I’ve mentioned this before, but I was careful to bury the story within another story [stderr] because I felt that the whole story was questionable.
Briefly: Smedley Butler, one of the founding pillars of the modern US Marine Corps, winner of multiple congressional medals of honor for shooting helpless people (that’s how he put it), came forward one day with a shocking story that he had been approached by an agent representing some very wealthy and powerful American industrialists who wanted him to pull together and lead an army of 500,000 veterans to overthrow the government. The whole thing was laughed off as an old warrior’s fantasies, and the agent who had offered Butler the money never materialized; there was a lot of plausible deniability.
Suddenly, I don’t find the idea of wealthy power elites deciding to bypass a bit of democracy, to be so far-fetched. [timeline]
President Franklin Roosevelt made an enemy of the richest Americans with remarkable haste. By his first term, his heavily progressive New Deal taxes and the suspension of the gold standard inspired vocal opponents within the highest echelons of industry. Among them was an irate William Randolph Hearst, who filmed a message decrying the “impudent” and “despotic” new tax code. Yet of all of Roosevelt’s powerful enemies, perhaps none were more formidable, or incensed, than those who considered throwing him out of office by way of a fascist military coup.
It is impossible to say exactly how close the Business Plot – also called the White House Coup and Wall Street Putsch – came to overthrowing the president. Nearly all we know about the plot is the result of an investigation conducted by the House McCormack-Dickstein Committee in November, 1934. Its chief whistleblower was one Major General Smedley Butler, a respected and tenured military leader with a talent for rallying support to his side. His part in the story began on July 1, 1933, the day he met with two members of the American Legion who had ties to Wall Street heavies.
America’s rich were disgusted at having to share the pie; when Roosevelt tried to salvage the wrecked economy that resulted from run-away capitalist greed, a market bubble, and demobilization after WWI, the rich plotted to remove him. This was all seen (by the rich) in the context of a global march toward socialism, in the form of labor unions forming as a reaction to abusive labor practices – the flip side to the immense wealth of the Carnegies and Rockefellers was violence against laborers and the establishment of a permanent under-class.
In a second meeting, MacGuire, a $150-a-week bond salesman for the financier Grayson M. P. Murphy, proposed Butler bring along a few hundred veterans for support, and showed him bank statements amounting to $106,000, to pay for their travel expenses. A skeptical Butler surmised that no coalition of veterans could have gathered those funds. Adding to his bemusement was the speech they wanted him to deliver. It lacked populist, pro-veteran rhetoric, and read heavily as a screed in favor of the gold standard, a policy which President Roosevelt had suspended about a month earlier.
The gold standard, as Butler’s subsequent research would uncover, was a major concern for the country’s wealthiest citizens. Bankers especially did not want to be paid back on their gold-backed loans with cheaper, ever-inflating paper. Keynesian economics be damned: To the capital interests of the country, a break from gold meant ravaging the nation’s wealth and savings.
The rich see gold as a currency that cannot be controlled, and which can be squirreled away in locked boxes hidden in the castle, where the starving people (who want food, anyhow) can’t get at it. I suppose you can also grab your gold and run when the angry peasants come. The whole American aversion to inflation is intimately tied up in the movement from specie to “fiat currency.” As though the instantaneous value of gold and silver is not also a social construct that depends heavily on demand and futures speculation; that always drove me nuts on the few occasions I’ve talked to “gold bugs” – ‘oh, no, gold is inherently valuable’ not like paper money. That ignores the rich history of kings and other thugs manipulating the gold market by simply swanning in and grabbing the stuff, trading your gold for your life, which is to say devaluing it considerably, or revaluing it infinitely, depending on how important your life is to you. I never understood how gold is not a “fiat currency” when its value also depends on your local governments’ willingness not to march in and grab yours.
Inflation is the great anathema to the rich, and for good reason (from their perspective) – it’s a proportional tax on wealth that nobody can escape. Inflation hardly hurts the poor at all, but the rich are utterly traumatized by seeing all the paper they chased their whole lives revealed as worthless. Not to belabor the point: the same goes for gold – if your paper money is worthless and it’s 100,000 zorkmids for an egg, perhaps your gold zorkmid coins will hold up better than the paper zorkmids, but the price-gouging is going to still apply: that egg may cost 2 gold zorkmids, or a small fortune, if you haven’t got any food, and the seller does. The old Russian saying is “the rich cannot eat money” and it doesn’t matter because gold is as inedible as paper.
At this point, Butler knew MacGuire was taking orders from someone, and requested to speak up the chain of command. It was then he met with Robert Sterling Clark, whose net worth of $30 million owed much to a recent inheritance from the Singer sewing machine fortune. Butler remembered Clark as a “millionaire lieutenant,” from when they served together during the Boxer Rebellion. Clark was blunt about his concerns. He and his associates hoped Butler would encourage support within the Legion and perhaps the country for the reinstatement of the gold standard. “I am willing to spend half of the 30 million to save the other half,” Clark confessed. As Butler suspected, this appeared less and less to be about veterans’ interests.
Clark also bankrolled MacGuire’s seven-month trip abroad in December of 1933, in which the bond salesman was to survey the transforming political tides of Europe. He observed the ascending Nazis. He appreciated the Italian Fascists and their symbiotic relationship with the country’s powerful business interests. But MacGuire’s ultimate model ended up being a right-wing nationalist league in France called the Croix-de-Feu, which had managed to summon 150,000 supporters, many of whom were veterans.
Oh, looky, another fan of Mussolini.
Yes, MacGuire admitted, it was true that the money came from a coalition of concerned captains of industry. At the moment, they had invested $3 million in the project, and MacGuire estimated he could raise $300 million need be. What he wanted, he told Butler, was for the major general to assemble a paramilitary force of some 500,000 veterans, and to use them to throw President Roosevelt out of office.
“Concerned captains of industry” is pretty transparent code for “rich people.”
An astounded Butler debated where to turn first, and decided to enlist a liberal Philadelphia paper to verify the details of his outlandish story. The paper sent their star reporter Paul Comly French who feigned anti-Roosevelt sympathies to interview MacGuire, who was candid about his views and details of the plot. He mentioned that the Remington arms manufacturers would supply the army, thanks to a working relationship with the DuPonts. “We need a Fascist government in this country,” he told the reporter, “to save the nation from the communists who want to tear it down and wreck all that we have built in America. The only men who have the patriotism to do it are the soldiers and Smedley Butler is the ideal leader. He could organize a million men overnight.”
The DuPonts were tremendously wealthy war profiteers who specialized in making many of the things that went “BOOM” in WWI go “BOOM.” [wik] For a bunch of French-descended immigrants, they were one of America’s wealthiest families, being in the gunpowder business since 1801. When I was a kid I used to take day-tours of the magnificent gardens at the huge DuPont summer house “Longwood”, a masterpiece of American castle-building. Personally I’m disappointed that the holders of such vast wealth were so foolish as to imagine that they’d be dispossessed in an attempt to get the US economy back on its feet, but as many rich people are stupid as poor people, and their economics tend to be on the myopic side, as in “what’s in it for me?”
The New York Times stepped in on the affair and adjudged Butler as a crank:
In a few days, the story hit the news cycle. “$3,000,000 Bid for Fascist Army Bared,” read one headline. Much of the press found the story risible. “Details are lacking to lend verisimilitude to an otherwise bald and unconvincing narrative,” wrote the New York Times. “The whole story sounds like a gigantic hoax … It does not merit serious discussion.”
In other words: “fake news.” Nothing here to see, move on.
It’s basically just that it’s not also a commodity/resource, like gold and silver are. A government simply issues it in order to serve as a currency, and if that didn’t happen, there would be none of it in the economy.
(Sure, somebody else could still make counterfeits. Not really a big problem with putting it that way though…. Suppose there never was a US dollar to begin with, so that there wouldn’t be anything for somebody else to counterfeit. Then, there would be literally none of them.)
