In our previous discussions, we’ve introduced you to Gap Psychology, a concept that fuels the desire to widen the income/wealth/power Gap below and to narrow the Gap above.
This psychological phenomenon not only perpetuates social disparities but also has dire implications for our environment.
The very rich want wide Gaps because, without Gaps, no one would be rich. We all would be the same. The wider the Gaps, the richer the rich, and the poorer the poor, i.e., “inequality.”
The rich are a major cause of global warming.
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 our lives.
The rich bribe our thought leaders to tell us wide Gaps are just and necessary, a result of innate superiority and hard work — that the rich and the poor have earned their places.
The rich bribe the media through ownership and advertising dollars.
They bribe economists through university endowments and jobs in think tanks. They bribe politicians through campaign contributions and promises of jobs in the industry.
The rich try to convince us that federal benefits are unaffordable and unsustainable, but we have the power to demand these benefits and make a significant change in narrowing the Gap and protecting the environment.
It’s part of the Big Lie that taxpayers fund such benefits as Medicare, Social Security, poverty aids, college loan forgiveness, and other benefits to the middle- and lower-income groups. (No mention is made of taxpayers funding tax breaks for the rich.)
But in a Monetarily Sovereign government like ours, taxpayers fund nothing. (Taxpayers do fund monetarily non-sovereign state and local government spending.)
All federal spending is funded by federal government money creation, ad hoc. Federal tax dollars, unlike state/local government tax dollars, are destroyed upon receipt.
The sole purposes of federal taxes are:
To control the economy by taxing what the government wishes to discourage and by giving tax breaks to what the government wishes to reward.
To assure demand for the U.S. dollar by requiring taxes be paid in dollars.
Here are excerpts from a NewScientist Magazine article describing another problem caused by the Gap, aka “inequality”:
Inequality is a major obstacle to sustainability. The super-rich are an environmental horror story that we can’t ignore. By Graham Lawton
According to the United Nations Environment Programme, the average greenhouse gas emissions of someone in the richest 10 per cent of global society are around 20 times the average of someone in the poorest 50 per cent.
Research by Oxfam and the Stockholm Environment Institute found the world’s richest 1 per cent collectively emit the same as the poorest two-thirds.
A new book by Ingrid Robeyns puts this in stark personal terms. In Limitarianism: The case against extreme wealth, she calculates that to get to net zero, the average per capita carbon footprint needs to be 2 tonnes a year. The European average is 8 tonnes.
The top 1 per cent emit over 100 tonnes, with billionaires emitting a mind-blowing 8000 tonnes, mostly through the use of private jets and superyachts.
There are very few billionaires, but their consumption is only part of the equation. Huge inequality is bad for everyone – and the planet.
In a recent webinar about the book, Pickett said: “What The Spirit Level showed was that economic inequality, specifically income inequality, was related to a whole range of different problems: health problems, issues to do with human capital development, such as educational attainment and social mobility, and everything to do with relationships.
The crucial point is that inequality seems to affect almost all of society.” In the years since 2009, the evidence for this has only grown stronger.
As for the environment, inequality isn’t just bad for the obvious reasons.
A recent paper in Nature Climate Change makes a compelling case that inequality is a major obstacle to sustainability, because people at the lower end of the income spectrum don’t have the resources – money and time – to make the necessary lifestyle changes.
Not only does inequality limit people’s opportunities to make sustainable choices, it also drives unsustainable consumption at lower income levels.
Humans are hardwired for “social evaluative threat” – anxiety about how we are seen by others.
This threat induces a type of stress called status anxiety. Subconsciously, we are all evaluating where we stand in the economic pecking order and trying to climb to the next rung, or at least not slide down.
One of the easiest ways to alleviate status anxiety is conspicuous consumption.
The cause for “status anxiety” is “Gap Psychology.” You can read more about Gap Psychology here, here, here, and many places elsewhere in this blog.
In any society, the poorest people have the highest levels of status anxiety and the richest the least. But here’s the rub: in more unequal societies, status anxiety is higher across the board.
One study found that in the most equal societies, the poorest have a status anxiety score of 2.2 out of 5, as judged by their degree of agreement with questions such as “others look down on me because of my job situation or income”.
The richest score about 1.8. In the most unequal societies, the scores are 2.7 and 2.1. In other words, the richest people in very unequal societies have roughly the same level of status anxiety as the poorest in more equal ones.
How do people respond to status anxiety? In part by consuming high-status goods.
Multiple research projects have found that people living in highly unequal parts of the US tend to spend more on swanky cars and designer clothes, which have a very large carbon footprint.
“Status competition driving consumerism upward is a huge obstacle to moving towards sustainability,” said Wilkinson in the webinar with Pickett.
Many Western societies are still tolerating, or even encouraging, eye-watering levels of inequality.
