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It takes only two things to keep people in chains: The ignorance of the oppressed and the treachery of their leaders..
Science is a search for facts. But often, agreed-upon facts can lead to diametrically opposing conclusions.
Consider the differences between Monetary Sovereignty (MS) and Modern Monetary Theory (MMT). Both are attempts to demonstrate the superiority of facts over intuition.
They agree on the same set of basic economic facts, some of which seem to be so counter-intuitive, that even many economists are confused:
- The U.S. federal government is sovereign over its currency, the dollar. The U.S, cities, counties, and states are not.
- Being sovereign over its currency, the U.S. government cannot unintentionally run short of U.S. dollars. The U.S. cities, counties, and states can and do unintentionally run short of dollars.
- To pay its bills, the U.S. federal government needs no income. The cities, counties, and states do need income.
- The federal government creates dollars ad hoc, each time it pays a creditor. The cities, counties, and states do not.
- Needing no income, the U.S. federal government does not need to tax or to borrow. Even if all federal tax collections were $0, the federal government could continue paying its creditors, forever.
- Unlike the cities, counties, and states, the federal government does not borrow. What misleadingly is termed “borrowing” and “debt” actually is the acceptance of deposits in T-security accounts by the Federal Reserve Bank, i.e bank deposits. The Bank pays off this “debt” every day, by transferring the dollars that already exist in T-security accounts, back to the checking accounts of the T-security holders. The federal government could pay off its entire “debt” today, if it chose, without creating a single, new dollar.
- Because the federal government never unintentionally can run short of dollars, no agency of the federal government can run short of dollars unless Congress and the President will it. Despite what you may have been told, Social Security, Medicare, the military, the White House, Congress, the Supreme Court et al, being federal agencies, cannot run short of dollars unless Congress and the President want them to.
These are the absolute Truths of the U.S. economy, on which both MS and MMT agree. Yet from these Truths, the two philosophies diverge, notably regarding what actions the federal government should take.
The very heart of MMT beats at the University of Missouri, Kansas City (UMKC), where the professors have created a monument to their beliefs, an organization called The Center for Full Employment and Price Stability.
As you might imagine, an organization bearing that title must foster the belief that the two most important problems facing the American economy, or any economy, are a lack of jobs and inflation.
Regarding jobs, consider these excerpts from an article in the May 27th, 2017 issue of NewScientist Magazine:
Technology for Tomorrow, a manifesto for change
Put workers before robots, p. 21 by Matt Reynolds
If robots aren’t already lining up to take your job, they will be soon. A much-cited study from the University of Oxford found that 47 percent of U.S. jobs are at risk of being automated over the next 20 years.
Automation is set to affect everyone from cashiers to credit analysts: even if your job can’t be fully automated, there is a good chance parts of it can be.
The implementation of Artificial Intelligence (AI), buttressed by “machine learning,” means that in the future, precious few jobs will not be done, wholly or in part, by machines — and this even includes the conceptual creation of those machines.
“Intelligent” machines already have taken jobs from humans, and will do so at an accelerated rate. If nothing is done, this looming lack of human jobs will impoverish the populace. So, what should be done?
MMT believes the problem can be stated very simply as “lack of jobs.”
MS believes the real problem is “lack of money.”
To solve what it considers to be the “lack of jobs” problem, MMT suggests implementing a “Jobs Guarantee” (JG) by which the federal government guarantees that everyone who wants a job will be given a job.
However, in reality, there is no shortage of jobs, nor has there been since the Great Depression. If you go to the Monster.com employment site and click “Chicago,” you will see: Jobs in Chicago, Illinois, 1000+ Jobs Found
The site doesn’t say how many more than 1000 jobs it lists, but the question is: Why are there so many jobs available if the problem is “lack of jobs”?
Is it because Chicago is such a big city? Not really. Consider little Mullen, NE, pop. 501, and near no other cities. Here is what Monster.com said on June 11, 2017: “Jobs within 10 miles of Mullen, NE: 65 Jobs Found.”
Then we have the thriving metropolis of Harlem, MT, pop. 830, where 52 jobs within 10 miles were found by Monster.com.
Would you consider 65 jobs available within 10 miles of a town having 501 residents, or 52 jobs close to a town of 830, to imply a “lack of jobs”?
And these are not special cases. They are typical. Go to Monster.com, and prowl around.
And those are just the jobs listed on one web site, Monster.com. Think about all the other job sites, and the classified sections of newspapers and the employment agencies, and the charitable organizations devoted to helping people find jobs, etc.
Yes, there is no shortage of jobs; there are plenty of available jobs, thousands of jobs, millions of jobs. But, for any individual job seeker, the vast majority are not the right jobs.