Also…. In a sense, its value depends a lot on the government’s willingness to grab them from you, in the form of taxation. (You had said not to grab them, but it’s the opposite.)
For any of our other economic needs, any arbitrary currency would be just fine. (Or perhaps even no currency, if you really want to consider bartering as a serious option.) However, if the US government demands that we pay taxes to it in US dollars, then we need to have a source of US dollars which we can use to pay those taxes. And they don’t (legally) come from anywhere else; the US government issues them to us for this reason. Thus, they have a real value to us — we have to do something in order to obtain them — precisely because the government’s willing to march in and grab them from us. (Not because it won’t do so. It certainly will.)
Because if we have none for it to grab from us, or not enough compared to what it says we owe it, then we could be charged with tax evasion and such. We don’t want that, because that’s not very pleasant. If that weren’t the case, we’d have no real need for them; as I said, we could just use anything else for private transactions and not have to worry about that.
Well, I don’t know where you’re coming from with that statement.
These days, I get very low interest on savings/CD accounts these days. Even a few years ago, when the economy wasn’t a complete disaster (but still pretty awful for those of us at the bottom), it wasn’t pretty. Today, it’s not enough to keep up with inflation. So, it’s like I’m only bleeding cash the whole time it’s supposedly being “saved” (i.e., lent to a bank which itself will get much better returns than I do), rather than getting something that’s actually more valuable in the end.
Meanwhile, the rich have access to countless better options, which aren’t just marginally better than hiding the money under a mattress. So they have no trouble at all keeping up with inflation at a bare minimum (or much better than that). And of course, that’s also leaving aside the fact that rich people, by definition, have lots of money, so it’s less important/meaningful to them that they can get even more.
All that said, despite everything I just said, they do seem to be especially whiny about it.
I don’t know if you would find it interesting, but you might enjoy The Secret Diary of Harold L. Ickes, the first 1000 days. Assuming, of course, that you haven’t read it already.
While I don’t recall the story you reference story being in Ickes diary, there is another one which dealt with executive order 6102. Prior to the executive order, FDR let the public (and particularly the millionaires) know that the banks were collecting the data on who had withdrawn the gold from the banks prior to the bank failures. And that the government was considering publishing their names. While I’m not certain that social pressure would work on the wealthy today, it did then, and when the banks re-opened a lot of the gold was returned.
Shortly afterward it became illegal to own gold bullion, the federal government took the gold and paid the people who owned it a fair market value. Although even today I see websites saying that the government paid the gold owners far below market value, but of course, value is in the eye of the beholder. Most of that gold went to Fort Knox, and the government at that point started setting the price of gold by decree. As I think everyone already knows, the USA went off the gold standard entirely under Nixon (which I believe was the root cause of the inflation of the 1970’s), and Ford signed laws allowing bullion to be owned by private individuals again.
Hard to believe, given that we’ve remained off the gold standard ever since, yet the inflation rate isn’t at the same high rate as it was then.
It’s also hard to ignore the fact oil prices went way up in 1973 and 1979, which affects prices for lots of other goods and services. And I don’t think it’s just a coincidence that those are the same times when inflation was highest.
consciousness razor @1 wrote,
If you have savings/CD accounts, you are not poor. You may not be rich, but you are not poor. You are not at the bottom, there are plenty of people who are less well-off then you are.
Your points about fiat currency are an observation which I think oversimplifies the situation. The idea that the only reason we use US government dollars as our currency is because the government only take US dollars in taxation suggests that other currencies could exist, and be used in the US, so long as they are exchangeable for US dollars when taxes are collected.
This experiment was tried, successfully, in the 1930’s in Ohio when the US economy was in a liquidity trap. There wasn’t enough currency to meet the transaction needs of the citizens, so local banks issued their own script. Technically this was against the law, but no one complained because it allowed farmers to buy petrol, to get their produce to markets and for families to purchase the produce to eat.
But currency isn’t just about taxation, it has a direct impact on inflation and also the interest rates you are complaining about on your bank accounts and CDs. The amount of currency in an economic system has a huge impact on inflation. Actually, I should amend that a little, the amount of buying power citizens as an aggregate has has a huge impact on inflation. Physically adding more currency into an economic system devalues the currency against goods, and creates inflation. The same affect can be created by increasing the buying power of citizens, which we saw in the 1970’s in the USA when credit cards because common, and we are seeing in the Chinese economy now as purchases on credit are becoming more common.
Not having enough currency in an economy can create deflation. The value of the currency rises in comparison to the goods.
This is harder to reach in an economic system because wages tend to remain the same even if the amount of currency decreases. Even if the same dollar buys 10 apples when it used to buy 1, employees want to be paid the same dollar amount for the work they do. When the value of the currency, usually through scarcity, raises high enough, people who have money are unwilling to part with it. Workers are laid off, leading to less currency circulating in the system, and more being hoarded by the few rich people.
For decades, the Federal Reserve would regulate the amount of inflation bay regulating the supply of money. Setting the interest rate, which the Federal Reserve also has the power to do, has a lot less impact on the economy (or at least it used to), than setting the reserve rate for the banks. The bank reserve rate meant that banks couldn’t issue loans of greater value then a proportion of the assets they have. I.e. if the federal reserve sets the rate at 25%, the banks can issue loans (money) to the amount of 4-times the assets they control. If the federal reserve changes that rate, banks can issue more loans, or call in loans to meet the required rate. This controlled the amount of currency available within the USA economy. Raising the reserve rate would reduce inflation, while lowering the reserve rate would increase inflation. The feds, historically, would like to keep the inflation rate at around 2%.
In the past thirty years, however, since the adoption of supply-side economics and the trickle-down theory, the inflation rate has slowed. This is very likely due to a reduction of the amount of currency (or buying power) in the general population. The fed has reduced the reserve rate to practically zero, and the amount of currency has not shifted. The fed has lowered the interest rates in order to encourage businesses to take loans, and nothing has shifted. This result is very likely a symptom of the increase in inequality in our economy. There are a small percentage of people who are sitting on the majority of the wealth, the buying power of the average citizen hasn’t increase much since the 1970’s. The difference is that we have different things to purchase, a lot of new shiny computers, TVs, and digital watches. So inflation is low, interest rates are low, and the middle class is shrinking.
The upshot of this massive screed is really to point out that currency (whether tied to a commodity like gold or strictly fiat) has a lot more complexity in an economy than simply being the medium from which tax revenue is collected.
During colonial times, during coin shortages some stores would issue tokens. Small denominations like a penny or farthing.
Depends.
It’s nasty on those who are on fixed incomes, such as pensions or annuities.
US oligarchs never seem to appreciate that Teddy & Franklin Roosevelt are two of the main reasons the USA has never hah a revolution complete with firing squads and guillotines.
BTW, Marcus, you write as if you conflated wealth with income. Different things.
consciousness razor @3 wrote,
I would say this is evidence for my point. There have been wide fluctuations in oil prices since the 1970’s an we haven’t seen the inflation rate as high as it was then.
I remember being taught in my economics courses that the inflation in the 1970’s was due to OPEC. But having given a great deal of thought about the possible causes of inflation, I am pretty certain what I was taught was wrong.
There is a very technical definition of inflation. Inflation happens when the supply of currency is greater than the need for currency in every transaction. That is, if people have more currency they are willing to lose some of the value of that currency because they have more than they need for that transaction. I know, no one thinks they are giving away money, but the result is that if someone is willing to pay $1 for an egg which would have cost $0.90 a week ago, they are assigning a higher value to the egg, and a lower value to the currency, than they did a week ago. This only happens with excess currency.
Or increased buying power.
