Mitchell’s laws: The more budgets are cut and taxes inceased, the weaker an economy becomes. Until the 99% understand the need for deficits, the 1% will rule. To survive long term, a monetarily non-sovereign government must have a positive balance of payments. Austerity = poverty and leads to civil disorder. Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
==========================================================================================================================================

At MMP Blog 50: MMT Without the JG? Conclusion you will find the last part of a discussion about Modern Monetary Theory’s (MMT) proposal for a Jobs Guarantee (JG)

Very briefly, JG would have the federal government guaranteeing a job to any person who wishes one. Here is what Professor Randall Wray (UMKC) said about JG:

(Disclosure: I know Professor Wray. At his invitation I spoke at his school, the University of Missouri, Kansas City [after he read my book, Free Money] and I agree with the vast majority of his MMT beliefs)

At the above link, you will see the following:

Let us move on to a conclusion of our discussion of the JG. The contentious issue is this: can one adopt MMT while rejecting the JG?

I had made the analogy between disease and unemployment: would any reasonable person who understands the cause of a disease oppose a cure? If you knew that a vaccination can prevent smallpox, would you oppose providing vaccinations (at least to those who want them—I do not want to get into a debate about forcing vaccinations as we have never advocating forcing jobs on those who do not want to work)?

Now I do realize this is not quite a fair comparison because it is possible that there are many cures for the disease of unemployment. MMTers advocate the JG cure. I am open to alternative cures. I just do not hear any coming from the critics.

In Professor Wray’s defense, he was not aware of my post, “Nine steps to prosperity,” where I listed these “cures,” not just for unemployment, but for many of the ills that beset our economy:

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)

In the comments section of Professor Wray’s blog, I said,

“Unemployment is just a symptom of a deeper problem: A bad economy. It was the economic slump that caused the unemployment, not the other way around. Treating the symptom is a bad way to treat the disease.

“Another symptom: Homelessness. Shall we also have HG (Home Guarantee)? And then there’s the symptom: Hunger. Shall we also have FG (Food Guarantee)?

I suggest we treat the disease, not just the symptom, for a lasting cure.

Further on Professor Wray’s blog:

Some try bait and switch: Let’s give them BIG (Basic Income Guarantee) instead of jobs. That does not cure the disease of unemployment. It is like providing antibiotics instead of vaccinations to fight Polio. They then try to justify this on the argument that if we give people BIG, they can still choose to work if they want to. No, they cannot. There must be jobs. Certainly it is true that giving everyone antibiotics does not prevent them from seeking vaccinations. But the vaccinations need to be available. I’m not going to argue more about this—the argument is just too silly. Yes we can give people BIG but that does not give them jobs. If someone is involuntarily unemployed, she wants a job. BIG will not cure the unemployment disease.

After my comments about the recession being the disease and unemployment being the symptom, rather than the other way around, a reader treated me to a medical lesson on the definition of “disease.” That shows the problem with analogies. People start to argue about the analogies rather than about the case.

Anyway, a reader named Tom Hickey wrote this:

RMM, do you really think that economic policy is capable of permanently achieving full employment in the sense of (no involuntary unemployment) and price stability (no more than modest inflation that the central bank can live with) solely with stimulus, Rodger, i.e., exactly offsetting saving desire all the time?

To which I responded:
“Tom, I believe you’re missing the point — the same point MMT misses — when you ask whether monetary policy could achieve “no involuntary unemployment.”

“The goal of an economics program is not just to employ everyone who wants a job. All communist nations do that quite well. The goal is to solve the many problems in an economy, of which unemployment is but one.

“Randy asks, “If you knew that a vaccination can prevent smallpox, would you oppose providing vaccinations?” His analogy assumes unemployment is the disease.

“It is not. The disease is a weak economy, and one of the several symptoms is unemployment. Using Randy’s analogy, treating smallpox would involve giving aspirin for fever and aloe for the rash.

“I suggest that MMT makes a fatal error when it bases its cure on treating a symptom.

“There are other symptoms of a bad economy. Shall we treat those directly, too? How about homelessness? Shall we have HG (Homes Guarantee).

