Twitter: @rodgermitchell; Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell
Mitchell’s laws:
●The more federal budgets are cut and taxes increased, the weaker an economy becomes.
●Austerity is the government’s method for widening the gap between rich and poor, which ultimately leads to civil disorder.
●Until the 99% understand the need for federal deficits, the upper 1% will rule.
●To survive long term, a monetarily non-sovereign government must have a positive balance of payments.
●Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
●The penalty for ignorance is slavery.
●Everything in economics devolves to motive.
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The oft-mentioned “Big Lie” includes the false claim that your children and grandchildren will be saddled with the federal debt. So, cutting the federal debt will protect your precious descendants. There even are “debt clocks” that purport to show how much each of us “owes.”
Total rubbish.
Federal debt is nothing more or less than deposits in T-security accounts at the Federal Reserve Bank — essentially the same as your savings account at your local bank (Your savings account is a debt of your bank).
How does your bank “pay off” its savings debt to you? Simply by transferring dollars from your savings account to your checking account.
That is exactly how the federal government pays its “debt.” It just transfers dollars from T-security accounts to checking accounts. Your children and grandchildren are not involved.
In previous posts, we have discussed how, “You never will know what you have lost” as a result of unnecessary and harmful federal debt ceilings and deficit cutting.
Well, the beat goes on. Here are a few excerpts from the January/February 2014 issue of Discover Magazine:
The spending cuts known as “sequestration” sliced $9.3 billion from federal research and development projects. The 24 federal agencies that conduct research slowed the pace of lab work, instituted hiring freezes and cut grant programs.
Yet, sequestration is only a small part of overall austerity. Deficit and debt cutting and limitation have been with us for many, many years — essentially since the end of WWII. (And before then, austerity was the primary cause of the Great Depression. See: Items 3 and 4.)
At the National Institues of Health (NIH). the sequester led to $1.6 billion in cuts and the loss of 20,000 jobs. With less grant money and fewer scientists, research stalled on cancer, the influenza virus, Alzheimer’s disease and more.
Do you think reduced research on such diseases will have any effect on your children and grandchildren’s futures?
The National Science Foundation (NSF) cut up to 600 grants, and NIH offered about 700 fewer than it did in 2012.
Steven Warren, vice chancellor for research at the University of Kansas predicts the most severe effects could come years in the future, as a generation of young faculty struggles for funding or pursues more conventional, less innovative projects, in an effort to win limited dollars.
How will less innovative research affect your children and grandchildren?
The 16-day, partial shutdown of the federal government stopped projects midstream and postponed the beginning of the five-month research season in Antarctica, where scientists are looking into everything from climate change to earthquakes.
The effects of sequestration and the shutdown have further eroded federal investment in science, which already had seen a 16% drop in the previous 3 years.
Mention this to any of your friends who tell you how they hate big government, and that government never created anything, and that the federal deficit and debt are too big, and that they worry about our children’s and grandchildren’s futures.
Remind your friends that they are parroting the very rich, who would like nothing better than to reduce federal spending on all things that could benefit the middle and the poor, so as to widen the gap between the rich and the rest.
The debt hawks say they want to protect your children and grandchildren, but instead, are destroying their futures, and doing the dirty work of the very rich.
Rodger Malcolm Mitchell
Monetary Sovereignty
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Nine Steps to Prosperity:
1. Eliminate FICA (Click here)
2. Federally funded Medicare — parts A, B & D plus long term nursing care — for everyone (Click here)
3. Send every American citizen an annual check for $5,000 or give every state $5,000 per capita (Click here) Or institute a reverse income tax.
4. Free education (including post-grad) for everyone. Click here
5. Salary for attending school (Click here)
6. Eliminate corporate taxes (Click here)
7. Increase the standard income tax deduction annually
8. Increase federal spending on the myriad initiatives that benefit America’s 99% (Click here)
9. Federal ownership of all banks (Click here)
—–
10 Steps to Economic Misery: (Click here:)
1. Maintain or increase the FICA tax..
2. Spread the myth Social Security, Medicare and the U.S. government are insolvent.
3. Cut federal employment in the military, post office, other federal agencies.
4. Broaden the income tax base so more lower income people will pay.
5. Cut financial assistance to the states.
6. Spread the myth federal taxes pay for federal spending.
7. Allow banks to trade for their own accounts; save them when their investments go sour.
8. Never prosecute any banker for criminal activity.
9. Nominate arch conservatives to the Supreme Court.
10. Reduce the federal deficit and debt
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:
1. Federal Deficits – Net Imports = Net Private Savings
2. Gross Domestic Product = Federal Spending + Private Investment and Consumption – Net Imports
THE RECESSION CLOCK
As the federal deficit growth lines drop, we approach recession, which will be cured only when the lines rise. Federal deficit growth is absolutely, positively necessary for economic growth. Period.
#MONETARY SOVEREIGNTY
#Monetary Sovereignty - Mitchell 
In keeping with Rodger’s comments above…
FOR AMUSEMENT…
Retired Admiral Mike Mullen continues to claim that the top threat to America’s national security is the “national debt,” and “out of control spending” on “entitlements.”
Mullen, 67, says that these “crises” keep him awake at night.
“We can’t keep spending ourselves into oblivion,” he told a gathering organized by Concerned Veterans for America.
Mullen hopes that austerity is the “beginning of being able to turn it around.”
This is a former chairman of the Joint Chiefs of Staff!
http://washingtonexaminer.com/former-top-military-officer-sees-national-debt-as-biggest-threat-to-country/article/2542594
FOR AMUSEMENT…
Some faculty members at the University of Missouri at Kansas City have a clue about Monetary Sovereignty. Not so with the faculty of Missouri State University. Thomas Wyrick, emeritus professor of economics, says the “national debt” is an economic doomsday clock. “If someone doesn’t stand in front of this machine, it will never stop!”
He says the problem is that, “Congress is looking for votes by promising money to this generation, and they are not thinking about 20 or 30 years down the road. So they put it on the credit card and send the bill to future generations.”
Wyrick says the only way to turn back the “doomsday clock” is to impose more austerity.
“The day of reckoning is coming. Who’s going to speak for future generations?”
And this is a PROFESSOR OF ECONOMICS!
http://www.the-standard.org/news/national-debt-out-of-control-msu-professor-says/article_b2474248-8232-11e3-8224-001a4bcf6878.html
The above clowns are deficit hawks. i find these morons to be less annoying than deficit doves who say the federal deficit is a “crisis,” while also saying the “crisis” is a phantasm, and we should focus on creating jobs. After the economy recovers, they say, we can address the “crisis” (the false chimera) by imposing more austerity (and thereby falling back into a depression).
Deficit doves make meaningless distinctions, e.g. between austerians who want total austerity now, and “deficit scolds” who, “Support the much more sensible goal of long-term deficit reduction, and endorse short-term stimulus alongside long-term austerity.”
So says one joker in an article titled, “Deficit Scolds Are Holding the Unemployed Hostage.”
If these morons genuinely cared about the unemployed, then they would acknowledge that they hurt the unemployed via self-contradictions.
Economics is a “science” in which circus clowns get paid for solemnly declaring that 1+1=3.
(Some even get Nobel prizes for it.)
http://nymag.com/daily/intelligencer/2014/01/deficit-scolds-holding-the-unemployed-hostage.html
FOR (SAD) AMUSEMENT…
Because Greece surrendered its Monetary Sovereignty, Greece will keep descending into debt and austerity forever. The gap between the rich and the rest will widen forever.
