–Unemployment, Disemployment and the new focus on OPTIMUM EMPLOYMENT

Mitchell’s laws:
●The more budgets are cut and taxes increased, the weaker an economy becomes.
●Austerity starves the economy to feed the government, and 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.
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Recently I posted, “How IBM can change the world.” and “Who, in the world of economics, is asking for that next super-computer? Both posts described why the field of economics desperately needs, and will radically be changed by, a computer having the skills of Watson, the IBM machine that won Jeopardy.

More recently, I posted “The new paradigm: Disemployment. Less work; more life,” New Paradigm II: What are your plans for the Age of Disemployment? and “How would you make disemployment work?”

These posts told why increasingly, thinking machines will replace human labor, and why the thrust of economics must change from “full employment” to optimum employment – the situation in which people will be required to work less and have the opportunity to live more, while machines do more work.

In “How would you make disemployment work?” I suggested these preliminary steps for our Monetarily Sovereign government:

1. Legally reduce the traditional 40 hour work week to 30 hours and less.
2. Prevent hunger for lack of dollars. The government could provide for everyone’s basic food supplies by paying grocery stores to offer free milk, meat, fish and vegetables.
3. Provide health care for everyone. The government could pay for 100% Medicare for every American of all ages.
4. Keep people from suffering homelessness. The government to pay for home mortgages at a minimum level (Rather than “minimum wage,” we could have “minimum home mortgage,” where people could add dollars for more expensive homes. Or “minimum rent,” something akin to the government paying for hotel stays).
5. Just as today we provide free education, grades 1-12, the government should provide free college and advanced degree education to every American.
6. Begin with government-paid-for local, public transportation, then expand this by paying airlines and railroads for free national public transportation.

Now comes NewScientist Magazine, with articles bearing on this subject:

NewScientist Magazine, August 22, 2012
Watson turns medic: Supercomputer to diagnose disease
by Jim Giles

More than a year after it won the quiz show Jeopardy!, IBM’s supercomputer is learning how to help doctors diagnose patients. Progress is most advanced in cancer care. “It’s a machine that can read everything and forget nothing,” says Larry Norton, a doctor at the Memorial Sloan-Kettering Cancer Center.

When playing Jeopardy!, Watson analysed each question. Then it looked for possible answers in its database, made up of sources such as encyclopaedias, scoring each according to the evidence associated with it and answering with the highest rated answer. The system takes a similar approach when dealing with medical questions, although in this case it draws on information from medical journals and clinical guidelines.

Watson is now absorbing records – tens of thousands at Sloan-Kettering alone – of treatments and outcomes associated with individual patients.

William Audeh, a doctor at Cedars-Sinai Medical Center in Los Angeles, says the last few months have involved “filling Watson’s brain” with medical data. The technology is particularly useful in oncology because doctors struggle to keep up with the explosion of genomic and molecular data generated about each cancer type.

Nurses are now training Watson by feeding it test requests and observing the answers.

Watson’s system is virtually identical with that used by human doctors – compare symptoms, treatments and outcomes – except Watson “can read everything and forget nothing” and has no emotional biases, and can work 24/365.

Here’s another snippet from the same article:

Preparing for your financial future

Is your pension invested in the best possible way? To answer this question involves weighing up multiple investment options, future income prospects and the experience of others in similar situations. It is the kind of problem that most people struggle with, but which IBM’s supercomputer Watson may be able to tackle.

IBM announced in May that it has partnered with Citi, a multinational bank, to explore the idea of training Watson as a financial adviser.

Again, this is exactly how you and your financial advisor decide your investments. Compare historical risk and opportunity with current and project economic fact. Except you can handle only a few variables, and have many human biases that cloud your judgement. Humans are notoriously poor judges of risk and reward (thus the existence of Lotto.)

A “Watsonesque” machine would learn everything and forget nothing — and not buy Lotto tickets. It also would do a better job projecting those economic facts.

