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Neoliberalism Kills: Part Two

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By letsgetitdone (Joe Firestone, who is Managing Director and CEO of the Knowledge Management Consortium International (KMCI). Originally published at New Economic Perspectives.

During Part One of this series, I approached the end of my post with this paragraph.

Apart from the political opposition from the insurance companies that Medicare for All would have engendered, I think the main justification for abandoning Medicare for All and switching to the PO and eventually the PO-less ACA, was actually neoliberalism. The President, his main advisers, the Democratic leaders in Congress, and most progressives working for Washington progressive organizations were steeped in neoliberal doctrine. They viewed the Bush tax cuts and the two Wars as unpaid for. The ARRA stimulus Act was similarly unpaid for and added to deficit spending and to the debt-subject-to-the-limit. They believed and most believe today that the Federal Government can have solvency problems if the debt-to-GDP ratio increases too much, and interest rates on the national debt are driven up by the bond vigilantes.

A Medicare for All Act would have required Federal spending on health care to rise by $800 – $900 Billion per year over present levels. They were not ready to cover that with higher tax revenues, and they were not ready to deficit spend it because they viewed that as fiscally irresponsible, and believed then and still believe now that it’s necessary to decrease the debt-to-GDP ratio over time.

So, they wouldn’t consider spending for Medicare for All. They wouldn’t look seriously at the hundreds of thousands of lives they were consigning to oblivion, at the bankruptcies and divorces they could prevent, or at the obvious fact that while HR 676 would have cost the Government $900 Billion more in money annually that the Government can create at will and at zero real cost; it would have saved the people who have to pay for health insurance, and health care out of pocket and in the form of “co-pays” $1.8 Trillion annually, thus providing a marvelous boost to the economy. Instead, they just said to everybody, that it was impractical and that the United States couldn’t afford it; but that it would be able to to afford a self-supporting PO bill, and later when that was taken off the table, a deficit neutral insurance bailout like the ACA.

My friend Lambert Strether liked Part One and cross-posted it at Yves Smith’s Naked Capitalism site. But the above statement bothers him because he thinks that using the label neoliberalism alone without explaining what aspects of that paradigm provided the justification for taking Medicare for All off the Table, and who the political actors are who adhere to this, makes my treatment incomplete. Even though I agree with the view that it’s easy enough to google “neoliberalism” if someone doubts what I mean by the “term,” I also agree with Lambert that it would add something to Part One for me to be more specific about my thinking and show the connections between neoliberalism and the decision to take Medicare for All off the Table. Hence, this Part Two.

What is Neoliberalism?

Neoliberalism is an evolving ideological paradigm which can be traced back to the work of Hayek and von Mises in the 1920s and even earlier than that. I won’t however, do a historical survey here of the various developments and nuances. Instead, I’ll just rely on the definitions and specifications of this body of thought that seem to me to be the clearest statements of the current state of the paradigm. Let’s begin with this contemporary definition and characterization of neoliberalism by Thorsen and Lie (2007):

Neoliberalism is, as we see it, a loosely demarcated set of political beliefs which most prominently and prototypically include the conviction that the only legitimate purpose of the state is to safeguard individual, especially commercial, liberty, as well as strong private property rights (cf. especially Mises 1962; Nozick 1974; Hayek 1979). This conviction usually issues, in turn, in a belief that the state ought to be minimal or at least drastically reduced in strength and size, and that any transgression by the state beyond its sole legitimate purpose is unacceptable (ibid.). These beliefs could apply to the international level as well, where a system of free markets and free trade ought to be implemented as well; the only acceptable reason for regulating international trade is to safeguard the same kind of commercial liberty and the same kinds of strong property rights which ought to be realised on a national level (Norberg 2001; Friedman 2006).

Neoliberalism generally also includes the belief that freely adopted market mechanisms is the optimal way of organising all exchanges of goods and services (Friedman 1962; 1980; Norberg 2001). Free markets and free trade will, it is believed, set free the creative potential and the entrepreneurial spirit which is built into the spontaneous order of any human society, and thereby lead to more individual liberty and well-being, and a more efficient allocation of resources (Hayek 1973; Rothbard [1962/1970] 2004). Neoliberalism could also include a perspective on moral virtue: the good and virtuous person is one who is able to access the relevant markets and function as a competent actor in these markets. He or she is willing to accept the risks associated with participating in free markets, and to adapt to rapid changes arising from such participation (Friedman 1980). Individuals are also seen as being solely responsible for the consequences of the choices and decisions they freely make: instances of inequality and glaring social injustice are morally acceptable, at least to the degree in which they could be seen as the result of freely made decisions (Nozick 1974; Hayek 1976). If a person demands that the state should regulate the market or make reparations to the unfortunate who has been caught at the losing end of a freely initiated market transaction, this is viewed as an indication that the person in question is morally depraved and underdeveloped, and scarcely different from a proponent of a totalitarian state (Mises 1962).

Thus understood and defined, neoliberalism becomes a loose set of ideas of how the relationship between the state and its external environment ought to be organised, and not a complete political philosophy or ideology (Blomgren 1997; Malnes 1998). In fact, it is not understood as a theory about how political processes ought to be organised at all. Neoliberalism is for instance silent on the issue of whether or not there ought to be democracy and free exchanges of political ideas. This means, as Harvey (2005) indicates, that policies inspired by neoliberalism could be implemented under the auspices of autocrats as well as within liberal democracies. In fact, neoliberals merely claim, in effect, that as much as possible ought to be left to the market or other processes which individuals freely choose to take part in, and consequently that as little as possible ought to be subjected to genuinely political processes. Proponents of neoliberalism are therefore often in the “critical literature? portrayed as sceptics of democracy: if the democratic process slows down neoliberal reforms, or threatens individual and commercial liberty, which it sometimes does, then democracy ought to be sidestepped and replaced by the rule of experts or legal instruments designed for that purpose. The practical implementation of neoliberal policies will, therefore, lead to a relocation of power from political to economic processes, from the state to markets and individuals, and finally from the legislature and executives authorities to the judiciary (cf. Østerud et al. 2003; Trollstøl and Stensrud 2005; Tranøy 2006).

Thorsen and Lie’s view of neoliberalism as an encompassing system of thought with the above characteristics is the best account of it I’ve seen. This view is a general statement about neoliberalism. And it lets us see how dangerous and anti-humanistic neoliberalism is in its broad implications for many spheres of life. But, of necessity, it can’t cover the finer points, and isn’t specified to economic neoliberalism’s take on the role of, and constraints on, Government policy in its relations with the economy. So, we need to go more deeply into the economic side of this. That further specification of one aspect, the economic side of neoliberalism, is called the Washington Consensus.

The Washington Consensus

Wikipedia offers a good statement of the 10 points in the Washington consensus specified by John Williamson, of the Peter G. Peterson funded Institute for International Economics. The points were used by the World Bank, the IMF, and other financial institutions to guide their relations with developing nations, and also as a set of principles or guidelines to inform the policies of Eurozone central authorities.

– Fiscal policy discipline, with avoidance of large fiscal deficits relative to GDP;

– Redirection of public spending from subsidies (“especially indiscriminate subsidies”) toward broad-based provision of key pro-growth, pro-poor services like primary education, primary health care and infrastructure investment;

– Tax reform, broadening the tax base and adopting moderate marginal tax rates;

– Interest rates that are market determined and positive (but moderate) in real terms;

– Competitive exchange rates;

– Trade liberalization: liberalization of imports, with particular emphasis on elimination of quantitative restrictions (licensing, etc.); any trade protection to be provided by low and relatively uniform tariffs;

– Liberalization of inward foreign direct investment;

– Privatization of state enterprises;

– Deregulation: abolition of regulations that impede market entry or restrict competition, except for those justified on safety, environmental and consumer protection grounds, and prudential oversight of financial institutions;

– Legal security for property rights.

It’s said by many that the Washington Consensus is dead now because of the Crash of 2008 and events since then. But I think it’s plain that its influence lives on in the thinking of people like Erskine Bowles, Peter G. Peterson, David Walker, President Obama, media organizations such as CBS, NBC, ABC, CNN, and The Washington Post, many media commentators and reporters, think tanks around Washington such as the Committee for a Responsible Federal Budget, The New America Foundation, AmericaSpeaks, The Brookings Institution, so-called non-partisan organizations formed to influence the two major parties and even spawn a third party, such as Americans Elect, and No Labels, and many in Congress including the “Gang of Eight,” which Virginia Democratic Senate candidate and former Governor Tim Kaine says he will immediately join, if elected.

I think it’s influence is felt even in liberal or progressive organizations, and among progressive commentators and writers, who all share, or at least constantly give lip service to, ideas like fiscal policy discipline, and tax reform, as well as more specific ideas derived from these principles which we will turn to now.

The Washington Consensus and the drive for Fiscal Sustainabiity/Responsibility Interpreted as Austerity and Long-term Deficit Reduction

The influence of the Washington Consensus is reflected in the myths and fairy tales being told by the continuing Fiscal Sustainability/Responsibility/Austerity political movement being driven by the above groups and people and many others. This movement has developed a more specific “Washington Consensus” in the form of myths and fairy tales derived from further specifying Williamson’s Washington Consensus. In another place I’ve listed and debunked them. Here, I’ll simply list them, so that their relationship to more general neoliberal principles and the original Washington Consensus can be seen:

The Government is running out of money

The Government can only raise money by taxing or borrowing

We can’t keep adding debt to the national credit card

We need to cut Federal Government spending and make do with no more money

If the Government borrows more money, the bond markets will raise our interest rates

If we continue to issue more debt, then our main creditors may refuse to buy it, an event that would lead us to insolvency and severe austerity

Our grandchildren must have the heavy burden of repaying our national debt

There is a deficit/debt reduction problem for the Federal Government that is not self-imposed.

The Federal Government is like a household and that since households sacrifice to live within their means, Government ought to do that too.

The only way to tackle our deficit is to cut excessive spending wherever we find it.