If you are willing to buy an egg today for $1, because you don’t have to pay back that dollar until you’ve earned $1.50. You are using that credit to increase the effective amount of currency you think you have. Yesterday, you wouldn’t have paid $1 for that egg, you would only have paid $0.90. But you want the egg today, and someone is willing to loan you that $1 today (so it’s not coming out of your pocket today), as long as you pay them back $1.05 in a month. So you buy the egg which was worth $0.90 yesterday for $1 today. You just created inflation. The value of the egg compared to the dollar changed. Yesterday the egg was worth $0.90 to you, today the same egg is worth $1.
Now, what did happen in the early 1970’s was that Nixon took us completely off the gold standard. It was the right thing to do. I’m not saying it wasn’t the right thing to do. A country needs to manage it’s currency. Using an arbitrary standard like gold, the currency of a country can be manipulated by world markets and a lot of tools which could be used to stabilize an economy within a country become almost impossible to use. A fiat currency is necessary in a modern economy.
But, it was inevitable that taking the US off the gold standard would do two things. 1. Increase the amount of currency in the country. 2. Allow banks to issue a greater amount of credit. Both happened, and we saw an incredible amount of inflation until the pent up demand peaked and stabilized at a new level.
I do not blame my professors for getting this wrong. I lived through this period myself and the conclusion that the market shocks due to high gas prices was something I accepted. However, after studying what inflation is really caused by, and critically thinking about other possible factors which could have caused inflation, I’m pretty certain I’m right that the primary cause of the 1970’s inflation was as result of the necessary move to a totally fiat currency.
Nope, you’re definitely wrong about that. Poor people have fucking bank accounts, believe it or not. Not much is in them, but they do exist.
I didn’t claim that nobody is worse off than I am.
By that standard, the planet only has a single poor person, who happens to be worse off than everyone else, rather than billions of poor people. I suppose I can only try to convince you that this is a very silly way to use the word. But whatever you do, that’s just not how I or most other people ever use the word.
I won’t dispute that my comment described things in a very simplified way.
I wasn’t explaining the reason we use dollars as our currency. I was explaining why they are valuable — at any rate one thing about them which makes them valuable. We owe them to the government, because the government was given the power to issue currency, levy taxes and enforce its laws. That really does matter to us in very tangible and material ways, and that is what translates into a monetary value.
If we had to pay taxes in some other currency, it would instead be valuable for similar reasons. Nowhere in this am I explaining the various historical accidents which led to this country deciding it would use dollars, not something else or perhaps a combination of dollars and other currencies, or anything like that.
If there weren’t any US dollars, there would be no exchange rate for them. They wouldn’t have a monetary value at all, because nonexistent things can’t have that. But they do exist, so where do they come from? Just from the government issuing them whenever it wants to spend money, that’s all. It’s not dug up out of the ground, like gold is. You can’t possibly find dollars there, because there’s no gold standard….
Anyway, some countries don’t have their own currencies. (They still have economies, obviously!) Or they may have one in some sense, but it’s pegged to the value of another, like the dollar for instance. But that’s not the US, so maybe I just don’t understand what you’re getting at here.
John Morales@#:
BTW, Marcus, you write as if you conflated wealth with income. Different things.
You’ve never heard of property taxes? (Another part of the wealth picture that is often dramatically in play in US politics)
Perhaps I was not clear, but I certainly do understand that particular obvious difference.
Marcus, that’s why my particular phrasing. :)
(it was about your communication, not your knowledge)
John Morales@#6:
It’s nasty on those who are on fixed incomes, such as pensions or annuities.
It’s equally nasty in proportion. The pensioner’s $2000/month pension might no longer be enough to support them if it suddenly loses half of its buying power. But the billionaire is going to think they’ve lost $500mn in the same situation.
They’ll still be fine, of course, but that’s the reasoning of the guy quoted in the article who’d rather spend half of his fortune trying to overthrow the government than to lose it in (presumably) targeted taxes and inflation.
With regard to “the poor” – I am talking about depression-era economy in which there were half a million impoverished people camped around Washington, having lost everything including jobs and homes, who were hanging onto doubtless a few possessions but otherwise in tent cities. They did not have pensions or bank accounts or anything left to lose. An unknown proportion were in debt and were not going to ever pay it off. This was terrifying to the oligarchs.
John Morales@#12:
(it was about your communication, not your knowledge)
I didn’t want to insult my readers’ intelligence with all that Captain Obvious pedantry.
consciousness razor@#10:
It’s not dug up out of the ground, like gold is.
That’s the thing. It’s nice for making jewelry out of and it’s a good conductor, but copper and aluminum are quite good for those purposes and are plentiful. Gold is pretty plentiful, too, except that it has also been arbitrarily decided upon as a medium of exchange. Aluminum is a good example of a problem with such arbitrariness, as are carbon crystals, which have artificially supported scarcity in their value proposition.
I’m not arguing with you, but I don’t see why the “it’s dug out of the ground” argument supports the value of any metal beyond “it’s pretty and shiny!” Which is how it get assigned its value. Gold is valuable because kings and dragons want it, I guess.
I guess it could be like plutonium, which is costly to obtain and therefore carries a substantial mark-up. Which, I suppose, means antimatter is the most valuable specie of all.
Marcus,
In proportion?
Ahem. Again you are contrasting income with wealth.
Anyway.
Pragmatically, given the situation you’ve chosen as an illustration, the pensioner will now scrabble for the necessities of life, whereas the billionaire merely becomes demoted to multi-millionaire status. Still no worries about necessities for them.
So, comparatively, qualitatively nastier for the pensioner.
—
@14, fair enough. I happen to share your opinion about the acumen of your readership.
Not inevitable at all. The government could have easily raised taxes, which reduces the amount of money in private accounts. Or it could decrease spending. Or some combination of both.
It can also try to be semi-intelligent when it decides what to fund, which of course will have different overall effects on inflation. Do we need a bunch of F-35s? Are those needed for anything? Will all the baby-boomers be interested in spending their social security checks on them? Can they get them at the piggly wiggly? Or what precisely happens to that money at the end of the day? And is that better or worse for inflation than building tons of free public housing for the homeless, for example? One thing I’m certain of is that they’re not equivalent.
Anyway, all of those measures can of course be taken with or without a gold standard.
That also has nothing to do with the gold standard. You’re just mentioning things that at least arguably might have affected inflation, but again, those things aren’t the gold standard or the end of it.
Of course, giving banks all the cash they could ever want (so they can charge us tons of money to borrow it from them), as is our custom in this shithole of a country, is not the only way that money could be introduced into the economy.
As many MMT people will tell you, use government spending to lower the unemployment rate, as close to zero as you can get it. A jobs guarantee means that you are increasing the real productive capacity of the country with that money — because those people will thus be working on something that we as a society need and will be useful — rather than just more rich people hoarding it and collecting rents/interest and speculating on stocks and whatnot, which is what happens when you hand it over to rich bankers from the very beginning.
People have too many dollars for not enough stuff? Inflation? Now, with this jobs guarantee, there is more stuff for them to buy, because that money isn’t just pooling up uselessly in some rich asshole’s bank account somewhere, when they might eventually want to spend it on something that isn’t being produced. (Because they’re not actually making anything tangible/purchaseable when they just make profits.) Also, we won’t have the huge losses in efficiency that come with large numbers of long-term unemployed or underemployed people. Besides, that huge public workforce could actually get some shit done for once…. There’s no doubt that there’s plenty of work to do, with infrastructure projects and all the rest. It’s just not necessarily work that a for-profit business is willing or able to spend the money on, which is why the federal government needs to step in to fund it.
consciousness razor @10 wrote,
How many poor people have multiple bank accounts, how many have any CDs? When you imply that you are poor because the interest rates on your bank accounts and CDs (note the plurals) are not keeping up with inflation, I feel that I can justifiably state that you made the claim you are poor. Maybe I shouldn’t have inferred that you meant that when you wrote,
, as a rebuttal to Marcus’s statement that high inflation rates hardly hurt the poor, but I don’t know how I would read that any other way.
