Remember the American GI bill, which put ex-service members through university?
When people talk about how much health care for all will cost, or any other program, you need simply remember the above, or that military spending makes up over 50 percent of all discretionary spending in America.
Spending is a fairly good indicator of a country’s real priorities. It’s easy to afford the cost of something you believe is first priority in a rich country–and the US is still a rich country. And if you don’t “have enough,” well, by historic standards, the US is hardly taxing anyone at all. Remember, back in the 50s top marginal tax rates hovered around 90 percent and corporate tax rates were much higher (and with far fewer loopholes).
(I am fundraising to determine how much I’ll write this year. If you value my writing, and want more of it, please consider donating.)
Basically, America can afford whatever America wants to afford, and the same is true of a variety of other countries like France, Germany, and Britain, and so on. The choice not to do something, in rich countries, is a choice, and reflects the goals of the people who run the country, and very little else.
This is especially true because the more a country does, the more it can afford, since doing more means more economic activity and generates a larger tax base.
It’s just a choice. There are countries that are literally unable to choose prosperity, it’s not so easy for them. But all of the major developed countries are perfectly able to do so.
shh
Wait. Are you saying that arming all participants in conflicts created to subsidize oil pricing in favor of making basic infrastructure investments in civil society as a matter of public policy is both a choice and a bad idea?
EmilianoZ
Yeah, but it aint that simple. We’re not dealing with independent variables here, everything is interconnected. Military spending is extremely high but it’s also part of the reason why the US can impose the dollar as the reserve currency, get better deals from foreign commercial partners and thus achieve a higher maybe undeserved standard of living.
George F. Kennan wrote circa 1950:
We have about 50% of the world’s wealth but only 6.3 of its population…
In this situation, we cannot fail to be the object of envy and resentment. Our real task in the coming period is to devise a pattern of relationships, which will permit us to maintain this position of disparity without positive detriment to our national security. To do so we will have to dispense with all sentimentality and daydreaming…
The day is not far off when we are going to have to deal in straight power concepts.
For the people in the US, the problem has been that of the 50% mentioned, the elites used to allow them to take a larger cut. But they have steadily eroded that part. For sake of discussion, let say that the people’s cut has been reduced to 1% of the 50%. Now, by reducing the military the people could maybe increase their cut to say 5%. But reducing the military also means reducing the 50%, so you’ll have a bigger cut, but of something smaller.
I think most Americans understand that more or less consciously (the reps voters certainly do), which is why I say that nobody’s really innocent.
Lemonhead
As a member of the middle class, STRONGLY disagree that the U.S. hardly taxes us at all
Hvd
But Kennan was wrong about it all. Keeping half the worlds wealth was and is not a reasonable goal hence the need for unreasonable means. In this he and we are merely following in the footsteps of that great master of blowing wealth and power, Great Britain. There are commercial means for maintaining position in a competitive world which is what we should have been looking for. Not dominance.
Hugh
One of MMT’s main flaws is that it looks at things in terms of money when it is really about resources, i.e. our society’s resources, what we have, what we make, what we can make, our social cohesion, our decentness toward each other, many, many things. The basic reality of kleptocracy is that the rich and elites can always shift/exploit our resources when it serves their purposes and is for their profit.
But if you are still money bound, look at it this way. The rich and elites spend trillions of dollars on endless, pointless wars, to blow multi-trillion dollar bubbles, and then spend trillions more to bail themselves out when the bubbles burst. But when it comes to us, the many, the 99%, all of a sudden, there is no money. It would not be fiscally responsible or wise to spend money on prohibitively expensive, unsustainable programs like Medicare for All, free education, a jobs guarantee, affordable housing, and secure retirements.
When you start looking at things in terms of resources instead of money and in social and not economic terms, then questions that the rich and elites never want asked are laid bare. Like how much is enough? How many of our society’s resources should any one person have or need? Is the economy serving our needs and aspirations or not, and if not, why not?
We have been inculcated with a cult of money so that our brains freeze when the subject comes up and we react reflexively and negatively (It’s theft!) to any hint of redistributing it. This is why I prefer to talk about resources. I suppose the powers that be just never thought it was worth their time or energy to install in us similar Pavlovian responses to resources. It allows us to have a reasonable discussion about how we want our society’s resources distributed and yes, redistributed, and how we do not want or want to allow a few to hog them.