We should also find a bipartisan solution to strengthen Social Security for future generations

We face a crushing burden of Federal debt. The debt will soon eclipse our entire economy, and grow to catastrophic levels in the years ahead

The next generation will inherit a stagnant economy and a diminished country

The United States is in danger of becoming the next Greece or Ireland

Fiscal Responsibility means stabilizing and then reducing the debt-to-GDP ratio and achieving a Federal Government surplus.

Federal Government austerity will create jobs.

Each of the links provided refutes a claim offered by the more specific fiscal sustainability/responsibility/austerity version of the Washington Consensus. That version began to gather urgency in Washington soon after President Obama assumed office, and became a major force early 2010 with the President’s appointment of the President’s National Commission on Fiscal Responsibility and Reform. After nearly four years of the Obama Administration, these myths and fairy tales dominate the Washington conversation about fiscal responsibility, fiscal sustainability, and deficit reduction, and still push these issues to the center of our concerns, even after years of high unemployment, and the destruction of 40% of the accumulated wealth of middle class Americans, the continuing decline in the quality of our schools, our collapsing infrastructure, the continuing decline in social and economic mobility in the United States, the continuing subversion of the political system by monied elites, both personal and corporate, the continued failure of our health care system to deliver health care that works to all Americans, and doesn’t economically devastate those who enter the health care system, and the continued exacerbation of many of our other problems. Why do the neoliberal partisans of austerity and long-term deficit reduction say that the fiscal responsibility problem is a more important problem than all of the others, or even a problem at all? Why do they prioritize fiscal discipline over everything else?

It’s because they say that the US Government is constrained in its spending by its need to raise revenue from taxing and borrowing, and its dependence on the bond markets for reasonable interest rates when it borrows. This is the Government Budget Constraint (GBC) which is at the very center of their story, and which drives their reasoning to the conclusion that unless we get the national debt under control, so that the debt-to-GDP ratio stops growing and stabilizes at some reasonable level, our financing from the bond markets will carry prohibitive interest rates. And that if we continue borrowing beyond that our credit will finally collapse preventing us from funding many of of our essential programs and even our common defense.

All the claims, I’ve reviewed here, except perhaps for the last, are based on the idea that this GBC exists. There’s plenty of evidence that it exists, they say. Look at households, look at private businesses, look at non-profit organizations, look at state Governments, look at Greece, Ireland, Spain, etc. They all have GBCs don’t they, and since the Government is just like an enormous household, it has a GBC too, right? Wrong!

Modern Money Theory (MMT) says that for a Government with a non-convertible fiat currency, a floating exchange rate, and no debts in a currency not its own, there is no GBC. That claim is at the heart of the counter-narrative asserting that the US has no budget constraint except for self-imposed ones.

Some rightly point out that even though the Constitution allows creation of financial wealth without limit, a GBC does exist in the US because Congress has imposed it, by locating the power to create money “out of thin air” in the Fed, and by requiring that the Fed not extend credit to the Treasury, by either allowing it run a negative balance in its accounts, or by monetizing Treasury debt by buying it directly. However, these claims don’t hold up because 1) Congress can always remove these constraints since they are political rather than economic, and 2) they ignore the 1996 legislation allowing the Secretary of the Treasury to mint proof platinum coins of arbitrarily high face value, e.g. $60 Trillion.

Treasury can use that law to fill the public purse, pay off all debt subject to the limit, and cease to issue any new debt. Since this capability exists, even without Congress removing its constraints on Treasury money creation, Treasury can still create whatever it needs to close any gap that might appear between tax revenues and Federal spending of Congressional Appropriations.

Conclusion

So, here we are, a Government without a GBC that can never run out of money involuntarily, and we’re facing a persistent, well-funded and powerful neolliberal consensus in Washington that wants to impose austerity on all of us in the name of a non-existent GBC that it passionately asserts will cause the nation to “go broke,” if we give priority to all of our major problems, while forgetting about their fantasy that we are doomed if we don’t reach some entirely arbitrary level of debt-to-GDP ratio, that they have no way of even deriving in any rigorous way from their neoliberal theory of government fiscal responsibility.

With increasingly grave warnings of doom they try to make us believe that we are facing a national crisis that must be met with a bipartisan solution that will be impervious to the inevitable protests that will arise from most people when their solution causes suffering — as it inevitably will, since as MMT shows, deficit reduction and government surpluses, in the presence of trade deficits, and desires to save in the private sector will inevitably cause destruction of private sector financial assets. Since the elites are in a better position to protect their financial assets than other Americans, the burden of austerity and the resulting hardships and fatalities will inevitably fall on most of us.

We will be sharing the sacrifices. They will be getting richer from their efforts in the international gambling casino, and from seizing everyone else’s property when austerity renders debtors unable to repay their debts.

Negotiation of that “grand bargain” they are seeking will probably use Bowles-Simpson as a framework, even though that framework was never adopted by the “Catfood Commission,” and even though it has received great resistance in Congress since it was published by the two Chairs in the absence of agreement needed to make it a commission product. In any event, the main thrust of the austerians/deficit hawks: that fiscal policy should focus on a long-term deficit reduction plan cutting back the social safety net, is still very much alive politically in Washington, DC and another attempt to implement it is likely either in the lame duck session, or early next year in the new Congress, barring an implosion in Europe before then that could derail the neoliberal deficit hawk drive for austerity.

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128 comments

  1. jake chase

    Bravo. To put all this in a sentence, Neoliberalism is socialism for the corporate and inheritor rich and free enterprise for everyone else.

    1. citalopram

      Reminds me of the old cartoons where the scam artist is dividing up wigits, and he’s giving himself 2,3, or 4 more for every one he gives the other guy.

      “One for you, one for me. Two for me, one for you.”

    2. banger

      Be glad to have free-enterprise but there is no such thing. We all live within a system of regulation and constraint at a local, state and federal level. All economics is political and is arranged through politics. There is no such thing and can never be such a thing as a free market of free enterprise and, also, there is no such thing as “economics” as separate from politics.

      1. MontanaMaven

        Agree that “economics” is a bogus field of study. The term “neo-liberalism” is just a fancy word for feudalism. It’s an excuse to engage in wholesale theft. Watch “Boardwalk Empire”. That’s how this country works. It’s about taking care of your family. Understand? It’s about patronage and back room deals. It’s about looking the other way and looking out for yourself.
        We had a brief flirtation with socialism in the New Deal. But that started to unravel in 1972 which I keep seeing as the most pivotal year in the last half of the 20th century or maybe in the whole century. People want more than a job, they want an identity. They want some meaning to it all. So when times were good, they wanted more say in the workplace, better conditions, early retirement. They became content to be “junior partners” in the capitalist system. But with recessions and austerity comes fear of losing what little you have and so the rebellion stops and the anger goes inward and the fighter becomes the spectator.
        (Currently reading “Stayin Alive” by Jonathan Cowie and “The Problem with Work” by Kathi Weeks)
        I agree with Hugh that it’s all about the corruption and not just on Wall Street.

        1. Susan the other

          It did start in 1971. It’s too bad we didn’t go into our post VN era with sensible social policies. And now we will get them regardless of neoliberal propaganda because there is no place left for the neoliberals to go with this. Other countries don’t want this nonsense any more than we do. The 10 points of the “Washington Concensus” almost sound good till you get towards the bottom of the list and see things like disguised austerity, privatization for profiteers and deregulation. So they got away with it for far too long. Right up until it actually crashed all on its own. Even though this is being blamed on the housing crisis and greedy borrowers, that’s just not true at all. What happened is that they did all their neoliberal social engineering stuff and it failed because they had no government policy to guide economics. The basic premise of neoliberalism killed neoliberalism because it killed government which neoliberalism, more than any other faction of civilization in all of history, relied on! The beauty of Karma. It’s over. They are pretending it isn’t over. So funny. They have succeeded in eroding their own foundation – government (also known as citizens because otherwise there is no government) so completely with their socialized losses that the whole thing crumbled like the twin towers. Destroyed from within. Don’t let them kid you. They do not have any cards left.

          1. Procopius

            No place to go? I don’t think you realize how good the middle and working classes have it now, how much they have to lose, how much The Oligarchy can still take away from them. If you haven’t already, you should read John Dos Passos’s U.S.A. trilogy. Changed my life, that one did. More recently I’ve run across Jack London’s The Iron Heel. His description of living and working conditions around the turn of the 20th Century is a good reminder. If anything, this mind-set is stronger than ever in the Villagers, mostly because it is so obviously failing. They still have the money, they still have the power, they still have the influence, and they still want more.

          2. David

            Seems likely that we’ll get more neoliberalism. Obama is doing it, and Romney seems to be talking about ways to do it faster.

            He wants deficit reduction, a broader tax base … he’s reading right off the neoliberal recipe. But he says he can create jobs by promoting small business. Boy I hope so, Obama’s failed, but even Romney will be taxing those small businesses or bueiness people to pay down the debt.

            Of course the USA can just print money. But the Chinese don’t want that, they say we should “pay our debts”. That sounds right, but it’s bullshit, everyone knew when they were lending all that money that they were not expecting to be repaid, at least not fully. It’s what everyone was saying. Now they get all serious about it — trying to get what they can. We should pay as little as we can, reducing real value of those debts by monetary inflation. Otherwise our grandchildren really will be screwed.

    3. casino implosion

      “To put all this in a sentence, Neoliberalism is socialism for the corporate and inheritor rich and free enterprise for everyone else.”

      …or as I always say: “MMT for the plutocratic elites and Austrian Economics for the rest of us”.

  2. David Lentini

    Excellent! I think you captured the zeitgeist quite well. One point that could be expanded on is the statement that

    “We will be sharing the sacrifices. They will be getting richer from their efforts in the international gambling casino, and from seizing everyone else’s property when austerity renders debtors unable to repay their debts.”

