Here are a couple of emails written in response to some climate activists who reject the Green New Deal (GND) and embrace an incrementalist approach proposed by the "moderates" (AKA "realists" AKA "reasonable people") ... like the Washington Post's editorial board. They say we can fund all kinds of environmental policies that would lead us to treat the planet better, but the idea of including social safety net programs that would let us treat each other better...apparently that's a bridge too far (and the climate activists agree!) Holy shmackerel! With friends like these, the planet doesn't need enemies!
Here are the mails...
I would respectfully disagree that the Washington Post's proposal is "efficient, effective, ...and achievable." It's focused, OK, but on whatever favors the 1%. The tax and dividend policy it suggests aligns with [Citizens' Climate Lobby, an organization promoting carbon tax whose proceeds are refunded to the population], but there are plenty of other side trips it takes.
For one thing the editorial immediately discards any mitigation for job shifting that the 99% might enjoy, saying proponents of the GND "should not muddle this aspiration with other social policy, such as creating a federal jobs guarantee, no matter how desirable that policy might be."
Really? So what's the plan to tell our coal miners and oil drillers? Let's all move to California and learn to write software? The GND is a *DEAL* above all else. Without compensation for those displaced--and there would be lots of displaced workers--it's a non-starter.
Then there's the plea for "Fiscal Responsibility™": "the country cannot afford to waste dollars in its pursuit. If the market can redirect spending most efficiently, money should not be misallocated on vast new government spending or mandates."
How about the government-funded research that discovered the transistor, the integrated circuit, the internet, the touch screen, roughly 75% of pharmaceutical innovation, GPS, etc? Why is government always a wasteful "misallocator"? Answer: the 1% can't control it as effectively as a privatized program.
Note that the Kochs funded the work of James Buchanan, who authored "Public Choice" economics (vouchers for everything!) which said the public sector *always* gets it wrong. As if to make Buchanan's work a foregone conclusion, Newt Gingrich's congress laid off the experts advising congress (See Why is congress so dumb?).
Of course government misallocates, while the private sector does not. That's why PG&E is cheaper than SMUD… Oh wait! [Sacramento Municipal Utility District power is cheaper]
So the Post is promoting theological economics. God has an "invisible hand" and all will turn out OK if we minimize any meddling from government and let wise Mr. Market handle our thinking automagically! Only the private sector can save us!
Incidentally, this insistence on discrediting government as a religious exercise is the point of all the recent attacks on it. Discredit it, under-fund it, and sure enough people will clamor to privatize even more of the public realm. The UK is doing that with its National Health Service now. In the U.S. Trump could have had his wall when he had both houses of congress...but by waiting he got to shut the government down, which was the real point.
The Post continues: "economists know that companies that invest in research and development do not get rewarded for the full social value of their work." See the fruits of the above government-funded research in everything from transistors to pharmaceuticals. Has the iPhone paid royalties for all the government-sourced research it uses? How about for the infrastructure that's not toll roads, or for the education of its engineers? Or how about paying for a good (for now) postal service? Meg Whitman couldn't make ebay work in Russia. Why? Answer: Bad postal service.
The private sector is not interested in funding infrastructure, education or basic research. It's too expensive and risky. That means the GND *must* be public policy, or we will have to submit to an economy that's a series of toll booths! Government has plenty of critical attention since its operation is publicized, out in the open, but it has no monopoly on cluelessness. We didn't read about Enron's board meetings until the bankruptcy trial made that public. Let's not draw too many conclusions from that particular distortion, shall we?
More Washington Post: "[the GND] would cost $27 trillion to get there by 2035 — a yearly price tag of about 9 percent of 2017 gross domestic product. (Total federal spending is currently a bit more than 20 percent of GDP.)"
Wow, now we *really* can't afford it (and have you seen the size of national debt? Holy Mackerel!). Why we're completely out of money!
Truth is that the U.S. is a sovereign, fiat money creator with floating exchange rates and debts payable in the currency it can issue at will. It can no more run out of money than the scorekeeper at the ball game can run out of points.
One recent example: according to its own audit, the Federal Reserve issued $16 - $29 trillion to bail out the financial sector in 2008 (Note: no tax rise; no inflation). For only $9 trillion, they could have paid everyone's mortgage off. Apparently banks are the most important thing...not climate, not the public, not the economy. What's important is the tiny slice of the population that owns most of America's assets.
One reminder: taxes do not provision federal government programs. They can’t. Where would people get the money to pay taxes if government didn’t spend the dollars out into the economy first? Saying otherwise is like believing you can give the ticket taker at the movies your ticket before you obtain one from the theater. Taxes make the money valuable, they do not provision government programs.