However, Mark Weisbrot says the IMF is finally “getting it right.”
(Weisbrot is co-director of the Center for Economic and Policy Research in Washington DC, a “progressive” outfit that supports the Big Lie.)
The truth is that the more the 1% and their puppets keep spreading poverty, the more they claim that prosperity is “just around the corner.” They have been saying this for years, and they will keep saying it forever. When leeches cause anemia, the cure is always more leeches.
Indeed, Mark Weisbrot says about the leeches, “The IMF is projecting economic growth for 2014. But this time they are probably, finally, going to be right.”
Weisbrot says that last month the Greek parliament approved a stimulus program of highway construction that will involve spending of €7.5 billion (US $7.2 billion) over the next year and a half.
“This amounts to about 2.7% of GDP during this period. For comparison, the US federal stimulus of 2009 was less than 1% of GDP.”
Where will this US $7.2 billion come from? Unknown to Weisbrot, it will be borrowed. The debt will be added to Greece’s already monumental debt. Hence this “stimulus” will triple or quadruple austerity. Greece’s a debt-to-GDP ratio was about 115% when Greece began austerity, and it has now reached 176%, and continues to climb. (Debt-to-GDP is important for Greece, but meaningless for Monetarily Sovereign nations.)
And yet, Weisbrot is celebrating Greece’s “return to growth”! He claims that “The austerity, or fiscal tightening, is basically coming to an end”!!!
When he is proven disastrously wrong (again) he will shrug his shoulders and continue spouting nonsense. After all, he is an “expert.”
Weisbrot, please get off your parents’ computer and leave us alone. Please.
http://www.theguardian.com/commentisfree/2014/jan/22/greece-growth-austerity-eases-europe-imf
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Here’s some more amusement, this time from faux progressive austerity clown, Rep. Alan Grayson, FL:
Rep. Alan Grayson
U.S. Congressman for Florida’s 9th District
Jan. 21, 2014
‘A picture is worth 1000 words. So let me show you two of them. On the left, our trade balance between 1962 and 1992, before so-called “free trade agreements.” And on the right, our trade balance since then:
What sane person could look at these two charts, and conclude that what America needs is more “free trade”?
We have run a trade deficit of at least $350,000,000,000.00 every single year since 2000, with no end in sight. The result is that we have gutted the U.S. manufacturing base, and run up enormous debt to foreigners — almost $6 trillion ($6,000,000,000,000.00) in U.S. Treasury debt alone.
We buy their goods, putting their workers to work. They buy our assets, driving us deeper and deeper into debt.
The real issue is not whether to sign new “free trade” giveaways and sell-outs. The real issue is how to curtail runaway U.S. trade deficits, and mountainous U.S. foreign debt.
The real issue is how we put our workers back to work, heal our economy, and heal our nation
Courage,
Rep. Alan Grayson
While I agree with Grayson that the TPP will only make the trans-nationals and the already rich richer, he is clueless about why we even have trade deficits and why it is not a problem at all. For the perfect rebuttal and ANSWER to Grayson’s nonsense, please refer to Rodger’s post:
https://mythfighter.com/?s=trade+deficit
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Grayson is one of those “progressives” who repeats the Big Lie about US government finances, especially the (fictitious) “national debt crisis.” In fact, he twice joined Republicans to oppose the raising of the federal “debt limit,” saying, “We need to live within our means. We need to eliminate wasteful spending. If we did those two simple things, we would not need to raise the debt limit.”
This is understandable, since Grayson (one of the richest members in Congress) wants to widen the gap between himself and the not-rich.
He says, “We buy their goods, putting their workers to work. They buy our assets, driving us deeper and deeper into debt.”
Actually the US government controls what foreigners can buy. The Committee on Foreign Investment includes the Treasury, DoD, Homeland Security, Dept. of Commerce, Dept of State, and 11 other agencies. It was created in 1975 when the USA changed from a net exporter to a net importer. (We send them dollars, and they send us goods. Hence the US government controls what foreigners can buy with those dollars). And of course the “debt” is trivial, since it consists of deposits in Fed savings accounts.
Grayson says he opposes austerity, but no one can simultaneously oppose austerity and uphold the Big Lie.
Sometimes, though, he dismisses the Big Lie. Last month he noted that Greek government debt stands at 160 percent of GDP, while the Japanese government debt stands at 215 percent of GDP with less unemployment.
So, for Grayson, the “national debt” is not a problem after all. And yet it is a problem.
Clearly he is mixed up.
At least Grayson opposes the TPP, or claims to. Rich people and corporations already control governments, and the TPP will radically increase their control. No matter what issue you care about, the TPP will make it worse. That’s why it’s being done behind closed doors.
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Regarding the trade deficit, a couple years ago, we wrote: When China exports to America, it expends massive amounts of energy, manpower, time and scarce resources to create products, which it sends to us in exchange for dollars, which we create at no cost, by touching a computer key. Thus, China is our slave, working and sweating essentially for nothing.
(https://mythfighter.com/2012/04/15/how-our-leaders-and-our-teenagers-take-responsibility-dont-blame-us-its-all-chinas-fault/)
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a few years back i was listening to that fool peter schiff. one of the things he used to brag about was that democrat alan grayson was one of his major customers.
it was entertaining to watch the contortions he would go thru to say, on the one hand, that grayson was extremely intelligent for being one of his most esteemed customers, but, on the other hand, extremely stupid for being a democrat.
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— Off topic –
ON THE MMT “JOBS GUARANTEE”
The NEP blog continues to promote the MMT “job guarantee,” which Rodger has often critiqued as impractical. Here I will submit that the “jobs guarantee” is downright pernicious, for it can only worsen poverty and inequality, no matter how many jobs we create. The “jobs” guarantee” ignores the global fact that the “job” is dead.
As individuals we each need an income, for we are not Monetarily Sovereign. Collectively we will not gain more income by having more jobs, since (as I will show) “jobs” perpetuate the duality between master and slave, rich and poor, owner and owned. This duality is the engine of the ever-widening wealth gap. It cannot be changed via the creation of more jobs.
Instead, the solution is something like Rodger’s Nine Steps to Prosperity, which would provide us with enough income to get back on our feet as humans.
Our problem is not lack of jobs, but lack of income, caused by the concentration of ownership of capital assets. The 1% are wealthy because they own the means of capital production. They own the machines, the robots, the patents, the land, the natural resources, the factories, the media, the money, the technology, the courts, the corporations, the politicians, the universities, and so on. In short, they own the capital — i.e. the factors of production that are not wanted for themselves, but for their ability to help in producing goods, services, and wealth.
By contrast, the poor own no capital assets. That’s why they’re poor. In this game, money is only a side factor, although money too is a form of capital. The real distinction is between owners and owned; i.e. between those who own capital, and those who do not. The latter will not become owners by having more jobs. They will remain increasingly disposable whether they are employed or not. They will remain owned by the rich, and cursed with diminishing usefulness. This cannot be changed by the MMT “jobs guarantee.”
Oxfam says the richest 85 people in the world have as much wealth as the poorest 3.5 billion – or half the world’s entire population – put together. The rich have this wealth because they own the capital. They own the capital because most of mankind is locked into an obsolete dependency on “jobs.”
Long ago, human capital was necessary for the production of wealth. Human energy was required for the production of goods and services. Labor was needed to build cities, fight wars, and harvest crops. That time is past.