And then NewScientist published this:

Digital doppelgängers: Building an army of you
15 August 2012 by Sally Adee

Alex Schwartzkopf can be in more than one place at once and, in principle, do thousands of things at the same time. He and his colleagues at the US National Science Foundation have trained up a smart, animated, digital doppelgänger – mimicking everything from his professional knowledge to the way he moves his eyebrows – that can interact with people via a screen when he is not around. He can even talk to himself.

It’s becoming possible to create digital copies of ourselves to represent us when we can’t be there in person. They can be programmed with your characteristics and preferences, are able to perform chores like updating social networks, and can even hold a conversation.

These autonomous identities are not duplicates of human beings in all their complexity, but simple and potentially useful personas. If they become more widespread, they could transform how people relate to each other and do business. They will save time, take onerous tasks out of our hands and perhaps even modify people’s behaviour.

For example, the website rep.licants.org, developed by artist Matthieu Cherubini, allows you to create a copy of your “social media self”, which can take over Facebook and Twitter accounts when required. You prime it with data such as your location, age and topics that interest you, and it analyses what you’ve already posted on your various social networks. Armed with this knowledge, it then posts on your behalf.

In principle, such services could one day perform a similar job to the ghostwriters who manage the social media profiles of busy celebrities and politicians today.

The Australian company MyCyberTwin allows users to create copies of themselves that can engage visitors in a text conversation, accompanied by a photo or cartoon representation. These copies perform tasks such as answering questions about your work, like an interactive CV. “A single CyberTwin could be talking with millions of people at the same time,” says John Zakos, who co-founded the firm. MyCyberTwin also uses tricks to add a touch of humanity. Users are asked to fill in a 30-question personality test, which means that the digital persona may act introverted or extroverted, for example.

In the past year or two, Apple has filed a series of patents related to using animated avatars in social networking and video conferencing. Microsoft, too, is interested. It has been exploring how its Kinect motion-tracking device could map a user’s face so it can be reproduced and animated digitally. The firm also plans to extend the avatars that millions of people use in its Xbox gaming system into Windows and the work environment.

So could avatars be automated too? It already happens in gaming: many people employ intelligent software to control their avatars when they’re not around. For example, some World of Warcraft players program their avatars to fight for status or to farm gold.

To similar ends, in 2007 the National Science Foundation began Project Lifelike, an experiment to build an intelligent, animated avatar of Schwartzkopf, who at the time was a program director. The hope was to make the avatar good enough to train new employees.

Jason Leigh, a computer scientist at the University of Illinois at Chicago, used video capture of Schwartzkopf’s face to create a dynamic, photorealistic animation. He also added a few characteristic quirks. For example, if Schwartkopf’s copy was speaking intensely, his eyebrows would furrow, and he would occasionally chew his nails. “People’s personal mannerisms are almost as distinguishing as their signature,” Leigh says.

These tricks combined to make the copy seem more, well, human, which helped when Leigh introduced people to Schwartzkopf’s doppelgänger. “They had a conversation with it as if it were a real person,” he recalls. “Afterwards, they thanked it for the conversation.”

The Project Lifelike researchers are now building a copy of the astronaut Jim Lovell, who flew on Apollo 13 and will answer questions at Chicago’s Adler Planetarium, and one of Alan Turing, who will field questions at the Orlando Science Center in Florida. Others are working on ways to create doppelgängers that will persist after people die.

And the beat goes on:

Meanwhile, Bickmore and his team are developing animated avatars of doctors and other healthcare providers. One of the nurse avatars they created is designed to discharge people from hospitals. In tests, he found 70 per cent of patients preferred talking to the copy rather than a real nurse, because they felt less self-conscious. Doctors, meanwhile, could use avatars to streamline their work. “A doctor might want to make a copy, for example, if they are the pre-eminent expert in a field,” Bickmore says.