Ian Welsh
Yes, Hugh it’s really a matter of resources (mostly human resources).
Joe
The Fed is the holy shrine yellen the priestess. We labor in her divine shadow for the gold stars of her favor. The strong light here represented by the zeros dispensed from the holy keyboard amen.
shh
Hugh, I very much like that train of thought because I’ve shared it for a great while, but there is a more subtle action going on I now think.
When you say “It would not be fiscally responsible or wise to spend money on prohibitively expensive, unsustainable programs like Medicare for All, free education, a jobs guarantee, affordable housing, and secure retirements.” What you do neatly is present two opposing sets of assumptions. Long discussions have convinced me of two things: one, the logic (of resource allocations) that follows from the differing assumptions can be flawless and achieve conclusions that are patently false to one with different assumptions, and two, discerning the origin and context of those underlying assumptions matter more than the divergences themselves. Interestingly, some of those assumptions have a genetic basis and some don’t. All assumptions can be rooted in either the genome, gene expression, or “nurture” (whatever the hell that means) so it’s damn hard to tell in any given individual what combination of factors produces a given set of assumptions.
Taking a psuedo-Jungian view and mixing it freely with arm chair evolutionary theory, my conjecture is that humans have evolved competing assumptions not as a result of socio-economic pressures but as a matter of the collective subconscious working through its…stuff. I was gonna say “individuation” but that is obviously not a group thing…or is it? Thus. the seemingly endlessly opposing views of “neoscum” and “libtards” etc. are actually both necessary and proper to a fully cognitive species. Certainly they are necessary pieces on the collective journey through evolution.
Elites enjoy their position for a while because they appear imbued with virtuous qualities and, as long as the collective doesn’t endure too much suffering, then they stay the Elites and the staggering status quo lurches convivially along. As the Yin-Yang teaches, all things ebb and flow. Such is the suchness of things. So, there are breakpoints that depend on cultural expedients and impediments, and eventually power structures fall to greater or lessor havoc.
But all of this is a group exercise. Wed o it together. No one does it to us except that we allow it. That is our choice. Brahma is still dreaming.
Tom
http://www.bbc.co.uk/news/world-europe-35602288
https://www.rt.com/news/332924-turkish-vehicles-cross-syria/
Its started.
https://en.wikipedia.org/wiki/Template:Syrian,_Iraqi,_and_Lebanese_insurgencies_detailed_map
FSA counter-attack retook Mare with Turkish Artillery Support and military supplies.
YPG attempts to attack FSA from its Aleppo Neighborhood failed.
SAA and IS for now are letting FSA and YPG duke it out.
shh
Oh, I meant to say that the proletariat projects qualities on to the elites that they have been deceived into believing they do not possess. The truth is everyone is born an incredibly powerful thing. For reasons that reach into darkest antiquity, our society has chosen to dis-empower ourselves and give our sovereignty of mind away.
On a side note, some ancient religions saw one incarnation of the Goddess as the source of Sovereign authority, hence the use of the royal plural. It’s the same reason we call ships by female pronouns.
The task is to become sovereign of mind, then and only then can we function in a collective egalitarian way. Many people are deeply opposed to this possibility for reason I fail to understand.
Billikin
Hugh: “One of MMT’s main flaws is that it looks at things in terms of money when it is really about resources,”
Actually, Hugh, you have that backwards. MMT says that, unlike those who say that government spending is constrained by taxes, money is not the question, that it’s really about resources.
cripes
“No one does it to us except that we allow it.”
Well.
Individuals are not positioned to refuse power arrangements, except in the sense a hermit or a prisoner does and endures the consequences of that refusal. The collective “we” does not have agency in the same sense as the individual although it has a force and direction, or not.
In any case, I have always been a little uncomfortable with a formulation that suggests mere refusal is a sufficient response to the power relations we see in our society.
V. Arnold
cripes
February 19, 2016
Yes; “No one does it to us except that we allow it.”, is correct.
What apparently is not understood, is that this has been a long process over decades.
Under the present form of government; we get the government we deserve.
If, for instance, Bernie wins; it’s just the beginning of a vicious and protracted fight.
I do not think the U.S. citizenry will be up for that when the full scope of what will be required is actually understood.
