Imagine that astronomers discover a giant asteroid headed for Earth, with vast destructive potential. It is capable of destroying an entire continent and setting off a nuclear winter that will kill all life on Earth. A massive effort is needed to set up a program to fire a huge missile to deflect the threatening celestial intruder from its path toward our planet. The world's best engineers and scientists must be mobilized quickly to plan and rapidly execute a defensive program. One or more backup missiles must be built in case of failure of the first.
There is general agreement that this work must be undertaken quickly. However, Congress decides that the costs of the program are too great and will increase the nation's budget deficit by an unacceptable degree. Congressional approval is delayed and Congress recesses for a holiday period.
Does this sound crazy?
In fact, comparable insane actions are happening continually. The nation and the world are being killed off in slow motion by failure to provide enough resources for optimal functioning of the human race and its supporting environment. All the resources exist but are not utilized because of artificial budget impediments and misunderstanding of economics. Our leaders are establishing an economic Austerity Winter that slowly stifles and freezes the human race.
Will outer space people examining our planet in the future conclude that humans died off due to a "failure to thrive" syndrome of unknown causes? Will they be unable to ascertain why humans had so many resources at their disposal but failed to use them properly to maintain the integrity of the species?
Humanity's failure to thrive
The world's people wander aimlessly while relentless forces seemingly beyond their control build toward catastrophic social, political and environmental crises, threatening their lives, their livelihoods, their futures and those of their children.
The world possesses enormous human resources, limitless talents and abilities, undiscovered creativity, untapped human energy. And yet the vast majority of these resources remain unused or undirected toward creating a better world.
Most of the world's people are mired in poverty, ignorance and destructive thought patterns, unable either to improve their own lives or contribute to resolution of worldwide problems. There is an enormous need to correct these massive failures of mankind, but the great resources the world possesses that could correct them cannot be marshaled because of a lack of sufficient money.
From preface to psyched's book
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To those who would say that the world is in good shape, that mankind has reached a high peak of development, pointing to its technological advances and abilities hardly dreamed of only fifty years ago, one must counter with the great gulf that exists between wealthy and poor people, with the prevalence of hunger, disease and despair in the world's population.
The rebuttal might be a claim that the poor are always with us, that there is no
permanent cure for poverty, that charity can help, but its reach is limited, that there is simply not enough money in the world to meet everyone's needs.
As progressives we should reject the notion that we must continue to treat the "have-nots" as part of the woodwork, as simply collateral damage in the great race to the top of the wealth tower.
Humanity cannot continue its downward slide toward oblivion. A future in which most of the world is mired in poverty and ignorance is horrific to contemplate. If one person is a slave to these evils, we are all slaves to them.
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The jagged road to austerity is scarred by numerous gashes, small and large. Traveling this rough road, the weakest are hurt the most. The most vulnerable are the first to suffer: children, the poor, the sick, the disabled, the elderly, the unlucky. They fall by the wayside while the wealthy march onward, unaware that they too are heading for disaster, for their quality of life cannot prevail when others are failing.
Both the wealthy and the poor benefit from public services such as fire departments, and likewise both lose benefits when services are cut. As society is weakened from loss of public services, both the rich and the poor are set onto a downhill track that ultimately destroys society.
Austerity (n.): severity, starkness, rigidity, reduced availability of luxuries and consumer goods.
The present austerity meme is poorly named. It denotes not the reduction in consumer goods and luxuries economists speak of, but rather the butchering or elimination of essential societal functions. The corporatists and the wealthy who promote austerity want sales of consumer goods and luxuries to magically keep flowing through the economy, for these things create their wealth. But they aim to eliminate the governmental support structure that allows consumer activity to take place.
The corporatists are lying to the public. The austerity we are told we must embrace is not real austerity, but a subtle re-labeling of the dismantling and destruction of the social framework through which our economy operates. It is a manifestation of the maniacal drive to shrink the government so it can be drowned in the bathtub.
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But surely, one might ask, how can such a process continue until society is destroyed? There must be counteracting processes in place to undo this bad work. There would surely be mass revolutions to unseat those in power who would promote such horror.