Look at all the jobs in your local paper, and see how few are appropriate for you.
And therein lies the problem — or one of the problems.
The MMT JG program does not, cannot offer the right jobs; it just offers jobs, any jobs.
There is no possible mechanism for JG to offer the right jobs to every resident of Mullen, NE and Harlem, MT, and every other Mullen and Harlem resident in America, who wants a job.
Think about the staffing and design of a federal agency capable of:
- Finding and offering the right job for every job seeker in every Mullen and Harlem around America
- Watching over those jobs (for ongoing working conditions, comparable benefits and pay, etc.), and most importantly,
- Making sure those are additional jobs, not just replacement jobs.
As technology reduces, year-by-year, the availability of those “right” jobs, JG will look less and less like a solution to anything.
And the MMT folks know it.
So why do they persist with JG? Here is what the article’s author, Matt Reynolds, says, and what MMT believes:
Work isn’t just about money. It gives us a sense of purpose and identity, which is why using technology to track workers to enforce optimal performance is so dehumanizing.
There you see a mashup of the nonsense promulgated by the rich: You masses cannot feel a sense of purpose and “identity” (whatever “identity” means) unless you labor. Presumably, the harder you labor, the more “purpose and identity” you will feel.
The rich, by contrast, feel just fine minimizing their own labor by employing people like you to do the work, while they lounge on yachts. Apparently, we should be thankful to the generous rich, who forego their own “purpose and sense of identity,” and give it to us workers.
And, if work gives us a sense of purpose and identity, why is tracking workers to enforce optimal performance “dehumanizing”? Wouldn’t optimal performance be what provides that purpose and identity?
And by the way, why do you buy labor-saving devices if labor gives you a sense of purpose and identity?
Yes, some jobs — jobs that make people rich, famous, and revered — can provide some measure of purpose and identity, but for the vast majority of us working stiffs, jobs are for money and hobbies are for pleasure, and we still look forward to weekends and vacations away from work.
Not many people on their deathbed say, “I wish I had spent more time digging in the coal mine or sitting in my office cubicle, answering ‘Yes, sir’ to my boss.”
The MMT professors seem to believe, deep within their souls, that the poor need to labor to fulfill their destinies, so they should be thankful to receive any job, no matter how onerous or empty.
The MMT professors are creatures of graphs, numbers, and formulas: A thousand unemployed and a thousand available jobs; put them together and poof(!) problem solved.
No, MMT, the problem is not a lack of jobs; the problem is a lack of money. And that is what the Ten Steps to Prosperity is designed to address, Particularly Steps #1, 2, 3, 5, and 7.
Finally, we must mention two comments from the article:
Bill Gates has suggested a robot tax, for instance, which firms would shell out when they supplant humans with machines.
Gates’s suggestion is a perfect example of why money and brains don’t always go together. A robot tax simply would hinder the development and implementation of robots, a bad idea for many reasons. (Why not a tax on all machinery, not just robots, so that thousands of people must be employed to do what a handful do now? Back to the pre-industrial age.)
As the author says:
The EU rejected a robot tax proposal in February, and such simplistic measures don’t get to the heart of the problem.
That’s partly why a universal basic income — a guaranteed small monthly income from the state — has been gaining interest; it lets people pursue their own priorities, including caring for relatives or running their own business. We have preliminary evidence that this can work.
That suggestion is Step #3 of the Ten Steps to Prosperity.
The MMT professors understand the facts of the economy; they should teach them to the populace. If only MMT would forget about JG and join MS in promoting the Ten Steps. Taking that path would lead to a better world.
And MMT, please begin your trip into the 21st century by changing the name from The Center for Full Employment and Price Stability to the Center for Prosperity.
Rodger Malcolm Mitchell
The single most important problems in economics involve the excessive income/wealth/power Gaps between the have-mores and the have-less.
Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics.
Implementation of The Ten Steps To Prosperity can narrow the Gaps:
Ten Steps To Prosperity:
1. ELIMINATE FICA (Ten Reasons to Eliminate FICA )
Although the article lists 10 reasons to eliminate FICA, there are two fundamental reasons:
*FICA is the most regressive tax in American history, widening the Gap by punishing the low and middle-income groups, while leaving the rich untouched, and
*The federal government, being Monetarily Sovereign, neither needs nor uses FICA to support Social Security and Medicare.
2. FEDERALLY FUNDED MEDICARE — PARTS A, B & D, PLUS LONG TERM CARE — FOR EVERYONE (H.R. 676, Medicare for All )
This article addresses the questions:
*Does the economy benefit when the rich can afford better health care than can the rest of Americans?
