Yves here. On Real News Network, Bill Black and Stephanie Kelton discuss why we need more direct federal job creation, particularly for infrastructure. Whenever we mention “jobs programs,” there is a knee-jerk tendency among the commentariat to treat them as insulting make-work, when the last effort at creating mass employment was anything but. As Marshall Auerback wrote of the New Deal programs:
The government hired about 60 per cent of the unemployed in public works and conservation projects that planted a billion trees, saved the whooping crane, modernized rural America, and built such diverse projects as the Cathedral of Learning in Pittsburgh, the Montana state capitol, much of the Chicago lakefront, New York’s Lincoln Tunnel and Triborough Bridge complex, the Tennessee Valley Authority and the aircraft carriers Enterprise and Yorktown. It also built or renovated 2,500 hospitals, 45,000 schools, 13,000 parks and playgrounds, 7,800 bridges, 700,000 miles of roads, and a thousand airfields. And it employed 50,000 teachers, rebuilt the country’s entire rural school system, and hired 3,000 writers, musicians, sculptors and painters, including Willem de Kooning and Jackson Pollock.
I lived in Escanaba, Michigan for a couple of years in my childhood. Its huge lakefront park, the best amenity in that small town, was a WPA project.
As for administration, one way to make implementing infrastructure projects faster and more responsive to local needs is to take a page from the playbook of that great American socialist Richard Nixon. He established revenue sharing, in which the Federal government gave money to state and local governments for their use, with anti-fraud and corruption oversight in place. The idea was that the Federal government could fund more cheaply than smaller government entities, but government bodies that were more accountable to their own citizens would often do a better job of spending.
PAUL JAY, SENIOR EDITOR, TRNN: Welcome to The Real News Network. I’m Paul Jay in Chicago at the People’s Summit.
And we’re about to talk to 40 percent of Bernie Sanders’ economic advisory team. And we’re going to talk about some of Bernie’s thoughts about the economy and perhaps things he should be addressing that perhaps he is isn’t.
Now, first of all joining us is Bill Black.
Thanks for joining us, Bill.
Bill is obviously a regular on The Real News Network–practically every week. He’s an associate professor of economics and law at the University of Missouri-Kansas City, a white-collar criminologist, a former financial regulator, and author of a book that has one of the best titles I’ve heard, The Best Way to Rob a Bank Is to Own One.
And also joining us is Stephanie Kelton. She’s an economic adviser, as I said, to the Bernie 2016 campaign. She served as chief economist on the U.S. Senate Budget Committee, is professor of economics at the University of Missouri-Kansas City, and founded the blog New Economic Perspectives.
Thanks for joining.
So I interviewed Bernie Sanders. And, actually, maybe what we’ll do is I’m going to run a little clip from that interview, ’cause I asked Bernie a question I don’t think he’d ever been asked before, at least not on camera. So this is a clip where I ask Bernie whether he would support a direct federal jobs program in New Deal, 1930s New Deal style versus the kind of stimulus program that President Obama had, or even before him President Bush, where you kind of give money out there, and they’re usually either for public-private partnerships or they’re sometimes to states and cities to spend, but often that money winds up in private-public partnerships versus just a direct-jobs, federal jobs program. And here’s what he said.
JAY: Would you consider a Roosevelt-style direct federal jobs program, perhaps targeting the inner cities like Baltimore?
BERNIE SANDERS, CANDIDATE IN DEMOCRATIC PRESIDENTIAL PRIMARIES: Absolutely. Absolutely.
JAY: ‘Cause when it’s come through the cities and the states, a lot of times ordinary people don’t get the money.
SANDERS: No, that’s right. That is exactly right. There are two elements. Number one, we have to rebuild our crumbling infrastructure. And that is our roads and our bridges, our water systems, our wastewater plants, airports, rail, etc., etc.
But second of all, when we talk about job creation, the federal money has got to go into those areas that need it the most. And what is happening in inner cities all over the country is a story that is not being effectively told, but we have crisis after crisis after crisis–crumbling public school systems, high unemployment, mass incarceration rates. We have got to start focusing on rebuilding inner cities in America.
JAY: So a direct, federally funded jobs program is on the table with you.
SANDERS: Absolutely.
JAY: Stephanie, so he said he would support it, but he never really had said anything about that before, and he I don’t think has said much about it afterwards. What have you been advising him in terms of what this infrastructure program looks like?
STEPHANIE KELTON, ECONOMIC ADVISER TO BERNIE SANDERS: Well, I think he didn’t invoke something like this before. He didn’t use the sort of language that you used. You specifically said something modeled on the old New Deal programs, like the WPA, CCC, the National Youth Administration. There was an alphabet soup of these direct job creation programs under the New Deal, right? You asked him, should a Sanders administration be supportive of something like that, and he said absolutely.