As with doctors, academics could spread their workload too. “This would allow you to teach as many sections as your department desires,” Bailenson says. With several copies operating simultaneously, a teacher could jump between them at will, inhabiting any one without ever letting on to the students.

A British company called Philter Phactory makes autonomous bots called Weavrs (that) can operate Twitter accounts and other social media on a person’s behalf. The company’s selling point is that Weavrs can be used to trawl the web for interesting links about certain topics, then post status updates or share videos and articles about them.

Many actors and performers have digital personas, sometimes created against their will. It seems laws will need to be adapted to define who can control people’s digital selves (see “Double jeopardy”).

Jaron Lanier, an author and Microsoft researcher, worries about technologies that claim to amplify our efficiency. “If you’re a history professor and you can operate 10,000 of these (bots), why does the university have to hire any other history professors?” Lanier asks.

Visualize you always have lived in a grass hut. A hurricane is coming. You know with absolute certainty, the hurricane winds will destroy your hut. Do you ignore it, or do you build, and move to, a concrete building?

We know with absolute certainty, hurricane “Disemployment” is coming to the island of economics. We already have felt the rising wind. Will we continue doing what we always have done, using the same old ways to search for “full employment.”

Several excellent economists, whom I know, belong to “The Center for Full Employment and Price Stability.” I hope they change the thrust of their thinking from “full employment” to optimum employment, and help our island prepare for the hurricane.

What do you think?

Rodger Malcolm Mitchell
Monetary Sovereignty

Nine Steps to Prosperity:
1. Eliminate FICA (Click here)
2. Medicare — parts A, B & D — for everyone
3. Send every American citizen an annual check for $5,000 or give every state $5,000 per capita (Click here)
4. Long-term nursing care for everyone
5. Free education (including post-grad) for everyone
6. Salary for attending school (Click here)
7. Eliminate corporate taxes
8. Increase the standard income tax deduction annually
9. Increase federal spending on the myriad initiatives that benefit America

==========================================================================================================================================
No nation can tax itself into prosperity, nor grow without money growth. Monetary Sovereignty: Cutting federal deficits to grow the economy is like applying leeches to cure anemia. Two key equations in economics:
Federal Deficits – Net Imports = Net Private Savings
Gross Domestic Product = Federal Spending + Private Investment and Consumption – Net Imports

#MONETARY SOVEREIGNTY

–Congress in Wonderland: Cut the deficit, but don’t cut the deficit. And it’s all their fault.

Congress demands not to do what it previously demanded to do and still demands to do, but denies it. And if you understand that, you have serious mental problems, which qualify you to run for office.

For several years, Congress – especially the Tea/Republicans, but to a lesser degree, even the Democrats – have demanded that the federal deficit be reduced. Some in Congress have demanded a “balanced budget” ($0 deficit), or even a federal surplus (pull dollars out of the economy).

So determined have our political leaders been to cut the deficit, via tax increases and spending cuts, they passed a law requiring a $500 billion deficit reduction beginning January 2013. Now, Congress and the President act as though it wasn’t they who passed the law.

Recently, a sense of shock and outrage has rippled through Washington at the relization that what they all wanted to happen may actually happen. The finger-pointing has begun.

Washington Post
CBO warns of significant recession if Congress doesn’t act to avoid fiscal cliff
By Lori Montgomery, Updated: Wednesday, August 22, 11:13 AM

The nation would be plunged into a significant recession during the first half of next year if Congress fails to avert nearly $500 billion in tax hikes and spending cuts set to hit in January, congressional budget analysts said Wednesday.

The massive round of New Year’s belt-tightening — known as the fiscal cliff or Taxmageddon — would disrupt recent economic progress, push the unemployment rate back up to 9.1 percent by the end of 2013 and produce economic conditions “that will probably be considered a recession,” the nonpartisan Congressional Budget Office said.

Isn’t that amazing! If you remove $500 billion from the economy, you actually will cause a recession? I’m stunned, or I would be stunned, if I hadn’t been preaching the same thing for the past 15 years.

