Who's Subsidizing Whom? And Should We Oppose All New Anti-Poverty Programs as Crony Giveaways?
Well, the new meme on the Left in favor of higher minimum wages seems to be that since many minimum wage workers also receive government benefits, those benefits "subsidize" the employers paying minimum wage. Example from Kevin Drum here. This is utter madness. A few responses:
- The implication is that the choice is between a job at $8 an hour or a job at $15 an hour. But this assumes the jobs still all exist at $15 an hour. Clearly, many would disappear over time, either as companies automate or as consumers reduce purchases at now higher cost establishments. If the alternative to offering a $8 an hour job is in fact offering no job at all, then minimum wage employers are reducing government benefits payouts.
- The Left has pushed eligibility for many programs (e.g. the changes in Obamacare to Medicaid) into higher income bands of people making more than 100% of the poverty line. How is this creeping up of transfer program eligibility somehow the fault of employers?
- Does this mean that all right-thinking Americans should oppose any future expansions of transfer programs as crony giveaways? And if you say no, that they should not be thought of crony giveaways in advance of their passage, why should they be considered such afterwards?
- The whole point of many of these programs, like the EITC which is listed among the programs in Drum's post, is exactly this -- to provide transition assistance from not working to supporting oneself. The Left's view on this is, as usual, entirely static. What are the folks who are on benefits and working in food service doing 5-10 years from now? Would they look back on that time as a stepping stone to something better?
- If you require that all employers pay a salary such that none of its workers are on assistance of any sort, which is the logical conclusion of this meme, then you divide the world into two classes -- those 100% employed and those 100% on benefits, with most people in the latter having little or no prospect of moving to the former.
- My company pays minimum wage to the vast majority of our 300+ campground workers. But who is subsidizing whom? Most of these folks are over 60 and on Social Security and find that they need or want more money than their Social Security can provide. One reason for this is that Social Security is a horrible retirement savings program, essentially paying a negative interest rate on the money contributed to the system in the retiree's name. If Social Security were a private retirement plan, its proprietors would be in jail by now. Because Social Security is so lame, older people seek work, and come to me, happy to stay active and earn money to supplement their government checks. So am I subsidizing the SSA's inability to provide a fair return?
Rob McMillin:
Once wealth transfer is on the table, the only question is, which gang of organized wolves will get most of the pelf?
April 20, 2015, 9:03 amRob McMillin:
Also, the people proposing these schemes have never succeeded at anything outside of "organizing" and activism. They have utterly no empathy with anyone owning and operating a business, and do not want to hear from those who do. It is as clear a sign as I have ever seen that the universal franchise is a dismal failure.
April 20, 2015, 9:05 amMatthew Slyfield:
Social Security is a Ponzi scheme.
As long as you have a lot more workers paying in to the system than retirees taking money out, it works reasonably well.
With increasing life expectancies and declining birth rates it is a time bomb waiting to go off.
April 20, 2015, 9:42 amRichard Harrington:
I believe your penultimate (either 100% working or 100% on welfare) point is actually the unstated goal. Divide the world-pie into three pieces: downtrodden poor, downtrodden workers, and evil rich people. Inflate the workers pay through union/legal efforts (taking money from the evil rich through productivity decreases), and bring the downtrodden poor up to some minimum, again by taking money from the evil rich.
April 20, 2015, 9:48 amFelineCannonball:
FYI, Kevin's getting his bone marrow wiped out for a bone marrow transplant today. He has a large number of guest bloggers filling in for the next six weeks or so. This one is from an assistant editor, Hannah Levintova.
You'll probably see stuff all over the map while he is gone.
April 20, 2015, 10:16 amirandom419:
Actually, it is the opposite. If you make minimum wage, you have an issue.
April 20, 2015, 11:49 amNL7:
Gets still more complicated if you consider a grocer like Walmart is also facilitating food stamps and is selling food (including fresh produce and proteins) at prices that would be considered cheap when compared to a lot of other supermarkets. So if SNAP depends in part on grocers like Walmart to distribute the food (since SNAP is just "school vouchers" for food), and if Walmart is selling the food at a price that is a big markdown from what would've previously been considered the market price, then in both ways isn't Walmart aiding the welfare state?