The closest that I can recall him coming to doing something like this before your question was in his speech on democratic socialism. And that’s where he invoked FDR’s Second Bill of Rights and he said, we need to go back as a party and rethink what it means to be a Democrat, and he laid out the sort of things that he thinks are important. And he went right to the heart of FDR. He said this is sort of unfinished business. FDR wanted a Second Bill of Rights that included not just the health care piece, which he talks a lot about, right, a guaranteed right to health care, not just the education piece, which he talks a lot about–everyone should have a right to an education, and of course he’s been pushing higher education to be included beyond K through 12–but also a right to employment. And that’s part of the Second Bill of Rights. He did it there, and he did it again in his remarks at the Vatican in April, where he talked about what it means to him to talk about a moral economy, and again he invoked the Second Bill of Rights. And there he got more specific. He talked about a guaranteed right to employment.
And so when he talked about this kind of stuff, the infrastructure piece is, I guess, a part of that, but it doesn’t go far enough. It doesn’t guarantee a right to employment for anyone who’s ready, willing, and able to work and unable to find work elsewhere in the economy. Infrastructure is primarily for males of a certain age with certain physical capabilities, and so it doesn’t have the reach of a full-throated federal jobs program.
JAY: If it’s a private-public partnership, a big whack of that money turns into profit that in theory could have been more direct jobs, and also whether even how much hiring you do is then guided by how much profit you’re going to make. The objective isn’t jobs for everyone if they want them.
KELTON: Yeah. So I think what you’re saying is in these private-public partnerships a lot of the money is peeled off before the work even begins. It’s peeled off by layers of government officials, it’s peeled off by consultants, and those sorts of things. So it never actually does the job of employing people in building out infrastructure.
Of course, doing public works projects like the kind that were done in the New Deal actually turns out to be very profitable as well, because you tend to boost the economy. And when you have so much job creation and people with new incomes and spending, it’s also very good for private industry.
JAY: Bill, what have you been advising in this respect? ‘Cause I say again, if you’re going to counter the power of billionaires, if you’re going to have a jobs for everyone, you’re going to have to have a serious build-out of the public sector, which I think includes not just throwing money into the public sector but also a real reform of how the public sector works–you can say even a democratization of the public sector. Does he not have to grapple with all this for this infrastructure program to make sense?
And just to take another step, we’re talking at this conference about political candidates that carry on this political revolution, and the next step for people here is to support candidates that take up these objectives. Don’t they have to flush this infrastructure thing out more?
BLACK: Yeah, and they need to, in our view, stop talking about infrastructure almost exclusively and as if it’s magic. So they think, for example, that you could have austerity, but if you spent $600 billion on infrastructure your economy would suddenly grow massively. Well, no. Right now it would be thrown into recession. Right? So aggregates matter, and if you run austerity plus–.
JAY: If you did all the infrastructure spending, that would throw you into recession?
BLACK: No. They want to combine it with austerity, right? And so they act like it’s magic: Well, as long as we’re spending money on infrastructure, doesn’t matter that we have austerity. And that’s not true. If you have a substantial increase in infrastructure spending but you decrease spending in other areas, keep your taxes the same, you’ll throw this economy into recession and you’ll do it within a quarter.
JAY: But Sanders isn’t suggesting that.
BLACK: No, but lots of people talk this way. For example, the Obama administration endlessly talks this way, that, oh, if we could just spend an extra $100 billion on infrastructure and have offsets in other fields, everything would be great. It wouldn’t be. Right?
So infrastructure can be valuable, right? You build the Erie Canal, one of the best things ever done in the United States–and Canada, by the way. It helped both of these economies grow enormously. But there are other infrastructure projects that have almost no effect on the real economy. And in particular if you’re trying to find blacks and Latinos, long-term unemployment, or teenage unemployment, as Stephanie has just explained, these are not infrastructure-type jobs in many cases. And so literally it’s sometimes handfuls of people that are hired.
Now, I wouldn’t think exclusively through governmental programs, because there’s another sector, and that of course is the NGO sector. And that is ready-made to be able to expand jobs without having that kind of peel-off that you’re talking about of private sector profits that get in the way.
But I want to endorse also and reemphasize something Stephanie said. All of these stimulus programs are actually very good for business as well. And I don’t care, right? I’m there to help the people. But if it helps businesses as well, hey, that’s fine. We just don’t want the stuff siphoned off into the private-sector profits directly. And so the private partnerships with government, as an overall statement, have been a terrible failure, one of the first things that we’ve done in the United States. And a pure profit model, where the private sector’s trying to take over, would have been government functions and nonprofit functions. I’m talking about for-profit universities. Well, The Wall Street Journal reported that if you went and got a degree at one of those places, you ended up poorer than if you had never gone to those kind of universities.
JAY: Yeah, ’cause you pay enormous tuitions, borrow money, and take forever to get out of debt, and you almost never get a job that had anything to do with your training.
BLACK: Because your training is crap.
JAY: It’s crap, yeah.
BLACK: In circumstances.