But they also underestimate the obscene wealth held by a few people who emit more than just greenhouse gases. It is a tough argument to make, but it has to be made.
Louboutin shoes: Affordable. Saving the world: Unaffordable.
As Wilkinson said: “We cannot solve the environmental crisis without solving the inequality crisis.”
Gap Psychology dictates that the last thing the rich want is to solve the inequality crisis. It’s what makes them rich.
That is why they bribe the media, politicians, and the economists to tell you various forms of the Big Lie in economics, including such lies as:
Social Security and Medicare will run short of money because fewer workers are supporting more older people.
To prevent Social Security and Medicare from running short of money, FICA must be increased and/or benefits must be reduced.
The federal deficit and debt are unaffordable and unsustainable.
Taxpayers pay for federal spending.
Comprehensive, no-deductible Medicare for All, Social Security for All, increased poverty aids, free college for all who want it, and other benefits for the middle- and lower-income groups are unaffordable.
All of the above are untrue. They could not exist without the active counter messaging by your information sources.
They want you to believe the Big Lie that the finances of our Monetarily Sovereign government are the same as your personal finances.
The federal government not only can afford to fund all of the benefits to you, while also funding the efforts to counter global warming.
The rich want you to believe that either global warming doesn’t exist, or if it exists, the costs to end it are too great for the government to fund, or for taxpayers to fund. All lies.
The government has the infinite ability to fund anything, without collecting a penny in taxes. To admit that, your information sources also would have to admit paying for your benefits also are affordable.
But that would narrow the Gap and make the rich less rich.
The sole benefits the rich allow are the tax breaks that only they can access. Those supposedly are “affordable” and “sustainable.”
Meanwhile, life on earth is threatened as the climate becomes less survivable. Eventually, the rich will discover that they need to support more equality for them to remain rich.
But that may be too late to save the world.
There’s still time to contact your Congressperson, tell them you are quite aware that the federal government can create infinite money without taxing or borrowing, and can provide far more benefits than it currently does.
Tell them the Gap is not sustainable, and the rich may have the money, but not the votes. Demand federal benefits for those who are not rich.
Rodger Malcolm Mitchell
Monetary SovereigntyTwitter: @rodgermitchellSearch #monetarysovereigntyFacebook: Rodger Malcolm Mitchell
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The Sole Purpose of Government Is to Improve and Protect the Lives of the People.
Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
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The nonsense in Washington boils down to a few simple questions that never seem to be answered
First the background:
The federal government is the largest customer and money provider in America, spending about $3.8 trillion dollars per year on goods, services and benefits. This compares with under $12 trillion for the entire domestic business sector.
The U.S. government also is America’s largest employer, with about 4.6 million full time employees:
Military: 1,430,000 (Department of Defense, Active Duty Military Personnel Strengths by Regional Area and by Country, September 30, 2010); 700,000 defense employees worldwide (Department of Defense Civilian Personnel Management Service); 2009 Number of Full-Time Federal Employees – 2,518,101 http://www2.census.gov/govs/apes/09fedfun.pdf
The federal government employs as many people as the top nine civilian employers – Wal-Mart, McDonalds, UPS, Sears, Home Depot, Target, IBM, GM and GE — combined.
The President, the Tea (formerly Republican) Party, the Democrats, the media, most columnists and old-line economists agree federal spending should be reduced and/or federal taxes increased. The goal: To reduce the federal deficit.
The two biggest problems facing America are the recession and the related unemployment.
Now for the simple questions:
1. What do businesses do when their biggest customer reduces purchases? Do they fire employees, reduce purchases of goods and services or both?
2. When businesses fire employees, or reduce purchases of goods and services, how does this stimulate the economy or cut unemployment?
3. What do individuals do when their salaries and/or benefit checks are reduced? Do they spend less, save less or both?
4. When individuals spend less or save less, how does this stimulate the economy or cut unemployment?
5. Considering all of the above, how does a reduction in federal spending and/or an increase in taxing (aka “deficit reduction”) solve our two biggest related problems: the economy and unemployment?
These questions never are asked, much less answered, because the politicians do not care about the answers. Their prime concern is not the working (or non-working) Americans. The politicians prime concern is who gets elected, i.e., power.
President Obama, the Tea (formerly Republican) Party and the Democrats all have the same goal, with the differences being only in the execution. And I use the word “execution” intentionally, because whoever “wins,” the American public will lose. We, our children and our grandchildren will suffer the execution of joblessness, poverty and loss of health and lifestyle. Our great American dream will be shattered — needlessly — all for the greed, ambitions and ignorance of the politicians.
While we stress about traitors at Fort Hood, we give a free pass to traitors in Congress, who intentionally do more harm to America than al Qaeda ever could.
Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
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Historically, whenever dollars have been taken from our economy, or even when dollar growth has been reduced, the economy has gone into recession or depression. (See: Cause of recessions and depressions)
Congress and the President insist the federal deficit must be reduced. There are but two methods for reducing the deficit: Increase federal taxes and/or reduce federal spending. Both methods reduce the number of dollars in the U.S. economy.
7/29/11: Roya Wolverson, Time Magazine: “The bad news just keeps coming. The U.S. economy grew even less than expected in the second quarter, at a rate of 1.3%, down from what many economists predicted would be 1.8% or higher. The reasons for the continued lackluster performance haven’t changed. Consumers, squeezed by higher gas and other prices, are buying less of everything from electronics to meals out to new furniture.”
Recently, I posted, “Based on where Obama and the Tea/Republicans are headed, there will be a depression (not just a recession) next year. Only a miracle of realization, by both parties, can save us now. (See: Depression in 2012)
7/30/11: Alan Rappeport, Pharmaceuticals Magazine: “Merck, the US drug company, will cut as many as 13,000 jobs, or 13 per cent of its workforce, as it looks to slash costs and invest in emerging markets. The cuts, to be achieved by 2015, follow those announced last year when Merck said it would reduce its staff by 17 per cent. Merck has been looking to achieve the savings it promised when it acquired Schering Plough for $41bn in 2009.”
Congress and the President remain ignorant. They continue to call for increased taxes and/or spending cuts. The depression cometh.
Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
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Unfortunately, this blog never will run short of material. With the vast majority of writers, politicians and even old-time economists, not understanding Monetary Sovereignty, and instead parroting today’s popular wisdom that federal government finances resemble personal finances, I have a huge selection of ignorant comments from which to choose.
This time, the myths come to us courtesy of Robert J. Samuelson:
Social Security, Medicare, Medicaid and other retiree programs constitute roughly half of non-interest federal spending.
These transfers have become so huge that, unless checked, they will sabotage America’s future. The facts are known: By 2035, the 65-and-over population will nearly double, and health costs remain uncontrolled; the combination automatically expands federal spending (as a share of the economy) by about one-third from 2005 levels. This tidal wave of spending means one or all of the following: (a) much higher taxes; (b) the gutting of other government services, from the Weather Service to medical research; (c) a partial and dangerous disarmament; (d) large and unstable deficits.
No Mr. Samuelson, it doesn’t mean any of those things. Let me address each:
(a)”. . . much higher taxes. . .” Federal taxes have nothing whatsoever to do with federal spending. The U.S. is Monetarily Sovereign. It pays its bills by instructing banks to credit bank accounts. Whether taxes fall to $0 or rise to $100 trillion, neither event would change by even $1 the federal government’s ability to instruct banks to credit bank accounts.
In federal financing, there is no functional connection between taxing (or borrowing) and spending. When you and I spend, we transfer money. When the federal government spends, it creates money. Huge difference, that Mr. Samuelson does not understand.
(b)” . . . the gutting of other government services, from the Weather Service to medical research. . . “ This is based on the myth that federal spending is limited. It is, but not by what Mr. Samuelson thinks. It’s not limited by taxes. It’s not limited by borrowing. It’s limited only by Congress and inflation, which today is nowhere near. Remember, we’re in a recession, where the nation is starved for money. Federal spending adds needed money to the economy.
(c)” . . . a partial and dangerous disarmament. . . “
Same as (b)
(d)” . . . large and unstable deficits.”
Yes the deficits will be large. They need to be. This is a large country with large money needs. Deficits are the federal government’s method for adding money to this large country. Without large and growing federal deficits we will not be a large and growing country. And what the heck are “unstable” deficits? Or is “unstable” just a more erudite-sounding word you toss in as a synonym for “bad”?
Like most opinion writers, you do not understand the differences between Monetary Sovereignty and monetary non-sovereignty. Let me summarize our current situation:
Our economy languishes. Unemployment is far too high. We need to stimulate businesses so they will hire more people. You, Mr. Samuelson, are suggesting that the federal government pay less money to Social Security, Medicare, Medicaid and other retiree programs, because you erroneously believe the government does not have the unlimited ability to pay its bills.
If the federal government increases its payments to these programs, the recipients of this money will spend it, which will stimulate business and help reduce the unemployment problem.
Mr. Samuelson has joined the crowd who feels that funding ”. . . other government services, from the Weather Service to medical research” along with the military must be accomplished by reduced funding to our seniors and to our poor. If we follow Mr. Samuelson, America will decline to a mean, harsh, wretched nation, indeed.
Readers of Mr. Samuelson’s columns should drop him a note and suggest he acquaint himself with Monetary Sovereignty, before he spreads any more incorrect and harmful myths.
#Monetary Sovereignty - Mitchell 