Well, consider that these negative processes have been going on for a long time, usually at such a slow pace that most of the public don't recognize them, like the frog slowly cooking in the gradually heated water. And consider that the evil-doers themselves don't recognize the magnitude of the disaster they are creating.
They don't recognize that cutting hurricane-warning budgets or failing to fund climate-change mitigation will negatively affect them and not just the common people, for which they seem to have no empathy. They don't seem to understand that defunding education and scientific research will hurt them along with everyone else.
And consider that when the good guys get into power, they understand these problems no more than the man in the street, for they have been subject to the same media brainwashing that everyone else has. So they cannot help a great deal, and because they are not part of the solution, they are part of the problem themselves, despite their good intentions.
It's enough to make one cry in frustration. They keep coming and coming--the proposed cuts to essential services that should be increased instead of reduced: libraries, health care, police, fire fighters, schools, salaries, pensions... We've all heard the litany. Everything designed to make life better must be cut--and why? They must go because we have a deficit. More money is being spent than is being collected.
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Do deficits really exist?
If you are an individual, a household, a company, a city, a county or a state, it is entirely possible to run a deficit with your budget.
With the federal government, however, things are different. It is impossible for the federal government to run a deficit because the federal government is the creator, the originator of money. The other entities cannot create their own money, and can run into budget problems, as they are at this moment. The feds could help them out by "revenue sharing", and the feds do this to some extent, but at the present not to the degree to keep them all solvent.
For now, however, let us pretty much abandon discussion of budgets below the federal level and concentrate on the big one, the federal government's much-discussed budget and its alleged deficits.
Conservatives, as well as liberals parroting conservative talk, will claim that the government is spending more than it is taking in and that this cannot continue. They claim the government is racking up a huge deficit that will have to be made up in some fashion such as by raising taxes. And since conservatives abhor taxes, the alternative they cling to is cutting spending. Of course they also want to cut taxes.
Cutting both spending and taxes is not a prescription for managing a deficit. These contradictory actions suggest that conservatives either (1) do not understand the realities of economics or (2) are greedy for wealth for their corporate selves and want the government to spend money only on programs that inflate their bottom lines, or (3) both of the above.
The fact is there is no federal deficit problem and there is no need to cut federal programs that are beneficial to our citizens and to the environment that nourishes us.
Kossack Letsgetitdone has explained this perhaps surprising fact in diaries such as this one Federal-Spending-Doesnt-Cost-Anything!
In it he provides links to several important essays that provide more detailed explanations. See this comment in his diary, which provides the links: comment with links
One of those links goes here:
www.correntewire.com/altogether_now_there_no_deficitdebt_problem
It's easy for non-economists to get lost in economic discussions, a fact that may partially account for the slowness in recognizing the school of economic thought, known as Modern Monetary Theory, to which Letsgetitdone subscribes.
Here are some quotes from the correntewire article:
...the deficit/debt problem is a fiction and a fairy tale. Such a problem doesn't exist except in the minds of people, evidently, like the President, who believe that the Government is subject to the same kind of spending constraint, in this case called a Governmental Budget Constraint (GBC) that private economic units such as Households and Corporations are subject to.
There are some Governments that are subject to a GBC. They include Governments of the Eurozone, all of whom have given up their sovereign currency-issuing power to the European Central Bank (ECB). These Governments, from a currency issuing point of view are like American States.
The author continues,
There are other nations however, including the United States, Australia, Canada, New Zealand, Japan, the UK, Argentina, Brazil, and many others that issue their own currencies, owe no debt in anyone else's currency, do not peg the value of their currency to any commodity such as gold or silver, and allow their currency's value to float freely in the International currency markets. Those nations are sovereign in their own currency, and they have no GBC because they have the constitutional authority to create the currency that is the basis for all financial resources in the non-Government Sectors of their economies.
The author comments on the prevalence of the false deficit meme:
Currently, there is a news blackout in much of the blogosphere, including its “progressive” wing, in the cable news networks, and in the MSM media on the question of whether or not there is a deficit problem.
[snip]
There is consensus now in most of the media, on a false neo-liberal paradigm that gives rise to the view that we have a deficit problem. This paradigm ignores the sovereignty of Government in its own currency, and vests the
international bond markets with legitimacy and power these markets do not deserve and only have because the United States refuses to bend them to our currency sovereignty and to the national interest of the United States.