For me personally; I just don’t believe the lying SOB’s any longer; Obama was just the last fraction of the straw that broke the proverbial camel’s back…
Hugh
No, Billikin, MMT says the sovereign creates money and gives it value by using its monopoly on violence to demand its use for payment of taxes. This appeal to legitimate violence coincides with a Hobbesian view of the state. It is popular in modern economics because it is simplistic. There is also a non-violent alternative to this view which is generally ignored by our elites because it is democratic and, being so, delegitimizes their rule and renders them superfluous. What I am talking about is the will of the people, the agreements and commitments we make to each other to create the society we seek. In this view, money has value because we say it does, and we use it to distribute our resources to create and maintain the society we want.
MMT only gets as far as making vague statements about the use of fiat money for “public” purposes without ever tying these purposes into a larger, and coherent, vision of a society, and more particularly, one we actually want, and laying out for us how they would work in and promote that society. This is an important omission. First, they don’t talk about resources, especially in the extended sense that Ian and I are talking about. And second, they don’t pay any attention to or formulate a calculus for the distribution of resources. The MMTers like Randy Wray that I have read just say, create money and spend it and don’t worry about the rich or the overall distribution. Indeed Wray says don’t tax the rich because you can’t effectively anyway. This seems to me to declare defeat before you have even taken the field. If you look at this from a resources perspective, you can see why the MMT approach doesn’t work. Money is a medium which gives access to society’s resources. Creating more money does not increase those resources. So if you want the relationship between money and those resources to remain stable, when you increase money to spend on us, you need to diminish the store of money held by the rich. More than this, you need to make sure that the money you intend to benefit the many does not end up transferred back into the pockets of the rich few. I have never seen any discussion of this by any MMTer. Money creation is treated only in terms of the neoclassical limits on it of inflation and full employment. Resources and their distribution are not really addressed at all.
Hvd
I guess the real answer to the question posed is: anything they want.
Tal Hartsfeld
It’s always a matter of which “baskets” one chooses to keep all their “eggs” in that determine what’s most focused on and nurtured.
reslez
To me the value of MMT is that it dispels deficit hysteria, and that is a huge task for anyone who supports Sanders-style policies. I’m not a fan of Wray. I personally find that MMT helps focus discussion on real resource allocation as opposed to worshipping a myth of money scarcity.
Every country in the world has a smaller military than the US. Many of them are far better places to live. It doesn’t follow that reducing the military or losing reserve currency will throw the average US citizen into poverty; the existing system already does that quite well. It’s just that elites in the US are drunk on the idea of being realpolitik Machiavellis when in reality they are Keystone Cops.
cripes
@ V. Arnold
It’s kind of hard to square the idea “we get the government we deserve” with the indisputable fact the government is 0% responsive to the clearly expressed demands, over four decades, of the citizenry and the 100% responsiveness to the corporate lobbyists and oligarch think tanks and superpacs. This also goes along with the idea that the voters are too stupid to vote for the right candidate, although the truth is obviously that the fix is in with both parties regardless of who they vote for. and the system is rigged to block the emergence of a viable third party or proportional voting.
The parallel idea that poor people get “what they deserve.”
That the large majority of people who are not represented by their government have failed so far to build a movement capable of seizing control of the levers of power is closer to the truth.
As far as deserving anything, you may as well say the Jews in interwar Germany, or black people under Jim Crow, both of whom had zero representation, deserved what they got.
Ian Welsh
Yes, I keep thinking I should do a big piece on MMT and its problems but it’s a PITA.
Billikin
Hugh: “First, they don’t talk about resources,”
Actually, they do.
Hugh: “especially in the extended sense that Ian and I are talking about.”
I don’t know your writing well enough to comment.
Hugh: “And second, they don’t pay any attention to or formulate a calculus for the distribution of resources.”
They say that those are political questions. Which they are, right? I rather suspect that you and Ian are better at politics than the MMT economists, but MMT is friendly to what Ian is saying in this post.
Hugh: “The MMTers like Randy Wray that I have read just say, create money and spend it and don’t worry about the rich or the overall distribution. Indeed Wray says don’t tax the rich because you can’t effectively anyway. This seems to me to declare defeat before you have even taken the field.”
I don’t read Wray much. I think that we have to tax the rich, but that is difficult to do at the moment.