JAY: And we know, seeing it even at Real News. People that have come from some of these private tech colleges, they come out with almost no worthwhile experience for professional use.
BLACK: And that’s because the incentives are wrong. It turns out if you want to educate people, it works a whole lot better in a setting that isn’t driven by profit. If it is, then you get exactly what Trump University–. And so Trump University lawsuit is great, because it reveals how the system is rigged, right? That isn’t just rhetoric when the senators, both Bernie and Senator Warren, use that phrase; that’s actually a very concise, accurate economic description. And that’s what we give advice on in some substantial part is how is the system rigged and how do you fix it. And as you say, it isn’t enough to spend more money; we do have to change how the public sector operates. Right now, these private-public partnerships are a disaster.
JAY: Right.
Some people talk about Trump as sort of an aberration–you know, endless articles in the media, how did he get here, who created him, who’s responsible for–but all like he’s a some kind of illegitimate bastard child of the system. And it seems to me he’s quite not that, he’s quite a legitimate representative of just how parasitical capital has become. He is the quintessential unproductive speculator who sells his brand and speculates on real estate with all kinds of shenanigans and apparently did well–maybe not as well as he wants everyone to think. But he’s a legitimate representative of what’s become of the whole economy in many ways. And it seems to me his enablers have been the leaders of both parties, because as long as the leadership of both parties protect these superprofits made from this kind of speculative economy, then it’s the fertile soil for somebody like a Trump politically, ’cause they’ve gotten so cynical about the whole economy.
I’m making a little–my own rant here. I have to come up with a question. I guess what I’m saying is in terms of advising Sanders, he’s been railing against the billionaire class, but one of the things that the speculative economy hates, perhaps the most–and if you’re going to have any infrastructure spending, that’s actually going to be a stimulus, ’cause you’re not going to cut it somewhere else–you’re going to have to raise taxes, and there’s nothing this whole speculative class hates more than paying taxes. Sanders has talked a little bit about the need for some raising taxes in his health care plan. He says, in the end working-class families will wind up better off. He’s talked some about raising taxes on the rich. But this is going to have to be a pretty significant increase in taxes, one would think, to build out an infrastructure program the way he’s talking about without making these offsets.
KELTON: Well, if you come into this with the commitment to paying for everything, having a revenue source for every item on the agenda, and you say, well, I can pay for my infrastructure bill, it’s all going to be paid for, then for Senator Sanders it’s paid for through a tax on what he calls Wall Street speculation. It’s a financial transactions tax.
I got little bit lost in the Trump–.
JAY: No, the reason it got lost is ’cause the first part of my rant had nothing to do with my question, and I figured out I had to somehow get it back to the question.
KELTON: But you said you have to raise taxes. Now, the question is: do you have to raise taxes? Because the Republicans are all too happy to put forward legislation to cut taxes on the argument that these things pay for themselves–you’re going to end up with so much economic growth as a result of these tax cuts, which are going to incentivize the job creators, and they’re going to go out and they’re going to invest and they’re going to hire and the economy’s going to do well and the tax revenue’s going to come pouring in.
Now, look, you’ve got people like Larry Summers making the argument that if we were to do massive infrastructure investment today–and Larry always points out that interest rates are practically zero and that bond markets are begging us to borrow money and all of that–maybe that’s not the way that I would pitch it if it were me, but this is the way many Democrats are making the case for infrastructure investment: we can borrow at next to nothing, everything is falling apart, we have to make these investments at some point, deferring the maintenance makes no sense in an environment in which you can take advantage of very low borrowing costs, and so let’s go ahead and do that–and, by the way, it may end up paying for itself largely or in full because you’re going to get so much economic growth out of this if you do it big enough. Another way to do it would just be to say, what if Congress just authorized $1 trillion of increased spending on infrastructure without it paid for? Because it’s a difficult thing. You’ve got a Democrat in the White House, you’ve got Republicans in control of both houses. So if you introduce a–.
JAY: Which might be changing.
KELTON: You introduce a bill in the Senate the way Senator Sanders did–$1 trillion for infrastructure investment. You’ve got to make a decision: how am I going to introduce this piece of legislation? Am I going to attach a [pay for?]? If you attach a [pay for?] that involves raising taxes on anybody anywhere, what are the odds that your bill is going to get the votes that it needs to get out of the Senate? Absolutely zero.
And infrastructure, by the way, is one of those things that Republicans historically used to be able to vote for. They like infrastructure. They get it. They mostly don’t view it as wasteful government spending and intrusion into something the private sector ought to be doing. Republicans could get behind infrastructure. But if you tell them, we’re going to do infrastructure, they may say, okay, and you say, and by the way, we’re going to raise taxes in order to do this, absolutely not. So this is the conundrum.
JAY: So how do you solve the conundrum?