    I suspect that many who claim to hew to the neoliberal doctrine are merely using that for a convenient cover to rip-off the public, as we are seeing with for-profit charter schools in many states. Neoliberal contempt for the concept of a common good that is overseen by government leaves everyone vulnerable to privatizing scams that rob the public treasury. In fact, the history of these doctrines to-date has been in sharp contrast to the promise of moral virtue for all–Illegal wars in the Middle East, corruption of our elections and government, and the destruction of private property rights for anyone in the way of coporate extraction plans.

    Also, I never ceased to be amazed at the sorts of savings clauses, such as deregulation “as much as possible”, without a hint as to determine that limit, in the neoliberal doctrine. What if our current system is deregulated as much as possible? I wish opponents of this evil would push hareder on that bit of intellectual cowardice.

    1. ZygmuntFraud

      After the good novels “The Firm” and “The Pelican Brief” and others by a well-known author in legal-minded fiction genre, a manifesto of sorts contra neoliberalism
      might be called: “The Stork Brief”, or
      some other catchy ominous-sounding thing .

  3. charles 2

    “Modern Money Theory (MMT) says that for a Government with a non-convertible fiat currency, a floating exchange rate, and no debts in a currency not its own, there is no GBC.”

    Very true, but the problem is that practically all governments in the world have debts in currency not their own, through all the real (as opposed to nominal) off balance sheet liabilities that they undertake (in the US, COLA Social Security payments, retirement for civil servants (including veterans) and necessary expenses to maintain various government assets and services (for instance, the US will not stop buying jet fuels for its military jets). Therefore practically all governments can have a GBC.

    1. Joe Firestone (LetsGetitDone)

      Sorry, I don’t see this point. All Governments have real resource constraints. But the GBC refers to a nominal financial constraint. The US and other nations with non-convertible currencies, freely-floating exchange rates, and no debts in currencies not their own have no nominal financial constraints. This makes them very different from households, corporations, other types of organizations and Governments that use the currencies of others.

  4. Middle Seaman

    Single payer or as it is called here Medicare for all didn’t happen because Obama and the people around him never thought that genuine health care reform is important. The deficit of almost a trillion dollars annually was not the main motivation against single payer. In the primaries of 2008, Obama was the last, and reluctant, candidate to even mention health care reform. He was almost dragged kicking and screaming into it.

    1. citalopram

      I can’t hardly blame Obama for not thinking it was important. There was no fuss for it aside from a few nurses. The day we have tens of thousands marching all over is the day we may see some change.

      Let’s face it: The American People will not fight for their own self interest. If anything, they’ll fight against it.

      1. banger

        Not necessarily true though it does appear to be. The fact is that meaning is really more important than material well-being and security. Where we stand in a mythological framework is key. Many thinkers mistake the tendency of people in red states, regardless of income, to vote for the right-wing as just being stupid. It’s not–the right wing provides them with a framework for thinking about the world that gives meaning to life and to suffering. Whether it’s the fact the right emphasizes religion or creates a more heroic and compelling view of humanity, i.e., that we are independent agents that can make decisions making our lives better or worse depending on our virtue–that if we succeed it is through our own efforts and if we fail we must pay the consequences–this view is a much more uplifting view than the “liberal” view that if you fall you need to be picked up and helped. These people often train their children, as they’ve been trained, to take responsibility for their actions and if they stray punishment is the result. That’s why we continue to have such a large prison population despite the fact incarceration is not cost-effective for most prisoners. The corporate sector knows and manipulates the mythological framework of the red staters cynically for profit and so far they’ve been proved right year in and year out.

        Will this ever change? Only if those in opposition to the current oligarchy present a more heroic view of human life and live it out and are willing to persevere in it. And that simply is not happening so we can expect a steady drift into neo-feudalism.

        1. Aquifer

          I have to agree with you (except for the part re the prison population which i don’t see as a sequitur …) re the fact that the left, IMO, dismisses the importance of a concept of “meaning” in people’s lives and because it is important, the void left by the left in this area is easily manipulated by the right. But i also think that there are some elements of the story, e.g. the role of personal responsibility that are central and I, personally, haven’t been too crazy about the way i see it handled by too many lefties … the victim mentality goes just so far, and frankly, methinks is, if nothing else, counter productive …

        2. nobody

          This comment reminded me of a bit from Dmitri Orlov’s “Post-Soviet Lessons for a Post-American Century,” which I happened to have just read:

          “Perhaps the more significant difference is not between the prevalence and the lack of religion, but the differences between the dominant religions. In spite of the architectural ostentation of the Russian Orthodox Church, and the pomp and circumstance of its rituals, its message has always been one of asceticism as the road to salvation. Salvation is for the poor and the humble, because one’s rewards are either in this world or the next, not both.

          “This is rather different from Protestantism, the dominant religion in America, which made the dramatic shift to considering wealth as one of God’s blessings, ignoring some inconvenient points rather emphatically made by Jesus to the effect that rich people are extremely unlikely to be saved. Conversely, poverty became associated with laziness and vice, robbing poor people of their dignity.

          “Thus, a Russian is less likely to consider sudden descent into poverty as a fall from God’s grace, and economic collapse as God’s punishment upon the people, while the religions that dominate America — Protestantism, Judaism, and Islam — all feature temporal success of their followers as a key piece of evidence that God is well-disposed toward them. What will happen once God’s good will toward them is no longer manifest? Chances are, they will become angry and try to find someone other than their own selves to blame, that being one of the central mechanisms of human psychology. We should look forward to unexpectedly wrathful congregations eager to do the work of an unexpectedly wrathful God.”

          1. ZygmuntFraud

            The God of the Old Testament might be quite patient.
            But when He starts to boil with wrath, it’s high
            time to get out of Dodge …

            Related material:
            Wikipedia article on Sodom and Gomorrah,
            wherein their destruction by God is
            depicted through vignettes of paintings
            of past artists:

            http://en.wikipedia.org/wiki/Sodom_and_Gomorrah

        3. Bingo!

          I’m not sure I’d characterize it as a more “uplifting” view, even for those who hold it, but you’ve nailed it completely otherwise. Most of my relatives are down and out red-staters, and that is exactly the nature of the conversation anytime it turns political. As in, politics are inherently viewed through a Judeo-Christian moral framework, and they’re almost – but not quite – even happy that they’re poor and sinking fast, wearing it as some sort of perverse badge of honor, while cursing any who might propose a solution to their plight. Of course, it doesn’t help much when a charlatan like Obama comes along and pretty much drives the final nail in the liberal political coffin (which, try as I might, I can’t convince them that he’s anything but a flaming red socialist either), but that’s another story. So I guess in the end, the only thing I have left to add is that although the majority of the red-staters aren’t necessarily “stupid,” their beliefs definitely lead them to act in ways that could only be characterized as such.

    2. Joe Firestone (LetsGetitDone)

      I didn’t say it was the main motivation. I said it was an important justification to get the progressive Democrats to easily agree to taking it off the Table, especially when the President told them that he would advocate for a deficit neutral reform bill with a the Public Option trick sparkle pony. Btw, that doesn’t mean Obama doesn’t believe in neo-liberalism, I think he does and that’s why he’s so persistent about pushing the idea of deficit reduction.

      1. Aquifer

        Hmmm – seems to me if this argument was persuasive to “progressive” Democrats, they couls hardly be described as progressive – is this the argument that persuaded Kucinich?

          1. amspirnational

            Kucinich’s cave was consciously transparent. That is, self-consciously. He said that although he was acceding to Obama’s plan, he not only did not believe it was adequate, he saw nothing in it that promised or even hinted it was going to be improved upon.

            That’s as honest a capitulation as you’re ever going to get from a politician.

            He could have since gone on record in a different manner, of course, but if he has I am not aware of any further elaboration on his part.

          2. Aquifer

            After his AF1 moment, not only did he support ACA but I do remember reading that he actively urged fellow members of the prog caucus to do so as well – and that his statement as to his reason was, in essence that he didn’t want his Pres and his party to fail in this signature effort – in other words he chose party over principle – and the irony is he wound up getting eaten by his own party anyway …..

            All politics is personal ….

          3. David

            No wonder Kucinich lost when they combined his district and he had to face Marcy Kaptur in the Dem primary.

            And now knowing that he did this, I am glad he lost.

  5. banger

    Whether the ideas around the deficit and how the economy ought to be managed are rational or not is not very important. There’s a couple of things we just have to accept: 1) as a society we are becoming steadily more illiterate, to be more precise, we are losing the thread of rational thought and moving into a world of fantasies, myths and superstions; 2) meaning is more important than facts or even self-interest to most human beings–this explains why people are willing to die for a cause and make great sacrifices. To put it another way this is why people in Kansas and other red states are willing to vote consistently against their own self-interest because they’re sense of meaning dictates that they live by a higher code.

    Once we understand this we can stop making a case for this or that approach to solving collective problems and begin dealing with what is really at issue. Are we going to continue the Western modernist project which features reason, science and fact gathering to be the main focus of soliving problems? Or are we going to make the leap and address real human needs for meaning and give people a reason to maintain the modernist project that goes beyond self-interest into a coherent meaningful life. In other words, what many of us miss is the spiritual component of the issues we are discussing and unless we address that aspect of life we cannot hope for our fellows to take much of an interest in what we say no matter how coherent and logical.

    1. jake chase

      Banger asks, “or are we going to make the leap and address real human needs for meaning?”

      Hitler tried it. The results were not pretty.

        1. Joe Firestone (LetsGetitDone)

          Banger, I think you have an important point. But I also think that the Modernistic Project can easily be framed to speak to morals, values, meaning, and spiritual needs. I think progressives often don’t do that in politics because short-run pragmatism informed by a spurious realism has led humanists to stop taking about human values. After all, they become inconvenient to the short-run pragmatists when people start insisting on things like FDR’s second Bill of Rights. But this isn’t a necessary condition. We can view MMT in a broader way as a system focused on public purpose and then formulate “public purpose” in a way that speaks to “meaning.”

