J.D. Alt: Forget the 1%

By J. D. Alt, author of The Architect Who Couldn’t Sing, available at Amazon.com or iBooks. Originally posted at New Economic Perspectives.

All this talk about the 99% versus the 1%? I say the easiest—and likely the most useful—thing to do is just forget the 1%. Write them off. Let them have their gated communities, their mega-yachts, their island retreats and off-shore bank accounts. What do we need them for?

For one thing, we DON’T need their money. Even if we could get it—which we can’t because they steadfastly refuse to use it for anything other than casino gambling in their private and secretive financial networks. We wonder why we have a “jobless recovery”? Does it have anything to do with the fact that such a large percentage of our “capital” has, for all practical purposes, been removed from the economy?

Even when the 1% decides to invest some of their dollars to manufacture or build something, they rarely decide to manufacture or build anything we really need—only things we really don’t need. Like strip-mines in the Bristol Bay salmon fishery, or pipe-lines across Nebraska’s freshwater aquifers, or rocket-planes for space-tourism. Thanks, but we really don’t need—or want—any of it. We’d much rather have fresh wild salmon (rather than the artificially colored hatchery-stuff) than more copper and gold, fresh water instead of tar-sands oil, and the good-old week-at-the-beach is just fine for a vacation.

President Obama adds to our confusion by claiming we need to tax a bunch of the 1%’s Dollars in order to pay for a minimal laundry list of hodge-podge programs to train unemployed people to do jobs that don’t exist—and which the 1%, whether you tax them or not, have no intention of creating—ever. Why doesn’t the President just forget the 1% and start investing Sovereign Dollars (not tax Dollars, mind you) in the lower and middle economic strata he claims to care so much about? The 99% can have its own life—and a very good one to boot—if we’d just ignore the 1% and get on with the job of paying ourselves to build the things we really need.

Here’s an example: It turns out the United States—which has the largest and most complex electric power network in the world, and which is completely and utterly dependent upon electricity for its daily survival—does not have the capability of manufacturing the single most crucial component of its electrical grid: the TRANSFORMER. To be exact, we can make little transformers, but the really big ones that are necessary to push electric current across long distances (which our electric grid is totally dependent on) are somehow beyond our ken. Or, to be more accurate, the 1% have no interest in building the plants and hiring and training the workers to manufacture the very large-size transformers.

They (the 1%) apparently reason that they don’t need to go to that trouble because in our globalized economy there’s somebody else who can build the really big transformers. It turns out that somebody is South Korea. So when, recently, Pennsylvania badly needed a new very-large transformer they placed an order with the Koreans, who promptly began building it. Two years later, the 400,000 pound item was put on a ship and transported for 26 days at sea to the port of Newark, New Jersey, where it was loaded by crane onto a railcar bound for Pennsylvania. (“Heart of U.S. Grid Difficult to Replace”, W.S.J. March 4, 2014.)

This little tale is made even more interesting by the fact that these very-large transformers—usually situated inside a compound protected by chain-link fencing—are easily destroyed with a few rounds of fire from a semi-automatic assault rifle. Thankfully, semi-automatic assault rifles are difficult to come by in the U.S., otherwise there might be cause for concern. The seventeen transformers recently shot to death in California (we can’t explain how this actually happened, since the NRA is only marginally active on the West Coast) are a cautionary tale: If this were repeated on just a little bit larger scale, the Department of Homeland Security has determined, our entire electric grid could be down for months—or even longer. (Come on South Korea, hurry it up…. We’re waiting!)

So my example is this: Why doesn’t President Obama propose that since the 1% have no interest in doing it, the U.S. sovereign government build a plant to manufacture very-large transformers, hire engineers to train unemployed people to do the labor, pay those unemployed trainees for making the effort to learn how to make a giant-sized transformer, then hire those newly trained workers to run the manufacturing process? We could build a backup supply of these critical electric grid components so that in the (increasingly likely) event some crazy, anti-government sociopath seizes the opportunity to turn out America’s lights, we could turn them back on in fairly short order.

That seems sensible. And it’s total nonsense to imagine that we have to depend on using ANY of the 1%’s gargantuan stash of Dollars to do it. Like I said, just totally forget them. Let them play their Monopoly game while we get on with the task of building the world we want to live in.

Print Friendly
Tweet about this on Twitter34Digg thisShare on Reddit0Share on StumbleUpon0Share on Facebook0Share on LinkedIn0Share on Google+0Buffer this pageEmail this to someone

109 comments

  1. JM Hatch

    We can’t afford to forget them. They, the 0.1%, or better yet, the 0.001%, will never forget us, never let us go. They bought us. We’re part of their property, secured by buying the government, by destroying the education system, so that many willingly put on chains.

    1. diptherio

      But we don’t need to go tying every one of our policy proposals to taxing the wealthy. It would, of course, be a good thing to do, but Washington is owned and operated by Wall Street and other moneyed interests. Best to focus our energies on policies that won’t receive so much push-back from vested interests.

      1. Veri

        We could forget the 1%. The 1% rely on taking stuff. If they see that you have a better yard, they want it. Say that the 99% did forget and did create a real economy.

        The 1% will use their lawmakers in State houses and The Federal Government to take our stuff.

        The rich won’t forget you. Because they need you to pay them to keep being rich. The more the 99% will separate, the more the 1% will use their authority to take.

      2. Ben Johannson

        The naysayers, though they don’t realize it, are wallowing in despair as every argument they present amounts to, “We can’t do anything!” They say we can’t disregard the wealthy and we can’t tax the wealthy and we can’t banish the wealthy and we can’t make them nice and we can’t blah blah blah . . .

        They want to stay home until someone magically gives them the revolution they argue can never happen. Anyone who says differently risks bursting the smug-bubble, so they bravely take to the internets, attempting to disrupt any effort to organize resistance to the Corporate Lords.

    2. jrs

      Don’t they also own most of the real assets like farm land and so on? If so unless we can buy them back with printed dollars, then pretending it doesn’t matter is not a reality based community at any rate.

  2. swendr

    Great, but I doubt the 1% will forget about us or the politicians they bought or the fact that they have already decided that things don’t need to be arranged the way you describe.

    1. MyLessThanPrimeBeef

      Maybe one would like to forget one’s ex-girlfriends, and the 0.01% are not, but it’s hard to forget the 0.01%, the TOP of TOP, when you have kow-tow to them everyday.

      “Yes, master, your dinner is coming right up. Thank you for this guaranteed job. And thank you, JG. By the way, you think I can sit down next to the misses for dinner, even just once?”

      Now, how can you forget something like that?

  3. sadness

    Turn on, tune in and drop out didn’t work back in the ’60’s, nor has it since….just look at us now.

    Yes we can live a nobel life separate from but within society as it is, but sadly ‘they’ are running the show into the ground, so although it might be that us meek folk might inherit the earth, it could well be toast….(sorry that’s too much from me)

    1. fajensen

      It worked just fine – it worked so well that ever since “they” have been busy preventing something like that from ever happening again.

      Why the “war on drugs”, for example? Especially the psychoactive kind, which are not addictive, with cannabis right at the front line – this drug being the weakest and most available? Because, the drugs were an important part of the youth rebellion culture!

      The war on wages? The same thing; high wages allow people to not work very hard and acquire resources of their own, to live the life they want to live!

      The war on freedom? If you are sitting with 99% of the worlds money invested in bonds, then you will want these suckers to pay interest all the way to maturity 10, 20, 30 years down the line, so, you cannot risk any pesky revolutionary ideas or for that matter innovation coming along to topple your cart.

      Next stage of the evolution towards subservient society is that “they” will coerce and when necessary kill researchers and scientist who may come up with something revolutionary, like brain-interfaces, protein folding, gene hacking – that works, molecular computers, e.t.c.

      What we are suffering now could be control overshoot, but, I think it is simply the elite’s revenge for almost losing control in the 1960-1970’ies. They re-established control around 1985-1990 but they probably figure, like God in the old testament, that sins must be punished for 7 generations to be cleansed.