I am not setting a standard for poverty. Other people have done that already. I’m saying that you do not meet it. Neither do I.
As for the value of currency, again, your statement that:
certainly implies that a major source of the value to US dollars is due to the government’s desire to use them to collect taxes. I’ve heard that argument before, and it’s backwards. The reason the US government collects taxes in US dollars is because the US dollar is the accepted medium of trade.
Yes, we want dollars because the US government only takes US dollars to pay taxes. That certainly adds some value to them. But if the US economy used a different generally accepted medium of trade, say the Euro, the US government would accept Euros as payment for taxes. Just as governments in Europe started accepting Euros for their taxes (and not Deutschmarks or Lira or Francs) when the Euro became the accepted medium of trade. Creating a unified European currency has caused problems for individual countries, and maybe giving up currency sovereignty wasn’t necessarily a good idea. But we can see that currency is not valued simply because it’s used for taxation.
I think that’s a point in favor of my position. The value of a currency in a country is not determined by the need for that currency to be used for taxation.
I’m glad you acknowledged that the value of currency to people and to an economy is not strictly due to the need to pay sovereign governments that currency in taxes. It may be one factor, but the purpose of currency in an economy is far greater than the need for a common article to facilitate taxation. I’d argue that the need for a country to use currency for taxation is a rather minor reason for the value of a currency, as we find occurrences of taxes being collected by confiscation of goods when dollars are not available. You can’t send your bushel of apples to the IRS in lieu of paying your taxes in dollars, but if you don’t pay your taxes they might very well come and take that bushel of apples.
Well… right. It doesn’t support it, at least not if you’re expecting a very good reason.
I think it’s mainly just a historical oddity. They could make jewelry out of it and crowns and all sorts of gaudy crap that creates a sort of spectacle. It’s fairly malleable, not so easy to find in large quantities, and probably there are some other nice properties that make it somewhat interesting. But obviously, many other things have been used besides gold, so none of these properties are too critically important — just icing on the cake.
Perhaps most important is that kings and dragons have wanted it, and that’s presumably because even earlier kings and dragons wanted it before them. If it’s not broke, don’t fix it. “It worked for them. It’s how they proved how gloriously powerful they were, unlike the peasants who can’t really do this kind of shit. So it’ll work for me.” Probably not a whole lot more complicated than that.
Admittedly, the alternative does require a degree of abstraction that people don’t find very natural or intuitive. That’s maybe part of the reason we still have goldbugs, even though their ideology is clearly way past its expiration date. You have to really sit down and think for a while about how things may work with a fiat currency, and not-thinking is much easier.
consciousness razor @17 wrote,
The government could have easily raised taxes, which reduces the amount of money in private accounts. Or it could decrease spending.
Okay, fine. There are other things the government could have done, and didn’t do, to offset the increase of currency in circulation. As a matter of fact, at the same time this happened, the government reduced the top marginal rate from 89% to 70%. Which probably added to the problem. It was inevitable in hindsight, I’m not saying it was clearly inevitable at the time.
But I think you are missing the point about what happened when the US government moved from the gold standard to a fiat currency. You do know that regardless of how much paper money is in circulation, currency levels are orders of magnitude beyond that? Currency includes all the letters of credit, loans, etc. Banks generate currency, and they do it based on the rules laid down by the federal reserve. When the federal reserve was on the gold standard the price of gold was fixed by the federal reserve. The amount of currency available for banks to lend, nationwide, was fixed by the amount of gold stored in the federal reserve. If the federal reserve had 500 tons of gold, and the GDP needed $5 trillion in currency, that would set the price of gold, and limit the currency available. There was a delay between the need for more currency in the economy and the federal reserve fixing the price of gold, sometimes in the range of several years. One sign that the economy was out of balance was that the actual value of gold in the economy (at this point sold on the black market) was higher than the value the federal reserve set on it. While there were other indicators, that one is a real clue that the economy did not have enough currency for healthy growth.
But then the US abandoned the gold standard. All of a sudden, banks were allowed to issue currency based on their own reserves, and not limited by the gold reserves held by the federal reserve. There were still rules to follow, they must retain a sufficient reserve of assets to meet any potential runs on the bank for example, but individual banks could issue credit based on their own resources and willingness to accept risk. Yes, banks were allowed to accept risk prior to the abandonment of the gold standard, but there were tighter limits to what banks could lend.
The result was a) banks were willing to loan out more money to businesses, who would then put that currency into the economy and b) banks started lending money via credit cards to middle-class individuals who’s current net worth didn’t previously entitle them to lines of credit. Sure, people defaulted on credit cards, people do so today. But the banks made the calculation that most people would not default, and they were proved right. Both things led to more buying power in the economy, leading to inflation in an economy which was not prepared for such an immediate jump in buying power.
Moving on…
I don’t disagree with your government jobs guarantee analysis. At this point I don’t necessarily agree either. I’m still thinking my way through the MMT ideas. I think there are some flaws in the MMT ideas, but I don’t think I can articulate them clearly enough yet. I need to keep studying them and thinking about them. I’m leery of jumping on the MMT bandwagon because I saw what happened when Milton Friedman’s theories were adopted by governments . Friedman’s work was thorough and very insightful, as theory. It bore little relationship to how the world economies worked, and continued to promote the fiction of perfectly rational economic actors. They don’t exist.
As far as the jobs guarantee goes you will end up paying for people to not work. I think that is inevitable. At that point you have a UBI. I think a UBI is possible, but it will unleash demand which is currently held in check by lack of buying power. Moving away from a discussion about MMT or UBI; just raising the minimum wage is going to increase buying power and result in inflation. I think raising the minimum wage is necessary, but it’s been so long since it’s been done we are going to see an inflationary shock. We may not, if the increase in minimum wage is mainly used to pay off debt the shock will be spread out. We can predict that an inflationary shock is a highly likely outcome of raising the minimum wage, so we can do things to offset it. Raising taxes on the rich probably won’t be enough. I support both increasing the minimum wage, and raising taxes on the rich, but the buying power for either group is already so lopsided that I wouldn’t count on one offsetting the other.
For a UBI or jobs guarantee, to avoid a large inflationary shock we probably need to move slowly. Start at a lower level, say $10,000/year, and raise it by 2-3% per year until you reach the point you want to be at. I know people are hurting and a UBI would help them, but we don’t help them by creating an inflationary shock which makes the UBI effectively worthless and damages the savings of the middle class too.
But this is far beyond the point of the original post or our discussions about currency. I think I understand currency, I do not yet feel that I’m competent to more than just make general comments on MMT.
It’s literally a “jobs” guarantee, meaning you hire people to do work. It’s right there in the name. It is work, like any other work, and there is nothing magical about it being “public” rather than “private” work which (inevitably or unavoidably or any such thing) transforms it somehow into non-work. That’s just pure, unhinged, Republican silliness. And I don’t buy into that.
It is definitely not a check in that you just get in the mail, like a UBI, without doing a job. Because it is a jobs guarantee. Not sure why you would think it wasn’t, but that’s what I am in fact talking about, not some thing which calls itself a jobs guarantee that is secretly something else….
Why? That doesn’t seem obvious to me. If your employer makes a lot of money (or the shareholders of that company do, etc.), and that money now needs to go lower-wage employees, this state of affairs somehow leads to an overall increase in prices? Why?
It’s exactly the same amount of money as before. That total amount is not what has changed. It only moved from one place to another in the private sector (more or less, from the boss’s account to yours). But you’re claiming there’s more of it. How did that happen? And if that’s not literally what is going on, then it’s not clear why you’d call that situation “inflation,” in the traditional sense. You can say that some prices may go up — it’s quite possible that they do — but it’s not because there’s more money floating around, or less actual stuff is being produced to match that supply of money, or a combination of both.