I think the confusion is a typical one of associating "things poor people do" with "things that make people poor." This thinking was behind a lot of "slum clearance" that targeted certain neighborhoods for supposedly being dirty and unhygienic, prohibition of drugs that supposedly make people lazy or criminal or stupid, and exclusion of fashion choices associated with poor people or young people.
April 20, 2015, 12:01 pmmorgan.c.frank:
if we are going to berate all employers whose workers get federal assistance, well, then pretty much every employer is going to be in trouble.
something like 70-75% of americans are net, after tax, recipients of federal benefits.
even households in the top income quintile are gross recipients of (on average) $11k in federal payouts, but at least they are paying in more than they take out.
https://www.aei.org/publication/new-cbo-study-shows-rich-dont-just-pay-fair-share-pay-almost-everybodys-share/
you could make this "the feds subsidize X" claim about anyone on a gross basis.
the left is just looking to try to invert the reality of the narrative.
the real subsidization here is the top 25% of taxpayer who are, on a net basis, paying for the entire federal government much of which amounts to wealth transfers to the lower percentiles.
April 20, 2015, 12:21 pmmorgan.c.frank:
rob-
estonia has an interesting take on that.
they suspend your right to vote if you go on welfare and do not give it back until you have been self supporting for some period of time (i forget how long).
this seems like a very interesting idea (not that you could ever get it passed in the US).
you can either support yourself, pay into the system, and have a say in governance, or you can be supported by the state but have no say in how it's run.
what you cannot do is be on welfare and vote yourself more.
it's really quite a sensible idea.
April 20, 2015, 12:56 pmJim Collins:
First time I've heard it put that way. May I borrow or blatantly steal that? I'll give credit to NL7
April 20, 2015, 1:04 pmdemockracy:
Again, straining at a gnat while swallowing a camel.
The Fed (the U.S. central bank), according to its own audit, pushed $16 - $29 trillion out the door to cure the frauds of Ponzi capitalism in the wake of Lehman's bankruptcy in 2007-8. The Dallas Fed estimates the total financial sector subsidy at $10 - $13 trillion. *ANY* welfare program for poor people is chump change in comparison to the subsidies enjoyed by the corporate / financial sector.
If Social Security were a private plan, its assets (like many pensions) would have crashed come the Great Recession, thanks to the siren call of Ponzi capitalism. Privatization turned out to be such a great idea that Chile abandoned it (but that didn't stop the "Chicago boys" from getting Pinochet to shove it down the population's throat when the CIA overthrew Chile's democratically-elected government). Uncontroversially, privatizing is often very much worse. I cite health care (uncontroversial), not Nixon/Romneycare, which is roughly twice as expensive in the U.S. thanks to its mostly private nature...and with far worse outcomes. Other natural monopolies like water and power often are more expensive when privatized.
But never mind the threat of [gasp!] socialism, U.S. government spending is *tiny*!!! Ranked against other nations as a percentage of GDP, the U.S. comes in 46th. If the U.S. spent twice what the Chinese do on its military, it would rank 90th (U.S. military spending is roughly six times its nearest military rival, China, and more than either the rest of the world combined or the next 14 military spenders combined, depending on where you read).
Per-capita spending by U.S. government is 31% below the average of the top 20 economies in the world. The idea of "big government" is ludicrous given these facts. (Source: Wikipedia, which cites Wall St. Journal and Heritage as its sources. See http://en.wikipedia.org/wiki/Government_spending#As_a_percentage_of_GDP
So minimum wage workers and welfare recipients are who deserve attack, or for that matter even attention here? Really?
Still straining at a gnat, while swallowing a camel, I say.
Incidentally, public policy is so in the thrall of the right (who has lost most recent elections, but hey, who's counting?) that it's unlikely to occur, but we could raise Social Security benefits without raising taxes.
To keep your heads from exploding, let me 'splain:
1. Government makes the money. In the U.S. it makes it without limit, any time. It does not need your money. If you paid your taxes by bringing cash to the Treasury building, they would mark your bill "paid" then shred the dollars. They don't need 'em. Taxes make the money valuable; they don't fund government. Obviously. Where would taxpayers get the dollars to pay taxes (or lenders the dollars to lend) unless government spent them out into the economy first?
2. "B...but if you just print money, you'll have [gasp! hyper-]inflation.