BLACK: Well, let me take first the Trump question. So Trump inherited substantial wealth. If he had simply invested it in Vanguard, he would be much, much wealthier than he is today. So he’s not a representative of someone who actually makes money through predatory practices; he’s actually reduced what his wealth would be if he were simply a passive investor. In other words, he’s a crappy business person. So he is representative of a significant class of billionaires who are actually really crappy business people.
JAY: But my point is his heroism is as a parasitical speculator. He turned this into somebody who’s supposed to be an icon.
BLACK: He does that somewhat inherently in that he buys large real estate projects. But most of the things involve rigging the system, right? So I’m going to get a special deal by giving–and he says this openly; this is the fun part, and this is your point that it’s both parties–he says openly, look, I’ve been on the other side of the table. All these members of Congress, these Senators, people running for president come to me and they want huge amounts of money, and they make it clear to me implicitly: if I want things done for me in the future, I pony up. And so I do. I don’t care about ideology. I just give.
Now, this obviously undercuts the whole Paul Krugman, Hillary Clinton claim that contributions don’t matter. Trump is telling you they matter enormously.
Then Trump says, look, I rig the system, I get political intervention, I get a zoning change–this is how you make money in real estate–because of my political contributions.
JAY: We know all about that in Baltimore.
BLACK: Right. But then sometimes I still lose. And then, even though I’m supposedly enormously wealthy and could pay my debts, I create subsidiaries and I put those subsidaries into bankruptcy so I never have to bear any substantial expenses. And then his next line in the debate was: all the greats do this. Right? So he’s really showing you the face of capitalism. And it’s a very ugly face. It’s a rigged system. They’re not terribly competent. But even when they lose, they don’t lose very much, because they shunt it off on other people. And they have absolutely no moral compunctions about any of this.
So what do you want to do with people like that? Well, you want one heck of a billionaire tax, right? So the conservatives call it the death tax. But this is a tax about–it’s not good for a society to have these seventh-generation incompetents destroying wealth and such and corrupting your political system. So you should have that not because it raises revenue; you should have that because it makes a democracy work better, it makes an economy work better. It’s not a good thing when the system is rigged for, really, many people. I mean, it’s literally one-thousandth of 1 percent in those circumstances.
JAY: I’m hoping we get you both together again soon and we can really dig deeper into the economic stuff. But the kind of burning questions that are at the summit are what’s the attitude of the Sanders movement towards, first of all, what’s next for the movement, what’s next for Bernie, and what’s the attitude towards people who really don’t want to vote for Hillary Clinton but are being asked to in some quarters. What’s your take on all this?
KELTON: Well, what’s next for the movement? I think we’re at an event today that is attempting to kind of get an answer to that question, where do we go from here and how do we continue to channel the energies that we have seen over the course of the last 12 months or so that have produced this thing that now everybody is referring to as a movement, how do we keep it going beyond the campaign season.
And I think one of the big things that you’re seeing is that people are getting actively involved in politics. And this is what Senator Sanders asked in his remarks the other night. He said to people, please run for office. You know, he’s always said no president–not Bernie Sanders, not anybody–could do this alone and no senator, if he ends up staying in the Senate, no senator can do it alone. When he introduces a piece of legislation, he needs cosponsors and he needs support and he needs the population behind him making the phone calls and pressuring their members of Congress to get behind his bill. He needs that support. And I think that’s what he’s telling people: I need you to stay actively engaged in the political process; this was not a one-off thing.
JAY: And he doesn’t seem to be saying that it needs to be within the Democratic Party. He just seems to say, elect progressives.
KELTON: I think that that’s right. I think that he is focused on the broader goal of having a movement of actively engaged people, however they choose to label themselves. And he’s fully aware, as most people should be, that most registered voters in this country are not registered as Republicans or Democrats. There are far more people registered identifying as independents than any other party affiliate. And so you kind of have a place for those people who feel disaffected and who don’t feel connected to the values and goals of either of the major political parties.
JAY: Alright. Great. Thanks very much.
And thank you for joining us on The Real News Network.
43 comments
Comments are closed.
My personal preference would be for a Federally funded jobs program, administered on a local level, with projects/jobs determined through a Participatory Budgeting type program. Communities/neighborhoods would engage in a process of suggesting and then voting on projects or work to have Job Guarantee workers perform.
http://www.participatorybudgeting.org/
On the interview proper, did anyone else get the impression that Kelton and Black didn’t actually have much say in Bernie’s platform development? From the responses they gave, they sounded more like outsiders looking in at the Sanders campaign, rather than insiders helping shape policy stances. Did they ever impress on Sanders the need to run on a Job Guarantee platform? If so, what was his response? If not, why not? It sounded to me like they were speculating about Bernie’s thought processes in much the same way that we do around here…which isn’t what I’d expect from official advisers. Granted, I was doing other things while listening to this yesterday, so maybe I got the wrong impression.