Today, human capital has lost most of its value because of technology and globalization. Most goods and services are produced via non-human capital (e.g. fuel, machines, and technology). Technological change makes tools, machines, structures, and processes ever more productive, while leaving the limits of human productiveness largely unchanged (the limits being physical strength and brain power, which remain constant). Because technology increases the profitability of companies throughout the world, technology always has the advantage over human labor when the costs of them are the same. As a result, the trend has been to diminish the importance of employment, while the ownership of productive capital concentrates faster than ever. Technology is an easier and faster way to get a job done. Thus, technological change makes capital ever more productive. Thus, full employment as the means to distribute income is not achievable. Nor is it desirable. What we need is not jobs alone, but the democratization of economic power, i.e. of ownership of capital. If we cannot have that, then we at least need an income that does not depend solely on jobs.
That is, we need the Nine Steps.
Because technology (e.g. robots, automation, and globalization) makes labor is increasingly expendable, jobs are increasingly scarce in every sector of the economy. Thus, wages keep falling, and unemployment keeps rising. Adding more jobs will not change this, since jobs will not make workers into owners. Hence, more jobs will not being more power to workers. Freedom and democracy require participation in power. For that, workers need incomes that are not entirely job-dependent. They need the Nine Steps. Until they get that, human capital will continue to have less value that non-human capital. Parasitic owners will continue to call themselves “makers,” while they disparage their human hosts as “takers.”
Most people they think the only way to earn a living is to depend on a job. Hence they mindlessly parrot the phrase, “There’s no free lunch.” However the owners of capital enjoy a free lunch, since they work for no one. They own the capital that does the work. Their power comes not from having a job, but from having a job-free income. Power and free income (the “free lunch”) reinforce each other.
Jobs alone will not stop the drive toward greater “labor flexibility” and “worker productivity” (i.e. worker disposability). Jobs alone will not end the drive to boost profits by cutting labor. Jobs alone will not stop humans from being replaced by increasingly more productive non-human means of production. Companies are not in business to create jobs anyway. Quite literally they are in the business of using and discarding workers. That is, making a profit with as few jobs as possible. This will not be changed by a mere “jobs guarantee.” More jobs will not stop the march of technology and globalization. More jobs will not restore the middle class, nor restore consumer purchasing power. Not anymore.
As long as workers continue to depend on wages, they will suffer from the continued gravitation of wealth to the One Percent who own the capital. Workers will be crushed and discarded, along with the consumer economy. Inequality will continue to worsen, as will the depression. More jobs will not cure wage slavery, nor end debt slavery. What people need is more income. What they need is the Nine Steps.
Capital produces affluence, but labor produces subsistence at best. And now labor cannot even produce subsistence. Therefore the quest for a job is a desperate search for a slave plantation where we can delay a miserable death. Unfortunately the plantations no longer need slaves, since everything is increasingly automated. The intense fear of losing jobs shows that Americans are job serfs; i.e. slaves without plantations. In their desperate search for a “job,” they increasingly submit to greed, deregulation, pollution, falling wages, increasing layoffs — ANYTHING.
Adding more jobs will not change this, for it will not alter today’s tectonic shifts in the technologies of production. No matter what, jobs will continue to be eliminated. What workers need is to become capital owners, or at least to have an income that is not based on jobs alone. They need the Nine Steps.
The “job” is dead. Thus, a “jobs guarantee” can only perpetuate death. Those who rely on jobs today will not have jobs tomorrow. The real split is not between employed and jobless, but between owners and owned. The wealth gap is an ownership gap. We can’t make everyone owners, but we can give everyone an income that is not strictly based on a “job.” Hence the Nine Steps.
The Marxist solution was to democratize the means of production, i.e. spread the ownership of capital. Unfortunately this replaced plutocracy with bureaucracy. Owners were replaced by controllers; and the owned were replaced by the controlled. (Same thing.) Communism had some advantages (e.g. little or no unemployment) but it didn’t work out. Neither can capitalism be a success, unless we consider a global dystopia a “success.”
The “job” makes people focus totally on going to work and hoping they don’t get laid off today. For humans, this condition is wretched and absurd. Until we form some kind of new social order, we will need incomes that give us the freedom to dream again. This means incomes that are not based on jobs alone, since a 100% dependence on “jobs” prevents us from dreaming.
THE FIRST STEP is to overthrow the Big Lie. Until that is done, no solution will work. None. Any alternative, no matter how creative, will only make matters worse. Indeed, a “jobs guarantee” is worse than useless. At best it will lull the masses into continued acceptance of wage slavery, worker disposability, and increasing poverty.
A few commentators understand some of what I have said above, but they continue to believe the Big Lie. They think the US government runs on loans and on tax revenue, and that Social Security is “unsustainable.” Indeed, they call Social Security “welfare slavery,” which (for them) is the same as wage or debt slavery. Thus, for them, Rodger’s Nine Steps would be another form of “slavery.” For them, the Nine Steps would trade dependence on a job for dependence on the State. Such people do not understand that a Monetarily Sovereign State has infinite money, and that government is (ideally) people helping people. With the Nine Steps, the “dependence” is on each other.
Right-wingers portray the masses as lazy. This is a pernicious myth. Humans are naturally ambitious and adventurous. They like to collectively “kick butt.” Give them enough money so they can dream again, and get out of their way. “Enough money” means an income that is not strictly job-dependent.
Unfortunately, the current job-based system crushes people so that they devote all their energy to simply avoiding death. Their “triumph” is to get through each day without being hit by yet another personal disaster. We will not change this nightmare by adding more jobs. An MMT “jobs guarantee” might briefly ease some symptoms, but it would simply create more wage slaves.
To repeat, the key is to overthrow the Big Lie, and to expose the fact that there is enough money for everyone, employed or unemployed, capital owner or capital bereft. Only the defeat of the Big Lie can bring genuine change.
As a species, we have come to a fork in the road. Either we overthrow the Big Lie, or we keep descending into hell forever. Things will not get better on their own. It’s too late for that. Anyone who thinks this is an exaggeration is living in a dream word.
MMT-ers, you’re living in the past. A “jobs guarantee” won’t do it. We don’t need more jobs. We need more incomes. For that, we need the Nine Steps. But first, we must defeat the Big Lie.
____________________________
P.S. Here is an example. Kellogg Cereals has become so automated that in October 2013 the company demanded the right to hire more part-time and casual employees at lower pay rates. When workers voted the proposal down, Kellogg locked them out. Scabs hired through an Ohio union-busting firm now produce Frosted Flakes and Fruit Loops. Buses filled with scabs enter at a separate entrance, not visible from the picket line.
The company is taking steps to become 100% union-free. Management recently announced that two union plants in Australia and Canada will close this year, and production will move to non-union facilities. Kellogg also recently shifted 58 million pounds per year of cereal production from Memphis Tennessee to Querétaro, central Mexico, where workers are required to live in a housing compound near the factory, and are bused to work. Some have been kidnapped by drug cartels.
The phenomenon is global, and it will continue to get worse. The “job” is dead. No “jobs guarantee” will change this. Even if we discount the role of greed and corruption, there remains the impact of technology and globalization.
There is no longer room for delay. Either we overthrow the Big Lie, and we embark on Rodger’s Nine Steps, or else we are headed ever-deeper into the wasteland.
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8. Increase federal spending on the myriad initiatives that benefit America’s 99%.
What examples can we have for those “myriad initiatives”?
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Road building, beach rerestoring, federal park protecting, food inspecting, drug inspecting, weather forecasting, the military, FEMA, FDIC, forest fire fighting, funding all sorts of research, and on and on.