Let's say this is a hypothetically realistic proposal: Government with its unlimited dollars could bid up prices (inflation!) competing with the private sector for goods and services which are not unlimited. But who else is bidding for the unemployed? Or the slack in manufacturing? (Hint: No one.) A small increase in Social Security benefits is unlikely to be inflationary, and a debt jubilee (for the debtors, not the creditors) would likely be a tremendous, non-inflationary stimulus to the economy. After all debt dollars (including the national "debt") have already done whatever bidding they're going to do. We could therefore pay off the national "debt" tomorrow with a few trillion-dollar coins, and experience zero change in inflation.
With the obvious exception of the mentally ill, employing the unemployed at a living wage would eliminate the need for many social safety nets. What do we do with the mentally ill? Try this: http://www.nytimes.com/2015/03/29/magazine/the-radical-humaneness-of-norways-halden-prison.html... unless you'd like to torture them with cattle prods, sort of like we do now. (tongue only slightly in cheek)
So government could guarantee a job to every single unemployed person without raising taxes or causing inflation. What's the downside? The plutocrats would lose the threat of poverty, homelessness or unemployment to induce people to take whatever crappy job was on offer.
...So anyway, is it true camel tastes just like chicken? And how many right-wingers does it take to change a mind? (Hint: numbers don't go that high)
April 20, 2015, 3:07 pmdemockracy:
Taxpayers clearly and obviously do not "pay for the entire federal government." OBVIOUSLY. Where would taxpayers get the dollars to pay taxes with if government didn't spend them out into the economy first?
So it's not "My tax dollars!" (or "My precious!")... You're using government money. The "debt" is just the amount of dollar financial assets left out in the economy. For more about that, see http://www.rooseveltinstitute.org/new-roosevelt/federal-budget-not-household-budget-here-s-why.
April 20, 2015, 3:13 pmdemockracy:
By definition, Ponzi schemes must contain an element of fraud. Where's the fraud in Social Security?
You are apparently under the impression that taxes pay for this program (or any government program). Please answer this question: Where do taxpayers get the dollars to pay taxes with if government doesn't spend them out into the economy first?
Taxes do NOT fund government; they make the money valuable.
Creators of money (governments with sovereign, fiat currencies like dollar, pound & yen, but *not* euro) are FUNDAMENTALLY different from users of money (households).
Yes, I know that even the "socialist" Obama says national "debt" is like credit card debt, but he's as big a propagandist as exists. See http://www.rooseveltinstitute.org/new-roosevelt/federal-budget-not-household-budget-here-s-why for details.
April 20, 2015, 3:16 pmdemockracy:
Exactly what the folks on Wall St. have been saying for centuries now...and as Warren Buffett says of this particular type of class warfare: "My class is winning."
April 20, 2015, 3:17 pmRob McMillin:
The frauds in Social Security are
1) The implicit assumption that future demographics will support current supporters.
April 20, 2015, 3:24 pm2) The widespread belief (but not legal doctrine) that because one paid into the system, one is owed something. (See Flemming v. Nestor.)
3) The belief that there is something in the "trust funds" besides empty promises. The same dollar cannot be spent twice, and yet this is the delusional belief adhered to by many of Social Security's advocates, including many in Congress.
4) The expansion of Social Security to include things that were not really within its initial compass, i.e. as a retirement fund for those on disability. This will accelerate the course to bankruptcy.
skhpcola:
The fraud in the SSA is from the transition from it being the administrator for a supplemental retirement scheme to being a wealth transfer mechanism that pays out billions of dollars to "disabled" people. Entire families get their chil'runs diagnosed as being "disabled," then sit at home on their fat asses and never even consider getting a job. The retirement side has always been a poor return, but the "disability" BS is straight fraud that is causing the SSA's insolvency.
April 20, 2015, 3:25 pmskhpcola:
I know 3 people drawing full SSA disability and they are all barely disabled, but they did find a doctor willing to fill out the paperwork. Two of these people have Harleys and blaze around drinking beer all day...nothing substantially or physically disabled about them.
April 20, 2015, 3:27 pmAndrew_M_Garland:
That is a whole lot of opinion. Why should I believe it? There are no links and no claimed personal experience.