Taxes create markets, too. Say the King wants to employ 10,000 soldiers. This is a logistical nightmare to feed, house, train, arm, etc. so many men. What does the King do? He pays his soldiers in the official currency (call them “crowns”). Then he taxes the entire population, payable in “crowns.” The population then scrambles to get crowns from the soldiers by providing them...and themselves...with a market. While there are plenty of nomadic, tribal and other forms of society, there are no historical examples of stateless societies that have markets and economic money. No state; no market.
So...good tax policy is essential to a productive economy, especially one that will have to produce climate mitigation.
Honestly, I've tried to be respectful here, but the distortions of real "solutions" are awful. It goes without saying that without some serious, all-hands-on-deck action about climate, the costs will be far greater than any GND.
That does not stop frequent Washington Post contributor George Will's recent National Review editorial from distorting the GND and Modern Money Theory (MMT) beyond all recognition as he sneers at it. MMT is the source of a lot of what's constructive about the above...So this editorial is not the only clueless thing the Post has published. If you're interested, here's Bill Black's answer to distortions like Will's. The Bee does print Will, but won't print something like Black's response. Back in the UK, though, the Financial Times has been publishing MMT's Stephanie Kelton as she responds to Paul Krugman. In any case, I'll go for a carbon tax (and dividend), but the rest of what the Post says to dismiss the GND is truly reprehensible.
What does Gandhi say? "First they they ignore you, then they laugh at you, then they fight you, then you win” ... One step at a time, I guess.
…
Mail #2 (after some responses)
I’ve got to confess my disappointment that neither of you gets how essential MMT is to success in addressing climate solutions. IMHO, it ain’t optional. And your response to something like me declaring “two plus two equals four”... is “I disagree.”
This is beyond puzzling. You “disagree”…?! I’d suggest, as gently as possible, that we don’t get to vote about this.
For you, somehow government can produce trillions (without raising taxes, or triggering inflation) for bank bailouts or Middle East wars, but even [another correspondent] says "I'd rather see some of the revenue used for green stuff"....as though government needs tax revenue to provision its programs.
Please ask yourself: Where do people ultimately get the dollars? The 2+2=4 answer: The central bank (the "Fed") is the monopoly issuer of dollars. Yet you believe that when government wants to provision a program, must it collect some dollars in taxes? Really? Do dollars really grow on billionaires? Where would taxpayers get their dollars if the government didn't spend them out into the economy first?
Marshall McLuhan says “Only puny secrets need protection. Big discoveries are protected by public incredulity.” True dat.
So it's not "tax and spend"...it can't be. It's "spend dollars first, then ask for some dollars back in taxes." Why have taxes at all? Answer: To make the money valuable. Dollars give us relief from an inevitable liability: taxes. They do not and cannot provision (federal) government programs.
But what about that National 'Debt'? Answer: It's different from household debt, if only because no household can issue dollars to repay its debts, as the Fed can.
National ‘Debt’ is actually more like bank debt. Your bank account is your asset, but to the bank, it's their liability (i.e. debt). When you write a check, you're assigning a portion of that bank debt to the payee. Those dollars in your wallet are simply checks made out to "cash" in fixed amounts. They appear on the books of the Fed as a liability, too. The Republicans understand this completely, hence the bigger deficits in Trump’s budgets...and the economic improvements weighted heavily toward Trump’s real constituents, the plutocrats.
So...Imagine a mob of depositors going down to their bank to demand that the bank diminish its debt (i.e. make their bank accounts smaller). Not a very sensible picture, is it? Yet my congressperson, Ami Bera, sponsored a Pete Peterson ["Concord Coalition"] workshop on how to reduce National 'Debt' (and I made a fuss). So...you're certainly not alone!
What is another name for the dollar financial assets out in the economy? Besides "citizens' savings"... it's "National 'Debt'"... We pass around government IOUs for money. It says so on the dollars (“Federal Reserve Note”). The word “note” is a legal term for an IOU.
The way we allocate the economy's resources is with money. The machinations of that magical capitalist "Mr. Market" got us to climate catastrophe, too. I don't think it's a stretch to say it's going to take something other than the market to get us out of our current hole--as you correctly point out.
The problem with the Nancy Pelosi / Democratic approach (“PayGo”) is that it preemptively sabotages new programs by harnessing their adoption to the same billionaires whose activities got us to climate catastrophe. “We must tax the billionaires!” saps the energy of climate remedies by taking on a needless battle. It also declares National ‘Debt’ is somehow a problem. History debunks that, too.
Anyway, I pray you will come to your senses and recognize how accurate and essential is MMT (the link is to a nice explanation). As for whether the Democrats will save us...I wouldn’t count on that (not to say that R's are better). Nancy Pelosi has already preemptively resigned herself to no new programs without cuts or new taxes, and colluded with much of the Democratic misbehavior of the past. See Thomas Frank’s Listen Liberal: Whatever Happened to the Party of the People? for the whole story there. For his trouble, Frank can’t get published in the U.S. today. McCluhan would understand.