There could be a relatively small effect due to an actual increase in public spending (= more $ pumped in from out of nowhere, because Congress declares it to be so). That’s because at least some more would go to lower-wage government employees, assuming there’s no corresponding decrease for its higher-wage employees. But actually that assumption does not in fact need to be made, so even that isn’t strictly necessary. But I’d happily admit that it’s probably what would happen, since Congress doesn’t tend to like reducing its own salary for example.
Interesting discussion — thanks for making it at the level that us dabblers can mostly comprehend.
I’ve been trying to wrap my head around MMT recently, partly as it’s been explained in this and other comment sections around here. My understanding of it is it posits that the purpose of taxes isn’t necessarily to fund the government, because the government can basically create money out of thin air. If we all had to pay our taxes in cash, and rather than depositing it the government just piled it up and burned it, it wouldn’t have any real effect on the economy because the government could just print extra. Rather, the purpose of taxes is to prevent inflation by soaking up money out of the economy so excess currency doesn’t drive its value down. Government spending is a spigot to the economy and taxes are the drain. So wouldn’t the inflation of the 70s be the fault at least partially of government deficits?
And the flip side as I understand it is that, as long as inflation is under control (as it currently seems to be), then deficits are no big deal.
Where I’m going with this is that it is likely that, between the Trump tax cuts and the COVID relief bills that have passed, we are likely to have all time record deficits in recent and upcoming years – Biden may possibly muscle through some kind of modest unwinding of the tax cuts, but he’s not going to be able to get revenue anywhere close to matching recent expenditures. But the money that the government is sending out is mostly going the people at the bottom who are going to spend it on rent and groceries — this isn’t money that is going to necessarily end up in bankers’ hands to make big loans with. So a question to the assembled smarter-than-I people — in your opinions, are these deficits likely to drive up inflation or not?
I don’t have a great deal of time now that the weekend is over and I need to get back to work, but a couple of points:
consciousness razor @21 wrote,
What work are they doing? One of the economic problems facing us in the decades ahead is the labor market glut. I.e. more people available to do work than jobs are available for them. Then again, not everyone is able to do all jobs. Someone wheelchair bound won’t be clearing garbage from streets. Yes, there are a lot of jobs a person with disabilities can do, and an effort can be made to match people to appropriate jobs. But, take for example the manufacturing plants I’ve worked with over the years. The one I work closely with now is an electronics assembly plant. They populate PCBs with components, but those PCBs in a case, and ship them out. For actually running the line we need about 20 people, over three shifts, to make over 3 million parts per year. There are another couple hundred people supporting the line; engineers, purchasing agents, and quality teams. When I first worked with this particular plant, thirty years ago, there were twice as many people making half as many parts per year. All mass production manufacturing is heading toward more automation and fewer people.
The next stage in manufacturing will be mass customization, and can already see it happening in the larger cost goods. If you have a house built there are more options than ever. If you order a new car, there are dozens of combinations of options, many of them at no additional cost. I recently purchased a print-on-demand book and I could specify if I wanted leather covers or clothbound. All of this is happening without increasing the number of jobs available.
A government jobs guarantee isn’t any good unless there are jobs available.
There another point to consider as well. Is the government jobs guarantee going to be creating jobs which compete with existing privately-owned companies? Will that put those workers out of work? Or does the government pay the private companies to hire more people?
Besides creating jobs, other reasons given for a government guaranteed job is to provide a wage floor, and to ensure consumers have money to spend to keep the money circulating. Strictly relying on government created jobs for this means people who are unable to work, for whatever reason, will not get support. So to correct this, the next stage will be to have a program where those people are also getting the same basic level of income that someone in a government guaranteed job gets.
All the above factors (and others I didn’t list) means that any government guaranteed job program will evolve to a UBI program over time. I’m not saying that’s a bad idea, but when you talk about government guaranteed job programs you either have to be clear that some people in society will not be covered by it, or that it will expand into a UBI type program over time.
consciousness razor @21 wrote,
That total amount is not what has changed. It only moved from one place to another in the private sector (more or less, from the boss’s account to yours). But you’re claiming there’s more of it.
I am not claiming there is more money in the economy, but more money in circulation in the economy. I know I haven’t made that distinction before, but it is an important one.
Let’s look at this another way. Let’s look at ROI, return-on-investment. When a bank, or a rich person, lends/invests money they expect a return on that money greater than what they lent. This money doesn’t flow through the economy, it boomerangs. And when it returns to the wealthy, it has taken a little more money out of circulation than it put into circulation. Yes, there is temporary increase in currency in the economy, but over time there is a net decrease. That’s why I can’t stand to watch shows where people are pitching ideas to private investors, I know that the private investor will provide money, demand an ROI, and do no work in developing the idea. And since they usually take a stake in the business, unlike a bank loan, they will siphon away the profits forever while providing no value. If the investment fails, they can write it off against their taxes. They take no risk. Private investors are like giant mosquitos sucking the life-blood out of the economy.
Now look at the consumer who is not expecting an ROI, but just buys things. These are the people who drive the economic growth because they are not expecting any return. When they buy a new washing machine, that money siphons through the economy going to all the people involved in the creation/distribution/selling of that product who themselves use that money to buy different products. There are a lot of transactions which occur, and almost every one helps circulate money in an economy. Of course, in every series of transactions there is some siphoned off to people who won’t put it back into circulation. Those are the wealthy people who will let it build up until they can lend (not buy) that money for a ROI.
When the minimum wage goes up, as it should, the lending class, the wealthy, the people who use a large amount of their money as investments and not for spending will get less income. As you said, the boss won’t earn as much. But that money will go into the hands of people who will spend every dime they get. The rational economic agent, who doesn’t exist, would use the extra income in paying down debt and increasing savings. The real person who gets 30% more money every month will use most of that increased cash to purchase things they’ve wanted. They will buy new televisions, a new used car, maybe a down payment on a house, computer games, cable TV, vacations, guns. The boss already had all of those things they wanted, sure the boss would by more, but not at the rate or quantity that the workers will.
The buying power of the general population will increase, which increases demand which will very likely cause some inflation. How much inflation? I don’t know.
brucegee1962 @22 wrote,
First, I am not smarter than you. For the past twelve years (hmm, it may be 15 now) I’ve been studying economics as a hobby. I’ve read most of the original texts, and I’ve found that many of them were miss-represented by the several economics courses I had in college. Some things I know fairly well, others I’m still trying to wrap my head around.
Next, inflation isn’t necessarily a bad thing. Or a good thing. It’s a reaction in the economy to the amount of currency being spent in the economy. As long as wage level increases keep pace with inflation the average worker will not even notice much of a difference. I.e. if their food budget takes 20% of their income, and both the cost of food and the wages they receive rise due to inflation at the same rate, 100% inflation does not change the fact that 20% of the workers budget goes to purchase food.
What a worker might notice is that the fixed-rate purchases they have made on time is taking up less of their budget. Their car payment, their mortgage (assuming they don’t have an ARM), is relatively cheaper, i.e. taking less of a percentage of their income. The lending, rent-seeking, class hate inflation because of these fixed-rate returns. If you have negotiated a 5% ROI and inflation is 10%, you’ve lost money. And the value of the wealth you’ve hoarded has also dropped.
That is, of course a serious over-simplification as there is not only significant hysteresis in the system between inflation caused price increases and worker wage increases, but there are market affects which can impact some goods and not others. E.g. the cost of apples may not rise due to inflation as efficiencies in production may offset the inflationary pressures. Or an outbreak of hoof-and-mouth disease creates scarcity which drives up the cost of meat far more rapidly than inflation.
