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●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, and the motive is the gap.
We previously have written about Modern Monetary Theory’s JG (Jobs Guarantee)
Why Modern Monetary Theory’s Employer of Last Resort is a bad idea. Sunday, Jan 1 2012
MMT’s Job Guarantee (JG) — “Another crazy, rightwing, Austrian nutjob?” Thursday, Jan 12 2012
“You can’t fire me. I’m on JG” Saturday, Jun 2 2012
The JG (Jobs Guarantee) vs the GI (Guaranteed Income) vs the EB Saturday, Saturday, Jan 25 2014
You can refer to those articles, to see the many, many objections we have to the JG concept. For your amusement, we also provide this playlet: “Life in a Jobs Guarantee (JG) World: A Dialog Between a Small-town Mayor and His Comptroller”:
Comptroller: Mr. Mayor, I have a great idea for saving money.
Mayor: Let’s hear it.
C: We fire everyone.
C: Yup, even you and me. Then we hire everyone back as JG — you know the program that says, “Everyone who wants a job, gets a job.”
M: But doesn’t JG pay minimum wage? I can’t live on minimum wage. No one can. Minimum wage people have 2nd and 3rd jobs.
C: We just give you and everyone else, bonuses on top of your minimum wage, to bring you back up to your regular salary.
M: What if JG won’t allow people to earn more than minimum wage?
C: That would be quite a problem, wouldn’t it? The federal government staffing up to make sure millions of people, all over the country, don’t make more than minimum wage? No raises. No bonuses. No promotions of any kind. Millions of minimum wage slaves, courtesy of the federal government?
M: Well, that’s the federal government. Is there a work-around?
C: Sure. We hire everyone’s wife and kids and cousins, aunts, uncles, friends, girlfriends — everyone in town — to be on JG. Get enough non-working people on JG, and the town will do just fine. And they don’t really have to do any actual work. Just sign up.
M: Great idea. We’ll save bundles of money.
C: But it gets better. You know how we’ve been trying to get Walmart to open here? Well, they already pay minimum wage, but we’ll put all their people on our JG, so Walmart doesn’t have to pay any salaries at all. That would be a huge saving and attraction for Walmart — an entire army of free employees, all paid by our minimum wage, JG. In fact, we could pay every Macdonalds, Burger King, and pizza parlor employee on our JG — the entire town could work on our JG.
M: But what if the government limits how long someone could be on JG?
C: You mean limited like unemployment compensation is limited? Isn’t the whole idea of JG, anyone who wants a job gets a job?
M: What about FICA?
C: Naturally, JG would have to cover FICA, too.
M: How do we get these people to do anything. I mean, if we fire someone . . .
C: Yah, he could get another JG job. That is a bit of a problem, I guess.
M: Any age limitation? Could an 80-year-old get JG?
C: Sure, anyone who . . .
M: Yah, I know. Anyone who wants a job, gets a job. What’s the economic benefit of starving the elderly, especially since lots of older people currently are among the able-bodied employed? But what if the government demands that people receive a “living wage” for JG, not just a minimum wage?
C: Better yet. Of course, what’s a “living wage”? Is it different in Manhattan than here in Nowheresville? There would have to be all sorts of formulas to account for different costs of living.
M: But wouldn’t the supervision of all this require a bureaucratic federal army — sort of like the IRS, only bigger?
C: Sure, that’s the beauty of it. The federal government would put a few hundred thousand more people on the payroll — more people working at minimum wage.
M: Is the bottom line, millions of people would “work” at meaningless, phony, minimum wage jobs, whether they actually show up or not, and the rest of the country would be paid for actual work?
M: If minimum wage or living wage were, say, $10 an hour plus FICA, for doing nothing, how much would a business have to pay someone to do actual work?
C: Good question. I mean, you’re not going to work 40 hours, just to make an extra $2 an hour, are you?. Probably regular paying jobs will have to add the same amount. If JG was was $10, a regular job probably would have to be about $20 plus FICA.
M: So businesses would be forced to pay a lot more, including FICA, in order to get non-JG employees. But why would they go to all that extra expense if JG employees are that much cheaper, and there are all those work-arounds?
C: Isn’t JG great! Just imagine. Millions upon millions of people in meaningless, no-raise, no-advancement, no-show-up jobs. An army of low level people, being ruled by a few wealthy overseers. It’s a 1%er’s Utopia.
M: Where did this business model come from? Businessmen?
C: No. Economists.
Perhaps, we should take one more look at the Nine Steps to Prosperity.
Rodger Malcolm Mitchell
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. Provide an Economic Bonus to every man, woman and child in America, and/or every state a per capita Economic Bonus. (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
Vertical gray bars mark recessions.
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.