  4. abynormal

    Men on a Wall / J.D. Alt
    http://neweconomicperspectives.org/2012/08/men-on-a-wall.html
    “Together, the Conservative assertions and the Progressive rejoinders, create a self-deceiving and self-defeating dialog that has devolved into nothing more than a shouting match: The building is burning, but since we have agreed we don’t have enough water to put it out, we can only argue about whether we’ll douse a little over there or a bit over here. If I say it we ought to douse here, you scream that’s not fair—we ought to be dousing over there instead. At what point in this futile effort, I am wondering, will we stop shouting at each other and realize the fundamental, almost silly, error in our thinking? Oh, look! We actually do have all the water we need to put the fire out completely. Look! Over there! You see that great big water spigot? What have we been thinking?”

    “Do not waste your time on Social Questions. What is the matter with the poor is Poverty what is the matter with the rich is Uselessness.”
    George Bernard Shaw

  5. Michael Fiorillo

    I’d love nothing more than to forget about the 1%, but as a unionized public school teacher, I can’t, because they’re essentially trying to kill my colleagues and I, closing our schools, diverting money from them into non-union charters, threatening pensions and health care, regimenting and alienating the kids with high stakes tests, and scapegoating us for the ills suffered by our students.

    Ignore the 1%? As the good people of Appalachia might say, I wouldn’t piss on members of the Overclass if their hearts were on fire, but I don’t have that luxury, I have to engage with their lies and attacks, some stealthy, some right in our faces, which keep on coming…

    1. McMike

      Boy, I do wish more teachers would wake up and get political before it’s too late.

      Of course, the elite found a way to get blue collar workers to fight amongst themselves, and to slit their own throats – a long and rapid fall from the proud short period of relative worker unity, class identity, and a willingness to bash heads to get a seat at the table.

      Compared to that, gutting the education system and taking over that captive market will be a walk in the park.

  6. semiconscious

    ‘So my example is this: Why doesn’t President Obama propose that since the 1% have no interest in doing it, the U.S. sovereign government build a plant to manufacture very-large transformers, hire engineers to train unemployed people to do the labor, pay those unemployed trainees for making the effort to learn how to make a giant-sized transformer, then hire those newly trained workers to run the manufacturing process? We could build a backup supply of these critical electric grid components so that in the (increasingly likely) event some crazy, anti-government sociopath seizes the opportunity to turn out America’s lights, we could turn them back on in fairly short order.

    That seems sensible…’

    this might be the most naive, child-like article ever posted on this blog. ‘ignore them & they’ll go away’? try telling that to the villagers in ‘the seven samurai’…

    we’re their livestock. & obama’s their sheep dog…

    1. James Levy

      This is right out of conventional Economics–politics and power don’t exist! Who in hell does he think is going to print those sovereign dollars and distribute them to the poor? What mechanism does he imagine will allow for such a move, and the assumed “debasement” of the assets of the 1%? How does he imagine the rich and powerful, the Power Elite, are going to respond to having their unique powers to control government and credit and jobs removed from them?

      This is a truly idiotic post.

      1. Wayne Reynolds

        It appears in Conventional Economics that even people don’t exist. We have been replaced by a pseudo mathematical algorithm.

      2. jrs

        It’s making narrow assumptions about what the 1% care about. So if you assume the main thing the 1% care about is their tax rate (assuming they can’t hide thier money. And isn’t income taxes rather than wealth or inheritance taxes already a win from their perspective?) then with that assumption it makes sense.

        So your build your transformer and you don’t tax the wealthy to pay for it. You don’t need thier money so presumably they don’t offer any resistance. Ok as long as it’s some tiny transformer project they don’t. But what if your project starts real competition for labor? You think the 1% will take that lying down. They suddenly can’t get engineers cheaply anymore. Ok they know the solution to this, it’s H1Bs to flood the labor market again but :)

    2. Talby

      I think the post was in a some what satirical modest proposal style mocking fact that billionaires benefit no one but the billionaire and we really don’t need to tax and spend when we can just spend on necessities. Why waste money trying to get programs on key goods and services AND taxing the rich when we can just do one then the other. Inflation occurs? Well then awesome!

  7. cnchal

    Why doesn’t President Obama propose that since the 1% have no interest in doing it …?

    President Obama may very well have an interest in getting the capacity to build those transformers, but he has commodified himself and sold himself to the highest bidder, and his owners have no interest in building really big transformers. What his owners do have an interest in is continuing their world wide financial crime wave. Too bad the 99% does not have enough money to buy President Obama back.

    1. Christopher Dale Rogers

      Would you really desire to invest honest, earned cash in purchasing someone who was corrupted at an early age by the powers that be – or was it just greed and a lust for power.

      The fact remains, the last person you’d want sat in the Oval office is Odubbya, and that really saying something after the disaster of Dubbya himself!!!!!!!!

  8. kjboro

    President Obama is part of the 1%. And, the rule making machinery of the current government is in the hands of the 1%. So, whether its the little transformers or any number of other possibilities, the argument to forget the 1% falls apart when it is suggested that the president or congress or government agencies take action. This becomes: “Forget the1%. Here’s a good idea for a possibility that benefits the 99%. So, let’s ask the 1% to take this step.”

  9. fajensen

    The seventeen transformers recently shot to death in California (we can’t explain how this actually happened,

    Here, in “pacifist Sweden”, systemically important transformers must – by law and entirely at the purchasers expense – be protected from projectile weapons (and other forms of sabotage) by concrete walls, locked, serpentine entrances, security systems and fences. There is a code for how to do the protection too.

    It is strange that the US who apparently always perceives itself to be under some form of enemy attack (a condition close to paranoia – for outsiders), apparently chose to not protect any of the civilian infrastructure against simple attacks. One does not even need a rifle, simply drilling a hole in the tank, slowly letting the oil out, will work! Burning some old tires next to a substation might pollute the insulation enough to “work” also.

    1. McMike

      The transformer attacks was one of those weird stories that pops up and then disappears almost as fast as it arrived.

      Leaving one wondering if the PTB were scared by the implication and covered it up, of: wondering if the act or story itself were merely part of some security state machination going on behind the curtain. God Knows What… rogue agents acting off the books, rehearsals for a false flag op, former spooks cranked up on meth and starting another militia, domestic black op sowing a little internal terror, Goldman Sachs trying to manipulate the price of some future somewhere, someone sending a signal to someone somewhere….

      1. James Levy

        Just to ratchet up the concern, there is this thing called a coronal mass ejection that could easily fry the entire grid. One in the late 1850s was big enough to register in the primitive instruments of the time, and created wild aurora effects. If the US can’t make there things, we would be toast. Whoever could make them would control the pace and place of recovery. This is a crazy variant of Lenin’s Rope Theory, truth stranger than fiction.

    2. Vatch

      @fajensen:

      in “pacifist Sweden”, systemically important transformers must – by law and entirely at the purchasers expense – be protected from projectile weapons (and other forms of sabotage) by concrete walls, locked, serpentine entrances, security systems and fences.

      But, …. , it would cost money to do that!

      Here in the U.S. we like our electricity to be unreliable. That’s why our electric lines are above ground. It’s easier for falling tree branches to do their work when the power lines aren’t buried.

    3. Wayne Reynolds

      The United States has to leave it’s infrastructure vulnerable so that any attack can always be used to justify it’s worldwide murder and pillage in the name of democracy and freedom.

  10. Schnormal

    So this article is saying that our system is totally dependent on our having these huge transformers, and if one breaks or gets shot up we have to wait months for a replacement fr S Korea.

    Wtf, don’t we keep a bunch of spares in a warehouse someplace? Or are each one of them custom made? Even still, wouldn’t you think we’d order two, one for a backup?

    I hope I get a chance to follow this thread, but I have to go to my ridiculous job now…

    Ps Yves I’m sorry to hear that you’re still not feeling well, and I hope you feel better soon!!