A growing economy requires a growing money supply. The federal deficit is the government’s method for adding dollars to the economy. Cut the deficit and you reduce the dollars coming into the economy, and thereby cause recessions and depressions. Always.

The outlook is considerably darker than the forecast the agency released in January, when the CBO predicted that the fiscal cliff would trigger a mild recession in the first half of 2013 followed by a quick recovery.

Since that forecast was issued, Congress has steepened the cliff by extending a temporary payroll tax break and emergency unemployment benefits, which are now also set to expire in January. In addition, CBO analysts have concluded that the underlying economy is weaker than had been predicted.

Let’s see if we can figure this out. Congress and the President extended that payroll tax break and unemployment benefits, because this pumps dollars into the economy. (The increase in federal deficit spending helps stimulate the economy.) And they understand that a decrease in the federal deficit will drive the economy off the “fiscal cliff.”

So what should Congress and the President do now? Hmmm . . . . Increase the deficit and stimulate the economy, or reduce the deficit and go off the fiscal cliff? Really difficult problem, isn’t it?

The shock would be felt for years to come, with the unemployment rate stuck above 8 percent through 2014, the agency said. And the effects are likely to be felt well before the fiscal cliff hits, as “businesses’ and consumers’ concern about the scheduled fiscal tightening will lead them to spend more cautiously than they otherwise would have” during the remainder of 2012.

The CBO’s latest fiscal outlook is likely to fuel the raging debate over budget policy as the nation barrels toward the Nov. 6 elections. Republicans, including presidential candidate Mitt Romney, want to postpone the biggest chunk of the cliff — $331 billion in tax hikes — to give Congress time to overhaul the tax code. Democrats, including President Obama, say they will not delay tax hikes set to hit the richest Americans, those earning over $250,000 a year.

Er, ah, excuse me. I almost hate to mention the obvious but . . . How about increasing the deficit by cutting taxes and increasing deficit spending? The U.S. government is Monetarily Sovereign. Unlike the states, counties, cities and euro nations, it has the unlimited ability to pay its bills. So what’s the problem?

Republicans quickly accused Democrats of inviting economic disaster.

You see, passing the law — in fact threatening filibuster if the law wasn’t passed — does not constitute “inviting economic disaster.” No, failing to overturn the law you insisted on, that’s what invites economic disaster. Got it?

“This CBO report underscores why on August 1, I and other House GOP leaders urged the Senate to follow the House in passing legislation that would steer our nation clear of the fiscal cliff,” House Speaker John A. Boehner (R-Ohio) said in a written statement. “Instead of threatening to drive us off the fiscal cliff and tank our economy in their quest for higher taxes, I would urge President Obama and congressional Democrats to work with us to stop the coming tax hike that threatens our economy and replace the looming defense cuts with common sense reforms.”

Hey John, aren’t you “America is broke” Boehner, who demanded that the federal deficit be cut. There are only two ways to cut the deficit: Raise taxes and/or cut spending. And you don’t want to raise taxes?? Or cut spending??

Unless the election helps to resolve the standoff, the same political gridlock that has prevented a deficit-reduction deal for much of the past two years would this time produce one of the biggest rounds of deficit reduction in modern history. Instead of exceeding $1 trillion for a fifth straight year, the 2013 deficit would instead plummet to $641 billion, the CBO predicts.

So the argument is: Do we cut the deficit less, thereby hurting the economy less, or do we cut the deficit more, thereby hurting the economy more? Again, I hate to mention the obvious, but what about helping the economy by increasing the deficit?

The national debt is growing apace, with debt owed to outside investors set to hit 73 percent of the overall economy by the end of September.

What everyone mistakenly calls “the debt” is nothing more than the total of deposits in Treasury security accounts at the Federal Reserve Bank. Why should the government or you worry about “too much” money deposited at the Federal Reserve Bank?