There’s a considerable difference between what Kelton in particular recommends and what Sanders has been saying. Sanders keeps repeating that all these programs of his can be “paid for” with more taxes or savings from this, that, and the other thing. Kelton’s philosophy goes along the lines of “What do you mean, ‘paid for’? Who do you think issues the money?”
And while Sanders would consider a job guarantee, it’s not part of his agenda. It probably should be. Might be why minorities were less enthusiastic about Bernie than they might have been, since I’m sure they’re well aware that they wouldn’t be seeing much of that infrastructure spending.
The Roosevelt central planners created the US suburbs, the greatest misallocation of resources in the history of the world.
That is completely false. The suburbs started long before that, in the 1910s and the 1920s, with electric trolleys. Better off people started moving away from central cities to get away from immigrants, minorities, and crowding. The Model T, which was introduced in 1908, also spurred the development of suburbs. When I lived in suburban Boston and suburban Dayton (Dayton was once a much more prosperous city than now), in both cases the housing stock in the suburbs in which I lived dated from long before the Depression.
Birth and marriage rates were very low in the Depression so you had very little new household formation. The priority (late but not fatally late) was to keep people who had not lost their homes from losing them via HOLC, not building new homes. Did you forget people were too broke to move and furnish them?
The next big wave of suburbanization was the GI Bill, which gave veterans access to cheap loans and led to the building of lots of starter homes after World War II.
Better trolls, please.
I have an idea: Let’s cut our “defense” budget by 75% and use the savings to improve infrastructure.
As long as infrastructure includes healthcare and education. In the video, both Kelton and Black spoke about how essential it will be to expand any jobs program way beyond physical infrastructure projects, but then they forgot themselves, and kept saying “infrastructure,” “infrastructure.”
Yeah, that’s one of the communication challenges of expanding MMT JG ideas more broadly that the core advocates don’t seem to have quite worked out. They get mixed up about what principles exactly they are advocating. Is it worker rights? Is it that people need work to have meaning in their life? Is it to have a monetary price anchor? Is it that there is inadequate aggregate demand? Is it that we need more cars? Is it to create a healthier environment? These notions are inherently conflicting.
Infrastructure makes a great summary word when the problem is lack of aggregate activity and the word ‘job’ has a relatively uniform meaning. But when the problem is inequality, malinvestment, poor distribution of resources, etc., it gets much trickier linguistically, because at this point our built landscape is as much the problem as the solution, and government compensation policy is at the heart of wage inequality. Whether doing more in aggregate helps, hurts, or is irrelevant depends on the details.
As much as I continue to support Sanders, I have always felt that his messaging and stated policy set has been incomplete and repetitive, at times smacking of misdirection, and as such, not entirely satisfying. I believe this is in part due to virtual impossibility of explaining MMT to a mainstream audience. I myself can barely convey the essence to another abstract thinker.
Academics such as Kelton perhaps need to focus on something that their every fiber will find anathema – to package these ideas in what are likely to be grossly inaccurate / oversimplified soundbites fit for general consumption. Perhaps we can enlist the folks that brought us “death panels”?
Agreed. That’s the trick of leaving the realm of academic monetary economics and really embracing how people actually think and feel and react, as well as embracing how management and organizations actually work in practice. Nonprofits and state and municipal governments are not exactly angelic actors*, no matter how much economists find it easier to assume good faith and good governance regardless of the evidence.
Most people don’t give a crap about the monetary theory justifications. The very notion of price stability itself has no experiential connection to the real world that most Americans have experienced over the past couple decades. In their world, inflation is a huge problem. Paying for the basics of housing, food, healthcare, education, transportation, and so forth, is a huge problem. Depressing, demeaning, and degrading workplaces is a huge problem. Etc.
And government is the problem as much as the solution, from petty harassment by the police to the prison system that traps many of our lower-income citizens in intergenerational poverty and oppression to the whole alphabet soup of government agencies whose primary mission today seems to be targeting Americans rather than protecting them. And of course there’s the bank bailouts and that whole ball of wax. The issue isn’t can the US spend money; of course we can, everybody knows that. The issue is how to spend it.
So the rhetoric has to be about return on investment, on why specific programs are valuable and productive, not on a general/intellectual appeal to full employment and price stability.
I don’t hold too much against Sanders*. The deck was stacked heavily against him, he actually did quite well considering the landscape, and where he did best was on concrete issues that are broadly popular, like inequality, single payer, and breaking up the banks. Interestingly, those are issues where advocates of JG have a lot of trouble translating the academese into policy proposals precisely because there are so many different competing principles in play.
For example, most people who support universal healthcare think that employment-based healthcare is part of the problem, not the solution, so JG as a solution to insufficient healthcare access is at best a nonstarter and at worst actually entrenches a bad system.