    1. Noni Mausa

      I imagine that the for-profit companies who control purchasing simply view such stockpiling as a waste of valuable capital. These things are ridiculously expensive. Also, depending on a transformer’s position in the grid, different sizes and capacities are needed, and as the grid evolves, those values can change.

      Back in 2008 I was discussing this here: http://nonimausa.blogspot.ca/2008/11/trace-elements-of-nation.html

      “…Motors, generators and transformers have shifted over the past 30 years to a very small number of producers, most of them offshore. Although I’m not in the field anymore, at the time I retired there were really only three or four producers of large power transformers, and the lead time for a single transformer might be three years. In some cases, there would effectively be only one producer because the others were not at that time taking new contracts.

      In an emergency situation, how do you quickly replace a damaged transformer? They are not kept sitting on the shelf, one of these would be large enough that it would only fit in my two-story house if I removed strategic portions of flooring and walls.

      The crisis of American manufacturing is not, I think, primarily one of job loss. It is instead the loss of capacity to rebuild oneself independently in a crisis. That capacity is only partly dependent on the infrastructure — the factory floors and steel mills. More importantly, the working knowledge of how these things are built and the working attitude of coming in every day and bending some more copper into shape, but doing it precisely right, have been punished out of the American workforce…

      To become skilled in one of these jobs often requires an opportunity loss of becoming skilled in other areas — in order to train a good machinist requires enough time that the skill becomes the individual’s only resource, and if that resource is no longer in demand, the entire field looks like that oceanic dead zone where there isn’t enough oxygen to survive…”

      Noni

      1. James Levy

        Beautifully put. The British discovered in the late 1930s that rearmament was constrained by trained cadres as much or more than anything. The 1920s had not seen the boom in Britain that occurred in the US and to a lesser extent in Germany, so plant and equipment had not been upgraded to the extent it was in those countries. Then, the Slump killed shipbuilding and the metal trades. Skilled workers wandered off to other jobs or emigrated. When the machine was switched back on in 1937 when Chamberlain became PM, engineers, draftsmen, and skilled workers were in very short supply, and critical infrastructure wasn’t there. Much of the early rearmament effort was simply coping with these deficiencies, to the point that by September 1939 the Navy literally couldn’t lay down any more cruisers, battleships, or carriers for want of slipways and production form the RAF was constrained not by money but by factory floor space, jigs, and machine tools (up to the very end they were buying gyroscopes–from Germany!).

      2. cnchal

        I agree with your last two paragraphs. Absolutely correct.

        Future skill development is stunted as well. The techniques to build these transformers advance and eventually we will arrive at the point where no one exists in North America that could build these things, if we haven’t already passed that.

        The Koreans and Germans that build them are also not about to give their playbook away like Boeing. Boeing outsourced among other things, the wing making for the Dreamliner to Japan and handed them a book they have spent the last 50 years and countless dollars of taxpayer support creating, called “How to make an advanced passenger jet”.

        The Boeing executives figured out a way to monetize all that taxpayer largesse and technical knowledge amassed by Boeing engineers and machinists and pocket the money for themselves.

        If that isn’t criminal, I don’t know what is. They are not just in banking and finance.

      3. Schnormal

        Interesting, thank you for sharing!

        I’d have guessed that the risk of being caught without a backup would outweigh the extra cost. But I guess only the people who can’t afford their own generator would be the ones bearing that risk.

      4. MyLessThanPrimeBeef

        Noni, thanks for that comment.

        It is in doing (things ourselves) that we find meaning.

        Imports may be cheaper (even if we forget the quality issue), you still want to buy local. That’s how a community finds its own meaning in life.

        Anything…transformers, cotton underwear, you name it.

    2. fajensen

      They sort of do this. The electrical company will run large transformers in pairs at 60% load and then overload the remaining unit – which is possible with forced air cooling at the cost of some service life, transformers are pretty robust devices – until the broken unit is replaced. The lead time for a new, large (larger than about 60 MVA) transformer can be up to 2 years. A Failed transformer will typically take 6-9 months to rebuild because they do not need to rebuild them completely. The core can take a long time to assemble and is rarely damaged.

      The reason one does not keep spares is that thes kinds of transformers are always “hand made” to a specific application, they always use paper and oil insulation because this is a very reliable system, but, this makes it very difficult to keep the water out of the insulation and the magnetic core itself, if the transformer is not operating for an extended time.

      Transformers can typically last 40 – 60 years with regular servicing and reconditioning of the oil, so not many of them are built. The US probably have a large enough electrical system to keep a viable “maintenance” production inside the country, should one wish to do so; but the real growth is in Asia. So, if one needs a transformer “quickly”, it will have t0 come from there because there is already a running “pipeline” to take it from – at a cost, of course.

  11. Jim Haygood

    ‘Does [the jobless recovery] have anything to do with the fact that such a large percentage of our “capital” has, for all practical purposes, been removed from the economy?’

    The largest misallocator of capital is the military-industrial complex, which has been flushing 5 percent of GDP down the drain for nigh on 70 years now.

    In his early 1990s motorcycle tour of the remnants of the USSR, Investment Biker author Jim Rogers was shocked at the decayed infrastructure behind the facade of military might.

    Now that we’re the evil empire, the symptoms are exactly the same. Malinvest for enough decades, and you get frickin’ poor.

    1. Ben Johannson

      No, the largest mis-allocation is the financial sector, with $1 quadrillion in fictitious capital displacing the real thing. The military sector actually does build stuff, while finance prevents things from being built.

  12. Polly Cleveland

    We can’t ignore the 1%. According to statistic from Ed Wolff of NYU, the 1% own more than 40% of the nation’s non-home assets. If, as often happens, they choose to underuse these assets, that hurts the rest of us. We need to tax them hard enough to make them sell some of these assets or put them to good use.

  13. Carla

    Here’s a thought, JD Alt: why don’t you start manufacturing those transformers right here in America? You could be a job creator. Maybe you could design a bullet-proof, secure model of the transformer.

    Lots of middle class people like me would love to invest. You’re right. We don’t need the 1%. Go to it, JD Alt! We’re counting on you!

    1. abynormal

      @Carla
      J.D. ALT started out intending to be a novelist, but became an architect and urban designer instead. He holds two U.S. patents for a downtown people mover system called “SMARTram”. He has lectured on the form of urban communites at various national and international conferences, and was invited to present his urban transit concepts in Beijing, China. Most recently, he completed two experimental houses in Port Townsend, Washington, built around a prototype prefabricated core module called a “HOUSEED”. Poised for a business start-up in 2009, the venture was put on hold because of the housing market collapse. Mr. Alt used the downtime to produce his first novel: The Architect Who Couldn’t Sing. https://www.smashwords.com/profile/view/jdalt

      1. Brooklin Bridge

        Thanks Abynormal, quite interesting. Do you think he proposes this, ignore them idea seriously? He wouldn’t be the first architect who thinks “contemporary problems” can be solved by ignoring them positively with a specially architected community or two. The transformers idea is novel.

        1. abynormal

          you know Brooklyn… there really is no way to stay under the PTB radar. i know many that are trying but it catches up in some form. there is an overlap in living ‘on the up n up’…costing more than most are prepared for and living in survival mode. unfortunately this lifestyle doesn’t allow for implementing large ideas…mostly helping each other survive (lie/fudge documents) etc.

          ‘our’ large ideas will develop from the sweat of our survival under their dark hand. i reread a few H.Zinn books recently…we won’t just survive but thrive and ‘they’ won’t….Guaranteed (they never do or we wouldn’t be tappin away today’)

          we don’t need No Mo Cowbells’)

      2. Carla

        Thanks for the info, aby. This means that Mr. Alt is all the more suited to the design/build project of revamping our grid.

        I understand that he would prefer that the “US sovereign government” undertake the task, as would I, given a perfect world. It appears to me that the fly in the ointment of MMT is that the US government is not sovereign. It is owned by people who are not at all accountable to the citizenry, and whom Mr. Alt proposes we simply wish away.

        Facts on the ground, and in the deep state, are so inconvenient.