“How about the income gap between the 1% and the 99%? Isn’t that a big problem the JG doesn’t even approach? Shall we have a SITNTG (Sufficient Income To Narrow The Gap) guarantee?

“I say, treat the disease, which currently is a poor economy. Then, if there remains some unemployment, as well as other symptoms, determine what disease causes them, and treat those diseases, too.”

A reader named “Tyler” then wrote:

James Galbraith believes the disease is “unsupervised bankers and ambitious economists,” which he wrote in his letter to the Financial Times published May 2, 2012 as “Dr Summers performs a medical miracle.”

This made me recall Rodger’s blog post, “At long last, are we ready to end private banking?”

I wrote: “Given the question of whether unemployment caused the recession or whether the recession caused the unemployment, I think any honest person would agree on the later. Cure the recession and you cure the vast majority (but not all) the unemployment.

There still will remain some unemployment caused by other problems: A bad educational system? Young people needing to leave school to support their families? Previous history of incarceration? Different skill set needed? You name the cause, and that is what needs attention.

As for curing “accounting control fraud,” that might prevent some future recessions, but it probably will not cure this recession.

The very heart of communism was JG, and I believe that was one of its main weaknesses, too. The notion of solving a problem directly, rather than focusing on the underlying causes of the problem, is a naive strategy. If the causes remain, the problem will remain.

A reader named “Marley” asked:

What say you of an economy like Germany then, where you have very low unemployment but 20% of the jobs are these mini/midi jobs that pay extremely depressed wages since Germany has no minimum wage?

I responded: “Sounds like Germany has a form of JG. So tell me, exactly what wage will JG pay? Will it be minimum wage, which today is poverty level for most people? Will it be above minimum wage, so people will quit their minimum wage jobs and go to JG? Or will it be below minimum wage — really poverty level.

“The question of what wage JG will pay is nontrivial, and I know there has been much argument about this. But without an answer, what is left of JG?”

In the interest of space, I’ve left a great many of the arguments out. I suggest you go to the site, and read them. Interesting discussion. I’ll conclude my post with this. Tom Hickey said, in response to another commeter:

“Arguing the details prior to agreement on general principles is a waste of time.”

It’s a distraction. The argument is about macro theory and policy options that follow from it. After that policy formulations need to be developed for specific cases, such as the US and UK, where political systems and economic conditions are somewhat different, and strategies and tactics developed for implementation.

Arguing about tactics while the debate is at the theoretical and general policy level is silly.

To which I responded: “The general principle of addressing a symptom rather than the underlying problem is wrong. And the details (i.e., exactly what salary, exactly what jobs, exactly what locations, who supervises, etc., etc., etc.) are weak.

“I’ll be interested to see how all that is resolved. My concern however, is that JG has evolved from a solution to a problem, and now has a life of its own, to be defended, fixed, defended again, fixed again — rather than starting from the real problem: How to make the economy better for everyone.

“In this, JG reminds me of the euro, another “solution” that is defended, fixed, defended again and fixed again, that also has acquired a life of its own.”

Sad to say, some proponents of MMT have become so enamored with JG, they react quite badly to anyone who questions their beloved solution. It’s a shame, because I believe JG, and MMT’s refusal to see it clearly, detracts from MMT’s credibility.

Rodger Malcolm Mitchell
http://www.rodgermitchell.com

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

#MONETARY SOVEREIGNTY

Mitchell’s laws: The more budgets are cut and taxes inceased, the weaker an economy becomes. Until the 99% understand the need for deficits, the 1% will rule. To survive long term, a monetarily non-sovereign government must have a positive balance of payments. Austerity = poverty and leads to civil disorder. Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
==========================================================================================================================================

There are two major political parties in the U.S. The Democrats are “leftish” (actually, center right) and the Republicans are “rightish” (actually, extreme right).

The Tea party is kook right, but being crazy doesn’t mean they’re stupid. I’ll give these folks credit for being smart enough not to put forth their own presidential candidate.