If you want a reference list, go to: http://www.usa.gov/directory/federal/index.shtml
Look through the list as visualize what each agency does
There are more than 700 federal agencies spending money and doing work, the majority of which benefits the majority of Americans, i.e. the 99%.
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How would something that is completely voluntary, ever “hurt the economy by putting people into lousy jobs.”
If you have or can get a better job, then nobody would force you into the JG program. If you don’t have and can’t get a job, you should be more than welcome to work for some local non-profit or other type of JG job.
For the life of me I cant understand the opposition to the JG. Ideally, we implement all of the 9 steps to prosperity successfully, and the private economy and normal Govt employment are so strong that every single person who wants a job can get one and the total number of JG workers is zero. However, because zero is unlikely, having a JG program would help some positive number of people. Even if only 10k people nationwide take advantage of the JG program, I would still think it was valuable and worthwhile.
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Auburn Parks writes, “For the life of me I can’t understand the opposition to the JG.”
We need jobs, but we must move beyond the “jobs” mentality, in which people wholly depend on jobs for their income.
Jobs keep disappearing. Wages keep plummeting. Technology and globalization have made workers disposable. It gets worse every day.
Half the people in my life are unemployed, and are desperately looking for a job. The other half wish they had freedom from their jobs.
The bottom line is that as long as you depend on a job for your income, you are owned. You are a slave. Your only power is to look for a new owner. This is not freedom. It is not democracy.
The JG sounds good on the surface, but it perpetuates the slave mentality. It also perpetuates the supremacy of the “job giver.” At a job, I give my time, skill, and energy in exchange for payment. It is an agreed-to trade. Yet society gives political superiority to the party that signs the check. Whoever signs the check is the “master.” I reject this. If I give you an orange in exchange for an apple, then why should you get to be the “master”?
I do not object to the “job”; only to sole dependence on a job for one’s income. A JG alone won’t solve our problems. We also need something like the Nine Steps.
Above all we must defeat the Big Lie.
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Anyone wanting to read my take on MMT’s JG (Jobs Guarantee) can see a summary at Why Modern Monetary Theory’s Employer of Last Resort is a bad idea. and at: Why Modern Monetary Theory’s Jobs Guarantee is like the EU’s euro: A beloved solution to the wrong problem
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Freedom from a job always sounds like a nice idea, but unfortunately it is only applicable to Chimpanzees. If you want to live like them then be my guest.
The fundamental problem is that humans will only share their resources with others they perceive as pulling on the same rope. This is what the science shows: http://www.sciencedaily.com/releases/2011/07/110720142007.htm
That means if others have a job, then you need to have one as well. Or you will be excluded from society and what society produces.
This is why unemployment benefit never lasts politically, why retirement pension payments keep getting smaller and further away and why here in the UK we can’t even keep in place a basic income for children – of a whopping £20 per week.
It is always politically agitated against and eliminated – using examples of so called ‘shirkers’, or those that “don’t need it” as proof of its insidiousness.
You have to be seen to be doing something that others consider worthwhile, if you want them to produce stuff and share it with you.
We have to design a system for humans, not robots. And that means individuals have to be doing something considered worthwhile by others in order to ‘earn’ their payment.
And that’s before you get onto the fairly obvious issue that people need something to do, and many people, if not most people, need and want to be told to do something.
The polls show that people want jobs. So just create the jobs. There are plenty of things that need doing.
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@ NeilW: Thank you for your comments. Some responses if I may…
[1] “Freedom from a job always sounds like a nice idea, but unfortunately it is only applicable to chimpanzees. If you want to live like them then be my guest.”
I see. Wealthy owners of capital do not depend on jobs. Do they live like chimps?
[2] “If others have a job, then you need to have one as well. Or you will be excluded from society and what society produces.”
Right, so you insist on remaining a slave, and on being owned. The wealthy and powerful are not owned, for they are not dependent on employers or jobs. You, however, are disposable. You are property. If you want to live like that, be my guest.
[3] “This is why unemployment benefit never lasts politically, why retirement pension payments keep getting smaller and further away and why here in the UK we can’t even keep in place a basic income for children – of a whopping £20 per week.”
The UK’s problem is that its politicians promote the Big Lie that the UK government is “broke” and “in debt.” In reality the UK government has infinite money (literally). Politicians impose austerity in order to widen the gap between the rich and the rest. They get away with it because people like you defend the Big Lie.
[4] “You have to be seen to be doing something that others consider worthwhile, if you want them to produce stuff and share it with you.”
Really. Do you think financiers in the City of London keep getting richer because people watch them over their shoulders, judging whether their actions are “worthwhile”? No. Power and wealth flow to the owners of capital. He who owns, gets. “Worthwhile” has nothing to do with it.
[5] “We have to design a system for humans, not robots. And that means individuals have to be doing something considered worthwhile by others in order to ‘earn’ their payment.”
This is the typical peasant mentality, which says our lives only have worth if we are toiling endlessly and miserably, and if others approve of how we suffer. I reject that straightjacket.
[6] “And that’s before you get onto the fairly obvious issue that people need something to do, and many people, if not most people, need and want to be told to do something.”
Collectively speaking, when people are treated like cattle, they think and act like cattle. However, when people have power and freedom, they become like wealthy owners of capital. They do not want or need to be told what to do. There are individual exceptions, but this is the tendency.
[7] “The polls show that people want jobs. So just create the jobs. There are plenty of things that need doing.”
People want are dignified, meaningful lives. It is not enough for them to simply have jobs. Would a job cleaning out sewers with a sponge make you happy? Is a job all you need?
I say let’s dream bigger.
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Rodger,
In essence then, those myriad initiatives and MMT’s JG can be one and the same thing – both are funded by federal gov’t.
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To the degree that MMT’s JG adds dollars to the economy, it would be stimulative. But, in my opinion, it would be bad economics, and eventually would hurt the economy by putting people into lousy jobs.
By way of analogy, if the federal government bought a few million swords to arm the military, that would stimulate the economy. But it would be bad military strategy and get a lot of our people killed..
Of course, if the government bought those swords and immediately melted them down, that would be stimulative, without sacrificing military strength.
Bottom line: All federal spending that adds dollars to the economy is stimulative. But some of what is purchased can hurt the economy.
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Rodger writes, “To the degree that MMT’s JG adds dollars to the economy, it would be stimulative.”
Yes, I think some aspects of an MMT JG might be workable, but as a society we must give up expecting to have decent lives from a “job” alone. The only way a JG might work is in combination with the Nine Steps, such that people’s income does not rely totally on “jobs.”
The reliance on “jobs” is noi longer workable. Labor is now expendable everywhere. Every day we read of more plant closing, and new assaults on workers. This trend keeps accelerating. It is not merely a function of greed and the desire to widen the wealth gap. It is also an unavoidable by-product of technology and globalization.
Also, as I noted, the essential division is not between employed and unemployed, or even between rich and poor, but between the owners of capital and the non-owners. Ownership confers vast wealth.
We have entered the old “Jetsons” cartoon that first aired in 1962. Ours is an automated push-button world in which few people have jobs. And since we have the Big Lie, few people have incomes either.
As a species we are at a fork in the road. Either things will continue to get much worse, or else we overthrow the Big Lie.
There is no middle route.
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Perhaps Wray and Mosler focus on JG rather than GI because it would be more palatable to the politicians. Remember now, we just can’t have any more lazy and state dependent ‘takers’,’ except for the rich of course. Wray also seems to be overly fixated about potential price (in)stability with a GI program.