          1. Aquifer

            We can, but we don’t, and that is the point – because, ISTM, that in a battle for hearts and minds we rather succeed in projecting the idea that the former is not only unimportant, but of inferior value, and, in fact, worthy of derision –

            And if we do decide to address it – it had better be understood as not only important but central, not a parenthetical, or a footnote, or a btw or a PS at the bottom of the page – “oh yeah, this will give meaning to your life ….

            I have come to my positions, political and otherwise, through a lifetime of experience and reflection – so if i support certain positions it is because i have most probably come to them independently, which process is almost always entangled with things that have nothing to do with charts and graphs, numbers, and “logic” as defined by adherence to those things – so when i hear/read a lot of lefties who I actually support because they are going where i think we need to go, they bore me to tears! And heaven forbid – I have learned not to mention that I go to Church in the presence of “bona-fide” lefties. So i wind up supporting lefty positions, not because of, but often in spite of ,”lefties” themselves. And the irony is, i do believe i wind up contributing more time and effort and money to lefty causes than many of the “registered” ones … And where does that commitment come from – not from logic and theory but from a sense that fighting for this stuff gives me a sense of meaning … But methinks i may be a bit of an exception here – a lot of folks are just plain turned off and walk away – the “truth” notwithstanding ….

            The irony, indeed, is that the proof of how the right so excels the left in this area is the degree to which Obama was able to inspire in ’08 – the right, represented by both DnRs has always understood this. Obama’s problem now, IME, is that his rhetoric mismatched his policy – he used rhetoric that could indeed be used to inspire the left, to advance a Right agenda …. Lefties deride his rhetoric at their peril – methinks we need to study it, as in Gillard’s speech, to learn how to use it to advance a REAL left agenda …

          2. Aquifer

            Just noticed – the fact that you put the word meaning in quotes – to me that says something right there …

          3. Aquifer

            Ha, ha, hoisted on my own pitard – i just noticed i put the word meaning in quotes myself above ….

            Well chalk that one up ….

        2. jake chase

          Real human needs are real, not mystical. Hitler addressed unconcious human drives for dominance, belonging. He created an in group and assorted out groups, and he unleashed the German id.

          All this mystical stuff is just mumbo jumbo the purpose of which is and always has been control of as large a sucker class as possible. Why do you think religion is still a sacred cow? Because it is human history’s most effective tool for controlling the maximum number of people. Patriotism runs a close second. Jefferson called it the last refuge of the scoundrel. Of course you can’t stand up and say this stuff in front of people nursed on a lifetime of propaganda.

          1. SayWhat?

            Well then, if all human needs are ‘real,’ why would all this ‘mystical’ stuff have such an obvious hold on us? Seems like you’ve argued yourself right out of a position there, Jake. Not that I’m a subscriber to the whole shtick, but something about not living on bread alone ring a bell?

    2. Aquifer

      Bingo – i have been making that argument for some time in various venues – glad to see some agreement …

  6. briansays

    we lost medicare for all/public option because of a handfull of democratic senators who sold us out it was in the house bill or would have passed the house (not any more)

    blanche lincoln now gone lost reelection

    ben nelson former executive for mutual of omaha and state insurance head befor becoming guv then senator now retiring so look for the lucrative private sector job/payoff

    max baucus who chairs senate finance

    joe lieberman the senator from connecticut home state for cigna/aetna so look for the private sector job payoff

    1. Joe Firestone (LetsGetitDone)

      All true. But these are proximate causes given the context Obama and the Ds set up.

      They could have gotten rid of the filibuster, but they didn’t do that. Some think they didn’t because they wanted to avoid accountability for selling out which they planned to do from the beginning. Some think they didn’t because individual Senators use the filibuster or the threat of it to get payoffs for their constituents, and because the filibuster makes each individual Senator very important.

      In addition, to getting rid of the filibuster, they could also have arranged to use reconciliation to pass the HCR bill. Again, they didn’t do that.

      Using both of the above approaches, the Ds would have needed 10 less Senators to pass HCR. So, they wouldn’t have needed 10 Blue Dog votes; and the rest of the Democratic Senators could have been whipped into line by Reid if he had wanted to do that. But, of course, he didn’t.

      Finally, polls consistently show that 2/3 of the American Public want Medicare for All. The President could have tried, from the beginning, to mobilize people to pressure Congress to pass it. Of course, he never did; but encouraged Congress to formulate the health care reform bill by letting the lobbyists write it.

      1. jonboinAR

        You nailed it, Joe. Obama never tried to mobilize the public as he had done in his election campaign, but instead worked quietly and behind the scenes with insurance industry and other lobbyists, thus governing in exactly the way that, while campaigning, he’d promised not to.

    2. Lambert Strether Post author

      To treat Medicare for All and the public option as alternatives is a category error.

      Medicare for All is a proven policy known to work in this country and internationallly.

      Public Option was a shape-shifting series of bullet points and a bait and switch operation designed to suck all the policy discussion oxygen away from single payer, a goal it achieved. Ironically, the “savvy” career “progressives” who ran interference for Obama on the public option were themselves betrayed by him, and from the beginning: The deal Obama cut with for-profit hospitals didn’t include it.

      This is a classic example of how the Overton Window gets shifted right: The “public option” zombie sparkle pony continues to be yearned for, while a proven policy remains “off the table.” Thanks, “progressives”!

      1. Lune

        Exactly! Thank you Lambert. The public option was a means to distract liberals’ focus away from the true option: medicare for all. By falling for it, liberals lost the battle before they even realized it had begun.

        Healthcare economics is always painted to the lay public as some sort of profoundly difficult, mind-blowingly complex topic that no one in the history of the world has ever figured out. But we, along with almost every other country in the world, have figured it out: public funding.

        Every country with public funding has lower costs and better health outcomes than we do. And in this country, Medicare has higher patient satisfaction and lower costs than private insurance. Even the Veterans program has better health outcomes and lower costs than private insurance.

        The complexity in all the proposals that our govt and lobbyists propose for health care funding, from HillaryCare to RomneyCare to ObamaCare, is all in trying to figure out how to make private insurance competitive with public funding. The thousands and thousands of pages in those plans is simply a testament to the amazing amount of economic acrobatics that one has to engage in to make private insurance even barely competitive with a simple, straightforward public plan.

        In the public arena (and not just in health policy), a simple plan, easy to conceptualize, that’s already working, with which the public is already familiar, will pretty much always beat out a complicated, difficult to understand proposal that is still in the planning stages. Regardless of which one is better (thus the resonance of “Drill baby drill!” over a 20-year plan of R&D, tax incentives, and infrastructure development to get to energy independence).

        And that was the danger to politicians pushing for Obama’s insurance bailout. Their solution? Change the odds by creating a complicated, difficult to understand, still-in-the-planning stages public option so as to avoid having their favored plan compete with the already existing and popular public program. Once liberals agreed to that fight, the outcome was a foregone conclusion.

        It’s as if the Kentucky Derby lures you into entering your weakest horse, and then you’re surprised when you lose.

        1. David

          It was more cynical than that as I recall. People across the country were begging the politicians for Medicare for All. If we’d been able to vote on it, it would have won with about 90%. Yes Republicans too, they know they’ll get sick from time to time too.

          But the Dems were bought off some other way, I don’t really know how, but massive forces were arrayed to keep MfA off the table, a lot of money spent, a lot of favors cashed. Nobody was fooled, they were pushed and/or bought. All of them.

          It was passed illegally, and then John Roberts played a trick to stick us with it. More buying off, he or his descendants will be very wealthy, I am sure. It was a maximum game played for all the marbles, and we lost.

          It’s almost too good to be true, to think that Romney will reverse it. But I will vote for him, largely on the hope that maybe he can and will, just maybe.

      2. LeonovaBalletRusse

        Lambert, fabulous image: “zombie sparkle pony” someone gifted in computer graphics ouught to make the best of this metaphor for the “heart’s desire” of “infantilized” Americans Left and Right, ready for the Next Hitler. I see “Bambi”-type sentimentality for children to go with the “dreamy” animated style, maybe crossed with Peter Max for the doped up hippy dreamers. Well, you have to hand it to the bankers who “know their market” for Pie in the Sky (re-hypothecated).

    3. Carla

      “we lost medicare for all/public option” — Medicare for All and the so-called “Public Option” were not the same thing at ALL!

      The “Public Option” was a sop thrown out by “progressives” trying to “save” whatever their concept of universal insurance coverage was from the scourge of “single payer,” otherwise known as Medicare for All…Otherwise known as a basic human right in the rest of industrialized world. Pathetic.

  7. Tiger

    Maybe I don’t understand but to me this article is Polarizing and mostly wrong. You need a disciplinary mechanism to constrain using too many of the earth’s resources too fast or too ineffectively or with insufficient returns in order to ensure humans act responsibly. If every country were to print money to deal with any problem we would all go bankrupt, go to war with each other and become lazy. There should not have been such a continuous deficit in the first place. All the tax cuts the wars and bail outs etc should not have bee allowed. But it’s very dangerous to say f*** this let’s get out of it the easy way. We are also responsible for not doing more about political corruption and for not having been more engaged politically since 1776.

    Also I don’t think that people who believe in a constrained budget should all be equated with the austerity monsters like Germany vs. Greece etc. I’m all in favor of Greece leaving the euro and printing but for the us to NOW print money hard? No way. First we need reform. Kick out bankers put them in jail. Break the 2 party system and safe guard the earth. Thats what we should do first. And protest.

    1. Susan the other

      The only way to vanquish the banksters is to take debt based money creation away from them. They have proven clearly they have no right to it.

      1. Tiger

        Susan I think the debt jubilee has to be the last step of the revolution. If ever. Only a last resort. We don’t want our revolution to be hijacked by someone who will then have a cleansed economy where they can introduce tons of debt once again. First control, then rewrite rules and then jubilee. To the other poster I agree GDP and debt are artificial and don’t match resource allocation models that are good.

        1. David

          Baloney, you’re just looking for an excuse not to have a jubilee. Put so many preconditions that it never happens.