Why smart? Because if there were a Tea Party candidate and a Republican candidate, the Tea candidate would draw votes from the Republican, and the Democrats would win in a walk.

I refer to that as the “Ralph Nader rule”. Ralph Nader was a leftish candidate, who drew votes from Al Gore, and thus elected George W. Bush. Feel better now, Ralph?

The Democrats, have proved to be the less politically intelligent party. They allowed the Republicans, who owned neither the Presidency nor one of the houses of Congress, to set the economic agenda for the nation.

And so it should come as no surprise that the leftish folks decided to form yet another party — The Green Party — a candidate from which will run for President of the United States. I know this because I have received communications on behalf of someone named “Dr. Jill Stein,” who says she wants to be President, and needs to be nominated by the Green Party.

There is an old joke is statistics that you have the same chance of winning a state lottery, whether or not you buy a ticket. Jill Stein may want to be President, but she has the same chance of winning, whether or not the Green Party nominates her.

I sympathize with many of her thoughts, which are:

*One hundred and forty-six million people – that’s nearly one in every two Americans – is now living below or near the poverty level.

*Last year, one million Americans lost their health insurance.

*Thirty million college students and recent graduates are trapped in the financial prison of student loan debt.

*Overall, nearly 25 million Americans are unemployed or unable to find full time work.

Over seven million are under “correctional supervision”, 10 times greater than in 1965, as incarcerating poor people – disproportionately of color – has become big business with the failed war on drugs.

*The gap between the very rich and the many poor has never been so great.

*And now, the political establishment in the White House, Congress, and state governments are making matters far worse, doing the opposite of what we need, by inflicting needless, harsh austerity policies on the country.

I’m in her corner. And here is what she wants to do:

First, we will guarantee the economic rights of all Americans, beginning with the right to a job at a living wage for every American willing and able to work.

Second, we will transition to a sustainable, green economy for the 21st century, by adopting green technologies and sustainable production.

Third, we will reboot and reprogram the financial sector so that it serves everyday people and our communities, and not the other way around.

Fourth, we will protect these gains by expanding and strengthening our democracy so that our government and our economy finally serve We the People.

O.K., she’s leaning in a praiseworthy direction. But every vote for Dr. Stein will be a vote for Romney (under the Ralph Nader rule). Surely she knows this, so apart from ego boosting, why is she running against President Obama?

I’d imagine she would claim that running for President is the best way she can get her message across. She may be right — or not. But, is getting the message across worth a few more Justices Scalia, Thomas, Roberts and Alito? Is getting the message across worth the reduction of Social Security and Medicare along with more growth in the gap between the 1% and the 99%?

Is getting the message across worth eight years of Tea/Republican craziness?

My advice to the Green Party: Take your lead from the Tea/Republican Party nuts. They know that in politics, it’s better to win as a soulless bastard than to lose as a kind, gentle soul.

Rather than putting up a separate candidate, the Tea Party published evaluations of the Republican candidates on the basis of following Tea Party beliefs. This clever approach forced the entire Republican Party to adopt Tea Party extremism — something like a crowd being steered by the one nut with a megaphone.

Green Party: Don’t run a separate Presidential candidate. Instead, try to sway the Democrats toward your goals. Publish rankings on Democrats’ “Greenness.” Back the most “Green” Democrat Congressional candidates. Fight to win for your beliefs, not for a person who cannot win.

If you compete with Obama, you will take votes from him. He will be forced to compete with you, thereby downgrading your message. It’s the dumbest possible thing you can do to accomplish your goals.

I know. I know. That old suicide urge has you in its spell.

Rodger Malcolm Mitchell
http://www.rodgermitchell.com

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

#MONETARY SOVEREIGNTY

Mitchell’s laws: The more budgets are cut and taxes inceased, the weaker an economy becomes. Until the 99% understand the need for deficits, the 1% will rule. To survive long term, a monetarily non-sovereign government must have a positive balance of payments. Austerity = poverty and leads to civil disorder. Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
==========================================================================================================================================

Sometimes things are better understood, or at least better respected, if they have a name. I always have been troubled by the right wing of the Supreme Court – most notably Justices Anton Scalia and Clarence Thomas – and their insistence on “originalism.”