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What are other viable options to a federal Guaranteed Jobs Program then?:
1. A guaranteed minimal income for all citizens (I believe the Swiss are actually considering something like this) (and also abolish the minimum wage at the same time?).
2. Funding for higher education and job training (getting paid to go to school along with a stipend).
3. fed. government grants (not loans) for businesses for entrepreneurs.
I’m hesitant to just give money to able-bodied-people without any kind of accountability or responsibility.
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The “Nine Steps to Prosperity” shown at the end of the post, are my suggestions.
I understand your feeling that unemployed people should not be “takers,” but should have to labor for money. I understand it, but don’t agree with it.
Forcing someone to work in an unpleasant or meaningless job — or starve — does not build accountability or responsibility. It merely satisfies an urge to make people sweat to survive.
I’d rather that able-bodied people spend their time looking for jobs or creating businesses or educating themselves, than being Walmart greeters.
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From what I’m reading in this thread, there seems to be a consensus on the core issue: eliminate debt and wage slavery, or, said another way, establish financial freedom for all, etc. Differences seem to be on what’s the best way to do that – Job Guarantees, negative income tax or equivalent (personally, I’d like to call it a Citizen’s Dividend)…
Central to these differences is the concept that those participating in a program, those we might now refer to as “unemployed”, must have an ABUNDANCE of opportunities for personal growth and development; opportunities to use their time to identify and pursue their personal happiness, as guaranteed by the Constitution. Such programs could include most of the ideas already presented, including education or training, volunteer participation in social programs, using their minds creatively, organizing others to develop new Employee Owned Enterprises…the sky’s the limit when it comes to putting idle human resources back into the productive economy.
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Jeff Rudisill says: “We must have an ABUNDANCE of opportunities for personal growth and development.”
Agreed. The essence of the Big Lie is the false claim that there is no abundance.
The JG will not yield abundance, for it ignores the vast gulf between masters and slaves. Between owners and owned.
If the JG gives us a job digging ditches, then our masters will still own the land, the tools, the machines, the fuel, and everything else. The masters will own us workers too, since we are expendable. (Control = ownership.) The masters collect 90% of the profits yielded by the ditch, while workers get very little. No JG will overcome this.
The masses favor the JG because the masses have been brainwashed to regard wage slavery as “common sense.”
The whole thing is an offshoot of the Big Lie, which claims that someone has to win, and someone has to lose. This lie has produced ever-worsening inequality. The JG is a red herring that further solidifies the lie.
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The purpose of the Jobs Guarantee is to slow down wage inflation, which is the driver of price inflation. This will occur when businesses can no longer keep up with demand and will go on hiring frenzies. For this to happen, disposable incomes must be raised by much lower taxes or much higher government spending. Of course, it would be viewed by the media as a social program. And neither condition (lower taxes or more govt spending) will take place in the US political environment anytime soon.
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A mmt jobs program is ok if you include the use of mind as a “job.” Education must be underwritten if people don’t physically work or fit in as a worker. Your mind can keep working well beyond retirement age. Knowhow is the real wealth. Take away money and keep knowhow and we’ll do fine because people will work for the love of the work and personal expression. Take away knowhow and keep all the money and we’re belly up.
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Agreed. Steps #4 and #5 in the “Nine Steps to Prosperity” are in that vein.
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The debt limit fight is on again :
House Republicans have no choice but to increase it because they’ve already lost the debate in the previous round and they would be hammered at the polls if they refuse to raise it. But that would be a blow to their sclerotic ideology of austerity and balance-the-budget-by-all-means mantra which perpetuates the national ignorance on MS.
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— Off topic —
MORE AUSTERITY FOR FRANCE
In mid-2012, Francois Hollande ran for the French presidency as an “Obama,” i.e. he promised relief for workers while he plotted against them. He posed as an alternative to the conservative Sarkozy, but turned out to be twice as conservative as his predecessor. (Just like Obama and Bush.)
As soon as Hollande got into office (15 May 2012) he did an about-face, and doubled the austerity attack. This was no surprise to Rodger’s readers, since they know that France surrendered its Monetary Sovereignty. Hollande is now the most unpopular president in all of French history. Again, no surprise.
(Jacques René Chirac remained popular after he assumed office on 17 May 1995. France adopted the euro on 1 Jan 1999, but Chirac’s popularity remained strong because of the subprime housing bubble. Chirac left office in May 2007 just before the bubble popped. Since then, the French government has been increasingly hated because France has no MS.)
Because France has no MS, its deficit keeps rising, with no way to pay it off. It is now at 74.9 billion-euros ($102 billion). (The deficit is crucial for governments that do not have MS.)
On 14 Jan 2014 Mr. Hollande vowed to cut another 50 billion euros in public spending, and abolish 30 billion euros’ worth of payroll taxes. These are the equivalent of the FICA tax that US employers must pay for each employee. French workers themselves will still have to pay taxes. (Eliminating the FICA tax on US employers and workers would be wonderful, but for France, it will be disastrous.)
Hollande wants to slash what ABC News calls “France’s notoriously high labor costs.” Mr. Hollande says that France’s suicide will let the country, “Keep control of its destiny,” and “restore its economic force.”
http://abcnews.go.com/International/wireStory/french-cut-50-billion-euros-public-spending-21526591
Meanwhile plants are closing across France. The latest is the Goodyear Tire & Rubber Company plant, 90 miles north of Paris. This will terminate 1,173 employees.
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Rodger, another well written essay. I shared it on my FB page.
Keep up the good work.
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Thanks, Dan
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There has been some discussion of MMT’s JG (Jobs Guarantee — formerly ELR — Employer of last resort). I began to respond in one of the comments (above), but due to formatting considerations, the comments to the comments get tinier and tinier, so I thought I’d respond in a bigger comment box.
Anyone wanting to read my take on MMT’s JG (Jobs Guarantee) can seesummaries at:
Why Modern Monetary Theory’s Employer of Last Resort is a bad idea.
and at: Again I lay my head on the MMT chopping block. Why JG (formerly ELR) is obsolete.
and at: Why Modern Monetary Theory’s Jobs Guarantee is like the EU’s euro: A beloved solution to the wrong problem
Each post makes somewhat different points.
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NeilW says, “So just create the jobs,” as a solution to unemployment and economic growth.
Actually, there are plenty of jobs. Look in your local paper. If you’re in a big city, you will see thousands of jobs being advertised.
Or go online to Monster.com and see thousands more.
Why do businesses pay millions of dollars every day, advertising the availability of jobs, if there is a shortage of jobs. Are businesses so stupid as to waste good money advertising the availability of something that is in short supply?
The fact: There is no shortage of jobs. There are millions of jobs available, and they are easy to find in the newspapers, magazines and on line.
There is, however, a shortage of the right jobs — jobs doing the right things, in the right places for the right compensation.
This points out a fundamental flaw in the Modern Monetary Theory’s JG (Jobs Guarantee). It begins with their belief that high unemployment by definition means there is a shortage of jobs.
So MMT wants to provide “a job” for everyone, but which job, doing what, where and for how much? Those “little” details are not addressed.
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“Why do businesses pay millions of dollars every day, advertising the availability of jobs, if there is a shortage of jobs.”
There are millions of share prices advertised on the Stock Exchanges every microsecond. So why don’t they all get sold?
For the fairly obvious reason that the jobs advertised don’t match the workers on offer.
I have an outstanding offer to buy a Ferrari for 10 cents. That’s a desire, not a sale.