That’s the highest level in more than 60 years, and nearly double the level in 2007, before the onset of the Great Recession.

There is no known mechanism by which deposits in T-security accounts at the FRB, can cause a depression. What did cause the Depression? How about the 10-year reduction in deficits immediately preceding the Depression? Pulling dollars out of the economy for 10 years might have had something to do with weakening the economy. You think?

There also is no known mechanism by which deficit reduction grows the economy. Pulling dollars out of the economy never can be stimulative.

And despite this, Congress and the President still say they wish to cut the deficit, while the editors of some newspapers even urge us to “Go Big,” i.e. make big cuts in the deficit. The notorious Chicago Tribune editors wrote, “Count us in the noisy chorus that wants the supercommittee to “go big” — that is, not merely to meet its minimum mandate but to make far more drastic reductions in future deficits.” Yikes!!

Lewis Carroll wrote about these people. But this isn’t funny.

Rodger Malcolm Mitchell
Monetary Sovereignty

#MONETARY SOVEREIGNTY

–How would you make disemployment work?

In two recent posts, we discussed “disemployment,” the fact that increased automation has made, and will continue to make, human work-for-money less needed:

The new paradigm: Disemployment. Less work; more life.

New Paradigm II: What are your plans for the Age of Disemployment?

Although many people enjoy their jobs, the vast majority work because they want money. This vast majority did not grow up saying, “I hope I can have a boss I must please by doing whatever he/she says.” They did not say, “I want to sit in an office cubicle all day, five days a week, or stand in front of a machine, or carry packages, or dig holes or be criticized.”

The vast majority did not grow up hoping one day they would be required to smile at irritable people, or continually to repeat the same words, or wake up early to meet someone else’s schedule, then ride public transportation, or drive through traffic jams in bad weather or be allowed to go away just two weeks out of the whole year.

The vast majority did grow up hoping one day they would lie awake at night, praying for customers, or for a good evaluation, or not to be fired.

No, the vast majority would like the freedom to do as they wished, under circumstances they enjoy – and for the vast majority, that does not mean having to work for money.

“The New Paradigm II” said: When our leaders create plans for curing unemployment, your question should be, “What are your plans for making my life and my children’s lives more enjoyable, more comfortable, safer, healthier — better? What are your plans for the coming age of disemployment?“

Today, I saw an article in the Global Intersection, titled Labor Costs: A Smaller Factor in Globalization

Two key quotes from the article:

A new wave of robots, far more adept than those now commonly used by automakers and other heavy manufacturers, are replacing workers around the world in both manufacturing and distribution.

And

Labor costs are no longer a primary factor in determining where business should locate.

More advanced computers are, and will continue to, replace human labor. Yet, what is the single, most important issue being debated befor the coming election? Human unemployment. See anything wrong with that?

I sometimes feel as though our politicians live in another universe – a universe where nothing changes – and the goal is to solve the problems of yesterday. With the development of ever smarter robots, the days of full employment are gone, forever. Disemployment is the new norm.

If today’s 8.2% national unemployment level bothers you, wait until tomorrow, when disemployment really kicks in, and 20%, 30%, 50% of those wanting money will not be able to work for money. What is Congress’s and the President’s plan for that eventuality? Raise taxes? Cut spending? Create laws against computers?

Let’s begin with three facts:

1. Most Americans work primarily to obtain dollars.
2. Americans use dollars to acquire life necessities and indulgences.
3. The U.S. government has the unlimited ability to create dollars.

Put them together and you have the beginnings of a solution: The federal government should provide more dollars for life necessities and even indulgences, with less requirement for human labor.

Yes, of course, if no one worked, nothing would be done and we’d all starve. But we’re not talking about no one working. We’re talking about working less, and enjoying life more.

And yes, some people love their work. No problem; they can continue to work, if they can find it. And yes, some people may choose not to work at all. No problem; they can live the life non-work affords.