As for declaring defeat before taking the field, that sounds like the US Democratic Party to me. Sanders excluded, OC. 🙂 But Sanders has Kelton, an MMT advocate, as an advisor. I first became aware of MMT in the spring of 2010, when the MMT economists were almost the only ones fighting back against the tide of austerity that led, in the US, to the Tea Party and the Republican sweep of the elections in the fall of that year. In 2009 President Obama said that the US government had run out of money. There is retiring from the field in defeat. What happened to “Yes, we can!” Why didn’t Summers and Obama’s other economics advisors resign in protest?
Hugh: “If you look at this from a resources perspective, you can see why the MMT approach doesn’t work. Money is a medium which gives access to society’s resources. Creating more money does not increase those resources.”
But that is not the MMT position.
There is a myth out there that governments have to go hat in hand to rich people on Wall Street and elsewhere in order to have the money to do what its citizens want it to do or that it needs to do. The main economists who are standing up and pointing out that myth are MMT advocates. They point out that the real questions are the resources available and the political will to make use of them. As Ian points out, America can afford what it wants to afford. That is the MMT position, as well. 🙂
Bill Mitchell writes voluminously about MMT. Here is a recent blog post of his about resources, entitled, “Ultimately, real resource availability constrains prosperity”, http://bilbo.economicoutlook.net/blog/?p=32938 .
V. Arnold
cripes
February 19, 2016
@ V. Arnold
This also goes along with the idea that the voters are too stupid to vote for the right candidate, although the truth is obviously that the fix is in with both parties regardless of who they vote for.
While it’s very tempting to second that sentiment; I’d put it differently. My impression is that people do not “know” anything about the candidates and just rely on the campaign rhetoric.
The best recent example of that would be Obama; he snookered almost everybody. Very few actually knew the man; if they had, I doubt he’d be sitting in the WH.
Clinton is the current example; a known liar, Wallstreet shill, and war criminal. And yet she’s got strong numbers and the majority of super delegates.
I think we’re well past elections making any genuine difference.
Hugh
Billikin, they call it Modern MONETARY Theory, not modern resource theory or anything else.
The split between economics and politics is fairly recent and both artificial and false. In the 19th century, they were more honest when they talked about political economy. Since the only reason for an economy is to help us build and maintain the society we want to live in, there are no economic questions which are not political questions. The word politics is itself rooted in the Greek word polis, which embodies the concept of community or society. As Aristotle noted in his Nicomachean Ethics, morality comes to us from society and is really about our actions in society. Economic activity is one subset of these actions. So it isn’t just that all economics is political. It is also that all economic activity is also moral activity. In other words, economics is not objective and descriptive. It is moral and prescriptive. So to say, well, those are “political” questions, not economic ones, is a punt and misses the point on all kinds of levels.
Billikin
Hugh: “The split between economics and politics is fairly recent and both artificial and false.”
We are in agreement. 🙂 However, the fact that the US government is the source of the US dollar, and that it is possible for that government to finance its spending on its own, as it did when it issued greenbacks during the civil war, is not a political question. Whether to issue greenbacks was a political question, which Congress debated at the time.
Hugh: “Billikin, they call it Modern MONETARY Theory, not modern resource theory or anything else. ”
So what? I searched Bill Mitchell’s blog for “resource” and gave you a link to a recent post, among others. If you don’t want to read what he has to say about resources, that’s up to you.
Hugh
Billikin, the link you gave is Mitchell discussing MMT in a subset of cases pertaining to resource constraints in less developed countries. Not real clear on the relevance. Mitchell continues to look on all this in economic, not social terms: full employment, being “prosperous”, etc.
My point about increasing the money supply not equating to an increase in resources was directed to the financial side of things. If you dump significant amounts of money into the financial system, you do change the monetary distribution within the system. But if you want to keep some control on the overall amount of money in the system, then what you create and spend into existence (hopefully for the good of the many) needs to be counterbalanced by taxing money out of the system elsewhere (as in taxing the rich). Otherwise, you introduce instabilities into the system which MMT does not explore or cursorily dismisses. The rich can counteract the effects of this spending money into the economy by mobilizing their wealth to blow bubbles. While I know MMT recognizes inflation as a constraint on spending, as far as I know and have ever seen, it has never acknowledged that bubbles pose at least as an important constraint on it as well, as the economic history of the last 35 years have shown. It also ignores how the rich control government and the financial system and can use these to direct most of this newly created money into their own pockets.
While MMT claims to be descriptive (a claim in keeping with all of modern economics and which I pointed out above is false: all economics is prescriptive), it rather glaringly mischaracterizes how money creation actually takes place in the US. The US government is responsible for very little money creation (only a couple percent). The vast majority of money creation occurs through the Fed, a public-private hybrid, with that money creation occurring through its private side.