A ‘job’ is when somebody who wants work concludes a deal with somebody offering work. Until then it is a ‘job offer’. Don’t confuse a sale with a desire.
The JG design has *always* been about striving to provide a palette of work opportunities that matches the worker on offer – paid at the living wage. Something that private capital struggles to do because of its different incentives. Removing those people from the reach of private capital forces private capital to invest to bridge the gap and bid those people back. And that helps drive productivity forwards.
And it does it in the same way as private capital, by distributing the opportunities to use the free labour on offer to as many public and community groups as possible. The more options you have, the more choice you have, and the more jobs you create.
The central state just pays the wage of any zero-wage timesheet filed by an eligible operation, up to a maximum number of hours per week.
JG is a *Job Alternative*. So you can quit a private job and take up a JG job any time you like. That helps liquidity in the private sector job market and ensures better matching of individuals to opportunities across the economy. During a pullback, you are no longer stuck in what you consider a dead end job, but which somebody else might love.
The little details have been addressed many, many times by Randy, Pavlina and Bill Mitchell in lots of different designs for how JG can work.
One such design is based on a three year study in Australia: http://e1.newcastle.edu.au/coffee/pubs/reports/2008/CofFEE_JA/CofFEE_JA_final_report_November_2008.pdf
Bill wrote a book on the subject ‘Full Employment abandoned’.
The Jefes programme design in Argentina shows how a system could work, as does the work Bill did in South Africa. However the key point is that the system has to be designed to fit the society in which it operates. A design for the US would be different because of the different attitudes towards work, society and public service in the States.
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There’s little need for a job guarantee. We already have one. It’s called economic stimulus. The only question is when will politicians get out of the way and allow deficit (proficit) spending to increase; or better yet peg it to low inflation. As long as low/no inflation exists then spending continues where needed month to month or annually via step #3. If there is too high inflation then it stops.
This is a quid pro quo feedback loop that puts more pressure than usual on the micro economy to compete and innovate, to hold the line on pricing as much as possible. Everyone has skin in the game directly or indirectly in the short and long run. At the same time we can gradually test our output capacity as well as the general level of citizens’ willingness to cooperate and for the first time take part in and be connected to a system that is more prone to give than to take. The rich still get richer, taxes roll in to state and locals, poverty is slowly licked and no saddling the future with debt.
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NeilW
Among the many, many objections I have to JG is the fact that no one seems to know exactly what it is. Yes, it is some sort of guarantee that everyone who wants a job will have one, but beyond that, the actual process varies wildly.
I even have seen disagreement about whether JG jobs would be private industry jobs or federal jobs.
Randy Wray has claimed that the infrastructure already is in place, and to implement JG would require only one more government employee.
By contrast, Bill Mitchell said the process would be:
Since Randy and Bill seem to be primary promoters of the concept, it is telling that they have diametrically opposite ideas about how JG actually would work.
JG is one of those innocent symptom-addressing ideas, that doesn’t get to the fundamental problem. (I.e. somehow give food to the hungry; somehow give housing to the the homeless; somehow give money to the poor; somehow give jobs to the unemployed.)
While those band-aids sometimes may help somewhat, they also can hurt: They divert attention, effort and funding from the fundamental problems causing the symptoms, thereby prolonging and exacerbating the symptoms.
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There isn’t a one-size-fits-all solution – because the real world is a messy political place.
That’s why it varies. It all depends on the politics on the ground and what it is the society requires. The way its public authorities are constructed and how it expects schemes to be run.
You tailor the scheme to the society. You tailor the type of work on offer to that which the society will permit to be offered.
The general principles remain the same though.
The free labour is bid for by eligible institutions locally on the ground.
The central government pays the wages of any zero-wage timesheet filed by an eligible institution at the living wage up to a number of hours per week.
The central government then adjusts the general grants and taxation policy across the economy to tune the JG down so that it becomes small at the point of maximum private sector expansion. But not too small to prevent it operating as a wage buffer anchor.
You either have an employed buffer or an unemployed buffer. My business experience tells me that business prefers to hire from the employed buffer, because it is less risky.
That derisking reduces the cost to business and allows the economy to sustain a larger private sector with a JG than it can with an unemployment buffer.
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“The central government pays the wages of any zero-wage timesheet filed by an eligible institution at the living wage up to a number of hours per week.”
Is the pay more, less or at minimum wage? That is, do they get paid more, less or the same as Macdonalds’s employees?
Also, is Macdonalds and “eligible institution”?
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“Is the pay more, less or at minimum wage? ”
It’s the living wage – the socially acceptable minimum that the society decides upon *politically*.
“That is, do they get paid more, less or the same as Macdonalds’s employees?”
Mc’D will have to compete with the JG wage. Whether that ends up being higher than the JG wage (because McD is seen as a crap employer), lower than the JG wage (because McD has fringe benefits) or the same will be determined by the market.
There is no longer any real need for a ‘minimum wage’ or a host of other worker protection measures. Simple competition with the JG permanent offer sorts it out.
“Also, is Macdonalds and “eligible institution”?”
All arguable.
I wouldn’t, and in general MMT economists tend to leave the private sector out of it.
The idea is that the private sector has to compete back the people or invest in machinery to eliminate the need for the job. And that is what the private sector is good at. Giving the private sector free labour means that they don’t need the machines – and that slows down the capital development of the economy.
And that’s before you get onto the dubious morality of subsidising private profit.
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It all seems so ill considered.
“The living wage is whatever society decides on, politically.”
By the House or by the Senate? By Republicans or by Democrats? In Manhattan or in Mississippi? In Chicago (IL) or in Peoria (IL). A living wage for a single person, a married person, a parent?
The same wage for skilled and unskilled labor? Managers and non-managers?
And what about those fringe benefits? Who pays for health benefits and childcare if the government doesn’t?
And no need for a minimum wage because JG will compete with private industry? And, “Economists leave the private sector out of it”? Really?
In short, the government would have to create industries and jobs that do not now exist, and create an entire infrastructure for hiring, firing and supervising those jobs.
And then, the government, which does not need profits, will own government businesses that compete with private companies that do need profits — not only a massive escalation of socialism, but if (actually, when) the government wins that competition, what happens to those private businesses?
Is it your opinion that having the government compete against private business is a good way to reduce unemployment?
You may consider all this (and really, much, much more) to be mere details in the grand plan of providing jobs, but it is the details that will define success or disaster.
And as for the “dubious morality of subsidizing private profit,” what about the dubious morality of cutting into private profit?
JG is a plan that only an economics professor could dream up. Having spent 1/2 a century rescuing troubled companies, I can tell you this: There is no plan. There is just a vague dream by inexperienced dreamers.
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It’s a pity you fall back on this sort of response Rodger.
There is a plan, and a good one, which my many years of putting systems into place in both companies *and* government says will work very well indeed.
If you don’t like it, then just say so. But you have put forward nothing other than the usual ‘objections to change’ that I have heard a million times.
And since at the moment I’m not being paid my usual fee for dealing with ‘objections to change’, then you’ll forgive me if I don’t play.
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Why not simply answer the objections I’ve raised? They are not objections to change. I like change See the Nine Steps to Prosperity. They all are change.
I object to ideas I feel are unrealistic or vague.
This is what dialog is all about: Someone has a suggestion. Someone else has objections, and then they discuss.
So far:
1. You haven’t said how a “living wage” will be calculated or who will calculate it geographically, by family type or by skill level, though “living” wage is at the heart of JG.