(Emphasis is the author's)
To sum up, the push for austerity largely originates from a misuse and/or misunderstanding of the actual operations of the economy. Progressive thinkers promoting Modern Monetary Theory believe that their ideas, if adopted, would
help save society from the degradation threatened by austerity.
Now let's have another look at the probable outcome of continued austerity, as well as an alternative future.
Austerity, as currently conceived, is beginning to destroy the social, economic and psychological structure of nations. Rather than improving humanity's condition and building a brighter future, austerity is degrading society,
moving it backwards toward its primitive, ignorant, uncivilized roots. Much has been written about the horrors and dangers of reducing the support structure upon which society relies--worse medical care, fewer emergency services, less education, more unemployment, deteriorating physical infrastructure, etc., etc., etc.
Let us set that bleak picture against a more ideal view of a future world--a world where education, science, the arts, employment opportunities all flourish. The conservatives would no doubt argue that such a utopian world can never exist; the chosen few of wealth can experience a world close to that, with their private estates, yachts and jets, their abundance of fine food and clothing and entertainment options. But most of the world's people have to make do with lesser circumstances because there is just not enough money in the world to create happy situations for all.
Because there isn't enough money, they believe, we must conserve what we have, and the smartest and most energetic and clever deserve to be highly rewarded, and the rest can make do as best they can. There isn't enough money in the federal government to spend lavishly on social programs, so since we are in danger of over-spending, we must take care to cut back on everything (except for those functions that serve the wealthy and deserving).
There is enough money. The conservatives and corporatists are wrong. Wealth is created by people working--laboring, thinking, writing, teaching, creating art and music, performing all sorts of services that help society. The money they receive and spend in the process of doing their jobs can be thought of as certificates
from the federal government to facilitate their work. The only limit to a nation's wealth is the creative capacity of its people, and a moment's reflection should convince one that it is virtually unlimited.
Since the government is free to create money, why does it not distribute enough to allow every able person to occupy himself or herself with beneficial activity? Why does it not want the nation to flourish? Compared to a utopian world, we are not even a mediocre one. We cannot even claim a minimal overall level of comfort among our citizens. We are at a subnormal level and falling. To discourage citizen engagement even further by the actions subsumed under austerity is nothing short of national insanity.
Letsgetitdone of the Money and Public Purpose group has called attention to the writings of Bill Mitchell, a clear explainer of Modern Monetary Theory. On Mitchell's blog, an unidentified commenter had this to say:
But there IS money. It was invented in the Middle East about 6000 years ago. We’re just getting the hang of how it works now, although I suspect there is a cuneiform tablet buried somewhere explaining MMT.
All money is created by “printing” it, by just saying “here’s an IOU”. Governments go through lots of stupid human tricks to disguise this fact, but that how it works. Unless we run out of paper for bills and checks, metal for coins, wood for tally sticks, mud for shubati or electrons for computers, it will never be true that austerity will be the only thing we can do.
There are many ways the federal government can stimulate citizen welfare and engagement. One is through a Basic Income Guarantee: giving every citizen a monthly stipend to cover basic needs, thus negating poverty. (Richard Nixon is said to have considered doing this.) Another is creating a WPA-type program to offer employment on useful projects (heavens knows there are enough of them to be done). Then there is the Economic Stimulus (if done in sufficient magnitude). There are many more ways to authorize people to build a better society.
If Modern Monetary Theory were actually adopted by governments, it would not automatically solve every societal problem. There would still be much work to be done on promoting better political leadership, dealing with corporations, all the numerous undertakings that are argued on progressive blogs daily. But MMT would seem to be an essential underpinning of a successful reformation of government.
But in order to bring MMT to life, we must mount an intensive campaign to make it known to as many people as possible, including economic and political leaders. Will we ultimately have to resort to massive demonstrations to impress our leadership with society's demands for this kind of economic support?
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Please follow our group,
Money and Public Purpose (here), as we plan a strong effort to bring MMT to the attention of everyone who can possibly support it. This diary has been one attempt at an introduction to MMT and the evils of Austerity. For more technical details on MMT, please see other diaries published by our group.
Thank you for reading and reccing.
psyched