This is why economic predictions are usually garbage. Economics cannot predict market shocks. Economics does best at looking backwards and explaining why something which did happen caused the next thing to happen, but it is very poor at predicting the future. That being said, there are some general things which can be said, and there are times when economics can predict that something will happen eventually without being able to predict when. For example, by the end of 1998 it was pretty clear to anyone who even had a cursory knowledge of economics that we were in the midst of a bubble akin very much to the to the South Sea bubble from 1711-1720. I dumped all my stock at that time and purchased my first house. It took another two years for the bubble to burst, and if I had stayed in until just before it burst I would have made significantly more money. But I had no idea how long it would last, so I pulled my money out. I was lucky.
As for your question, the important thing to consider is what the influx of money is going to be used for. The initial stimulus checks were largely used for rent and food. This money replaced money which had already been circulating in the economic system, but was pulled out of the system when employers started laying people off. My gut feeling that about 60% of previous stimulus money was used in that way. Why do I say only about 60%, and what about the other 40%? My guess is about 60% went to replace lost earnings because the initial stimulus package was sent to pretty much everyone. I got stimulus money myself, and I never lost my job. I used my money to purchase gift cards from local restaurants who were struggling. I recently found out that my aunt gave her stimulus money to her hairdresser, because the hairdresser needed it more. The actions I took, and my aunt took, and that a lot of people took didn’t add to the buying power of the general population.
But here’s another facet. I work in the automotive industry. All the OEMs looked at the economic shutdown and started looking at temporary layoffs, so did all their suppliers. Their reasoning was sound, with a depressed economy fewer people will be buying new cars. Yet, when the stimulus checks hit, there was a surge in new car orders which took the entire industry by surprise. Apparently many people who received, as a family, a $1200 check, which was unexpected money for them, then used it as a down payment on a new car. The automotive industry was caught flat-footed and we are still trying to recover.
So, what will be the effect of the next stimulus package? My prediction is this, If it simply replaces lost wages it will have little to no impact on inflation. If it only goes to the wealthy, who won’t spend it, it will have little impact on inflation. If it is large enough to not only replace wages but increases the level of currency in the economy it will create inflation in proportion to that amount. Looking at what the proposals are, my gut feeling is that the next stimulus package will be more targeted to replace lost currency which was previously in circulation and have little impact on inflation.
But because economic agents are not rational, and economics cannot predict catastrophic events (not necessarily bad events, but rare ones), my prediction is almost certainly wrong.
Anything that needs doing. Can’t think of anything? Get an imagination. Or just keep reading below, since I discuss that a bit later.
You act like you’ve already been there to see it in action. What we do have now is some in the private sector making a choice to decrease the number of workers, in favor of automation and so forth. Since the government is not in the business of making ever-larger profits, at all costs and no matter how it impacts our society, I have no clue why you would assume it must be the same story.
So what? I’m not able to do all jobs, and yet I am working. Didn’t seem to stop me. Probably hasn’t stopped you. Seems like a weird thing to say in any circumstance.
What we would do is not hiring everyone to do all jobs. We would be hiring some people to do any one of a large variety of jobs which need to be done. And they wouldn’t actually need more than one job, since one will pay them a decent enough wage that they can actually live on.
So you don’t actually have a coherent point to make here. Noted.
I fail to see how any of this is relevant to a government jobs program.
That’s why we make them available, with the program that guarantees them. We’re not just waiting around for the invisible hand of the free market to drop them on our laps. “Jobs guarantee” is really not hard to grok. Do you suddenly have a problem understanding ordinary English words? Or are you just hoping that maybe one of your random complaints might actually stick?
Leaving aside federal government positions for the moment, local governments around the country have all sorts of stuff that needs to be done. Building and repairing infrastructure of all kinds — roads, buildings, public transportation, water treatment plants, you name it. Teaching kids in our public schools, expanding that to include free preschool/early-childhood education, running after-school programs and so forth. Providing mental health care, addiction counseling, and all sorts of other social work. Running food banks, homeless shelters and other things like that. Simply expanding the number of employees in any government agency you care to name, so that it can get more shit done, whatever that may be.
I’m sorry, but it’s really bizarre that you’d think there is a shortage of things to do, because there certainly isn’t. Where have you been? Not the US, apparently. Or you haven’t been paying attention to all of the shit that hasn’t be done over the decades. We could actually start doing some of that, and I don’t think we’d ever run out. But this isn’t forcing anyone to work — it’s not prison labor — nor is it specifying ahead of time that there must be a certain amount of work in order to be successful. If there really isn’t enough demand on either side, not enough interested workers or not enough work for those people to do, then not a single thing that I’ve said has told you that we’d be trying to juice up the numbers on it anyway. There is just no good reason to be opposed to that.
To be clear, the plan is that cities, counties, states, territories, etc., can get funding for all sorts of stuff from the federal government. (Because if they were to fund it themselves, that would certainly require tax increases, whereas we actually can run a federal budget deficit like we do almost every year.) That will not be money for purchasing stuff from private businesses or for contracting them out. The funds will be for hiring people into the public sector, particularly where unemployment is high and those new jobs are most needed, in a jobs program which is federally-funded and may typically be locally-administered. Much like the numerous programs we had during the New Deal era. Hardly a radical idea, but of course that doesn’t stop some people from losing their fucking minds over it.
@15, one other crucial aspect of gold that makes it useful for currency while antimatter and tulips are not such good candidates is its stability. Gold does not easily react with atmospheric gases including water vapor and that powerful oxidizer, oxygen.
I admire your passion.
I’m not losing my mind over it, but you really ought to take a closer look at, for example, the New Deal jobs programs. Those were not guaranteed jobs for everyone who wanted a job. The depression-era unemployment didn’t vanish once those programs started.
I’m perfectly fine with having government open more positions and hire people for work. You are right that there is a lot of work which could be done. But if the government guarantees they will find work for everyone who wants to be employed, we also need to accept there will be people who the government has no use for but still want to be employed. The government guaranteed them a job, so do we give them busy work so that they earn their income?
I don’t know about you, but I spent 12 years as an elected official on the board of my township. If the township had the ability to hire anyone who wanted to be employed, and put them to work, there are things which we could have done faster than our current plans. The non-motorized trails we want to put in would be done, clearing away dead trees from the roadways would happen, improvements to our parks and more recreation classes would have been possible. A few social workers, and teachers to help tutor the children. All things which a variety of people could do, but probably no more than twenty permanent employees and maybe another fifty people for seasonal, outdoor work for no more than 3-4 years. If our township was forced to hire 50 people full-time because of a government job guarantee, half the time they would be sent home with no work to do. This isn’t a lack of imagination, it’s a lack of need for labor. Our township hall needs repainting, but we don’t need to do it every year.
@23 Is the coming ‘labor glut’ any kind of real problem or is it a manufactured problem characteristic of a highly problematic society? The whole notion is absurd to me.
The ‘labor glut’ is just that the wealthy want all livable work to be done in their interest, as they control most of the resources necessary to live. All labor not devoted to their interests is ‘waste’. Hence their obsession for eliminating taxes at the expense of public welfare.
@26 your imagination seems limited by things that were most highly prioritized while you served for your township.
Quick brainstorming from my limited perspective: you could expand your library and community center hours, have better, more regular public park and litter clean up, create town art exhibitions and performances, increase cultural activities, create an office of local exploration, create or strengthen a community garden program, start an indigenous landscaping program. Offer public classes on technology and software, money management, useful domestic skills or other programs children, seniors or the general public are interested in. You know, actually investing in a local culture. Restructure any local law enforcement to include unarmed, de-escalating community officers intended to actually serve and protect the community, to listen to community problems and try to fix non-violent lawlessness without the use of violence.
@23,
No, the labor glut is a serious issue in economics. When it arrives is not foreseeable, but trends point toward it. It could be a utopia or it could be a wasteland. If it does materialize I lean toward wasteland.