2. You haven’t considered fringe benefits, and have implied there would be none!
3. You haven’t discussed the many potentially harmful effects of a government business competing with private industry.
4.You seem more concerned with the “morality” of helping private business as opposed to the “morality” of hurting private business, when the opposite should be the case.
5. You haven’t addressed Randy Wray’s “one-peerson-could-run-it” vs. Bill Mitchell’s requirement for a large bureaucracy.
And the above is just for starters.
I’ve spend 15 years defending Monetary Sovereignty. Don’t walk away with an excuse. If you like the JG idea, defend it. That is how we all learn.
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Rodger, I, too, am disappointed to see NeilW leave the discussion. Being somewhat new to the concepts of MS and MMT, I’m appreciating his contributions.
I can’t answer for NeilW, but I do have some thoughts about the points you raise above. Let me preface this with the understanding that I’m NOT defending or attacking the idea of JG. Personally, my position is to guarantee a living income, regardless of employment status. My concern about such an approach, however, is the old saw, “Idle hands…etc”, which I think NeilW brought up in the context that everyone should work. BTW, I don’t agree with that concept: see quatloosx’s reply.
RE: how a living wage (income) is calculated, this is currently being done in some places, such as San Francisco. I think the following would be a good place to start – http://livingwage.mit.edu/
I don’t consider fringe benefits as part of the argument. The objective, IMO, is to eliminate wage and debt slavery. A living income/wage means that physical and security needs are met, and that’s what counts. Any thing beyond that are “fringe” benefits, and not essential for survival: by definition.
I don’t think the US (or any) govt should (or would) be in “business”. Here’s where I probably differ from NeilW. JG could operate without employment by the govt. If the US govt provided grants for start-up Employee Owned Enterprises, or for financing non-profits to hire employees, or considered Student as an occupation, there would be no GOVT businesses created to compete with the private sector. I understand NeilW to say that private enterprises shouldn’t obtain “free” labor, paid for by the US Treasury, under a JG program. I agree that would benefit the private sector unduly. Without creating “new govt businesses”, the only competition I can foresee would be in the labor market. D’ya think Walmart or MacDonalds could continue to offer minimum wages if the labor market was guaranteed a living (not minimum) income/wage? If everyone, or family, had a guaranteed living income/wage, there would be no need to guarantee a minimum wage.
Rodger, I appreciate you sharing your knowledge and 15 years of dedication to MS. I believe it is an essential concept in creating a viable economic future for us all. I know you’ve said MS shares much with MMT. It would be tragic for semantics or misunderstandings to drive a wedge between the two. To some degree, I wondered if I were witnessing a couple of experts, so attached to their own biases, that they couldn’t (or wouldn’t) consider what the other had to offer. 🙂
In peace.
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Rodger,
Those points have all been addressed many times and we’re frankly all getting tired of hearing them.
The approach you are taking is precisely the same as the people who deny there were Moon landings, or believe that the Earth is 6000 year old, or the Jehovahs Witnesses.
You appear to engage, but then snap back to just stating your ideological belief in the usual fashion – no doubt to rapturous applause from you audience.
So there is no interaction here, just an opportunity to play ‘Why don’t you. Yes but’ interminably. Not playing, sorry.
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After 15 years, I’m tired of hearing the same old objections to Monetary Sovereignty, but I continue to address those objections. One cannot assume that because objections previously have been addressed, no further discussion is needed.
By failing to address objections, you give the impression you really don’t know how, and rather than admit it, you just blow them off.
As for your moon landings, the age of the earth and Jehovah’s Witnesses, you merely add to the impression you have no response to legitimate objections, but prefer to sneer and change the subject.
I’d very much like to hear your counters to my objections. Perhaps I can learn something.
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One other small point I’d like to bring out concerning the guaranteed income is this. We’re at the point of –as others have stated– automation and expatriation taking away jobs while population continues to grow and 1000s of college grads keep surfacing every semester. I’m reminded of the little Dutch boy with his finger in the dike trying to stop–in this case– heavy unemployment. Impossible!
The old equation is job = income. No job = no income. Automation is the new equation. Robot = no job no income. We can’t expect the private sector to feel sorry for the displaced. Face it. They are a cold lot. Money making comes first.
But automation is good. It lowers costs and releases us from repetitive drudgery. Science and engineering are part of our evolution trying to make life easier. A machine is, unfortunately, viewed as a bad thing that’s taking away jobs. This is where ONLY government can save the day. The private sector won’t do it. Government must be the one because it is not in the business of trying to make a profit. It exists to do what the private sector can’t/won’t do.
Therefore, a guaranteed annual living income is an absolute unavoidable necessity. Regardless of what the reactionary, right wing talking heads will say, this must come to pass and when it does it will be for the better. Here’s why.
The G.I. will naturally separate wheat from the chaf, the ones who want to work and be a productive part of society as opposed to those who think they’re gaming the system staying at home taking in free money. I say PERFECT. You don’t want disturbed people without ambition in the office or on the shop floor. You don’t want people with all sorts of problems mixed in with dedicated, competent workers who love what they do. The G.I. allows the cream to rise. The competent and incompetent will naturally separate themselves without having to go through the embarrassment of firing or going postal to seek revenge.
The end result? People who are part of the work force will have the highest respect in society, and those who think they are gaming the system will finally realize they’re being naturally filtered out of their own accord. They will eventually want back in, but will have to seek psychological help and/or training in any number of ways in order to gain acceptance into the work place which we all really want anyway. Those who don’t–the unfixable Manson-Hitler types–will not have to rebel as they still have their G.I. And those who know them, their neighbors and friends, won’t hold anything against them because they’re “in the right place” at home and OUT OF THE WAY, while those who are competently employed won’t mind one bit having them out of the way so they can do their work knowing the “nut jobs” are at a safe distance.
It will pay great dividends all around to have a MS/MMT supported G.I. The future is only going to become –by all indications– heavily robotic; and only government can do what the private sector will refuse to do– take care of the ticking time bomb—-> the unsupportable excess.
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G.I. is simple. Let everyone file an income return (like a tax return), and let the government send them a check for the difference between what they earn and a selected target income.
No need for the government to be a massive employment agency or a massive hiring hall.
The problem, of course, is that, it discourages participation in jobs that pay below, or even somewhat above, the target income.
Better, might be a monthly check, sent to every man, woman and child in America, regardless of income. Send it to you. Send it to me. Send it to Bill Gates.
Step #3 in the “Nine Steps to Prosperity” suggests sending every American an annual check for $5K. Perhaps, it should be $500 per month for each adult and $250 per month for each child.
Everything you earn above that is extra. So there is no reason not to accept a job paying a low wage, because that salary is “bonus” money.
The simple “check-to-everyone” doesn’t discourage work, yet helps prevent starvation. It doesn’t require that people work in bad jobs,so they can eat. It doesn’t require people to work at all, but if you want to “eat better,” you’ll look for a job.
I may write a bit more about this in a post.
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Let me start by applauding tetraheadron720’s comments in support of GI.
And Rodger, it’s good to see you support the concept of a GI. I believe it should be a guaranteed LIVING income, or GLI, since we’re using abbreviations. Your idea of a monthly check would be a step in the right direction, but, I would argue, at best a half-measure in that it ignores what it costs to live: the basic physical and security needs.
