Mitchell’s laws: The more budgets are cut and taxes inceased, the weaker an economy becomes. To survive long term, a monetarily non-sovereign government must have a positive balance of payments. Austerity = poverty and leads to civil disorder. Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
Let me begin by saying that much of America’s greatness comes from private enterprise, and I do not, nor ever have, recommended Marxism, socialism or any other “ism” in which the private sector is trivialized. The problem facing communist (for instance) regimes is not only that they devolve to totalitarianism, but they lack an incentive mechanism to improve, which is why communism always has failed and always will fail.
The single, most powerful, proven economic, incentive mechanism is the attainable profit motive. To be a motive, there must be a profit, either in money or power, and it must be attainable – a combination uniquely provided by private enterprise.
Having said that, I also am puzzled by the popular belief that private enterprise always is better than public works, and that our government is a burden on us.
The Tea Party’s misguided, nation-damaging efforts to shrivel the public sector, have made sneering at the government and government workers oh-so-fashionable. When the right wing casually cuts federal payrolls, too many of us think, “To hell with those people. They aren’t doing anything anyway.”
And the word “socialism” has become so pejorative, it’s the epithet of choice anytime anyone suggests the government provide some service. It seems, the primary goal of conservatives is not to grow the economy or even to maintain the economy at its current quasi-recession levels, but rather to reduce the size of the federal government.
This is a goal ??
I believe the myth of universal private-sector superiority took hold when President Ronald Reagan included in his first inaugural address, the magical line, “In this present crisis, government is not the solution to our problem; government is the problem.” It became an addictive slogan, a mantra for those who would rather not suffer the agony of thought and evaluation (though Reagan, himself a government worker, set records for increasing the size of government — but hey, why worry about facts?)
The reality of the public vs. private debate: Some industries are better run by the private sector, because the profit motive supports efficiency, creativity and service. But some industries are better run by the public sector, because the profit motive would support greed, lawlessness and hardship for many. It depends on the industry.
Merely to focus on the reduction in government is to ignore one basic fact: We have governments only because there are some things governments do better than private enterprise does. Wisdom requires knowing which things to render unto the public sector and which things to render unto the private sector.
It was private enterprise – private ownership of banks — not the Fed or Congress, that caused the recession, and if we recover, it will have been the government, not private enterprise, that got us out of it.
I personally am glad the government runs Social Security and Medicare. I’d hate to see those programs left to private sector insurance companies (i.e., eliminate the programs). And, while Medicare supplements and Medicare Part D involve private insurers, they follow strict rules set up by the government.
This demonstrates the perfect public/private program. The government creates the plan and the ground rules, and the private sector executes it. Both parties are necessary for its success.
For instance, anyone who wishes to purchase Part D – which comes from private insurance companies — can go to a wonderful web site run by the federal government, that is superior to anything offered by the private sector.
There, you can drill down through all the private companies offering Part D, exactly what medicines they cover, exactly what the charges are, the types of coverage, plus a terrific ranking system based on cost, your drugs, your drug store and even on the quality of each company’s service (!). I challenge anyone to show me a private insurance site that even comes close to providing this kind of service.
Recently, I answered a couple of comments, disparaging government work, and mentioning the postal service as a specific example of inefficient, lazy, uncaring government. Here is what I said:
The postal service is required to deliver the type of mail no one else wants to deliver, at low prices no one else wants to charge. For example: Advertising mailers and first class everywhere.
For about $.45 you can send a letter anywhere in America, including Hawaii and Alaska. Who else will do that, even for triple the price? For even less, you can send advertising mailers all over the nation, and have them hand-placed right in mail boxes.
Yesterday, I mailed four books for $2.35, total postage. Fed Ex would have charged me more than $10 for 3 day service. I can mail a 5lb. box anywhere in the country for about $5, two-day service. That same box will cost me at least $15 if shipped by FedEx 3-day service.
The belief that private industry always is better than the government – a belief that leads to the single-minded focus on reducing the size of government – is wrong-headed and destructive. Government exists because in some areas it provides superior service to the people.
In America, the left hand is the public sector and the right hand is the private sector. Our country was built by two hands, working together. Cutting off the left hand is no way to build a nation.
Now, if only someone could please inform the Tea Party “Patriots,” before they completely ruin America.
Rodger Malcolm Mitchell
No nation can tax itself into prosperity, nor grow without money growth. Monetary Sovereignty: Cutting federal deficits to grow the economy is like applying leeches to cure anemia. Two key equations in economics:
Federal Deficits – Net Imports = Net Private Savings
Gross Domestic Product = Federal Spending + Private Investment and Consumption + Net exports