I thought that when governments spend less, it is called efficiency.
April 20, 2015, 4:00 pmAndrew_M_Garland:
In your model, the government pays for itself by printing money. That would be a neat trick.
Money is intermediate. The people in the government and those who receive government transfers receive the real resources which the money buys. Those real resources are produced by the taxpayers, enough to trade with everyone in the US to aquire the mix which the government employees et al want.
Do you think that these resources are produced on government plantations?
April 20, 2015, 4:08 pmMatthew Slyfield:
2.A) The widespread belief that a workers individual taxes are saved away to fund that individual's retirement benefits (i.e. the view of SS as insurance). This belief largely drives belief in your #2.
April 20, 2015, 4:49 pmMatthew Slyfield:
"Where do taxpayers get the dollars to pay taxes with if government doesn't spend them out into the economy first?"
From the creation of real wealth, i.e. the conversion of raw materials into useful products with a surplus that can be sold to others.
Money isn't value, it is a measure of value. There was an active economy before the existence of paper fiat currencies.
Just because the government's budget is not like a household budget, that does not mean that the government can take on infinite debt without serious (catastrophic) consequences.
Other governments with sovereign, fiat currencies have gone down that road before. Sooner or later it ends in ruin.
April 20, 2015, 4:56 pmobloodyhell:
}}} then you divide the world into two classes -- those 100% employed and those 100% on benefits, with most people in the latter having little or no prospect of moving to the former.
So, basically, into Europeans...
I hate to break this to you -- but yes, that's what liberal twits want. They want the USA to be Europe.
Would that they would just fucking MOVE TO THEIR DARLING EUROPE, and stop trying to fuck up THIS place, then perhaps EVERYONE might be happy. :-/
April 20, 2015, 6:25 pmobloodyhell:
As I note above... Europe.
April 20, 2015, 6:27 pmDanSmith:
So, can you point out a country anywhere in the world that has adopted your economic theories? Must be a well guarded secret if it is thriving as much as you claim or else all those illegals would be flocking to get in.
April 21, 2015, 8:05 amMJ:
I think the confusion is a typical one of associating "things poor
people do" with "things that make people poor." This thinking was
behind a lot of "slum clearance" that targeted certain neighborhoods for
supposedly being dirty and unhygienic, prohibition of drugs that
supposedly make people lazy or criminal or stupid, and exclusion of
fashion choices associated with poor people or young people.
It's a classic example of environmental determinism, and yes it has seeped into many failed public policy programs over the years. Public housing is another classic example. Poor people were stuck being poor because they were condemned to the poor conditions of the only private rental housing they could afford. Given them better (government-supplied and run) housing and their lives will be dramatically improved. The list goes on.
April 21, 2015, 10:05 amMJ:
Venezuela. Iran. Zimbabwe. Argentina. There are other, but these are just the most recent examples.
April 21, 2015, 10:13 amMJ:
(Hint: No one.) A small increase in Social Security benefits is unlikely
to be inflationary, and a debt jubilee (for the debtors, not the
creditors) would likely be a tremendous, non-inflationary stimulus to
the economy.
So you admit that it is not a free lunch? That the creditors do in fact get screwed? That no real resources are created, and hence that there is no real 'stimulus'?
The problem with this shell game is that when it is not a one-off event (and here in reality it isn't) the creditors respond in ways that tend to wipe out any 'gains' from the initial trickery, by demanding higher interest rates (more phony currency) if they are to do any future lending.
April 21, 2015, 10:17 amMJ:
You're missing the point. Government money has no value unless it is backed by real resources. In the past this took the form of precious metals, etc., but now it is backed simply by the government's power to tax, that is, its ability to claim a share of its subjects' resources -- namely the fruits of their labor. If the government printed money (oh sorry, "spent them into the economy") at a faster rate than the real resources in the economy expanded, then the currency would accordingly lose value. No free lunch to be had.
April 21, 2015, 10:27 amMJ:
How about the assumption that the size of the workforce would be the same in each generation? Or that all members of future generations would have the same uniform life expectancy? Or that expanding eligibility for disability programs would not have any impact on workers' propensity to seek and retain employment?