I understand your point re: discouraging work. I see it differently. I see it as creating deserved financial freedom for people to define and pursue their “happiness” – a fundamentally defined US (and human) right. Would it “hurt” private enterprise if they no longer had access to low-cost labor? Perhaps. But remember that ending slavery “hurt” the economic interests of cotton plantation owners, until the cotton gin helped make manual labor obsolete. Actually, it could inspire private industry to find other ways to deal with rising labor costs through innovation and more automation. I agree with tetraheadron720 that doing away with meaningless work is a good thing. Also, though most would not continue working for WalMart or MacDonalds, the opportunity for additional income is still there.
How, then, to deal with those who no longer have to work for starvation wages, aka wage slaves? This becomes another challenge to be resolved through human ingenuity and technology. I start with the premise that MOST people have a craving to do something meaningful with their lives. I also agree with NeilW’s observation that many people need to be told WHAT to do. But it’s not difficult for me to imagine that the formation of “agencies”, both public and private, would not develop to work on this issue in the form of life counseling. This is what I meant when I said there must be an ABUNDANCE of opportunities to develop latent human resources, foremost among them education and training. I have to assume that both of you are retired and no longer HAVE to have a job. Yet, you continue to do something meaningful; something that conceivably help to change the world for the better.
More anon…
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I agree with Tetrahedron720 above. Automation can be a blessing or a curse. Our task as humans is to make it a blessing.
And yes, because of advancing technology and globalization, government is the only thing that can preserve our quality of life, since, “Government is not in the business of trying to make a profit. It exists to do what the private sector can’t/won’t do.”
(Unfortunately the masses have been brainwashed to condemn any form of government other than brutal tyranny by the rich.)
Regarding the future, we might have a G.I. one day, but I think it equally likely that the entire planet will become Indonesia, which has the worst poverty I ever saw. Far worse than Mexico or even India. One thing is certain: we are headed up or down. The entire world will become either Indonesia, or else a place of renewed hope. There will be no middle status; no muddling through.
This is the way of things. No society avoids change, regardless of surface appearances. At any given point in time, a society (any society) is always becoming more egalitarian or less egalitarian. More decadent and impoverished, or less decadent and impoverished. If a society seems to be treading water, this is an illusion. Currently we are drowning.
If change does come, when will it be? No one can say. It’s like a ball of liquid sodium. Put a current through it, and the ball will have a north and a south pole. The poles will periodically switch (reverse), but no one knows when, how, or why. The same phenomenon occurs with the physical planet itself. Pole-flip happens. The mystery is when and why.
I strongly agree with Tetrahedron720 that a G.I. will NOT encourage widespread laziness. On the contrary, it would free people to dream again. It would unleash ambition and creativity. “The G.I. would allow the cream to rise.”
True, some people would be happy to continue being homeless even with a G.I, but as Tetrahedron720 says, the G.I. would separate them from the rest. And none of us would need to feel sad about the starving homeless, since they would be happily exercising their free will, and they would not be starving.
Instead of a JG, I favor a GI, for all the reasons that Rodger and Tetrahedron720 say. Granted, there are problems to iron out. If we simply send $500 to every person per month, then the owners of rental properties, for example, would unduly benefit.
Still, one reason why the GI is preferable to a JG is that we already have a GI in Social Security, whereas the JG remains purely hypothetical. JG proponents cannot even nail down its particulars, let alone agree on them.
The GI would simply be an expansion of Social Security, just as Single Payer health insurance would be an expansion of Medicare.
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Amen, quatloosx. I would like to see a term used that I’ve read somewhere: a Citizen’s Dividend…for living in (what could become) the greatest country in the world.
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I wrote to Dr. Wray about a GI pegged to inflation as well as other “goodies” pointed out by RM in his 9 steps. He never wrote back. He either thought I was nuts, delusional or perhaps slapping the face of his JG idea.
We already know a GI is possible since there’s already social security, and remember when president Bush had the treasury send out a one time $600 check to everyone during his second term. Granted, a weak attempt at stimulus, but we now know the stage is set to do this on a grander scale if we really want.
Of Roger’s two suggestions, either a “difference check” to everyone or a straight $500 / mo, I like the latter. It’s easier to administer and could be an expanded SS electronic deposit, untaxed!
However this all shakes out, I think the more a society gives to its people the more thankful and constructive their response. We see what taking-taxing is doing to everyone, not many happy campers. The answer must, as far as I can tell, be in the realm of reward and giving, not taking and punishing. Most people don’t want to bite the hand that feeds them.
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@tetrahedron720, thank you for the thought of “…the more a society gives to its people…”. A central founding principle of this republic is fairness. Without economic fairness, this experiment in democracy is doomed.
I would greatly counsel to raise the sights, however. $500 per month is but a band aid, as is the $5K per year. Why limit the option to the two that Rodger proposes? For this revolution to work, it will take elimination of poverty, not incrementalism. It will take a guaranteed living income for all in the US. Fear of how this will impact those businesses dependent on non-living-income labor is not a reason to deny economic justice. An average guaranteed living income of $20K-$25K per year per family will dramatically increase the velocity of money and stimulate a robust economy. The old saw, “A rising tide floats all ships.” is correct, but the tides rise from the bottom, not the top.
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Jeff,
Imo, when it comes to either a JG or a GI I think the stage is set to do a GI more than a JG. The JG may or may not require a greater effort to bring it to life, depending on whether you go along with Wray’s assessment or Bill Mitchell’s. (Politically, the JG has a better chance since the work ethic resonates with most people more than a perceived GI “hand out.”)
Maybe it comes down to a mix of the two. But which comes first, the GI chicken or the JG egg? To me the GI should be first in order to quickly stimulate the economy then naturally separate and identify the willing-to-work-(or study) from the rest. After a natural separation occurs the JG steps in to pick up the remainder.
Those who want a JG job can get it including full time student all paid. Those who can’t work or study can be paid to stay out of the way. People may look at this as a dole out but it’s actually an investment in quality control. The more able and competent the work force the better the output of the private sector. Those who are set aside are actually “working” for the better by staying home. But human pride and desire to ”be accepted and involved” will keep the number of unemployables to a minimum even though misunderstanding “conservatives” will knee-jerkingly fear a complete breakdown of society.
You’re right about upping the ante-reward; but as Roger already stated to me, this should be done gradually and incrementally by way of his 9 steps and, as I’ve already mentioned, should continue so long as inflation is held to an acceptable minimum.
I think a GI > to > JG approach would work in any advanced economy with monetary sovereignty. But this is all unquestionably a pipe dream given the so called “real world” problems we now have, i.e., scarcity based politics, puppetry and broken thinking (we’re broke!).
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@tetraheadron720, thanks for elucidating. I concur with your comments. I understand the incremental approach, but I’m wary. And I agree that a both/and approach should be on the table, instead of either/or.
But, as you point out, we’re more than likely spitting into the wind, given current realities. Yet I also believe something must be done, and I keep trying. And, as I’ve said before, there’s a great need to combine the efforts of the various proponents of reform, instead of bickering over who has the ultimate solution: Grignon, Zarlenga, Brown, et al
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Excellent discussion, Rodger! Brings to mind our failed 70’s CETA program that failed miserably for many of the reasons you’ve cited above. Read about it here: http://www.politicsdaily.com/2009/11/19/ceta-a-70s-federal-jobs-program-that-didn-t-work/. Great blog!
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Right. And the key sentence is the very last one: ” . . . effective management matters – and that an ill-designed program can turn a laudable idea into a laughing stock.”
The MMT JG proposal is a perfect example. They MMTers believe they can run a program without good management and without a detailed business plan.
Only an economics professor could love it.
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