        1. Aquifer

          Was wondering the same thing – he seems to be A&W and posting at the NEP site, just not on NC, don’t know why …

    2. Joe Firestone (LetsGetitDone)

      I don’t know whether it’s just you either, but it may be. I don’t doubt the need to constrain the use of our real resources. Those are limited and we have to manage how we’re using them and what the impact of our actions are. But that’s very different from using artificial budget constraints like particular levels of the debt-to-GDP ratio as a litmus test for responsible fiscal policy. especially since using such a test or reducing deficits to meet such a test has no direct connection with the irresponsible use of our resources. You can’t make the case that we were any more responsible in the ways we used our resources during Clinton’s 4 surplus years than we were in other times in our history such as Reagan’s 8 years of soaring deficits, or Obama’s three years of deficits (his first year was set by Bush).

      On “printing money,” I’m not advocating that. I’m advocating deficit spending to increase the production of goods and services and to add net financial assets to the people in the economy who really need them. I would not advocate just “printing money,” because it adds no value to the economy as the Fed is has been showing us with its QE “printing” programs.

      Also, it’s important to note that the term “printing money” is an epithet used in Gold Standard days to refer to issuing money without gold backing. So, the new money created wasn’t as good as the old money, because it couldn’t be exchanged for gold. However, with out current fiat currency system, any new money issued by the Government is just as good as the old, i.e. previously existing money. That is both are backed by the strength or lack of strength of the economy.

      So, now the issue becomes, will the deficit spending being advocated in a particular case, for example funding Medicare for All, lead to inflation, thus devaluing everyone’s money, and, if so, is the cost of inflation higher than the cost of not having Medicare for All, or having much higher unemployment due to its absence, or having many more foreclosures, many more fatalities, many more bankruptcies, many more divorces, and crime. So, that’s the sort of argument we need to have. It’s an argument about what sort of policy impact we can expect, not some silly argument about the refuted quantity theory of money or the importance of discipline.

      And btw, I wish the 1% who are always the rest of us about the importance of discipline should quit preaching and look to their own self-discipline, because I don’t see much of that involved in their constant breaching of laws on the books, systematic commission of control frauds and outrageous conspicuous consumption. They live like Gods on this earth and take what they want. The only time discipline enters their vocabulary is when they’re talking about everyone else.

      1. Aquifer

        “some silly argument about ……. the importance of discipline.”

        Perfect example of derision of a concept that has real legitimacy in many folks minds and for not trivial reasons – i suggest you engage it not deride it …

        Just a thought ….

        1. Joe Firestone (LetsGetitDone)

          I’m not deriding discipline. Just the hypocrisy of the well-off who condemn others for not having any when they, themselves, never practice it at all, or, like Mitt Romney, practice it only in an immoral way for immoral purposes. Discipline is very important but the idea shouldn’t be used ideologically as a kind of slogan functioning to condemn the poor and to distract attention from the lack of discipline and failings of the rich who just crashed the world economic system with their undisciplined and unlimited greed.

          1. Aquifer

            I am not arguing that the way the right uses “discipline” is not faulty, dishonest, or hypocritical – all i am saying is that the left doesn’t use it at all – except, apparently to ridicule it …

            Where is the place for discipline here?

            Please – do not misunderstand me – I am not trying to punch holes in MMT – I don’t have anywhere near the expertise to do so if i wanted to. All I am suggesting is that if you really want to convince the most folks you can, it just might be useful to speak their language …

          2. David

            This is the wrong time for discipline, precisely when the ultra-rich interests find it in their … interest … to have austerity for everyone else.

            Let’s print what’s needed now, and/or wipe out the debts faster with a jubilee, then I will be more than happy and eager to work with you to implement a disciplined system going forward. But now, no way, fuhgeddaboudit.

      2. Susan the other

        First I thought we went into the middle east to control the production and sale of oil so that prices would not shoot sky high and soak up more of our dollars. Then I decided we did the war to prevent the price of oil from crashing and releasing all those dollars into circulation, inflating the currency. Now I think we must be doing the war to keep the price just steady; if it goes either way there is no longer any flexibility in our economy to handle it. We are effectively paralyzed and cannot improve our situation. What we need is a mechanism to get the money directly into our system to spend for the good social projects we need and do it directly. Prevent extraction at all levels. Oil is one of those commodities that has the capacity, because it is/was too free market supply and demand, to destroy entire economies for private profit.

        1. LeonovaBalletRusse

          Susan, most believe now it was to enforce adherence to petrodollar supremacy, if not central bank syndicate supremacy.

    3. David

      Yeah, let’s just f*** it. It’s the right way out, is it proper for us and our descendants to labor under endless debt?

      I guess you’re from China, which is long the debt and wants its value maintained, so you’re one of those who now produces a moral sounding argument. But when you were lending us the money it was widely believed, and stated, that of course this would be paid back in depreciated dollars or otherwise reduced. You needed the stimulus to your economy. Now you give us a big moral charade, you can keep it, thanks!

  8. Jesse

    Why I agree wholeheartedly with almost all of this, and especially the description of the perniciousness of neo-liberalism, I do think one slight addition is in order.

    The President and his people had no chance to get a single payer proposal through the Congress, because of the outmoded filibuster rule in the Senate. That was a political reality.

    They went to a backup proposal, the ACA as we have it, that is virtually the same plan as concocted by the conservative Heritage Foundation, and made it only with a fight, and the President is still vilified for it.

    I am no great ‘fan’ of Obama, but I think it is a huge mistake to underestimate the highly concentrated and stubborn opposition to almost all social programs in the States today. It is almost a type of madness.

    1. Hugh

      No Senate is bound by the actions of a previous Senate. Article I, Section 5 of the Constitution states in part: “Each House may determine the Rules of its Proceedings.” So at the beginning of a new session, that new Senate is governed by regular parliamentary procedure until it says different. That is there is no filibuster until Senators agree by simple majority to adopt the rules of the previous Senate. They could just as easily by that same simple majority vote dispense with the filibuster entirely.

      Now about two weeks after the November 2008 elections, I remember hearing Mitch McConnell, the Senate Minority Leader, say on I believe it was NPR that he intended to block, that is block via the filibuster, any legislation not to his liking.

      So the Democrats had two months warning, as if they didn’t know already, that the Republicans were going to pursue a policy of obstruction, and the incoming Democratic Senate, with a mandate of change, had the means to negate that obstruction by eliminating the filibuster. And they didn’t do it.

      So I for one am not going to let Obama and the Democrats off the hook. There was a filibuster in the Senate rules in January 2009 only because they allowed there to be one.

      That is the real political reality.

      1. LeonovaBalletRusse

        Hugh, the problem is that the “threat of filibuster” has been substituted for the filibuster (which these weak sisters are incapable of carrying out). These guys & gals are milquetoasts.

    2. Eureka Springs

      I couldn’t disagree more. Senate Dems set their own rules… decidedly..after many of us asked them not to do so far in advance.

      And even if everything you say is true… it is no excuse for not trying to do far, far better. It’s not like there are not over 35 existing models in ALL of the developed world out there… who do better than us on most metrics.

      I agree the public option was a divide and conquer sham… it is still very telling that Democrats did not insist upon a mere 25 billion of a 900 billion dollar bill be utilized in a PO form, while a huge portion of very active Hope Dem constituents asked for it. (Coakley effect). It made sure people could not democratically move the overton window towards public health care for all. And the fact all Dem energy is now on cutting medicare eligibility rather than enhancing it….. well.

    3. Joe Firestone (LetsGetitDone)

      All the objections to Jesse are correct. But let’s not forget that they could also have gotten to enhanced Medicare for All through reconciliation. And even at the last minute they could have extended current Medicare to everyone over 45 to ameliorate the situation, and then worked to incrementally approved that. That course would have been much better than a bailout of the insurance companies.

      On the filibuster itself. Harry Reid was due to run in 2010, and, as we know, he was quite vulnerable. All Obama had to do to get the filibuster changed was to call Harry in during December and tell Harry that he needed the filibuster gone, and if Reid balked he could have made it clear that without that he wouldn’t support him for majority leader and wouldn’t campaign for him in 2010. Reid would not stuck with the filibuster under those conditions. Without it in place Obama could have gotten a much, much larger stimulus, much more directed to high multiplier spending, as well as Medicare for All, and far, far better Credit Card Reform (CCR) and FinReg Bills then we got. Then we would have seen no Democratic defeat in 2010, and a far, far better record for Obama to run on this year. Obama and the Ds blew it. The only question is whether it was a bug or a feature. I incline towards the feature myself.

      1. MontanaMaven

        I am so “inclined” towards “feature” that I’m on my back. If we are to have this republican kind of government where we send representatives instead of direct democracy, then the basic premise is that there be open transparent deliberations on policy. Much was done behind closed doors. Deals were cut with the drug companies and hospitals and insurance companies. What was public was an even bigger sham with Max Baucus laughing as they dragged out Dr. Margaret Flowers as she tried to advocate for single payer. (Even getting arrested doesn’t get you attention by our so called media). There should have been an open democratic discussion of the health care plans in those 35 other countries and what would be best for us. The president should have gone from state to state pitching it. But the fix was in long before 2009. And nobody was in the streets because Americans don’t know what they are missing. In Europe they have something to lose, so they take to the streets. Their unions too are with the people and not with the establishment. Maybe it’s because their union leaders don’t make much more than the rank and file.

  9. Wat Tyler

    “The American People will not fight for their own self interest.”

    I disagree. They fight very hard in what they see as their self interest which is different from what most commentors on this blog see. What a large (largest?)segment (defined as lower middle class and working poor whites) demand is for government to stop taking their money and giving it to “those people” – meaning Blacks of course. Playing the races against each other is as old as Reconstruction and as new ,on the national scale, as Jesse Helms and Nixon’s Southern strategy.

    This is where the GOP makes it’s living.