  14. Malmo

    I don’t want to build a world that allows the 1% to keep flourishing or to keep their rigged gains. I think it’s supremely naive to think we can build a stable/egalitarian/just world where concentrated wealth and it attendant power are ignored as if they matter not. I can’t even believe someone is suggesting as such. The antecedent to a transformed world worth building is to confiscate a significant portion of the wealth accrued by the few on the backs of the many. We also need to ensure that future gross wealth accumulation into the hands of the few cannot happen again. Always and everywhere with money comes power, and that power concentrated in the hands of the few inevitably produces perverse social costs and outcomes. Ignoring the 1% thus makes no sense if it’s emancipation for the 99% one desires. Of course it makes sense if Alt is a 1%er himself. Beyond that, his whole thesis here is simply ridiculous.

    1. Ben Johannson

      I don’t want to build a world that allows the 1% to keep flourishing or to keep their rigged gains. I think it’s supremely naive to think we can build a stable/egalitarian/just world where concentrated wealth and it attendant power are ignored as if they matter not. I can’t even believe someone is suggesting as such.

      If your conclusion is that the world can’t change unless some group is “gotten”, then you’re feeding right into the conservative class-war meme.

      1. Dan Kervick

        The class war meme is conservative?

        There is a class war. We have to deal with it. We can either fight it or surrender.

      2. Malmo

        Sure, it might change, but the change won’t have much duration if the 1% maintain their power hegemony, brought to bear largely by their conspicuous wealth concentration.

        And, yes, the 1% and much of their wealth, needs to be whittled down significantly. That in no way is what you label a “conservative class-war meme”. More like the liberal variety.

        This isn’t about who’s gotten. It’s about who’s getting their fair share of the productive spoils– the 99% on the backs of the 1% for a change.

        Not all MMTers see it the way Alt does either. For example Mike Norman penned a very cogent piece yesterday that is in diametrical opposition to Alt’s apologia of the rich.

      3. Alejandro

        To deny is to delude. Class war is ALWAYS on. Entropy within the ninety-niners determines whether it’s asymmetrical, has some “resistance”, a little “push-back”, or a sustained organized effort to counter.

        “Gain in entropy always means loss of information, and nothing more”.- G. N. Lewis writing about chemical entropy in 1930

        Excerpt from “THE TYRANNY OF WORDS” by Stuart Chase-1938: “A community of semantic illiterates, of persons unable to perceive the meaning of what they read and hear, is one of perilous equilibrium. Advertisers as well as demagogues, thrive on this illiteracy……………….Without ability to translate words into verifiable meanings, most people are the inevitable victims of both commercial and literary fraud. Their mental life is increasingly corrupted………….…………One wonders if modern methods of mass education promote knowledge in children’s minds as they do confusion………………”

      4. Massinissa

        Theres been a goddamn class war for decades.

        Where the rethugs get it wrong is that the war isnt the 99% against the 1%, its the 1% against the 99%…

      5. MikeNY

        Warren Buffett said recently something to the effect of:

        “Yes, there is class warfare going on. And my class is winning.”

        1. MyLessThanPrimeBeef

          He is like that famous Chinese Jin-dynasty politician, Xie An, who defeated his enemy while playing Go.

          Not to be out-done, Buffett won his class war while playing bridge.

          That’s double humiliation for the 99.99% soldiers.

    2. ron taylor

      ” We also need to ensure that future gross wealth accumulation into the hands of the few cannot happen again ” .

      Agree 100% . We need to start with End the FED ( or totally nationlize it ) . Good luck — they are the 1913 frankenstein that owns the fedgov . The Fed is privately owned by whom ? Is there any other example in history where a golden egg laying goose had been magicly created by a bunch of flunky politicians voted in by an equally flunky electorate ?

  15. Wayne Harris

    Then there’s this, from Lloyd’s via RT:

    Super solar storm could leave Western nations without power ‘for months’

    The total cost of such a scenario today in Europe and North America is estimated at $2.6 trillion for a five-month blackout period, though it could be as low as $0.6 trillion.

    In 1859 a solar superstorm, the so-called Carrington Event, hit Earth’s magnetosphere . . . telegraph wires in North America and Europe were reportedly destroyed , giving operators electric shocks and knocking out the telegraph network as far away as Australia and Asia for two days.

    In March 1989, the strongest measured geomagnetic storm caused the collapse of Hydro-Québec’s electricity transmission system in Canada. More than six million people lost electric power for nine hours. That cost the government $12.7 billion.

    [snip]

    Historical auroral records suggest a return period of 50 years for storms like the one in Quebec and about 150 years for extreme storms such as the Carrington Event.

    [snip]

    According to the data in the report the total US population at risk of extended power outage from a Carrington-level storm is between 20-40 million, with durations of sixteen days to one or two years.

    “The duration of outages will depend largely on the availability of spare replacement transformers. If new transformers need to be ordered, the lead-time is likely to be a minimum of five months,” it says.

    “They are very limited in terms of numbers of replacements and manufacturing new transformers takes quite a long period of time, up to almost two years” said Neil Smith, Research Manager at Lloyd’s of London as quoted by the Telegraph. “These are huge pieces of equipment. Building and transporting it is a huge job” he added.”This could take weeks, even years, in the event of a really big storm.”

    There are currently four satellites that can warn Earth of the coming CME and allow grid operators to prepare and take preventative measures before the storm, though the report adds that the force of the storm can only be measured in 15-30 minutes before it hits. The satellites are also past their mission lives and need replacement

    Full article here: http://tinyurl.com/qfvtllh

  16. McMike

    (1) The toxic political atmosphere dominated by neoliberal cant makes it impossible to pursue public investment of any kind.

    (2) The elite will not allow any outflow of taxpayer funds that does not flow directly to the elite.

    (3) If the government builds something that creates value, the elite will eventually steal it, and then crapify it.

    (4) We should be moving away from our central distribution system anyway. A more robust and efficient decentralized system is the way we need to go.

    As an aside, I assume that one reason the manufacturing is off shore is that it is still probably highly toxic. Awareness of PCBs may in fact have started the migration.

  17. McMike

    I do like the principle, it is one everyone should be well-served to remember: when confronted with a sociopathic or otherwise parasitic personality, the best strategy is to find ways to distance yourself – isolate and ignore as much as possible. Make that person invisible in your thinking and planning.

    The challenge in working with pathological personalities is they tend to knock people off their own game, so to speak, as they suck the oxygen out of the room.

    We would do well to just start planning our world as if they don’t exist. This will lead to new habits of thoughts, changes in dialog, and eventually to building our own world independent of them.

  18. lee

    This is an instructive thought experiment. Most of what most of us do serves people mostly like ourselves. What is it the 1% contribute that we cannot better do ouselves or do without?

    Also, a bit more autarky would not go amiss as it would reduce geopolitical vulnerabilities and pressures that militate in favor of the race to the bottom. There is much triumphalist crowing of late about U.S. new found energy independence. Would not greater independence in the products of labor also be desirable?

  19. JTFaraday

    If we thought we could afford to “forget the 1%”– and their assorted enablers– why would we even read this blog?

    The point is not to engage in “a class war.” The point is that the way people are making most of their money today is deeply destructive. There’s simply no slinking off into a corner with yer two bits while hoping for the best.

    Them days is gone.

    1. Brooklin Bridge

      True, the !% need us about 99% more than we need them which is why they have co-opted the legal system, the financial system , the political system, the educational system and just about the entire media system (to mention a few). But that’s already a lot of system and they have been very successful at it. Hard to believe that J.D. Alt is ignoring reality altogether, so I assume this post is intended more as a thought tease than as serious suggestion.

      1. JTFaraday

        Okay, well. If he needs a basic thought experiment like that then here’s a basic answer for him: No, we can’t treat a deeply destructive elite whose aim is to undermine us as if it were a benign one who didn’t.

  20. Noni Mausa

    We can, I suppose, forget the 1% as citizens or consumers, since we hardly ever see them and they don’t consume enough to be of any use to the rest of us.