Now for the reality of the majority: Given previous points #1, #2 and #3, we can consider how we might plan for the inevitable disemployment:

1. Legally reduce the traditional 40 hour work week to 30 hours and less.
2. Prevent hunger for lack of dollars. The government could provide for everyone’s basic food supplies by paying grocery stores to offer free milk, meat, fish and vegetables.
3. Provide health care for everyone. The government could pay for 100% Medicare for every American of all ages.
4. Keep people from suffering homelessness. The government to pay for home mortgages at a minimum level (Rather than “minimum wage,” we could have “minimum home mortgage,” where people could add dollars for more expensive homes. Or “minimum rent,” something akin to the government paying for hotel stays).
5. Just as today we provide free education, grades 1-12, the government should provide free college and advanced degree education to every American.
6. Begin with government-paid-for local, public transportation, then expand this by paying airlines and railroads for free national public transportation.

We began this discussion with three facts. There is a fourth fact: Disemployment is the future. As winter follows fall, nothing will stop it.

At first blush, some ideas may seem outlandish, if based on yesterday’s employment reality. But, disemployment already has begun. The coming years will continue to see less and less need for human labor. We can close our eyes to change, and follow the increasingly obsolete “full-employment” paradigm. Or we can begin to discuss ways to meet this challenge.

Summer has ended. Fall has just begun. We can buy heavy clothing for winter – clothing which may seem outlandish based on yesterday’s warm reality – or we can ignore the occasional chilly breeze, and allow ourselves to freeze when the snow falls.

Disemployment is not an “if.” It’s a “when” and the when is upon us. We can rail against the cold, or we can prepare. We should stop looking at unemployment as a problem to be solved, but rather as an eventuality and an opportunity to loosen the binds of obligatory labor.

How would you make disemployment work?

Rodger Malcolm Mitchell
Monetary Sovereignty
—————————————————————————————————————————————————————–
Nine Steps to Prosperity:
1. Eliminate FICA (Click here)
2. Medicare — parts A, B & D — for everyone
3. Send every American citizen an annual check for $5,000 or give every state $5,000 per capita (Click here)
4. Long-term nursing care for everyone
5. Free education (including post-grad) for everyone
6. Salary for attending school (Click here)
7. Eliminate corporate taxes
8. Increase the standard income tax deduction annually
9. Increase federal spending on the myriad initiatives that benefit America

#MONETARY SOVEREIGNTY

–Former (?) Debt-Hawk Admits Federal Debt is Necessary

Every so seldom, a notorious debt-hawk will publish an admission that well, yes, not just federal debt, but growing federal debt is necessary for the survival and growth of our economy.

Washington Post
The reality of trying to shrink government
By Lawrence Summers, Published: August 19, 2012
Lawrence Summers, a professor and past president at Harvard University, was Treasury secretary in the Clinton administration and economic adviser to President Obama from 2009 through 2010.

There is a widespread view in both parties that it is feasible and desirable that in the future the federal government should be no larger as a share of the overall economy than it has been historically.

RMM: Yes, it is the widespread view – the wrong view, but widespread. Unfortunately, no one in either party explains why the government’s share of GDP should be no greater than it “has been historically.” The reason for this omission: There is zero economic significance to the debt/GDP ratio.

Second, exactly what has that “historical” ratio been?

(“FGSDODNS” is federal debt. “GDPA” is Gross Domestic Product)

As you can see, the Debt/GDP ratio has had no relationship with Gross Domestic Product growth, and has bounced all over the place — and there is no “historical” ratio.

For structural reasons, even preserving the amount of government functions that predated the financial crisis will require substantial increases in the share of the U.S. economy devoted to the public sector.

First, demographic change will greatly expand federal outlays unless politicians decide to degrade the level of protection traditionally provided to the elderly. Between Social Security, Medicare, Medicaid and some smaller programs about 32 percent of the federal budget, or about 7.7 percent of gross domestic product, is devoted to supporting those over 65.