Best wishes for "getting" the above, no requirement that you agree with it. Two plus two can take care of itself.
Here are the mails...
I would respectfully disagree that the Washington Post's proposal is "efficient, effective, ...and achievable." It's focused, OK, but on whatever favors the 1%. The tax and dividend policy it suggests aligns with [Citizens' Climate Lobby, an organization promoting carbon tax whose proceeds are refunded to the population], but there are plenty of other side trips it takes.
For one thing the editorial immediately discards any mitigation for job shifting that the 99% might enjoy, saying proponents of the GND "should not muddle this aspiration with other social policy, such as creating a federal jobs guarantee, no matter how desirable that policy might be."
Really? So what's the plan to tell our coal miners and oil drillers? Let's all move to California and learn to write software? The GND is a *DEAL* above all else. Without compensation for those displaced--and there would be lots of displaced workers--it's a non-starter.
Then there's the plea for "Fiscal Responsibility™": "the country cannot afford to waste dollars in its pursuit. If the market can redirect spending most efficiently, money should not be misallocated on vast new government spending or mandates."
How about the government-funded research that discovered the transistor, the integrated circuit, the internet, the touch screen, roughly 75% of pharmaceutical innovation, GPS, etc? Why is government always a wasteful "misallocator"? Answer: the 1% can't control it as effectively as a privatized program.
Note that the Kochs funded the work of James Buchanan, who authored "Public Choice" economics (vouchers for everything!) which said the public sector *always* gets it wrong. As if to make Buchanan's work a foregone conclusion, Newt Gingrich's congress laid off the experts advising congress (See Why is congress so dumb?).
Of course government misallocates, while the private sector does not. That's why PG&E is cheaper than SMUD… Oh wait! [Sacramento Municipal Utility District power is cheaper]
So the Post is promoting theological economics. God has an "invisible hand" and all will turn out OK if we minimize any meddling from government and let wise Mr. Market handle our thinking automagically! Only the private sector can save us!
Incidentally, this insistence on discrediting government as a religious exercise is the point of all the recent attacks on it. Discredit it, under-fund it, and sure enough people will clamor to privatize even more of the public realm. The UK is doing that with its National Health Service now. In the U.S. Trump could have had his wall when he had both houses of congress...but by waiting he got to shut the government down, which was the real point.
The Post continues: "economists know that companies that invest in research and development do not get rewarded for the full social value of their work." See the fruits of the above government-funded research in everything from transistors to pharmaceuticals. Has the iPhone paid royalties for all the government-sourced research it uses? How about for the infrastructure that's not toll roads, or for the education of its engineers? Or how about paying for a good (for now) postal service? Meg Whitman couldn't make ebay work in Russia. Why? Answer: Bad postal service.
The private sector is not interested in funding infrastructure, education or basic research. It's too expensive and risky. That means the GND *must* be public policy, or we will have to submit to an economy that's a series of toll booths! Government has plenty of critical attention since its operation is publicized, out in the open, but it has no monopoly on cluelessness. We didn't read about Enron's board meetings until the bankruptcy trial made that public. Let's not draw too many conclusions from that particular distortion, shall we?
More Washington Post: "[the GND] would cost $27 trillion to get there by 2035 — a yearly price tag of about 9 percent of 2017 gross domestic product. (Total federal spending is currently a bit more than 20 percent of GDP.)"
Wow, now we *really* can't afford it (and have you seen the size of national debt? Holy Mackerel!). Why we're completely out of money!
Truth is that the U.S. is a sovereign, fiat money creator with floating exchange rates and debts payable in the currency it can issue at will. It can no more run out of money than the scorekeeper at the ball game can run out of points.
One recent example: according to its own audit, the Federal Reserve issued $16 - $29 trillion to bail out the financial sector in 2008 (Note: no tax rise; no inflation). For only $9 trillion, they could have paid everyone's mortgage off. Apparently banks are the most important thing...not climate, not the public, not the economy. What's important is the tiny slice of the population that owns most of America's assets.
One reminder: taxes do not provision federal government programs. They can’t. Where would people get the money to pay taxes if government didn’t spend the dollars out into the economy first? Saying otherwise is like believing you can give the ticket taker at the movies your ticket before you obtain one from the theater. Taxes make the money valuable, they do not provision government programs.
Taxes create markets, too. Say the King wants to employ 10,000 soldiers. This is a logistical nightmare to feed, house, train, arm, etc. so many men. What does the King do? He pays his soldiers in the official currency (call them “crowns”). Then he taxes the entire population, payable in “crowns.” The population then scrambles to get crowns from the soldiers by providing them...and themselves...with a market. While there are plenty of nomadic, tribal and other forms of society, there are no historical examples of stateless societies that have markets and economic money. No state; no market.