    But what they really have, far more than mere money, is control. Control of who gets employment income, and how secure that income is. Control of the laws which end up affecting us, never them. Control of which investments and binding promises are legally honoured and which are written off. When you have that sort of control, the actual money is almost irrelevant.

    Noni

    1. ron taylor

      True enough ; but you do not get that control without lots of money involved somewhere along in the process of acquisition .

  21. washunate

    Wow.

    Well, I do applaud the honesty here. I have felt for some time that MMT proponents secretly believed that we should ignore inequality, kleptocracy, the concentration of wealth and power. Between the post from Wray earlier this week and this one from Alt, it appears they are now more comfortable acknowledging this reality.

    1. lee

      I think you are missing the point. Falconry is possible because the raptor is trained in such a way that it does not realize the critters it catches are food. It is never allowed to consume what it catches but eats only from the falconer’s hand. Sometimes a bird makes the connection between what it catches and the food it requires. Then the game is over and the bird will typically fly away.

      The 99% have the physical, technical and organizational skills to provide for ourselves without the leadership or mediation of the 1%. We just don’t quite know it yet and it is toward that insight that the post directs us.

        1. lee

          Consciousness precedes action as in a class not just in itself but for itself. The author’s intent be damned, I find the “we don’t need them” meme, which I derived from my reading, or misreading as the case may be, to be quite powerful.

          1. washunate

            I heartily agree we don’t need them. Are you suggesting that people have a high regard for banksters and their ilk?

            The point is, the top 20% (give or take) of the population doesn’t leave the rest of us alone. Rather, they prey on the bottom 80%. Have you missed that part of what’s happening, from the two-tiered justice system to the national security state to environmental devastation to the assault on public education? The wealthiest 20% of Americans control almost all of the wealth of the nation.

            http://www2.ucsc.edu/whorulesamerica/power/wealth.html

            1. lee

              I don’t disagree. Iwas riffing on a confidence building political slogan or maybe a bumper sticker. “The 1%: they need us, we don’t need them.”

  22. Dan Lynch

    This article sums up what is wrong with MMT, IMHO.

    Inequality is the DISEASE of our age. If you don’t believe me, watch Richard Wilkinson’s video: http://youtu.be/cZ7LzE3u7Bw

    MMT has no plan to address inequality. No plan to reduce the Gini to Scandinavian levels. Instead, MMT says about the poor “let them eat minimum wage dead end jobs.”

    It’s true that taxes do not serve to “pay for” government spending, and it’s important to know that. It’s true that we should not make new social programs dependent on new tax revenues, except as necessary to control inflation. But progressive taxes do serve to reduce inequality, and that’s worth doing. You cannot reduce the Gini to Scandinavian levels without taxing the bejesus out of the rich.

    I’m surprised and disappointed that Yves posted this article. I expect this sort of apologetic drivel from MMT, which is after all bankrolled by a 1%er, but I thought Yves and Lambert were smarter than that?

    1. Peter L.

      @ Dan Lynch,

      I sympathize with your comment, however, I think it is worth noting, that, to an extent, many people are “ignoring the 1%” (not terminology I am comfortable using, b/t/w) and having some success doing so. So far the best work on this I’ve seen is from Gar Alperovitz, who has been documenting the worker owned and or controlled enterprises across the United States. It is more complicated than “ignoring the 1%” but many people are being forced into that position. If you or anyone hasn’t seen it, check out the Community Wealth website (http://community-wealth.org/), and Gar Alperovitz’s own website.

      Alperovitz says that because of desperation, many people have given up hoping that “the 1%” are going to provide positive contributions to society, and especially their local communities. In some cases this is leading to positive developments, as people figure out democratic ways to organize industry that can really sustain a decent living.

      To me a paradoxical aspect of a proper understanding of money and taxes is that one quickly comes to the conclusion that we do not have a financial problem, but instead very serious political problems. So I agree with Dan Lynch that to literally ignore “the 1%” seems to be neglecting the political crisis that people falling under the MMT umbrella actually help to identify in the first place!

      (I don’t agree that the article sums up what is wrong with MMT. I think the idea is worth talking about, even if it seems politically naive, especially because a more charitable reading of what Alt is saying is possible.)

        1. allcoppedout

          I didn’t know this Econ. Thanks for the information. MMT is a reasonable thought experiment on money. A bit like standard big bang physics it starts to have the impossibly big occupying nothing as it approaches the singularity of politics. Playing with the maths doesn’t help much even in physics, other than taking us to the inscrutable deferment of origin. MMT is obviously no good if it just adds to Mugabe’s fleet of Mercedes, wonderful with other outcomes.

          There’s enough empty land in Saudi about the size of Austria that could power the world (hydrocarbons and ammonia from air or such to transport it). Now, not even with our poor choices generally, we presumably would want to take some precautions to stop the Saudis ruling the planet. MMT has snags.

          1. Lambert Strether

            I hear this argument over and over again. I can’t imagine why it persists, and the only reason I can think of is that IT IS SO FUCKING STUPID.

            Here it is:

            MMT is obviously no good if it just adds to Mugabe’s fleet of Mercedes

            Let’s parse that, shall we?

            The third law of thermodynamics is obviously no good if it just adds to Mugabe’s fleet of Mercedes.

            Except you don’t get the internal combustion engine without, ya know, physics and chemistry. In the same way, you don’t automagically get your preferred outcome, politically, from an accurate description of how money is created — or any other economic theory. Just a huge category error. It’s like blaming your plumber for the architecture of your house.

            And through constant repetiton, it really is attaining the status of a Big Lie. It’s appalling.

            1. EconCCX

              @Lambert you don’t get the internal combustion engine without, ya know, physics and chemistry. In the same way, you don’t automagically get your preferred outcome, politically, from an accurate description of how money is created — or any other economic theory. Just a huge category error.

              I’ll gladly agree that MMT’s objectively false portrayal of money creation is a matter separate from its destructive, plutonomic policy prescriptions.

              But would you agree that MMT is laced with policy prescriptions and that their outcomes are legitimate matters of debate? If so, no category error.

            2. allcoppedout

              My, my Lambert, have you got the wrong end of the stick. You must be some kind of adherent to react such. Nernst’s postulate hardly equates with something like MMT. NP is a law of science, of stuff humans don’t influence (though we mess about beyond absolute zero these days and strangely this turns out to be at temperatures above it). MMT is clearly in the remit of human and institutional behaviour. The category error is yours.

              I’d take Yves rebuttal that MMT is funded as the Koch brothers and others do with various groups. Kelton, Hudson and others are unlikely to find Mrs Thatcher wonderful. I just didn’t know there were any rich establishment advocates of MMT and was grateful for that information.

              As to Mugabe and his disaster, the point is merely that one could do MMT’s money-printing as a crook, so that aspect of the theory can’t be the only one and there must be a run up against the ‘global’. Most knowledge runs up against counter-examples (Gettier’s are the most famous) as we should know from the problems with formal logic, theories of truth and knowledge justification. This remains a problem even in science’s mathematical theories, as approximation is key in deciding what these will be (Gunther Ludwig). Some good stuff at Stanford EP online if anyone is interested. There are no simple explanations.

              One can justify Lambert’s outburst as an eristic component of argument. It can be important, perhaps especially amongst friends, to let others know you are pissed off. I manipulate physics and chemistry quite well for a biologist and built a kit car once. My brother, a linguist, was always the better mechanic. I’d say the very idea of an economics separate from politics is just another positivism leading to the unwarranted abstraction of method and how it applies in human affairs, There is no equivalent of building a combustion engine guided by physics and chemistry in the sense of economic theory to social outcomes.

              We can’t even put science to work without restrictions. We don’t, for instance, exactly put nuclear technology into the public domain. MMT is hardly alone in needing to explain how it could operate once grounded to the world economy. It might have, metaphorically, problems similar to hot fusion (grounding screws it).