My belief has been that any judge who prefers adhering to what he considers to be the letter of the law, is just a lazy thinker. He doesn’t need to go through the agony of considering the many ramifications of reality. He isn’t a thinker; he is just a translator.

Originalism is the belief that the original intent of an author should be adhered to in later interpretations of a work.

Several reasons are given for “originalism” in the Supreme Court:

1. Originalism reduces the likelihood the judiciary will create law, a duty of the legislative branch. [History shows that originalist judges can be as activist as non-originalist judges]

2. Non-originalism leads to judges using their own personal values as opposed to the law. [Yet, originalist judges apply their personal opinions about the intent of the framers.]

3. Originalism allows voters to amend their Constitution when necessary to change the law. [An extremely difficult, time consuming task, that forces the population to suffer bad law for an extended time]

4. Originalism strengthens the Constitution as a binding contract. [Circular thinking. It’s a binding contract only if the citizens agree on the original intent.]

5. Originalism forces lawmakers to avoid creating bad laws, rather than leaving them to the courts to amend. [Good hypothesis; bad reality. It has done no such thing.]

The correct name for originalism is ”The Historian’s Fallacy” – “a logical fallacy that occurs when one assumes decision makers of the past viewed events from the same perspective and having the same information as those subsequently analyzing the decision.” (Wikipedia)

Justices Scalia and Thomas assume:

– They know what the framers of the Constitution were thinking.
– The framers were able to anticipate all relevant events occurring in the two-plus centuries after the Constitution was written
– These events do not affect the law or the way the law is administered
– In writing the Constitution, the framers were not subject to political pressures, facts, beliefs and contingencies of the time
– Changing the Constitution is an appropriate and easily accomplished alternative to bad law

They are wrong on all counts. Scalia and Thomas are no different from the religious fundamentalists, who think the bible should be interpreted literally (Exodus 21:17 Anyone who curses their father or mother is to be put to death. Exodus 31:15 Whoever does any work on the Sabbath day is to be put to death.) Like religious fundamentalists, they believe nothing relevant has happened since pen was put to paper.

I suggest that the right wing, originalist branch of the Supreme Court has what we, as kids, called “stupid brains” – academically intelligent people, who when faced with the real world, make foolish decisions.

Sadly, most of the right-wing justices are young, which means we will live under the lash of 16th century justice for a long time.

Rodger Malcolm Mitchell
http://www.rodgermitchell.com

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

#MONETARY SOVEREIGNTY

Mitchell’s laws: The more budgets are cut and taxes inceased, the weaker an economy becomes. Until the 99% understand the need for deficits, the 1% will rule. To survive long term, a monetarily non-sovereign government must have a positive balance of payments. Austerity = poverty and leads to civil disorder. Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
==========================================================================================================================================

In their single-minded effort, not to benefit the nation, but to gain power, my formerly favorite political party, the Republicans, moved from reasonably sensible to extreme, right-wing, mean-spirited nuttiness.

They put forth a dozen candidates, all of whom embodied serious derangement, and finally wish to be led by the “Zelig” candidate, a man having no core beliefs.

The right-wing anti-spending votes have hurt terribly, and will continue to hurt, the lower 99% income group, while enriching the upper 1%. Some might say the 99% deserve reduced Social Security, reduced Medicare and . . . well, reduced everything . . . along with increased taxes, because they vote for these criminals. But, I feel sorry for them.

Yes, anyone earning less than $300K per year and voting Republican is self-destructive and ignorant, but we all are ignorant about different things, and much of the 99% just happens to be ignorant about economics. No crime there.

But, it brings me to the following article.

There was one positive aspect to right wing nonsense: The belief federal taxes should be reduced. Yes, federal taxes are an unneeded drain on the economy. They can and should be reduced each year, and eventually, eliminated.

Yet now, even that wee bit of sense is beginning to disappear.

GOP showing small shifts on taxes
By Rosalind S. Helderman, Published: May 25, 2012

In GOP activist circles it is known simply as “the pledge,” and over the past generation it has become the essential conservative credential for Republicans seeking elective office. Of the 242 Republicans in the House today, all but six have signed the pledge.