*My overarching strategic quibble is that if Sanders was really running to win, he had to run hard and early against the entire Democratic party establishment. That means directly drawing contrasts with Clinton as well as tying that in to the state and local party apparatus backing her. Instead, by the time the primary voting actually got started, the bulk of the party insiders had already endorsed her. I’m not saying this strategy would have necessarily been successful, I’m just pointing out that the issue isn’t the policy rhetoric so much as the hesitancy early on to really indict the core of the Dem party/pundit/insider class. And this is directly related to a lot of MMT advocacy since they expect these very same state and local actors to all of a sudden become dedicated public servants when it comes to designing, implementing, and overseeing JG projects. The cognitive dissonance there is amazing.
Our defense budget, including military, MIC and VA, is a massive federal jobs program paid for by our taxes. And of course, we do need a defensive force as an insurance policy but unfortunately, we use it offensively as well which is unnecessary, despicable and highly dangerous. Also it is bloated and inefficient but then, if it weren’t, it would employ less people which is a primary purpose of a jobs program.
But yes, we could divert money from one overpriced federal jobs program to a more societal productive federal jobs program. And hopefully we could make it more efficient and thus also employ more people at less cost.
“paid for by our taxes”
Nope.
And that (not funded by taxes) is the scary part.
That budget has no theoretical limit.
I think you are going to have to be more specific. I see significant portions of the federal budget devoted to maintaining the military and associated expenses. And I am going to have to make an assumption that our taxes are heavily involved in paying those expenses.
Now I am guessing you are hinting at taxes not being involved in paying for the wars but again you will need to be more specific. But maybe you mean something entirely different. Hard to tell from a one word comment.
The Federal government isn’t funded by tax payer money, and hasn’t been for decades.
So what happened to all my federal tax payments made over the decades? What was it used for? I certainly wasn’t able to use that money once the government got a hold of it.
You are going to have to be more specific. You are making statements and not backing them up with any logical explanation.
Your tax money was destroyed upon receipt. Newly created money is used to pay the defense contractors and all other federal dollar recipients when the Fed keystrokes instructions to their banks to increase the amount of dollars in their accounts.
All the allocations of tax money, including FICA, for particular purposes is simply an accounting convention that tends to hide the actual mechanisms.
A more thorough understanding of the descriptive parts of MMT will help you understand this.
This thread demonstrates quite well the rhetorical limits of MMT out in the wild. In the common tongue, taxes pay for spending. That’s what people mean when they talk about paying for things. Not the mechanics of the cash flow, but rather, the big picture.
Yes, of course, MMT intellectuals have defined words in the English language to mean specific things that are not quite how they are used outside the confines of monetary economics, but if you want to communicate with a broader set of the public, these types of semantics are irrelevant.
Of course taxes, in general, ‘pay for’ spending. That the specific electronic digits you send to the IRS get wiped out, and different electronic digits get sent to Lockheed Martin, is a distinction without a difference. That government technically spends first, and then taxes currency back, is irrelevant. Taxing the currency units back is paying for the spending in any lay definition.
Why?
Because the other form of paying for spending is inflation (money printing, the emission of new currency units).
That’s it. In aggregate, looking at the totality of the system, all national currency units spent by the national government are either 1) newly emitted currency units (inflation), or 2) existing currency units taken from one private actor and given to another (taxation).
Or in mathematical form, Spending = Inflation + Taxation
No, you’re the one playing semantic games. Federal taxes don’t fund anything; the money is not collected into some giant account and then dolled out to pay for budgets. In fact taxes don’t pay for spending. That’s the only point that needs to be made. Money to pay for things is created on demand, as needed.
“That the specific electronic digits you send to the IRS get wiped out, and different electronic digits get sent to Lockheed Martin, is a distinction without a difference.”
It’s reeeeeeeeeeaaaaaaallly not.
MMT can do just fine in the wild, in this particular case I just couldn’t be bothered to type at length to explain the basics. Bad form, sure, but honestly a simple ‘nope, that’s not how it works’ is actually a pretty good starter. It tends to halt people right in there tracks: “What do you mean ‘nope’? My tax dollars are paying for X”. Well, no, they aren’t actually, and here’s why…
Nope, that’s not how it works.
***
Your use of the word only either means you don’t understand the economics or you are being purposefully deceitful. I hope it’s the former and will respond here with that assumption.
Here is Wray verbatim:
MMT, at least if we’re talking about Wray, Mosler, et al, does not reject establishment buffer stock monetary economics. Rather, they argue that NAIRU is the wrong mechanism.
This is the key point: the mechanics of the cash flow is only half of the issue in national government spending. The other half of the issue is purchasing power: the price anchor. It’s true you can fund national spending with 100% money printing and 0% taxation. You are projecting a hostility to chartalism that is not in my actual comment. I embrace fiat currency, not reject it. I’m not the one saying that the USFG is budgetarily constrained. It’s MMT proponents like Firestone who have argued that.
Instead, the point which you are missing is that there is a tradeoff. Either currency units are destroyed (taxation) or they are not. I have termed your confusion the MMT Mouse in homage to Schrodinger’s cat. You want to claim simultaneously that taxation destroys currency units and that taxation does not destroy currency units. That taxation does something and that taxation does not do anything.