So...good tax policy is essential to a productive economy, especially one that will have to produce climate mitigation.
Honestly, I've tried to be respectful here, but the distortions of real "solutions" are awful. It goes without saying that without some serious, all-hands-on-deck action about climate, the costs will be far greater than any GND.
That does not stop frequent Washington Post contributor George Will's recent National Review editorial from distorting the GND and Modern Money Theory (MMT) beyond all recognition as he sneers at it. MMT is the source of a lot of what's constructive about the above...So this editorial is not the only clueless thing the Post has published. If you're interested, here's Bill Black's answer to distortions like Will's. The Bee does print Will, but won't print something like Black's response. Back in the UK, though, the Financial Times has been publishing MMT's Stephanie Kelton as she responds to Paul Krugman. In any case, I'll go for a carbon tax (and dividend), but the rest of what the Post says to dismiss the GND is truly reprehensible.
What does Gandhi say? "First they they ignore you, then they laugh at you, then they fight you, then you win” ... One step at a time, I guess.
…
Mail #2 (after some responses)
I’ve got to confess my disappointment that neither of you gets how essential MMT is to success in addressing climate solutions. IMHO, it ain’t optional. And your response to something like me declaring “two plus two equals four”... is “I disagree.”
This is beyond puzzling. You “disagree”…?! I’d suggest, as gently as possible, that we don’t get to vote about this.
For you, somehow government can produce trillions (without raising taxes, or triggering inflation) for bank bailouts or Middle East wars, but even [another correspondent] says "I'd rather see some of the revenue used for green stuff"....as though government needs tax revenue to provision its programs.
Please ask yourself: Where do people ultimately get the dollars? The 2+2=4 answer: The central bank (the "Fed") is the monopoly issuer of dollars. Yet you believe that when government wants to provision a program, must it collect some dollars in taxes? Really? Do dollars really grow on billionaires? Where would taxpayers get their dollars if the government didn't spend them out into the economy first?
Marshall McLuhan says “Only puny secrets need protection. Big discoveries are protected by public incredulity.” True dat.
So it's not "tax and spend"...it can't be. It's "spend dollars first, then ask for some dollars back in taxes." Why have taxes at all? Answer: To make the money valuable. Dollars give us relief from an inevitable liability: taxes. They do not and cannot provision (federal) government programs.
But what about that National 'Debt'? Answer: It's different from household debt, if only because no household can issue dollars to repay its debts, as the Fed can.
National ‘Debt’ is actually more like bank debt. Your bank account is your asset, but to the bank, it's their liability (i.e. debt). When you write a check, you're assigning a portion of that bank debt to the payee. Those dollars in your wallet are simply checks made out to "cash" in fixed amounts. They appear on the books of the Fed as a liability, too. The Republicans understand this completely, hence the bigger deficits in Trump’s budgets...and the economic improvements weighted heavily toward Trump’s real constituents, the plutocrats.
So...Imagine a mob of depositors going down to their bank to demand that the bank diminish its debt (i.e. make their bank accounts smaller). Not a very sensible picture, is it? Yet my congressperson, Ami Bera, sponsored a Pete Peterson ["Concord Coalition"] workshop on how to reduce National 'Debt' (and I made a fuss). So...you're certainly not alone!
What is another name for the dollar financial assets out in the economy? Besides "citizens' savings"... it's "National 'Debt'"... We pass around government IOUs for money. It says so on the dollars (“Federal Reserve Note”). The word “note” is a legal term for an IOU.
The way we allocate the economy's resources is with money. The machinations of that magical capitalist "Mr. Market" got us to climate catastrophe, too. I don't think it's a stretch to say it's going to take something other than the market to get us out of our current hole--as you correctly point out.
The problem with the Nancy Pelosi / Democratic approach (“PayGo”) is that it preemptively sabotages new programs by harnessing their adoption to the same billionaires whose activities got us to climate catastrophe. “We must tax the billionaires!” saps the energy of climate remedies by taking on a needless battle. It also declares National ‘Debt’ is somehow a problem. History debunks that, too.
Anyway, I pray you will come to your senses and recognize how accurate and essential is MMT (the link is to a nice explanation). As for whether the Democrats will save us...I wouldn’t count on that (not to say that R's are better). Nancy Pelosi has already preemptively resigned herself to no new programs without cuts or new taxes, and colluded with much of the Democratic misbehavior of the past. See Thomas Frank’s Listen Liberal: Whatever Happened to the Party of the People? for the whole story there. For his trouble, Frank can’t get published in the U.S. today. McCluhan would understand.
Best wishes for "getting" the above, no requirement that you agree with it. Two plus two can take care of itself.
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