RMM: Or we can accept the right-wing extremism of self sufficiency – until those same right wing “John Waynes” reach elderly status, at which time they pitifully will cry, “Help me, help me, I’m old and sick and broke.”

As Americans’ health and life expectancy improve, it may be appropriate to revise upward the assumed retirement age. That would, however, be unlikely to counteract the expected 34 percent increase in the share of the population over the next generation who will be within 15 years of estimated life expectancy.

RMM: “Revise upward” expresses the extreme right-wing, “Work ‘til you drop” philosophy, which again, they are guaranteed to disavow, once they get there. (“What? I have to work until I’m 75? Who will hire me? I’m too weak for the physical labor I once did. Wah wah wah.”)

Second, the accumulation of more debt and a return to normal interest rates will raise the share of federal spending devoted to interest payments.

RMM: Yes, those who invested in Treasury securities, will expect to earn interest on their investment. And then, they will spend that interest money, which will stimulate the economy. And by the way, what is a “normal” interest rate”?

Third, increases in the price of what the federal government buys relative to what the private sector buys will inevitably raise the cost of state involvement in the economy. Since the early 1980s the price of hospital care and higher education has risen fivefold relative to the price of cars and clothing, and more than a hundredfold relative to the price of televisions.

RMM: Fundamentally correct, though the private sector pays for most higher education, which is why we have all those excessively indebted college graduates. In truth, the federal government should finance higher education.

If government is to continue providing the same level of these services, government spending as a share of the economy has to rise, by at least 3 percent of GDP.

RMM: Or, we can do as the Tea/Republican Party wishes, and cut government benefits for the 99%, ala European austerity. That seems to work nicely for Greece, France, Italy, Spain et al, whose people very soon may begin to build guillotines for their leaders.

Fourth, several methods that have been used to repress the deficit, such as federal pension liabilities and the deferred maintenance of federal infrastructure, will soon be unsustainable.

RMM: Right: Spending of pension dollars grows the economy, while infrastructure spending reduces unemployment. And by the way, our Monetarily Sovereign federal government can afford both.

Meanwhile, there is a steady decline in the fraction of tax returns that are audited and evidence of growing tax noncompliance. Both reflect unsustainable cuts in spending. And on almost any reasonable view of the state’s responsibility, large increases in inequality such as those observed in recent years should call forth increased government activity.

RMM: Almost buried in the article is the media-denied fact that federal deficit reductions always increase the gap between the upper income 1% and the 99%. (Yet, in the next election, millions of Americans will vote to reduce the federal deficit. Go figure.)

Defense spending, which represents 4.7 percent of GDP could be reduced significantly. But our military is badly stretched by sustained deployments.

Technology could greatly reduce government costs in some areas, the largest parts of the federal budget involve cash or in-kind transfers (which) are far less susceptible to productivity-enhancing technologies. (Also) efforts to identify waste, fraud and abuse invariably come up with only negligible savings.

RMM: In short, even Lawrence Summers has come to understand there is no economically sound way to reduce deficits and many reasons not to. But that won’t change the minds of most politicians and right wing extremists (Is there a difference?), who will continue to claim, “It is feasible and desirable that in the future the federal government should be no larger as a share of the overall economy than it has been historically.”

For the next three months the nation will debate the merits of growing vs. shrinking government. But for the next three decades the United States will confront the reality that major structural changes in its economy will compel an increase in the public sector’s fraction of the total economy unless the functions that the federal government has long performed are substantially scaled down.

RMM: “The merits of growing vs. shrinking the government” should be the debate, but unfortunately it is not. The debate has devolved to: “How to shrink the government” aka “How to send us into depression while increasing the gap between the 1% and the 99%.”

But at least and at last, Lawrence Summers seems to get it. That’s one. Is there now hope for the rest of the 300 million?

Rodger Malcolm Mitchell
Monetary Sovereignty

#MONETARY SOVEREIGNTY

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