The trend in manufacturing is toward better and better control systems and fewer and fewer people needed to run them. If we project far enough in the future, it is quite possible that objects will be created on demand rather than manufactured in bulk ahead of time. 3D Printers and that technology is showing how this can be accomplished. Sure, today the typical 3D printer uses limited materials and most of them cannot mix materials without human intervention. But this requirement for human intervention is not an insurmountable restriction. I mentioned a print-on-demand book I ordered from India, that was manufactured entirely by machine. Someone loaded the paper and feeds the machine for the binding thread and the leather cover, but as long as the hoppers are full any book they have in their catalog can be printed. If the hoppers contain enough material, one person can run the factory. If the hoppers can be filled by autonomous equipment, delivery trucks, forklifts, etc., you could reach a state where the factory has an owner, and signs the purchase orders for raw material and the postage charges maybe taking a day a week, and other than that simply rakes in the profit.
That type of specialized factory may be something we see within our lifetime. And it’s an indication of what can happen in other industries in the future. If you want a new set of kitchen knives, either you get Marcus to make you a set, or you order a set which is then made and shipped to you automatically. Oh, there will still be manufacturing jobs, but there will be a lot fewer of them.
So where is labor in this future? What role does labor have when all of manufacturing is done automatically? The immediate answer is in the service sector. So what about the service sector? Can it take all the lost manufacturing jobs? That’s hard to say. I think some jobs, like bartender, will be hard to replace with automation. Other jobs, like short-order cooks? May be at risk. So there will still be jobs.
But a lot of jobs revolve around manufacturing. About 300,000,000 jobs in the world are manufacturing jobs, about 10% of the current number of employed people. About 16,000,000 manufacturing jobs are in the US, and that number keeps trending lower. Yes, the job numbers do fluctuate year-by-year, but the trend is down. This number doesn’t include ancillary jobs which are also likely to be impacted by technology developments. How many bars near the factories will shut because the factory closed? How may truckers will be working when autonomous driving finally gets going? How many truck stops will shut down?
That’s one example. But in theory a lot of jobs, from construction being done by pre-programmed drones, to re-forestation by autonomous vehicles, to mining, lumber mills, roadwork, carpet cleaning, bus drivers; hundreds of jobs. There will still be a need for software engineers to build the tools, design engineers to build the models, and quality engineers to verify they are correct, but the number of people needed will drop and the skills required from the remaining people will be very specialized.
When will this happen? No one really knows. Will there be enough service jobs to handle the extra labor available? No one really knows. But the trends are heading that way; asymptotically, but still going in that direction.
There are temporary solutions; shorter working weeks, and working hours is one. If you need 40 hours of labor to produce a product, having 8 people work 5 hours each spreads the work and the reward among more people. But this doesn’t appear to be the direction the oligarchy wants to take. Maybe if they didn’t have to pay the healthcare costs of 8 people they would find shorter working weeks more attractive. Of course, they are fighting against that too.
John Galbraith wrote about the coming end of scarcity. What he was envisioning was that so many goods would be available to so many people that the laws of supply and demand, the basic foundations of our economic principles, would no longer apply. If there is enough supply, there is no scarcity, and no unfilled demand. Everyone has enough to eat, enough clothing and shelter, and enough freedom to travel, or to get education, or to just watch TV as much as they wish. He envisioned a cashless society where there was no need to have a medium of exchange because exchange was not necessary, any reasonable request could be filled without a transaction. I think this is where Roddenberry got the idea.
Marx wrote about how all value is created through labor. In Marx’s view, the value of gold is not because of scarcity, but because of the labor needed to purify it, and the labor needed to defend it from others who desire it. If items can be created without labor, what is their value?
That’s a utopian vision of the future. It’s not impossible, but to get there we would need to put societal restrictions on things which appear to be part of human nature. The desire for power over others; which leads to demagoguery, would need to be managed by society. The impulse to create tribes, in-groups and out-groups, us vs them, would need to be sublimated in into other channels, like sport. There are a lot of very human impulses which, if we ignore, will continue to prevent equality in society.
The dystopian view of the future is one where money is still used as a medium of exchange. Where the price of goods is set not by supply but by demand, i.e. the widget can be made for $0.05, but I’m selling it for $50 because that’s what people will pay. Where there is massive unemployment because there isn’t enough work, or all jobs are service jobs and we do each other’s laundry to get enough money to eat. Maybe we all become independent workers, creating specialty items for people who want something which is not machine made. Maybe this isn’t possible because the raw materials are too expensive for anyone but the global manufacturing firms.
There are other possible outcomes as well. If the population naturally declines over time, and it might start doing that sometime in the next 100 years, the amount of goods needed to appease everyone will drop. Would it drop enough? Who knows.
But the coming labor glut is not based on any wealthy idea that all the work needs to be done in their interest. To be honest, I don’t think they think much about labor as long as they have enough to keep their factories running while paying the workers a low wage. In economic theory the possible labor glut is a real concern, even if it doesn’t ever really materialize. As I mentioned above, economic predictions are notoriously uncertain.
flex:
Nobody’s forcing your township to hire 50 people. I said nothing of the sort. If you wanted to refuse the federal funding, because you’re too oblivious or hard-headed to understand what can be done with it, then like many conservative asshats have demonstrated countless times before, you could make many of your constituents suffer for your foolishness.
Don’t want more funding for Medicaid either, because “Obamacare bad”? Then don’t take it! People will suffer and die. It’ll be great! You can feel very satisfied that you made the right choice. Now sure, you may get reelected for that reason or you may not. No guarantees that it helps your political career. But that’s the deal, take it or leave it. It’s not “you must hire X people to do … I don’t know what,” because that’s dumb and obviously unnecessary.
The aim is to make unemployment go down as low as possible, but it’s not to somehow make it go into the negatives. So you don’t actually have to worry at all about the idea of it going into the negatives, because nobody has any intention of even trying to do that, whatever you think that is supposed to look like.
Sounds like an okay place to live, which doesn’t have much unemployment. Good for you (assuming you even know what you’re talking about).
The rest of the country is a big garbage fire, with tons of stuff worth doing and tons of people to do it.
Sam N:
Yes, certainly. And it’s worth noting that, no matter what kind of jobs they may be (but teachers and jobs trainers are definitely a good idea), this will mean people are working. In other words, they get more work experience and may learn some new skills, which will make them more attractive candidates to private firms, should they want to work again in the private sector. A lack of skills or experience can be the reason a person was unemployed, underemployed, or couldn’t find a job in the line of work they were interested in doing. This can help to address that, while something like a UBI simply doesn’t.
It’s also worth mentioning some other nice things that can come along for the ride with higher employment. Lower rates of crime and domestic violence, drug abuse, suicide, etc. Obviously fewer people going hungry or bankrupt, being unable to pay their bills or rent/mortgage or whatever. They could even try to save some money for the first time, because I’m told by some kind of an authority on the subject that poor people don’t have any savings at a bank or credit union, or at least no more than one (no matter how little it may be).
And presumably, there would be less political unrest, perhaps even fewer Trumpists or other flavors of proto-fascist, who at least have no trouble recognizing that our system is utterly broken and not working to benefit ordinary people like them, although they may not know how best to address that. But most importantly, tons of people aren’t stuck in poverty, desperately looking for any way out of it that they can possibly find, because of all of the horrible shit that brings with it.
A new library is being built next year.
Some of the seasonable people I mentioned would be assigned to this. We have a lot of parks, and the current parks department does a good job of keeping them clean. With the newer lawn mowers a park can be mowed quickly, but there are times when there is too much water in the soil and no mowing can be done. Additional labor isn’t really needed.