I hope you read the above as a genuine attempt to explain the lay perspective of purchasing power. When people ask what taxes pay for, they are talking in price anchor language, not cash flow language. However, if you insist, then I challenge you to state with brevity which condition, in your opinion, exists. Does taxation destroy currency units, or not?
America’s economy was once described as being based on ‘military Keynesianism’. To an extent its true, but its more to say that America’s regional economic policy is based on military expenditure (hence putting so many military bases in poor areas in the South). It does work to an extent, but its a very inefficient way of spreading money. Even more so when more and more of those soldiers get based in the 800 or more off-shore facilities.
It’s not just jobs, it is creating a future. I watched a PBS special on the Civilian Conservation Corps, a highly regimented low-skilled labor program, specifically for young men, a part of the New Deal. It was an army of hard hats and logging boots. Many have used the things those boys produced, to this day. In a way, particularly out West, they created the nation we now have. Something similar would be great – putting young men to work instead of in jail. This leads to a question – would it be appropriate for government to require compulsory service to the country? This could take the form of military enlistment or 2 years of low-pay work for the good of the country – with all participants gaining free college, tech, or vocational school training. I won’t push this too hard because my generation fought against the compulsory draft during Viet Nam – yet, I do think the concept has merit. Further, if such a program existed, non-violent youth crime could be punishable through conscription, again, rather than jail.
One could even consider an ongoing community contribution infrastructure of some kind, as long as it involves the participatory dynamics diptherio mentions above. Perhaps there could be an obligation for a year or two for young people, but some form of ongoing participation should be made possible, on a voluntary basis. Many people might wish to be involved in projects that improve quality of life in their community, if there were an infrastructure and value system that supported it.
For example, the Twin Oaks community has evolved a method that allows residents to participate in activities that benefit the community, and are self-chosen.
I might be a bit more sympathetic to the idea if military services was absolutely prohibited from being included.
My understanding is that the United States fought a civil war to ban compulsory labor — aside from prisoners duly convicted. So that would probably require an amendment. I feel kind of dubious about the idea of requiring labor from young people in general. Maybe if you framed it as — complete your 2 years of service, open to all ages/creeds/physical abilities/etc. — and you are now eligible for the national health care system for life.
So basically youre recommending corvee labour. Well, it did work for the Egyptians, but I still doubt that would work for us…
The BRAC list may be a model for infrastructure programs. Force an up or down vote, with no amendments, to keep the pork and silliness to a minimum (e.g., USPS sweetheart deal to Feinstein’s hubby). That wouldn’t be popular among lobbyists, but would give politicians some cover as they could say that everyone is in the same boat.
You don’t have to tell anyone who lives in the South about the CCC or the WPA. As with that town in Michigan, a nearby lake where I walk almost every day was built by the feds back in 1937. And in my state practically every state park was built by the CCC. Going a bit further afield Great Smoky Mtns National Park was established during FDR’s time with generous help from the Rockefellers. I could be wrong but I don’t believe the Rockefeller name appears anywhere on the place.
One of the stated reasons for the rise of the National Park system and by extension the state park systems was that it fosters a love for the country and a sense of patriotism–patriotism that often seems completely lacking in today’s globalized plutocrats.
So here’s hoping Black and Kelton’s suggestion comes to be. It’s not just about the jobs.
“and hired 3,000 writers, musicians, sculptors and painters, including Willem de Kooning and Jackson Pollock.”
A lot of painters created enduring public art in the WPA that lives on in our public spaces. These were a great gift that would not have existed otherwise.
Here are a few examples:
https://en.m.wikipedia.org/wiki/Federal_Art_Project
Also good is hiring people to be artists, as everyone is capable of being creative.
And people are creative when they can relax and be playful.
“Sit there, do nothing or just play. Let your creativity come to you. It’s like basic income.”
“Whenever we mention “jobs programs,” there is a knee-jerk tendency among the commentariat to treat them as insulting make-work”
Even if it were the case that the government was just creating bullshit jobs, so what? What is the alternative? Starve and die? Oh yeah, you’ll have so much ‘dignity’ as you waste away.
The alternative is give them a non-job…pay them to do non-work.
Yoga or meditation heals….it’s ‘health care’ related work (but is called non-work at this time, and staying home to practice yoga is considered a non-job).
That is to say, the alternative can be basic income (in the form of non-job, non-work).
Interesting no one responded to you. I personally favor social insurance over basic income, but really that’s a relatively minor quibble.
What continues to intrigue me is that people proffer this notion that there is no alternative to JG despite the fact that there are, indeed, alternatives.
No, my position is that you need to be giving people money for any reason. People who complain about paying people for ‘bullshit’ jobs are likely to be even less inclined to just give them money for no job at all.