              I take Neurath’s view on science:
              ‘To theorize about society is inseparable from theorizing for and within society. Science is in every sense a social and historical enterprise. It is as much about social objectives as it is about physical objects, and about social realizations as much as about empirical reality’.
              He was an Austrian in economics, yet put welfare over profits.

              MMT seems a good candidate to me for international distributive justice – you could start here at – http://plato.stanford.edu/entries/international-justice/

              It seems to me that dealing with the Mugabes of this world and our even more bloated examples is not stupid but essential in practical learning transfer efforts in order not to get decent ideas like MMT into practice rather than sucked into the black hole of neo-liberalism. Fred Soddy and Max Weber (on lytric systems and a couple of honest adding machines) were around long before MMT. We still don’t have the honest adding machines, though we do have all the technology other than the honest social bit.

              Iced tea in the perma-garden Lambert? I promise to leave my sharpened mango at home.

      1. Yves Smith Post author

        Oh puhleeze. Mosler is not funding MMT. It comes out of a tradition (chartalism, Wynne Godley). The leading academics are at UMKC. Please show me any grant programs or chairs that Mosler has funded.

        1. EconCCX

          He has also helped to build an infrastructure to mint new modern monetary theorists, helping to found the Center for Full Employment and Price Stability at the University of Missouri-Kansas City, and financing a small army of graduate students. “Someone once said that economics advances one funeral at a time,” Mr. Mosler said, chuckling. “The hope is that we have a generation of economists coming up who really understand how things work and can put those ideas to a public purpose.”

          Warren Mosler, a Deficit Lover With a Following – NYTimes.com

          MMT also has a platform on Forbes.

          http://www.forbes.com/sites/johntharvey/

          MMT’s anti-tax money-creation message is manna to the 0.1% because the NFA its policies create, Treasury Bills, work unto eternity as clearance money to accrue bottleneck resources, while its accompanying deposit currency has the debt deflation characteristic, and is thus rapidly extinguished via interests, bank fees and the repayment of prior debt.

          1. Ben Johannson

            So MMT is anti-tax (except it isn’t) and loves Treasurys (except that it recommends no longer issuing them). We can therefore judge your argument as true so long as we begin by accepting your argument is false.

            Wonderful.

          2. EconCCX

            @Ben Johannson

            Does this suffice as an anti-tax message? It’s not that they shouldn’t exist; it’s that they curtail employment and aggregate demand, and are too high.

            So then why does the Federal Government tax us?

            Answer: to take away some of our spending power.

            Why would it want to do that?

            Because if it didn’t, then our spending of all the income and profits we make, plus all the Federal Government’s spending, would overwhelm the markets and cause prices to go higher and higher. There would be too much spending power chasing too few goods for sale. That’s called inflation.

            So what does government do?

            They tax us to take away some of our spending power, so their spending, combined with our spending, doesn’t cause inflation.

            That’s why the Federal Government taxes us. Not to get money for them to spend. They don’t use money when they spend. They just change numbers in our bank accounts.

            So what’s the right amount to tax?

            If they tax too much, we don’t have enough spending power to buy what’s left for sale after the Federal Government is done with its spending.

            And that’s exactly what’s happening now. We can build a lot more cars and houses and other goods and services that we’d then like to buy.

            But the Federal Government has taxed away too much of our spending power, so sales are way down and unemployment sky high.

            Can the Federal Government go broke or run out of money if it taxes less then it spends and runs a deficit?

            How can it? It’s just changing numbers in our bank accounts in its own monetary system run by its own Federal Reserve.

            Why do they say deficits are bad?

            Because they don’t understand their own monetary system and it’s ruining our lives!

            Will lower taxes today mean higher taxes later?

            Every year, taxes can be adjusted to make sure we have enough spending power to buy whatever we can produce and want to have.

            Taxes only have to be raised if we have too much spending power, and the economy is doing so well and unemployment is so low we want to cool things down with a tax increase, to keep inflation where we want it.

            So lower taxes today mean prosperity today, and higher taxes later only if things get ‘too good’ and we get worried about inflation.

            Warren Mosler via The Center of the Universe » Blog Archive » Federal Taxation (for Dummies)

          3. EconCCX

            @Ben Johannson

            So MMT is anti-tax (except it isn’t) and loves Treasurys (except that it recommends no longer issuing them)

            Again, here’s Mosler on Treasuries. The world’s dollar savings to the penny. Message: increase spending, lower our taxes and don’t take away our savings accounts. Just as I said.

            MMT to President Obama and Members of Congress:
            Deficit Reduction Takes Away Our Savings

            SO PLEASE DON’T TAKE AWAY OUR SAVINGS!

            Yes, it’s called the national debt, but US Treasury securities are nothing more than savings accounts at the Federal Reserve Bank.

            The Federal debt IS the world’s dollars savings- to the penny!

            The US deficit clock is also the world dollar savings clock- to the penny!

            And therefore, deficit reduction takes away our savings.

            SO PLEASE DON’T TAKE AWAY OUR SAVINGS!

            Furthermore:

            There is NO SUCH THING as a long term Federal deficit problem.

            The US Government CAN’T run out of dollars.

            US Government spending is NOT dependent on foreign lenders.

            The US Government can’t EVER have a funding crisis like Greece-
            there is no such thing for ANY issuer of its own currency.

            US Government interest rates are under the control of our Federal Reserve Bank, and not market forces.

            The risk of too much spending when we get to full employment is higher prices, and NOT insolvency or a funding crisis.

            Therefore, given our sky high unemployment, and depressed economy,

            An informed Congress would be in heated debate over whether to increase federal spending, or decrease taxes.

            Warren Mosler – The Center of the Universe » Blog Archive » MMT to President Obama and Members of Congress:

        2. washunate

          Yves, if you are in contact with Professor Wray, an interesting question for him would be if he thinks that JG jobs should pay close to what he makes, or if he thinks that public policy should explicitly create wage inequality.

    2. Calgacus

      MMT has no plan to address inequality. No plan to reduce the Gini to Scandinavian levels.
      Yes it does. The best one. The only one that has ever worked. The one that worked in Scandinavia, and made their societies more egalitarian. The one that worked spectacularly well everywhere in the world, including the USA, until the fall of the economic dark age, the decades of stagnation, in the 70s. Full employment (or usually, something not as absurdly far from it as we have now, at the 1%ers behest.)

      Instead, MMT says about the poor “let them eat minimum wage dead end jobs.”

      A JG would spectacularly reduce inequality and is by far the best means to do so. Poor people would get much more money, especially when they needed it, when the 1% traditionally wage their class wars, when inequality rises, during recessions. And it would not be an inflationary handout a la the idiocy of a stand-alone (big) BIG, but the real world expression of a human right. Tax rates can go up and down, and of course progressive soak the rich taxation would be dandy. But true human rights, like the right to a job in a monetary economy, once achieved and understood, are very rarely lost.

      Poor people are intelligent enough to understand that a JG would be crucial progress, and support a guaranteed job more than wealthier people, more than proposed alternatives. The more money one makes, the less logically and morally defensibly one tends to think about it – partly due to education in the risible, insane raving which composes most “economics.”

        1. Calgacus

          There’s the Yougov poll based on Jesse Myerson’s Rolling Stone proposals. The JG was the most popular proposal, supported by 53% of those who expressed an opinion. Looking at the full results, one sees support for a JG and a BIG (not clear if “big” or “small”) declining as income goes up.

    3. ron taylor

      ” taxes do not serve to “pay for” government spending ”

      This nonsense must stop – it is endlessly confusing as well as conflating meanings of linquistics . If the gov stopped spending would people still ” pay taxes ” ? If so , for what ? If not , why not ?

      1. Yves Smith Post author

        Taxes are to legitimate the currency and drain savings (prevent inflation). MMT explains that clearly. They can also be used to redistribute income and to discourage activity (sin taxes, like tobacco and alcohol taxes).

        1. EconCCX

          @Yves Taxes are to legitimate the currency and drain savings (prevent inflation). MMT explains that clearly.