    Jim

    1. jonboinAR

      The Left for its part would help its cause with the poor and middle-class whites if it would stop demonizing them for a second. There is no culture group on earth that it’s permissible to racially disparage without fear of being deemed “racist” (second only in scorn to child molester) besides whites. Any remark that can be taken even to hint at racial disparagement toward ANY other culture group is considered a serious faux pas requiring much bowing and scraping and apologizing. OTOH, amongst “progressives” its an unspoken imperitive to demonize whites, particularly white males, and castigate them for their racism. It’s freakin’ hilarious, actually. Supposedly these “progressives” are intelligent people.

      1. Aquifer

        I agree – the left’s biggest Achilles heel, IMO, is its focus on “identity” politics, a perfect formula for divide and conquer …

  10. backwardsevolution

    Karl Denninger takes an opposite view in “The Fraud of MMT”:

    “So let’s presume that the government simply “emits” 100% of GDP into the economy by “creating money” through the purported “sale” of Treasury Instruments. The Central Bank monetizes those by pushing a button and now Treasury has $16 trillion dollars, which the government decides to evenly distribute to everyone. That is, tomorrow you go to your mailbox and find in it a check for $51,499 for every man, woman and child in your household, payable to you, printed out of literal thin air.

    You’re wealthy according to MMT! Happy days are here again, let’s go have a party!

    Uh, wait a second.

    Remember, MV = PQ.

    “V” hasn’t changed.

    But “Q” hasn’t changed either; when you woke up this morning there weren’t new factories that magically materialized, there weren’t any new jobs that magically materialized, there weren’t new services invented out of thin air, none of that happened.

    In fact, what happened is that “M” was dramatically increased.

    Since “Q” didn’t change, and “V” hasn’t changed (yet), what does the fundamental economic equality say must occur?

    That’s right — “P” must rise in an exactly ratable amount.

    It has to, because third grade arithmetic says that it must as a matter of economic axiom.

    As such the so-called “wealth” created by this MMT action is a scam, because “P” (price) immediately rises across the economy in the exact amount of the “money” that you created.

    GDP (defined as “PQ”) rises but this is not economic progress, it is inflation!

    That is, it’s bad, not good.

    But wait — why is it bad? Isn’t all that new money worth the same as the old money in aggregate (that’s what the fundamental equality says), right?

    Ah, you see, you forgot something very important.

    Not all the money or credit I want to spend today was acquired today. Some of it was acquired yesterday, last year, or last decade.

    But when that “money creation” happens all of the existing units of “M” are devalued by the exact ratable amount of the new monetary emission. It cannot be otherwise; again, the fundamental economic equality must hold.”

    http://market-ticker.org/akcs-www?post=213147

    1. Hugh

      Denninger is very good at market watching, but he is a hardcore libertarian with regard to money. He thinks money acts today just like it did under the gold standard (which Nixon dropped in 1971).

      What he overlooks is that people could take that hypothetical money and use it to pay down debt. This would have no effect whatsoever on P, i.e. prices.

      There is also a sleight of hand going on. If we got this money tomorrow and there was no provision to use it to pay off debt, then prices very well might rise, but A) the current capacity utilization of our industries is low so with some lead time the supply of goods could keep up with new demand and B) hello, we would have more money even if there was some inflation. If inflation does not occur or if it lagged our increased wealth, we come out ahead.

      What you have to understand is that what Denninger is stating as an iron law isn’t.

      1. jonboinAR

        Yes. If it were used to pay down debt, would not that, in the current environment, tend to give “V” a good jolt?

    2. Lambert Strether Post author

      If Helicopter Ben dropped a pallet of cash off at the house, instead of the bank, I’d fix my teeth, install a new boiler, and put the rest toward a new roof, giving employment to many.

      But Zimbabwe! I’ve got charts!

    3. What?

      THAT might be the most simplistic and directly empirically refutable comment I’ve EVER read on this site. Congratulations! I’m surprised the wolves haven’t picked your bones clean yet. I think they’re feeling generous today.

  11. RanDomino

    Good definitions of Neoliberalism. Some examples might also be good, such as IMF horror stories from third world countries over the last 50 years, showing how they execute Neoliberal ideology.

    MMT still changes nothing about capitalism, if it’s true.

    1. Joe Firestone (LetsGetitDone)

      That depends on how you define MMT. If you include public purpose as the over-riding goal of Government policy, then that changes capitalism a great deal because it implies a mixed economy with no necessary priority given to private enterprise. That is if public purpose is your standard, then depending on how you define that you can evaluate enterprises based on their outcomes regardless of whether they are public or private.

      1. Aquifer

        I have discovered in my travels on the internet, however narrow they may be – that there is a certain school that insists on nothing less than a blanket condemnation of capitalism in all it’s forms and that any theory or proposal that does not say this upfront and outright is not worthy of consideration – “reform”, no matter how radical it may be, is a dirty word, “eliminate” is the sine qua non ….

        1. Me

          If you look at environmental and ecological issues, I don’t see how capitalism survives in the long run. It doesn’t mean that certain elements of the capitalist system won’t survive, just like we still have elements of the feudal system now (like rentier interests). What we call capitalism though is horribly destructive when you take ecology and the environment into account. The whole thing is not compatible with the world we are entering into, although some things can be done to make the system a little better, buying a little more time.

          I also don’t think that capitalism has ever benefited the majority of the world’s people or countries. There is a finite amount of resources and if you look at per capita consumption levels in developed capitalist countries you can see a direct correlation to the poverty in the so called “developing countries”. Holding onto the system means holding onto that inequitable distribution of resources and income. They system doesn’t benefit ME enough to fight to maintain it. Even if it did anyway, it is still an immoral system. It extended its life in the West by mixing with non-capitalist elements and now they have been stripped away. What we are dealing with now is what the poor countries of the world have been dealing with for decades, centuries even.

          Marx, in the third volume of Capital, talked about the eventual collapse of capitalism (the 13th chapter I think). The following chapter he pointed to some counter acting factors that might keep the capitalist system going. He was pretty right on. In addition to the third volume focusing on finance, debt, fractional reserve banking and the like (all very relavent now) that following chapter is exactly what the capitalist countries have done. Can it go on forever, especially when the capitalists in the West are now moving to other countries and are using that to beat down workers and the domestic economy? I don’t see how. If we were to improve the lot of workers the investor class, which invests very little in actual production any damn way these days, would jump ship again.

          I personally think neoliberalism is what needs to be done to maintain the economic system. Workers and unions WERE seeing big gains the first few decades after WWII and social democratic ideas WERE becoming dominant. Neolibealism seems to be the logical response to that.

          1. SayWhat?

            I personally think neoliberalism is what needs to be done to maintain the economic system. Workers and unions WERE seeing big gains the first few decades after WWII and social democratic ideas WERE becoming dominant. Neolibealism seems to be the logical response to that.

            I’m not sure I follow you in that last paragraph. Realizing that neoliberalism is an inherently plutocratic centered philosophy, then yes, that’s what required to perpetuate the current capitalist economic order (Are you saying that’s a good thing?). Which begs the question, well why in the world would we want to perpetuate such a thing anyway? Indeed, why would any enlightened human civilization want to perpetuate such complete intellectual/philosophic bullshit!

          2. jonboinAR

            “(Are you saying that’s a good thing?). ”

            No, I don’t think “Me”‘s trying to say that neo-liberalism is a good thing, but that it’s a last-ditch effort to maintain the current order, and has worked in that way, for awhile.

          3. Aquifer

            I am not arguing that “capitalism” or any of its structural elements need to be maintained – all i am saying is that arguing that they need to be destroyed because they are, per se, elements of capitalism is counterproductive – we may wind up tossing them because they are not useful for, or in fact destructive of, getting us where we need to go – but that should be the criteria and not whether they can be considered subunits of “capitalism” …..

  12. Frank de Libero

    Medicare covers almost all seniors and none of the rest so a data-driven analysis of what might be v. neoliberalism is not possible. But we can do such analysis wrt to Medicaid. Doing that we find evidential support for the negative affects of neoliberalism that’s argued in these posts, I & II.

    I have done this for two example outcomes and Medicaid v. conservatism (the U.S. term for contemporary neoliberalism and extreme individualism) using data from the 50 states. http://www.lettingthedataspeak.com/human-cost-ideology/ The result: As the two outcomes, prevalence of child poverty and heart disease, increases with increasing concentration of conservatism, per capita Medicaid dollars decreases. Increasing need is associated with reduced care in the context of neoliberalism.

    There’s a similar picture presented in a subsequent post, this time using an index of human development. http://www.lettingthedataspeak.com/the-human-cost-of-ideology-ii/ Neoliberalism not only kills, it also costs human and social capital, and imposes costs on our health care system.

    BTW, a shorter take on neoliberalism and extreme individualism is:

    The belief that the market rules and everything has a price, that competition is the wherewithal, that we’re totally self-reliant, and all that’s worthwhile derives from great men so that an unequal society is a good society.

    This description was influenced by my readings of Corey Robin.

    1. Aquifer

      Frank – with all due respect to Joe, i think yours is perhaps a more useful definition to use in conversation …. :)

        1. Aquifer

          Well, maybe that’s part of the problem – why MMT winds up being confined to the wonk box – until you can “take it to the street” it winds up in academic backwaters …

          Why do you suppose the neoliberals wound up in charge – because they infiltrated the gov’t – yeah, but mainly, i would suggest, because they had infiltrated the popular imagination/psyche to the extent that these are the guys WE voted into office in the first place because – they “think like us” and “that makes sense”. So and how did they do that? Well you could argue media and all that – but i would suggest they did it by advancing ideas in terms that the common man could nod his head to and not ones he heard and said “Huh?”

    2. JTFaraday

      “and all that’s worthwhile derives from great men so that an unequal society is a good society.”

      Yeah, good point. We don’t see this stated too often, although it manifests attitudinally frequently enough. I also like Robin’s take on the essentially revolutionary nature of the conservatism he looks at.

      Seems to work well with David Graeber’s assertion that the forces of social and economic disruption always manage to put themselves forward as the last bastion of order.