But now, an increasing number of GOP candidates for Congress are declining to sign (Grover Norquist’s) promise to oppose any tax increase, a small sign that could signal a big shift in Republican politics on taxes.

And there you have it. Federal spending adds dollars to the economy; adding dollars is stimulative. Federal taxing subtracts dollars from the economy, which is anti-stimulative.

So, what do the Tea/Republicans now wish to do? Increase taxes.

Said Richard Tisei, an NRCC Young Gun and former Republican state senator in Massachusetts who is running against Democratic Rep. John F. Tierney. “If there’s a loophole that can be closed that ends up generating additional revenue that can be used specifically to pay down the national debt, I’m not going to lose sleep. And I don’t want to be bound by the pledge not to close it.”

Translation: “I want to take dollars from taxpayers’ pockets and give it to our Monetarily Sovereign
nment, which doesn’t need the dollars, (because it has the unlimited ability to create its sovereign currency, the dollar).”

Freshman Rep. Scott Rigell (R-Va.), who signed the pledge in 2010, recently posted an open letter to constituents indicating that he would not renew the promise as he runs for reelection. He said he fears it could stand in the way of an everything-on-the-table approach to tackling the mounting debt.

“Averting bankruptcy requires us to grasp the severity of our fiscal condition and summon the courage to speak boldly about the difficult steps needed to increase revenues and sharply decrease spending,” he wrote.

Translation: “Never mind that in the entire history of the universe, no Monetarily Sovereign nation ever has been, or ever can be, forced into bankruptcy. If the federal debt today were $100,000,000 trillion, the federal government could pay it off tomorrow, by pushing one computer key, and this would not add a single dollar to the economy.

But hey, if that’s what you fools want, I’ll vote for it. My election is more important than your money.

Sure, Rigell knows this. We all do. It’s just our cynical ploy to benefit our 1% money boys at the expense of you poor 99%ers. We know you’ll vote for us, anyway, because we taught you to hate Obama.”

Norquist said that in the days of the debt-ceiling debate last summer, Republicans held firm against tax increases and wrested a deal from Democrats to lower deficits through spending cuts alone.

“That was when the pledge was tested and the commitment of Republicans not to raise taxes was really pushed hard. And Obama and the spending interests failed, and Republicans and the taxpayers won,” he said.

Translation: “We made sure the recession wouldn’t end, so we could blame it on Obama. We all are praying for another recession before November.”

Democrats have said they will not agree to renew some of the tax breaks or avert the defense cuts, as Republicans want, unless Republicans agree to impose higher taxes on the wealthy.

Translation: “Because those Republicans have moved to extreme, right-wing derangement, we Democrats have been forced to move to partial right-wing derangement. Votes are votes.”

Democratic attacks on Americans for Tax Reform and Norquist as obstacles to a debt deal, some Republican candidates report that they are hearing from more voters who want them to reject the pledge than the opposite.

Translation: “Taxpayers have been so brainwashed by the 1%, they actually are begging Congress to take more money out of their pockets — and we’re still recovering from a recession!!”

“Voters want me to represent them and not special interests,” said Gary DeLong, a member of the Long Beach City Council, who will (not sign the pledge).

Translation: “I’m going to represent my re-election by voting to take more money from you voters, and you poor slobs want me to do it! Ain’t democracy wonderful?

Sen. Tom Coburn (R-Okla.), a fiscal conservative who has tangled with Norquist, said he believes candidates are starting to understand that the ATR pledge’s power has been exaggerated by Norquist and the media and that Norquist is wrong when he asserts that it is nearly impossible to win a Republican primary without signing the pledge.

“That’s him patting himself on the back,” Coburn said. “And I think it’s bull crap.”

Translation: “You people have plenty of money. You can afford more taxes. You don’t need so much Social Security. And if you ate right and exercised, you wouldn’t a medical insurance plan as good as mine.

And if you 99%ers say you’re hurting, that’s bullcrap.”