          It explains this via the objectively false assertion that Federal Reserve Banks are under the command and control of the US Government and thus can be compelled to mark up the Government’s balance at will. They’re private clearing houses owned by their member banks, and have the note-issuing franchise that the national banks had through 1935, and pay a franchise tax for the privilege.

          The Treasury General Accoung is the government’s asset and the Reserve Banks’ liability. Taxes thus convey one form of FRB liability, Reserves, into another form, the TGA. Whereas in Stephanie Bell’s 1998 depiction, an FRB is merely the US Government under another stripe, extinguishing its own liability and creating its own asset.

          http://estes.levy.org/pubs/wp244.pdf

          My local bank discloses its Reserve Bank shares and dividends on its financial statements. MMT utterly depends on its false portrayal of Reserve Banks to support its assertion that taxes do not fund government.

          1. Ben Johannson

            The Federal Reserve is the agent of the Treasury:

            (0:39:50) Ch. Bernanke: Well first let me say, of course, Congress sets the mandate for the Federal Reserve and so Congress has the right, of course, to set the mandate any way it likes.
            ****************
            1:34:25) Sen Toomey: So clearly there were plans regarding how to deal with processing of Fed payments, for instance, and other things. Could you give us a sense of what those plans consist of and what you can tell us of those plans?

            (1:34:39) Ch. Bernanke: Well, my memory won’t be complete, but we looked at our systems and our ability to make payments to principal and interest holders. For the most part we found that we were able to do that with a few possible exceptions – people holding savings bonds and few things that are not as easily connected to the system. We also had some discussion of the kind of policy we would have with banks – with discount window lending would we accept a defaulted treasury – all kinds of things that were contingency planning if this were to happen. What we did not do was directly engage the private sector for any contingency planning. We were mostly looking at our internal systems and our ability to address whatever directions – we are the agent, of course, of the Treasury and it’s our job to do whatever they tell us to do. We were just working through our capacity both as an agent and managing the payment system and also as a bank supervisor to deal with a possible default if the debt ceiling was not raised.

            http://www.c-span.org/video/?312894-1/us-economic-outlook

  23. Curtis

    All these comments sound a lot like the hippies who took to the hills here in Northern Ca and are now in the small organic farmer’s market game. Check out Resilience.org.

  24. Brooklin Bridge

    J.D.Alt’s breezy description of “all it takes is to ignore them” is a rhetorical device intended to make one think more than an attempt to ignore the reality of legal and financial shackles the 1% has welded on to the rest of us. At one level it’s true, the bonds are made up of the Emperor’s clothes. If no one went to WalMart, it would collapse. Another chain would take it’s place of course – but ultimately, with persistence, which is what J.D.Alt breezes over – it would become irrelevant and then simply collapse as would the system that keeps it in place.

    As other commenters have been quick to point out, however; it simply isn’t that easy, even as a thought experiment if we keep reality as part of the experiment conditions. The bonds of habit, belief and fear are better than steel so a breezy revolution in which we ignore the 1% simply isn’t going to happen. And those bonds are made up of more than just fear for the next pay-check, more than the propaganda and ideologies designed and disseminated with subjugation in mind. We have real para military police forces with real and very sophisticated technology that the 1% are counting on. And they are now international (think of: the US along with a bunch of European countries as well as Russia all salivating over their next meal in Ukraine). And even more than police and military force, we have a system of jurisprudence that has been totally co-opted to enforce the poverty (asset stripping) and dependency of the 99% on the 1% (Again think of Ukraine and putting in new Western friendly oligarchic Presidents at Obama’s whim – (not defending Putin)).

    If we stopped going to the WalMart(s), or started producing generators for ourselves, a whole slew of new laws would suddenly appear making our independence from the 1% progressively more difficult exactly as happened for the Occupy Wall Street protesters who were prevented by well organized paramilitary forces from even meeting in public. There would be a sudden new war. The deficit that doesn’t exist would suddenly mean massive austerity. The ideology machine would crank up full force. New mandated programs requiring purchase in WalMart like chains would suddenly appear out of nowhere for our protection.

    The most critical component of being rich is to watch others who are in poverty by comparison suffer and like any drug, that high of comparative advantage needs ever more stimulus to maintain itself -as is becoming very clear now- and that means ever more stark poverty and suffering for the 99%. It’s true we don’t need the 1%, but they desperately need us in a sick and twisted way and they will not give that up without the ferocity of the addict; without a fight in which they give little or no thought to the consequences for the 99% or even for themselves.

  25. Matthew G. Saroff

    The problem is that for Wall Street in the US, and the City in the UK, these people are not separated from us.

    They are a parasite, and we are the host, and they make their money from extracting rents on the rest of us, whether it be front running/HFT or other corrupt business practices.

    I’ll not argue taxes, but I would suggest that we need a zero tolerance criminal law enforcement regime similar to the one that is applied to corner drug dealers:

    Long jail times, asset forfeiture, etc.

    1. J Sterling

      Yes. Alt’s solution addresses the problem of rich people taking purchasing power away and just not using it. But if the strategy he proposes were to start to bite, they would not continue to leave their money unspent. They would spend it, differentially. On thugs, astroturf, politicians, lawyers, and so on and so on.

      Ignoring will solve the problem of money unspent; it won’t solve the problem of money spent on a hostile campaign.

  26. susan the other

    I liked Alt’s little parable. Because trade is almost unnecessary in a technologically modern world – a world that needs to become self-sustaining asap. Ukraine is in a mess because Ukraine has not kept up with the times and cannot be globally “competitive” – but this plays into the hands of the 1% who want to financialize the uncompetitive world via loans, trade pacts and austerity. Everybody knows this nonsense doesn’t work. If we gave Ukraine all the technology it needed to have a functioning, self-sustaining economy it would not have to go hat in hand to either the EU or Russia. So yes, Alt is right on the money here when he proposes countries do their own manufacturing and take responsibility for their own progress. It would serve the US and the world far better to provide the know-how and equipment to other countries so they could do just this. And clearly we should do it ourselves. Just cut the financiers, the 1%, out of the picture and make them come up with their own ideas. Since they have been totally bereft of ideas for at least 4 decades now it is unlikely they will have any bright ideas now – just the same old paradigm of financialism. This change in the way the world does business – on a self-sustaining platform – would do more to rid us of the scourge of the 1% than anything else. But there are also lots of things we can address as a sovereign nation to put ourselves right. As long as we aim our arrows at the heart of private finance which is controlled by the 1%ers we will succeed in controlling them. It goes without saying that in order to put them back in their cage, we need laws against their casino capitalism that are strictly enforced because we have to protect our sovereignty and currency against them.

  27. Brooklin Bridge

    (tried posting this earlier and it was dissapeared – I’ll try it in pieces)

    J.D.Alt’s breezy description of “all it takes is to ignore them” is a rhetorical device intended to make one think more than an attempt to ignore the reality of legal and financial shackles the 1% has welded on to the rest of us. At one level it’s true, the bonds are made up of the Emperor’s clothes. If no one went to WalMart, it would collapse. Another chain would take it’s place of course – but ultimately, with persistence, which is what J.D.Alt breezes over – it would become irrelevant and then simply collapse as would the system that keeps it in place.

    As other commenters have been quick to point out, however; it simply isn’t that easy, even as a thought experiment if we keep reality as part of the experiment conditions. The bonds of habit, belief and fear are better than steel so a breezy revolution in which we ignore the 1% simply isn’t going to happen. And those bonds are made up of more than just fear for the next pay-check, more than the propaganda and ideologies designed and disseminated with subjugation in mind. We have real para military police forces with real and very sophisticated technology that the 1% are counting on. And they are now international (think of: the US along with a bunch of European countries as well as Russia all salivating over their next meal in Ukraine). And even more than police and military force, we have a system of jurisprudence that has been totally co-opted to enforce the poverty (asset stripping) and dependency of the 99% on the 1% (Again think of Ukraine and putting in new Western friendly oligarchic Presidents at Obama’s whim – (not defending Putin)).

