The Alternative to Regulation

Understanding the technology of money is, in my humble opinion, critical path knowledge. Knowing that money is a social construct, a measurement, not a commodity, so all shortages of money are artificial is essential to clearing a path toward better societies and healthier relationships with nature.

That we could have a kinder, more sustainable world is really not hard to believe, given how arbitrary suffering appears in current circumstances. I’ve read that just $30 - $85 billion would end world hunger, for one example. The U.S. spends more than that on single weapons systems (about $100 billion for “Star Wars” missile defense...and it still doesn’t work).

Perhaps the current princes of this world believe that inflicting suffering on the population is a better motivation, or more reliable in insuring their continued power and position. But even a dog trainer will tell you rewards are more reliable than punishments at motivating their charges. (And, if nothing else, the current #metoo scandals remind us we aren’t that different from dogs.)

So...as part of waking up to the alternative of a kinder / more sustainable world, we need to realize we can use money to reward, rather than regulation to punish. That’s the sense of the We Pay versus You Pay article below.

We Pay versus You Pay

Posted on January 2, 2018 by J.D. Alt | 11 Comments

The New Regulatory Regime of Modern Fiat Money

By J.D. ALT

I was momentarily taken aback to read in the Washington Post that a primary reason Donald Trump was elected president of the United States was because of a little swampy area in the middle of an Iowa farmer’s cornfield. The cornfield in question belongs to an Angus beef farmer named Annette Sweeney who was both incredulous and outraged by the Obama administration’s new regulations on Clean Water. The regulations, known as WOTUS (Waters of the United States), established that the 1972 Clean Water Act applied not just to just major bodies of water, but also to their headwaters which, by circuitous routes, feed them. This headwater stipulation, by definition, included a ½ acre swampy place in the middle of the cornfield Annette Sweeney’s family had used to feed their beef cows for over two generations. This meant that the cornfield she thought belonged to her family was now essentially under management of the federal government—which stipulated requirements for new inspections and permitting regimes costing her thousands of dollars and untold hours of strife just to be allowed to plant feed-corn without garnering federal fines. Not only did Annette Sweeney vote for Donald Trump, she became a political activist advocating, successfully, against government regulations of virtually any kind whatsoever.

Reading her account, I too was incredulous and outraged—but for a different reason: I realized, suddenly, that farmer Sweeney’s story represents a perfect example of the failure of our political imaginations to come to grips with, and effectively utilize, the reality of the fiat-money system we have actually been using now for over half a century. We continue, in other words, to make ourselves miserable simply to maintain allegiance to an outdated macro-economic myth.

To be specific, the WOTUS regulation imposed by the Obama Administration was, first of all, based on irrefutable and pragmatic logic—namely that if you dump manure and pesticides and fertilizer into the headwaters of a community fishery or drinking-water reservoir, you will poison a critical resource shared by the larger community of people. That is the proverbial no-brainer that even farmer Sweeney (according to the article) is in total agreement with. The problem is NOT that we cannot agree that we shouldn’t poison the water we all share; the problem is that we believe our sovereign government (our collective self) doesn’t have the financial resources available to pay for addressing the problem. The problem—which is a collective problem—must therefore be paid for by the private individuals who happen to occupy the place where the problem is occurring. And this solution is imposed by means of “regulations” which, in essence, establish how and in what way the private individual must do the paying.

This regulatory strategy—necessary to protect the public good—is predicated upon a macro-economic calculation, as I suggested earlier, that says the State cannot collect enough tax dollars to pay for the work, the materiel, or the technology that a practical solution entails. The labor may be sitting idle on the fence, the tools and equipment may be sitting idle on the shelves of a nearby AA-Rental—but the State simply does not have the dollars to put them to work. Therefore, the State has no choice—in the interest of the public good—but to impose its “regulatory regime” requiring, in essence, that Annette Sweeney use her financial resources to put the labor and the tools to work. Or alternatively, to accomplish the same public good, by simply ceasing her farming operations and allowing the land to return to its original, unpolluting state of swampiness. This is what I would call the “You Pay” regulatory strategy of our old macro-economic myth.

A proper understanding of Modern fiat-money, however, makes possible an entirely different approach—and it is very straightforward and simple one: Instead of “regulating” dollars out of Annette Sweeney’s pocketbook, offer her the opportunity to earn a fair payment for building and managing the bio-retention swales and systems that will keep her little headwater clean and clear. Since she already agrees it would be beneficial and “community-minded” to do so, it seems likely she’d be happy to take up the cause—and add the compensation to her annual cash flow. This is what I would call the “We Pay” regulatory strategy of modern fiat-money. What could be simpler? What could be more effective? What could be more sensible?

And all it requires is a simple “reality-based” understanding of our modern money system.