Your original position was, to quote:
You have been offered two specific alternatives. You don’t have to agree that they are better policy options, but do you acknowledge that both basic income and social insurance are alternatives to ELR/JG that do not result in people starving and dying?
As far as this:
That is a sweeping claim. What evidence do you have to support it? Yves was talking about criticism here at NC, not some corporate Dem or laissez faire Republican. And inequality is a major issue. One of the core drivers of inequality is crap jobs.
At anyrate, social insurance is actually wildly popular. If you’re switching terrain from evaluating policy options to making a political argument, then it’s tough to beat Social Security. The old age and health insurance programs are two of the most popular programs in the entire government. That’s not a reason to reject direct spending for non-work. It’s yet one more reason to support it.
It’s tempting to copy the entire Wikipedia entry – the scope of the WPA was breathtaking and involved workers across every possible level of skills, education, age, etc., and as others here have said was a lasting source of pride. Here’s just a snippet, but to read the whole article and to think of all the work that needs to be done our communities….
Glad to see the clarification on Infrastructure jobs being largely targeted to a very specific group of workers. Not that they don’t need jobs, too, but why can’t infrastructure include things like staffing nursery schools, or elder care homes or communities, or, Good Grief, working on “renewable energy” projects? How about community centers, drug treatment programs, mental health care, or renovating homes for the homeless? So many things need doing around here that don’t involve structural engineering that could help communities really improve the lives of their residents.
As always, such huge failures of imagination from our so-called “elites”. If there isn’t a check enclosed, they don’t want to hear about it.
Yup, that’s my response to the “make-work, BS jobs” argument. There are a lot of things we need that we could pay people to do. Tutoring/mentoring students and providing care for the elderly (in their own homes, ideally) are two of my personal suggestions.
I try to avoid words like “infrastructure” or even “public works” when I talk about this. To me, it’s putting people to work doing the things we need to do, including the process of finding people jobs and getting them to those jobs. It could be anything from babysitting to rocket design.
There’s plenty of stuff that needs doing. A lot of that is infrastructure,but a lot is medicine or other forms of care, education, and emergency management. Point is we shouldn’t be limiting ourselves – if there’s something that needs doing, spend some money and employ people to get it done.
Hey, I normally agree with you diptherio, but the make-work BS is usually about things that are silly ideas, like the one that got posted about having people wash cars (I’m not kidding, there was really an author who mentioned as one of the job ideas washing cars, and there was another author who talked about saving Norfolk without, apparently, any idea that Norfolk hosts one of the major military installations in the known universe, and certainly no acknowledgement that perhaps the national security state is as much a problem as a solution).
For your two ideas, I think most people agree that education and healthcare are important fields of work. Rather, the dissent (or perhaps hesitancy is a better word) in those areas is primarily about these two issues:
1) We already have lots of labor in both of those fields. The primary issue isn’t needing more labor in aggregate; rather, the issue is that a lot of what we currently do is wasteful (and even counterproductive – to give one concrete example, ending the drug war would improve childhood education since prosecuting the drug war causes so much devastation to families and we know that family/home life/socioeconomic status has a direct relationship to academic success). JG doesn’t solve the underlying problems of why our education and healthcare systems are so poorly designed and managed.
Also, by definition, since time is a finite resource, JG time directly trades off with volunteer and civic engagement time. This is one of the philosophical problems with work in the formal economy that is not unique to tutoring and elder care but stands out here: perhaps it’s better for the informal economy to handle a portion of this activity.
2) Inequality is a huge elephant in the room. People working with children and people working in homes tend to be some of the lowest paid workers in our system. What’s the pay rate (and all the other terms of employment)? If we’re talking paying existing home healthcare wages, that’s a crap job. If we’re talking about paying these workers like academic economists, well now, that’s a very different kind of proposal.
The New-Deal project to last generations would be to transform our dreary, sprawling car-scape into a human-scale living environment.
I don’t disagree, but in order to popularize the idea need to build an ROI-based argument detailing how over a longer period the project would pay for itself. Easy in principle, difficult in practice.
My grandad worked for the CCC in his teens. all over the place…parks and schools and such. Learned a trade thereby (lathe and plaster/stucco) that served him(and us) til the day he died.
I’ve been advocating this since Obama took office(he never calls back).
We need to abandon the damned supply side, piss on my head nonsense, and get back to demand side. one of the biggest problems I see in my ongoing, side-of-the-road economic indicator hunting, is lack of velocity . there ain’t enough jack floating around out here where it counts(ie: it’s all stuck in the Caymans or in some mainframe, somewhere).
as has been said, there’s plenty that needs doing, and it ain’t stuff that megacorp can make enough profit(holy holy) on. but it still needs doing.
The usual suspects will cry about it, and belittle and smear the whole idea…but we seem to have plenty of money for destruction and rapine. let’s try building things, for a while.
Important subject and lots of insights,but Jay is a terrible interviewer, he went into long rants before the questions–notice Kelton confused at 14:00 because his rambling had gone on so long.