    1. allcoppedout

      In animals, the 1% (leadership) role is quickly taken over by previously ‘pleb’ individuals in which it was latent and may even involve such as a sex change. The leadership-followership dynamic is odd in that we want to control both. Rid ourselves of the 1% and it will grow back from us.

      I like the idea that we could get on with funding what we need – green power, decent health and care services and such. Given we can magic-up the money and have the labour what is the real sky-will-fall obstruction. Screen love affairs always have obstructions, like WW2 or crass parental objection on class or race. The romance ending might be a green-powered real democracy from the Urals to California. What logic forms the obstruction?

      1. Brooklin Bridge

        If there is a sky-will-fall-on-our-heads objection, it might be the billy clubs wielded by the goons you mention below, or a more modern equivalent. If we are to survive as a species AND maintain something akin to our current technological level, we will have to evolve so that greed and ego and other pathological impulses are smaller factors or so that we have better control over them. If we stay as we are now, our extinction is simply a matter of time; probably not much of it either.

  28. Brooklin Bridge

    If we stopped going to the WalMart(s), or started producing generators for ourselves, a whole slew of new laws would suddenly appear making our independence from the 1% progressively more difficult exactly as happened for the Occupy Wall Street protesters who were prevented by well organized paramilitary forces from even meeting in public. There would be a sudden new war. The deficit that doesn’t exist would suddenly mean massive austerity. The ideology machine would crank up full force. New mandated programs requiring purchase in WalMart like chains would suddenly appear out of nowhere for our protection.

    The most critical component of being rich is to watch others who are in poverty by comparison suffer and like any drug, that high of comparative advantage needs ever more stimulus to maintain itself -as is becoming very clear now- and that means ever more stark poverty and suffering for the 99%. It’s true we don’t need the 1%, but they desperately need us in a sick and twisted way and they will not give that up without the ferocity of the addict; without a fight in which they give little or no thought to the consequences for the 99% or even for themselves.

  29. John

    “So my example is this: Why doesn’t President Obama propose that since the 1% have no interest in doing it, the U.S. sovereign government build a plant to manufacture very-large transformers, ”

    Mr. Alt, don’t you realize that President Obama is transitioning from minion of the 1% to full up-to-date membership. He’s drunk the kool-aide. Just as Billy Bob Jeff Clinton did, he will take the payday after leaving office when he gains full membership. Full payment for services rendered.

    MMT addresses monetary operations well. It mentions “public purpose” occasionally, but never addresses how to deal with that very political non economic issue. Aas if it would just take care of itself. Good luck with that.

    Remember, oligarchs have a public purpose: Neoserfdom.for the 99%.

    Among MMTers, there is plenty of talk with regulatory capture, accounting control fraud and even the use of taxes to discourage undesirable things. Besides inflation, I would use taxes to crush oligarchy. That would be noble public purpose.

    Oh, you are correct in one sense. We should be working on defining what good public purpose would be, beyond a sustainable electric grid, so that when we crush the oligarchy, there is a plan.

    Buddhists talk about the integration of method and wisdom to achieve liberation. In this realm, MMT is just method, the wisdom will arise in clear and good public purpose.

  30. allcoppedout

    We might ignore the 1% as suggested, but it’s tough to ignore their goons with the pepper spray and eviction notices.

    We should sequester the lot of them to the innovative gutter they claim to have sprung from through genius. This massive necessity is the mother of invention experiment would not doubt lead to massive growth as their ingenuity caused multiple phoenixes from the ashes. I like this idea of trickle-up economics.

    Their money could be put into a green investment bank as an experiment on whether we plebs can actually organise a piss up in a brewery.

    We could do both the above and such as jubilee as a sophisticated thought experiment. What stops even the thought?

  31. Beppo

    We should do the opposite of forget, we should remember, we could have a big parade every year where we remember the dearly departed. It’s so sad that you’re gone forever, bye bye :-)

  32. Derek R

    The 1% don’t just own most of the money, they also own most of the oil wells, the best farmland, the mines, the prime downtown real estate, Sure the 99% could ignore them, their money and their possessions. But only if the 99% is prepared to give up any claim to all those natural resources. That would be a high price to pay.

    1. jrs

      Exactly. And don’t they also increasingly own more and more of even ordinary single family and apartment real estate given how that market was deliberately encouraged to become investor dominated? Just another thing they own, the oil and farmland and mines are more valuable, but owning the ground beneath our feet isn’t small. Also at this point do we also have to give up any claim to “our” government as they own that as well?

      Really I think a multi prong strategy is needed. We need to do the things we would do even if the 1% didn’t exist! We can’t squander all our energy in defensive battles with the 1%. But we also can not ignore the fact that the 1% does indeed exist.

      1. MyLessThanPrimeBeef

        There ought to be things that we would do even without the 1%, but which would also address inequality.

  33. jrs

    Incidently can’t you just imagine the transformers somehow running afoul of the TPP, somehow. That is the power of the 1%. We ignore them and they declare all our environmental, regulatory, labor laws etc. illegal. EVEN IF they are implemented on a strictly local level. Many states have outlawed municipal level broadband. The TPP is that on steroids, we build our municipal broadband and even if the state allows it under whatever popular pressure, it’s declared afoul of the TPP (it reduces expected profits to which they have a divine right) and out it goes. So much for ignoring them. The TPP is a declaration of war. You can’t ignore the war when the bombs are going off.

  34. allcoppedout

    The theory’s (MMT) followers come mainly from a couple of institutions: the University of Missouri-Kansas City’s economics department and the Levy Economics Institute of Bard College, both of which have received money from Mosler. But the movement is gaining followers quickly, largely through an explosion of economics blogs. Naked Capitalism, an irreverent and passionately written blog on finance and economics with nearly a million monthly readers, features proponents such as Kelton, fellow Missouri professor L. Randall Wray and Wartberg College professor Scott Fullwiler. So does New Deal 2.0, a wonky economics blog based at the liberal Roosevelt Institute think tank.

    It seems Mosler’s funding is well-known and extends to a fair number of graduate students.

    In physics we often imagine some point in the future to understand more of now. Sooner or later it’s all photons (Roger Penrose) and so big as to be incredibly small. There’s a lot of maths in MMT that have internal consistency but may well break down in much less extreme circumstances than the speed of light or whatever we replace big bang with. I might do something sophisticated with this if I get any time, but my feeling is the sums are a bit of an irrelevance. I suspect the internal consistency relies on externalities. On might think Godel here, but really accounting systems have become so corrupt they are more difficult to follow than tensor field equations incorporating dark matter and energy.

    One might think of a distant situation with MMT working and what we would be seeking to control. I’d argue key issues would be Mugabe-like, a very standard theme of resource allocation and corruption prevention, whether all the money still slides to the likes of Mosler and the accounting tautologies of MMT survive what this future ideal-type situation actually is. The justification of output as equating to a summation of spending seems unlikely to survive without substantial change in the future ideal-type situation in comparison to now.

    Some may associate Relativity with the extreme of the speed of light, but it also furnishes the only accurate explanation of why lead-acid batteries provide as much power as they do. MMT may still be Newtonian, though most of the physics we use still is. My feeling is it remains more of a parable and a valuable one. Physics can predict the future as in where stars and galaxies will be, or how to get to Mars. Economics just doesn’t work like that.

    Susan very sensibly said we should sort the Ukraine out by giving it what it needs to be a self-sustaining country. Of course we should. MMT in a big enough trading block done honestly would help. But then South Korea hasn’t done that badly without it and Zimbabwe would be as bad with or without it under Mugabe. I only wish this thinking was FS. There are still places on this earth where you can change the economics by giving tribesmen a couple of AKMs and a thousand rounds of ammunition. I doubt Lambert will sell many MMT bibles there.

    http://www.washingtonpost.com/business/modern-monetary-theory-is-an-unconventional-take-on-economic-strategy/2012/02/15/gIQAR8uPMR_story.html

    1. skippy

      “Civilization is a movement and not a condition, a voyage and not a harbor.” [Arnold Toynbee]

Comments are closed.