. But it will keep rolling…