Finally, again as I pointed out above, all economics is political although not all politics is economic. In other words, the economy is just one part of our social structure. And the real measure of an economy is not how “well” it is performing but whether it is helping us create and maintain the kind of society we want to live in.
Billikin
@ Hugh
It appears that we are generally in agreement about a number of things. However, what MMT says is consonant with what Ian says in this post. Rich countries can afford what they want to afford. There are no financial barriers to their governments making use of available resources to do what their citizens want or need them to do. MMT proponents are conspicuous among economists in standing up to the myth that we cannot afford infrastructure projects or social security or whatever. MMT says that money is not the problem. It agrees with Ian that it really is a matter of resources.
Apparently you got the opposite impression from Wray. Mitchell writes a good bit about resources. I am not a proponent of MMT nor an apologist for it. I am not out to prove that you have gotten the wrong idea from Wray. I gave you the link so that you can find out in more depth what MMT actually says about resources.
In that post Mitchell writes, “At the more popularist end of the MMT blogosphere you will read statements such that if only the government understood that it can run fiscal deficits with impunity then all would be well in the world. In this blog I want to set a few of those misconceptions straight.” IOW, money may not be the problem, but it’s not about the money, it’s about resources. To make that point Mitchell looks, not at rich countries, but at poor countries, which do not have the resources of rich countries.
Billikin
BTW, not that my opinion matters, but I think of two different kinds of economies, Malthusian economies and Dickensian economies. OC, there is no hard and fast distinction between the two. The defining problems of Malthusian economies are those of scarcity; they are resource constrained. The defining problems of Dickensian economies are those of penury in the midst of plenty. In rich countries we deny resources to certain people because of decisions that we have made and continue to make, even though there is plenty to go around. The choices are ours.
nihil obstet
@Billikin
MMT doesn’t actually say anything. There are a number of economists, mostly academic from what I can tell, who make statements that they say are supported by MMT. Yes, Randy Wray has written that MMT indicates that trying to tax the rich is counterproductive. Other MMT economists have said contradictory things. Other than the base statement that governments sovereign in their own currency can’t run out of money, I was never able to figure out if there was agreement on anything else. Wait, there was agreement on something else — if we state that government can’t run out of money, we’ll get social spending and infrastructure, not more wars and financial transfers to the rich. I never understood the rationale except that MMTers believe themselves to be nice, liberal people.
Basically, I don’t understand why it’s important to label policy as MMT or not MMT.
Hugh
Billikin, final word. MMT looks primarily at spending. It sort of recognizes that spending changes the distribution of money in the system but it doesn’t explore how the distribution is changed, the effect of changing the quantity of money (except vague statements about inflation and full employment), and as far as I know does not treat at all the flows of money within the system and how these with or without new spending lead to greater inequality.
My memory of Bill Mitchell is that he was primarily interested in debt and wasn’t an MMTer. He then did get interested in MMT and wrote a primer on it, but kind of remains affiliated with MMT rather than a hardcore MMTer like Wray. I also agree with nihil obstet’s comment that it is incredibly difficult to analyze MMT because there are almost no elements that all MMTers agree upon. When I write about MMT, I’m usually thinking in terms of Mosler and Wray with maybe a touch of Auerback because these were the first I came into contact with. I look on Joe Firestone as more of a popularizer of and proselytizer for MMT. I may have played some small, indirect role in their adopting the gold standard terminology and talking about a living wage with regard to their job guarantee. Even so Firestone’s idea of a living wage was distant from that of Wray’s or Auerback’s. And there were a whole host of areas where I never could get them either to simplify their explanations (as with the platinum coin), reconsider their ideas, or learn enough about the nature of theories to produce a coherent one. I eventually gave up on them and they gave up on me. The reason resources strike a chord with me is that in response to MMT I developed a theory of social economics based on them. So when someone comes around now and says, Oh, MMT covers that. My response is that it sure didn’t when I was around it. On the other hand, by the time I left MMTers were claiming their theory covered everything including how to bake bread if the topic had ever come up. And their line was you have to have read everything we ever wrote before you talk to us, let alone criticize us. So bottom line is this: I’m glad that Mitchell is talking about resources, but he is still talking about them in traditional economic, not social terms.