  13. JTFaraday

    I don’t see how anyone can even attempt to deploy this libertarian sounding definition of “neoliberalism” from pre-crisis 2007 in post-crisis 2012, when it should be apparent to anyone who is not being thoroughly ideologized into viewing everything through the lens of the deficit, that the neoliberal project is about using the coercive force of finance sector controlled governments to channel private and public monies into private and privatized corporations, contractors, and privately managed government services, not to reduce the deficit.

    I suppose I shouldn’t be surprised to see this outmoded definition when Part 1 of this two-part post used the federal government bailout of the health insurance industry as a pretext for (largely irrelevant) talk about how the deficit was the driving force eliminating “medicare for all” and not the fact that “medicare for all” limits the capacity for private sector mooching off the public purse.

    This inability to focus accurately on the real neoliberal agenda just means the fanboyz in the MMT posse are like Budd, in Kill Bill Vol. II, showing up late to work again: http://www.youtube.com/watch?v=oaf11UNSvcQ

    It was the preservation of private sector financial and managerial mooching that was the motivation behind Obamacare—full stop. It is behind Paul Ryan’s Medicare vouchers—full stop. It was behind the push to privatize social security under Bush and I see no reason why, if Paul Ryan is successful with Medicare, we won’t see those privatization efforts return. Whining about the deficit is just one tool deployed to the real end of privatization under financial sector control of the government.

    Underpinning neoliberalism all these many years was a theory about what sorts of human activities have economic and therefore social value, and those activities reductively boil down to financialization and the profits it brings and the managerialism that supports it.

    Not surprisingly, that is where the government is actively re-channeling public funds—as well as administrative authority—which it can’t do if it maintains the earlier definition of social value as it was defined by the public, in terms of human services and goods delivered.

    This is still how the public tends to define social value, and the public would cut out all financial and managerial middlemen as an unnecessary expense. We see this in a reactionary form amongst higher ed faculty all the time, all too many of whom are overgrown permanent grad students, and who seem to labor under the delusion that the entire university magically runs itself. Here are your thrifty conservatives, whatever they profess to be socially. Not so the essentially profligate neoliberal, to whom no expense is too great– provided it bolsters the “right” values.

    It is when you start shining a light on the current state of neoliberalism that the MMT minimum wage sh**-job guarantee, normalizing low paid work under a “progressive” banner without offering a real national industrial and trade policy aimed at rebuilding what has become a monomaniacally extractive economy, appears in its true light as the final neoliberal policy knife in the back of the broader not “financial and managerial” public that neoliberals have traditionally preyed upon, (not to mention the final insult to everyone else’s intelligence, which the typical MMT-er also lubs to do, and which they demonstrate over and over again). After everything else is stripped, you mop up the social and political mess with old fashioned conservative workfare.

    All the rest is hot air. (Like the “knowledge management” economy itself, a mile wide and a quarter inch thick, if that).

  14. SocraticGadfly

    Neither Obamacare, nor the “public option,” nor Medicare for All, as best as I can determine, have adequate cost controls compared to other developed nations.

    The failure to stipulate that such cost controls need to be part of national health care is, let’s call it …

    Paleo-progressivism.

    I don’t want “Medicare for All” if we’re still spending 50 percent more per capita than other developed nations, or more, for health care.

    Period.

    There are times where legitimate financial constraints on medical insurance under any name need to be considered.

    socraticgadfly DOT blogspot DOT com/2012/10/paleo-progressivism-neo-progressivism DOT html

  15. Psychoanalystus

    Here is a truly scary article about Honduras. It looks like we are officially entering neo-feudalism, complete with corporatist city states.

    http://www.guardian.co.uk/world/2012/sep/06/honduras-new-city-laws-investors

    If I am to guess, it will be built by Bechtel, security will be provided by Blackwater (or whatever they call themselves today), the “last agricultural frontier” will be implemented by Monsanto, and JP Morgan will provide the financing (courtesy of the Fed). Last (and certainly least), slaves will be plentifully provided from planet Earth.

    Let the Hunger Games begin.

      1. LeonovaBalletRusse

        Thanks, Lambert. Let’s see:

        //Over the last year, Paul Romer’s ambitious and controversial vision for Charter Cities — foreign-run economic colonies designed to bring wealth and stability to poor countries — has been moving quickly towards reality in the Honduran jungle. But a rapid series of setbacks may have brought the project to a halt.

        Last month, the project’s Transparency Commission, an oversight committee featuring Romer and several other prominent economists, was excluded from agreements between the Honduran government and international development companies, prompting fears about corruption. (One of those companies, the Future Cities Development Corporation — slogan: “Creating Humanity’s Future” — was founded by Patri Friedman, grandson of Milton, who wrote in 2009 that “democracy is not the answer.”)//
        ————————
        Repeat: “founded by Patri Friedman, grandson of Milton, who wrote in 2009 that “democracy is not the answer.”

        Do you see the .01%DNA Riech + .99% Agency in action, for “Elite DNA” prosperity, privilege, and dominance in perpetuity, Lambert?

        This is why the Monster Elite DNA Machine cannot be controlled, but only “stopped” by the French National Razor–more completely this time.

        1. LeonovaBalletRusse

          And, Lambert, this is the RockUChi Friedman-Kissoff IMF-enforced “Development” System for Private Profiteers, that the Koch Brothers having been driving into our “Uberefficient” Homeland (with funding finessed through the CIA–like w/ “The Paris Review”–from the central banker printing presses?).

          The SheisterMeisters need a computer-run world for this IBM-Nazi model Ultraconservative Neoconlib “Efficiency by any name.”

          See “Architects of Annihilation” by Goetz Aly for the How It Works.

  16. Paula

    Hi, I just started reading NC recently and so am just learning about MMT.

    I wonder if anyone has a relatively simple explanation for why inflation is not a big concern if the government prints money without issuing debt?

    I am also curious about how special the USA is in not being subject to GBC? What other countries are also not subject to GBC? If people stop using US dollars to buy and sell oil, will that then subject the US to GBC because of the need for foreign currency to purchase oil with?

    Thanks!

    1. SayWhat?

      The ‘simple, simple’ answer, real asset price deflation. Aka imaginary debt destruction (previously over-valued assets (largely mortgages and all the side bets on same) being (or attempting to be) reevaluated at their new, more realistic levels. Pumping new money into the system is simply trying to somewhat stem the hemorrhage of old money out of the system, realizing that money is almost entirely created as debt.

      To understand money as debt, start here (or similar): http://www.youtube.com/watch?v=jqvKjsIxT_8&feature=related

      You can Google ‘money as debt’ or ‘the money masters’ to find videos that give you all the basics. Contrary to to Wall St and university financial professors, it’s not all that difficult in concept. The details are of course a rabbit’s warren, which is as it was designed to be in the first place. Long story short: it’s nothing more than an elaborate con (Ponzi) game, once again, exactly as it was designed to be.

      MMT merely says that monetary sovereigns like the US don’t necessarily play by the same rules, unless they arbitrarily decide to. They issue their OWN currency, and they have NO NEED whatsoever to issue it as debt, once again, against they arbitrarily decide to.

      MMT says two things:

      1. Stop worrying about debt limits, as they merely represent the size of the money supply. They don’t have to be ‘repaid,’ and indeed, if they ever were, the money supply itself would collapse.

      2. Stop issuing money as debt in the first place. There’s simply no need for it. A monetary sovereign can simply ISSUE money on it’s own authority without resort to an intermediary banking ‘authority’, just as the US actually DID prior to the Federal Reserve Act of 1913.

    2. Calgacus

      The MMT Primer is a great place to start. MMT money-printing is really how governments must spend and do now spend. It is NOT “spending without issuing debt” – a dollar bill is just as much debt as a bond. Everybody (sorta) used to know this. As FDR put it in his second fireside chat : “… government credit and government currency are really one and the same thing.” The government issuing bonds is just playing around with interest rates. “Issuing debt” or “printing money” doesn’t have all that much effect on inflation. What really matters is how much the government spends, how big the deficit is, and what it spends it on, or course.

      If people stop using US dollars to buy and sell oil, will that then subject the US to GBC because of the need for foreign currency to purchase oil with? People using dollars to buy and sell oil, having oil priced in dollars doesn’t mean very much. What means something is that the US buys & sells an enormous amount & people want to save dollars. The USA is still pretty much THE choice for foreign currency reserves, because of the size of its economy and willingness to deficit spend.

      It’s not that the USA or any other nation is not subject to a GBC, it is just that the GBC is a meaningless, uninformative, accounting tautology that amounts to saying “the government spends what it spends”. It is a pretty recent Dumb Idea, dating only from the 60s, when the Empire of Stupidity started striking back. Governments throughout history happily ignored this silly non-constraint for centuries and millennia. Sometimes their spending caused inflation, but sometimes not. It’s a lot like what I think of as the Lincoln Leg Length constraint: When someone asked Abe how long a man’s legs should be, he said “Long enough to reach the ground”.

      1. SayWhat?

        It is NOT “spending without issuing debt” – a dollar bill is just as much debt as a bond.>

        Horseshit! A dollar bill is only “debt” because it’s a Federal Reserve Note issued by the Federal Reserve Bank. And FDR was obviously President after 1913 AND a paid in full member of the rentier class, whatever else his qualifications. Before 1913 and NOW if we were to wish it to be once again, a Dollar bill could simply be just a Dollar bill once again. No debt strings attached whatsoever. Too hard to wrap your mind around?

        1. Calgacus

          SayWhat?:MMP #52 Conclusion: The Nature of Money explains this at length. All money everywhere is debt the way that horses are animals. They fit the definition. The problem is that many people in their heads have weird definitions of “debt” when applied to money that are different from the basic definition that children understand: obligation, liability, favor owed etc. A does something nice for B. B says “I owe ya one”, “I owe A a debt.” Dollars, yen, pounds, zlotys are just ways of quantifying this relationship between A & B. That is all.
          Dollars printed before 1913, greenbacks coins etc all were debts, represented a debt from Uncle Sam to the holder. This has nothing to do with bonds & interest.

          a Dollar bill could simply be just a Dollar bill once again. No debt strings attached whatsoever. Too hard to wrap your mind around? Hey, I’m all for letting dollars just be dollars. But dollar bills don’t have debt strings attached to them, whether or not there are no bonds. Dollar bills ARE debt strings. A dollar bill is a way to pull on the sovereign issuer Uncle Sam & get him to do something for you. Money is a relationship between a holder and an issuer. It is not a thing. A bond is just another kind of dollar bill.