Not a bad idea. We are a fairly rural community, but there is no reason we couldn’t find some local artists. There are nearby communities which meet the needs of local artists, but again, there’s no reason we couldn’t supplement what’s already available. Not much need for labor though.
a folk arts school is starting in the township. Giving lessons in blacksmithing, haberdashery, broom-making, wooden spoon making, and more classes are being planned. This is being funded by the county, but we are supporting it as best we can. The parks department organizes kickball games, gives away kites in the spring, pumpkins in the fall, and partners with the local library to provide a summer camp, including free lunches, for children from the section 8 housing located in the township.
There are three citizens groups already doing this. One is a historical society, another is a land conservancy, and the third is a bird watching group.
This is a good idea, and I’ve agitated for it previously. There are two community groups in the area who run community garden programs, and I’ve tried to get them interested in getting our township involved. The thing about community gardens is that it takes little local government maintenance. We do have and support a farmers market, and have a local craft fair once a year.
Not certain what you are suggesting here, but we have community groups dedicated to wildlife restoration, they maintain a number of nature preserves and the township owns and maintains another nature preserve. There is a long-term desire to expand these preserves, but they don’t take much labor and what is required is seasonal.
There are already free classes for seniors at the local community college on these topics. There are fee-based classes for non-seniors, which is something which could be done but the approach would probably not be to hire teachers ourselves but to contract the community college for public lessons. No additional labor involved.
Law enforcement is handled at the county level. That being said, there is a citizens oversight committee on law enforcement already, and there is a real effort to engage in community with de-escalation tactics. This doesn’t mean the township couldn’t do more. Or even hire people for this type of work. But again, the number of people needed is small.
I am not trying to be flippant. I know that the township I live in and served in is very privileged and very special. We have a lot going for us, and we do a lot for our citizens. I know that other townships, counties, or states probably have greater needs than our township does. I also know that when I talk to the citizens of our township many of them don’t know all the services and events we already provide or promote. (Some of the citizens even get angry about how much we are doing because their tax dollars are supporting events they choose to not attend.) When was the last time you learned about all the community activities in your municipality? There may be more going on than you think. Or you may be already heavily involved in all of them so I’m talking through my hat.
And getting back to the original question, from the above list how many of them need a great deal of labor?
If you want ideas which would really take some labor, here’s one. I would love to bury all the power and cable lines in the township. That would really cut down on the number of power outages we experience, and make the township a whole lot prettier too. That would take a lot of labor. But that’s very specialized labor. That’s the type of work you hire a company who specializes in horizontal drilling to perform, otherwise you are likely to spend a fortune in drill bits and risk hitting things like water, sewer, or gas lines. It’s a great idea, it would take a lot of labor, but it’s not something you can just hire twenty people off the street to do.
consciousness razor #30 wrote,
Which I fully support. You keep arguing with me as if our goals are different. Our goals are the same.
You are also saying that the way to achieve this goal is through a government jobs guarantee. The government gives a job to anyone who wants to work.
All I’m saying, is that if such a program is created, there will be people in places who want a job but a job isn’t available.
So the result is either:
A) The government creates make-work. Has people perform tasks which are unnecessary in order to meet the obligation they created by giving guarantying a job for anyone who wants one.
B) The government pays people to stay home, thus creating a de-facto UBI
C) The government reneges on it’s promise to guarantee a job to anyone who wants one.
There are really no other options. I’ve never said this was a bad idea, only that the most likely outcome was creating a de-facto UBI (which I’m also not necessarily opposed to) and you seemed to take offence at my suggesting that was going to happen.
What you are arguing is that there are always tasks available for anyone everywhere, and all the government needs to do is to identify those tasks and hire people to do them. My whole argument is that there are not always tasks for anyone to do everywhere there are people. I used my township as an example of how, in this example, there are a limited number of tasks available. I know my township is a special case, but you are arguing a universal condition which just doesn’t exist.
Cripes, I’m not turning into John Morales am I?
I don’t know, let me rephrase my argument a bit. A government jobs program could reduce unemployment without creating an expectation of always having a job available. A government jobs guarantee would reduce unemployment while creating an expectation which cannot be met of always have a job available.
Nope. That is a John Morales argument.
I’m sorry. I’m splitting hairs which probably don’t need to be split. I apologize.
By the sound of it, your township is a place where unemployment isn’t especially high, and you already have a lot of government services.
Again: good for you. But this is not an example of a problem with anything that I’ve said. Do you think it is? What could possibly make you think that it is? I don’t know.
You just misunderstand something about the proposal, if you think it will mean in this type of situation (your township’s, purportedly) that there’s not enough work for unemployed people to do: “there will be people in places who want a job but a job isn’t available.” That doesn’t really sound like your township, at least not as you’ve characterized it so far.
But okay…. Who in your township needs a job, but because you have rather casually made the determination here on behalf of its entire population that nothing more needs to be done or isn’t worth doing, thus there will be no job available for that person who needs a job?
Is unemployment itself not a major social problem that would be worth addressing in your very special community? And did you know that there are other communities in your state, whatever it is? And there are other states with even more communities in them?
Anyway, back to your Very Special Example Township. Have you ever asked this unemployed person anything at all, but particularly to find out what kind of stuff they may think is missing in your community? Such as a job for someone like them, for instance? Or anything else they might say. Just listen. Have you done that?
Is it really up to you to give the first and last word on what should happen there, which types of public works/services would be valuable, which things might be doing alright but could benefit from some expansion, etc.?
Look, I don’t feel like being combative about this. But how am I supposed to regard this as a problem for a federal jobs guarantee, or even with the way that I’ve talked about one in this thread, rather than a problem with how you have decided to approach the topic or with how you are currently willing to think about it? From my point of view, all I see is the latter. Nothing that even touches on the former. If we’re agreed that it’s a good idea, if you can’t think of any coherent and substantive criticisms of that proposal, then I’m okay with that. Let’s just leave it there.
Yeap, let’s just leave it there. I see that my argument is one of definition, rather than substance, and I should know better than that.
I’ll continue to think about what you have said, and I thank you for saying it.
Well, we at least came to some kind of agreement I guess. But I just happened to come across this article, which you may find surprising or at least interesting:
Why Recent American Governments Have Fumbled Crises
“While our population has doubled in the past 70 years, the number of federal employees hasn’t increased (in case you wonder why our pandemic response has lagged).”
I guess I’m sort of old-fashioned in some ways, but I would never feel right saying we should go back to the 1950s. Still, maybe just this once it wouldn’t actually be the worst thing we could do….
Sorry, I fucked up the link:
https://prospect.org/politics/why-recent-american-governments-have-fumbled-crises/
… Major General Smedley Butler*, a respected and tenured military leader…
US military officers receive tenure?!?
… the richest Americans …
The grandfather and great-grandfather, respectively, of two recent presidents took an active part in this conspiracy.
Nearly all we know about the plot is the result of an investigation conducted by the House McCormack-Dickstein Committee in November, 1934.
Used-book sleuths might also look for Jules Archer’s The Plot to Seize the White House: The Shocking True Story of the Conspiracy to Overthrow FDR (1973; reprinted 2007).
*No known relation to me, but possibly: my branch of the Butlers first settled in Smedley B’s native state of Pennsylvania. I have long sought but never found evidence as to whether his 1930s anti-war work opposed or supported that of Charles Lindbergh and other Nazi sympathizers.
Pierce R. Butler@#37:
US military officers receive tenure?!?
Not formally, but high-ranking officers’ pensions can be pretty massive, and a successful officer (especially with 2 CMH!) is close to guaranteed a position until they die in the saddle, if they want it.
“Tenured” was not the word I’d have chosen. “Encrusted old barnacle” might have come to mind.
Marcus Ranum @ # 38 – Maybe “long-tenured” would have better suited the intended description.
… a successful officer (especially with 2 CMH!) is close to guaranteed a position until they die in the saddle, if they want it.
The Smedley Butler bio I read, long ago, said that he finally bailed out with two stars after the Corps top brass, in their delicate and subtle way, made it crystal clear he would never make Commandant.