*Aside from improved health care, what are the other economic effects of “Medicare for everyone?”
*How much would it cost taxpayers?
*Who opposes it?”
3. PROVIDE A MONTHLY ECONOMIC BONUS TO EVERY MAN, WOMAN AND CHILD IN AMERICA (similar to Social Security for All) (The JG (Jobs Guarantee) vs the GI (Guaranteed Income) vs the EB (Economic Bonus)) Or institute a reverse income tax.
This article is the fifth in a series about direct financial assistance to Americans:
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
Why Modern Monetary Theory’s Jobs Guarantee is like the EU’s euro: A beloved solution to the wrong problem. Tuesday, May 29 2012
“You can’t fire me. I’m on JG” Saturday, Jun 2 2012
Economic growth should include the “bottom” 99.9%, not just the .1%, the only question being, how best to accomplish that. Modern Monetary Theory (MMT) favors giving everyone a job. Monetary Sovereignty (MS) favors giving everyone money. The five articles describe the pros and cons of each approach.
4. FREE EDUCATION (INCLUDING POST-GRAD) FOR EVERYONE Five reasons why we should eliminate school loans
Monetarily non-sovereign State and local governments, despite their limited finances, support grades K-12. That level of education may have been sufficient for a largely agrarian economy, but not for our currently more technical economy that demands greater numbers of highly educated workers.
Because state and local funding is so limited, grades K-12 receive short shrift, especially those schools whose populations come from the lowest economic groups. And college is too costly for most families.
An educated populace benefits a nation, and benefitting the nation is the purpose of the federal government, which has the unlimited ability to pay for K-16 and beyond.
5. SALARY FOR ATTENDING SCHOOL
Even were schooling to be completely free, many young people cannot attend, because they and their families cannot afford to support non-workers. In a foundering boat, everyone needs to bail, and no one can take time off for study.
If a young person’s “job” is to learn and be productive, he/she should be paid to do that job, especially since that job is one of America’s most important.
6. ELIMINATE FEDERAL TAXES ON BUSINESS
Businesses are dollar-transferring machines. They transfer dollars from customers to employees, suppliers, shareholders and the federal government (the later having no use for those dollars). Any tax on businesses reduces the amount going to employees, suppliers and shareholders, which diminishes the economy. Ultimately, all business taxes reduce your personal income.
7. INCREASE THE STANDARD INCOME TAX DEDUCTION, ANNUALLY. (Refer to this.) Federal taxes punish taxpayers and harm the economy. The federal government has no need for those punishing and harmful tax dollars. There are several ways to reduce taxes, and we should evaluate and choose the most progressive approaches.
Cutting FICA and business taxes would be a good early step, as both dramatically affect the 99%. Annual increases in the standard income tax deduction, and a reverse income tax also would provide benefits from the bottom up. Both would narrow the Gap.
8. TAX THE VERY RICH (THE “.1%) MORE, WITH HIGHER PROGRESSIVE TAX RATES ON ALL FORMS OF INCOME. (TROPHIC CASCADE)
There was a time when I argued against increasing anyone’s federal taxes. After all, the federal government has no need for tax dollars, and all taxes reduce Gross Domestic Product, thereby negatively affecting the entire economy, including the 99.9%.
But I have come to realize that narrowing the Gap requires trimming the top. It simply would not be possible to provide the 99.9% with enough benefits to narrow the Gap in any meaningful way. Bill Gates reportedly owns $70 billion. To get to that level, he must have been earning $10 billion a year. Pick any acceptable Gap (1000 to 1?), and the lowest paid American would have to receive $10 million a year. Unreasonable.
9. FEDERAL OWNERSHIP OF ALL BANKS (Click The end of private banking and How should America decide “who-gets-money”?)
Banks have created all the dollars that exist. Even dollars created at the direction of the federal government, actually come into being when banks increase the numbers in checking accounts. This gives the banks enormous financial power, and as we all know, power corrupts — especially when multiplied by a profit motive.
Although the federal government also is powerful and corrupted, it does not suffer from a profit motive, the world’s most corrupting influence.
10. INCREASE FEDERAL SPENDING ON THE MYRIAD INITIATIVES THAT BENEFIT AMERICA’S 99.9% (Federal agencies)Browse the agencies. See how many agencies benefit the lower- and middle-income/wealth/ power groups, by adding dollars to the economy and/or by actions more beneficial to the 99.9% than to the .1%.
Save this reference as your primer to current economics. Sadly, much of the material is not being taught in American schools, which is all the more reason for you to use it.
The Ten Steps will grow the economy, and narrow the income/wealth/power Gap between the rich and you.