          The decay of philosophy in the last century odd has brainwashed people into thinking they can’t understand things they very much DO understand, like relationships: like a debt, like money, like a marriage, like a friendship. People are made to think they can only understand atomized objects as the “fundamental” “reality”. Nonsense.

          1. Mansoor H. Khan

            Calgacus said:

            “The decay of philosophy in the last century odd has brainwashed people into thinking they can’t understand things they very much DO understand, like relationships: like a debt, like money, like a marriage, like a friendship. People are made to think they can only understand atomized objects as the “fundamental” “reality”. Nonsense.”

            — or the relationship between the CREATOR and the CREATION!

          2. Calgacus

            or the relationship between the CREATOR and the CREATION!

            “Everything turns on grasping and expressing the True, not only as Substance, but equally as Subject”

          3. Mansoor H. Khan

            Calgacus said:

            “Everything turns on grasping and expressing the True, not only as Substance, but equally as Subject”

            Can you please elaborate? I don’t understand.

            Mansoor H. Khan

        2. EconCCX

          All money everywhere is debt the way that horses are animals. @Calgacus

          Cal, consider bridge tolls usable as money. Means of exchange, store of value, and unit of account. You own a thousand GWB crossings and can trade them directly to others for whatever you want. Overview at sbdm.org as you’ve already seen.

          It’s accurate to say there’s a debt that creates value in the money. The issuer’s obligation to allow you or your exchange partner to cross the bridge. A debt in kind.

          But what you don’t have under an SBDM (service-backed, service-denominated money) system is loan debt in the creation of the money. You’ve already earned those crossings; you do not have to pay them back with interest to the institution that issues them. Whereas it’s impossible to describe the creation of our present money without terms like “borrow,” “loan” and “interest.” This recursive and compounding loan debt is mathematically unpayable without borrowing anew. Not the case for SBDM, which is bartered into existence.

          Loan debt is not an inherent property of money. It was an engineering choice for our present system of money, making it an instrument of predation rather than reciprocity.

          So you’re right that all money that doesn’t devolve to worthlessness requires some obligation of performance in exchange. But as you reiterate that all money is debt, I hope you’ll also aim for thinner slices. Finer distinctions. A better way.

          1. Mansoor H. Khan

            both debt and equity are claims on something of value.

            but a debt claim behaves differently than an equity claim and this difference has staggering implications on a civilization.

            pure fiat is more like an equity claim. the current debt based fiat is a problem because of the debt part (the debt must be issued in order to issue the currency).

            there is a reason why Judaism, Christianity and Islam all forbid dealing in “interest” based debt. this prohibition is based on knowledge of the creator of universe. the wisdom of this prohibition is now being globally validated!

            mansoor h. khan

    3. EconCCX

      Joe, as you consider Paula’s question, I’m wondering if you’d walk us through the mechanics of the PPC proposal. I think your Corrente piece may have glossed over the bondholders. PPC seems a powerful way to pay off the debt and fund some needed infrastructure. Here’s my skeptical amateur’s attempt at tracing the steps. Any corrections would be most appreciated.

      * Treasury delivers to a Federal Reserve Bank twelve Proof Platinum coins, total face value $60T. FedBank takes ownership of the coins as its own asset.

      * FedBank makes the book entry to add $60T to USG’s Reserve Account.

      * USG draws down this account to pay USG employees, vendors and retirees, and also retires its debt upon maturity. Sooner, if the debt-holder prefers.

      * In each case, some tens of thousands of billions in Reserves, FedBank money, are conveyed to those who now own them. If the former bondholder has no account at Fedbank, he can take his Reserves in $100 Federal Reserve Notes; or he can create or augment an account at a commercial bank. If he does the latter, that commercial bank takes absolute ownership of the Reserves, while the customer is a creditor with spendable IOUs in the form of commercial bank deposits.

      * Now these trillions set about seeking a return. Banks, owners of the new Reserves and no longer Glass-Steagall restrained, bid against former bondholders, owners of commercial bank money, to buy farmland, businesses, buildings, infrastructure, TV networks against which to collect rent: the Hudson effect. Perhaps even some political spending or resource speculation. Banks can leverage their reserves by lending: two dollars of Reserves can meet liquidity needs on $100 of commercial bank deposits. The over-optimistic high borrower gets the asset: the Minsky effect. Some payments are taken; then the bank regains the asset through foreclosure. Every time a bank writes a check, the recipient puts the proceeds into that or another bank. So banks are able to procure real-world resources for Reserves that are forever recycled to them.

      In short: where formerly these $60T claims were deferred, sequestered, and infinitely rolled over, now they’re liquid and can be leveraged. Rehypothecated. Used for maneuvers only Yves and her ilk understand.

      MMT, in PPC mode at least, is quite friendly to the interests of the 0.01%, as I see it. Am I mistaken about this?

      1. Hugh

        A few things to consider:

        T-bills can be repoed and used in transactions now. You can’t use a T-bill to buy groceries, but in finance T-bills and cash they are essentially interchangeable.

        Kleptocrats won’t invest in real assets unless they can be blown into bubbles. Otherwise the returns aren’t worth and the perceived risks are higher. It’s much easier, and profitable, from the kleptocratic perspective to keep new money feeding paper bubbles. So while what you are saying is possible as long as the current dynamic holds, they will keep most of their money in the paper, as opposed to the real, economy.

        As others have pointed out, political change must precede economic change. If we had the kind of political change we need, the proof platinum coin or PPC would not be necessary. But even if we went the PPC route, it is not nor pretends to be a complete solution. What we need beyond it is to see any concentration of rentier interest profits resulting from it be taxed away.

      2. EconCCX

        Thanks, Hugh. Of course there’s an active market for any security. An individual’s ability to trade one for checkbook money is part of the natural flow of money. One party gains liquidity in the transaction, one surrenders it for the expectation of a greater return. The quantities of each asset remain unchanged.

        But I don’t think those effects can be compared with PPC’s, which, if I’m not mistaken (Joe?) would entail replacing sleepy T-Bills in the aggregate with high-powered Central Bank Money, and the fractional reserve and leveraging privileges that come with it, PLUS pallets of cash, plus the nonbank bondholders’ share of commercial bank money, plus whatever FedBank’s owners are allowed to do with their $60T. PPC to me is a Wall St. dream, a blueprint for privatization of the commons and destruction of the wage bloke, the currency, and the vestiges of representative government.

        1. Aquifer

          This is a debate i would love to see in a video – in back and forth and in language the common man could understand ….

  17. Rich

    I’m reminded of what Chomsky once said about the wealthy elite and why they make the seemingly counterproductive decisions that they make. He said that “the elite are scared that they will lose their money if they don’t have absolute power and they can’t have absolute power unless they have absolute control.”
    I believe MMT to be a threat to their levers of control. MMT would create economic democracy.

    1. Doug Terpstra

      Hmmm, Chomsky’s view of wealth and power sounds like cart and horse, but maybe they’re interchangeable or interdependent like the chicken and egg. To many acquisitors, power is the ultimate end, and wealth is a primary means to serve that end. Amassing wealth is concentrating power, and one can never ever have too much power. That’s the banksters’ opiate, as the warrior’s is adrenal-fueled violence.

      That’s why relative wealth disparity is so desirable, essential — a feature, not a flaw or side-effect. In their view, you can’t run a tight feudal plantation in a system of shared power, true democracy, and equality. People just don’t bend over and kneel as readily if they have a measure of economic freedom. (It’s a shame that Whitney character learned to read and claimed the creative freedom to invent the cotton gin, upsetting the divine order of things.) That’s why the Shock Doctrine is not intent on raising all boats, on full employment, or optimizing total economic output; it’s about authoritarian control. Financialization and militarization are intertwined.

      In economics and politics (including foreign/military policy), it should be clear by now that the premise accepted by most economists and journalists that the elite 1% and their political minions are well-meaning, just unfortunately mistaken, is manifestly, dangerously false. I’m convinced most of them are whores and (drone) killers in fine suits, wolves in sheepskin.

      “It is not enough to succeed. Others must fail.” Gore Vidal

      “The first truth is that the liberty of a democracy is not safe if the people tolerate the growth of private power to a point where it becomes stronger than their democratic State itself. That, in its essence, is fascism – ownership of government by an individual, by a group or by any other controlling private power.” – Franklin D. Roosevelt (FDR)

  18. SH

    This is amazing after 108 comments no one understands classical liberalism.

    http://en.wikipedia.org/wiki/Classical_liberalism

    Classical liberalism is before “liberals and progressives”.

    The liberals in “liberals and progressives” are neo-liberals.

    The “aggressive” neo-liberals that this author refers to are just neo-neo-liberals.

    We could also do anti-federalists in the Jeffersonian sense and then Federalists in the conservative Republican traditions and run in circles all day long too. How can you be one or the other? It’s a rhetorical device.

    I’m going with the two negatives make a positive and that this definition of neo-liberal is the true definition of liberal. I prefer neo-liberals and progressives as one group and then just liberals as the group this author argues against.

    Scott

  19. A Real Black Person

    Capitalism is just another variation on civilization. Civilization is unsustainable. ( large numbers of people living in cities, growing populations of diverse humans living in crowded areas. Diversity is a function of population size) for the same reasons capitalism is unsustainable; it’s humans imposing their will over natural systems (including other people Religion is primarily about controlling other people’s behavior. ). That never really works out well over time.
    Even in places where it has worked for a long time, it didn’t work for MOST people. Most people lived under a system close to slavery and could only dream of fantasize about freedom. They were often only allowed to do so through religion, as long as that religion told them to delay gratification until the Next Life began.

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