April 21, 2015, 10:32 amslocum:
Yep. The idea is that everyone should have either A) A job paying at least $15/hr, or B) Government assistance providing a similar level of income. A job paying less that $15/hr is exploitation, and paying top-up benefits is subsidization of employers. So it's $15/hr or welfare/disability and nothing in between (except for volunteer work and unpaid internships at non-profits and government organizations).
April 21, 2015, 11:43 amNL7:
I'm definitely not the first person to frame it that way, so feel free to steal without attribution - or at least without attributing me. If I had to guess, I probably most recently read Megan McArdle write something like this, or maybe it's from Econlog.
Unless you meant "food stamps is school vouchers for food" in which case I assume that I heard that years ago from who knows where. Also free to reproduce. No point in giving political opinions on the internet if you claim you can stop people from repeating them.
April 22, 2015, 10:53 amdemockracy:
This is your meme: Why the beatified Steve Jobs (great name!) produced the iPhone all by himself! Only the private economy and its CEOs can save us by producing *real* (as opposed to wasteful, bureacratic) things! (Please ignore the government-funded research that produced the transistor, the integrated circuit, the internet, GPS, etc.)
Obvious baloney.
So here's a question back at you: Do you think the (mostly) privatized health care v. single-payer was a better service. Understand that the evidence (really not controversial) is that the private health care was twice as expensive, *and* less effective. Government can and does produce things. *Real* things / goods / services, including the context within which markets occur.
The idea that government can only produce bureaucracy and toxic waste is obvious propaganda. Without government (of some kind) no markets exist. See the recent experiment on the "Dark Internet" for exactly how limited is the libertarian aspirational alternative. Executive summary: It didn't produce the promised no regulation / enforcement market. The explicitly libertarian exchanges done with ultra-encrypted Dark Internet as the go-between devolved into a pseudo-state with regulation and enforcement.
April 22, 2015, 3:34 pmdemockracy:
Sorry. The idea that the largest economy in the world is not a real resource is only possible to believe in a trance state.
"Precious metals" occupy about two centuries of the five millenium history of money. Money without commodity backing (or anything else like that) is orders of magnitude more common. The critical capacity of money to retire the inevitable liability of taxation is the critical, and most common source of its value. Ask yourself how useful gold or silver would be to Tom Hanks' character in Cast Away. Even commodities require a social context to have real value. Money, in its origin, is social, not a medium of exchange (it actually was to repay damaged families to avoid feuds).
True story: The British colonized Nigeria and wanted to hire Nigerians to do things (sweep floors, guard buildings, etc.). The Nigerians had done without British money for .... well, forever, and were having none of it. "Keep your money," they said "We don't need it." The British implemented a "hut tax" and presto! Their money was all of a sudden in demand.
Private moneys coexist with the official money. Heck you can accept an IOU from a friend, and have another friend take that IOU in payment of a debt, and the IOU is a "money thing." (Hyman Minsky says: "Everyone can make money; the problem is in getting it accepted") The "gold standard" in money is the governments, though, almost always.
Like you, I used to believe that, for one example, the Romans ran out of silver, and that was their downfall. That's literally not true. First, Roman coins were denominated according to what was stamped on them, not the weight of silver, so a commodity was not the basis of their value. And recent archaeology suggest the Romans ran out of food (Visigoths conquered North Africa) and they could no longer feed the Italian peninsula since slave labor depleted their soil there.
But seriously, read David Graeber's Debt: The First 5,000 Years -- a terrific book with the actual history rather than the convenient libertarian myths (which date from the Renaissance, not from the origins of money).
I will agree with you that if government spent dollars in the economy faster than the real resources / goods / services became available it would cause inflation. It's doing that now in financial resources thanks to QE. That's about the only sector of the economy experiencing inflation.
So it's always a theoretical possibility that government, with its unlimited dollar resources, could bid up prices competing with the private sector for goods and/or services. That would be inflation (currency that "lost value").
But who else is bidding for the unemployed? (Hint: No one.) So government could literally provide wages for the unemployed without raising taxes or causing inflation. Their labor is going to waste now, so it would actually increase the supply of services to match the dollars issued to employ people.
Your suggestion that only individuals can make things is similarly misguided. Do individuals make interstate highways? Clearly and obviously the activities of collections or organizations with lots of individuals are more powerful. Do you say "the guys on the assembly line at GE are who really makes toasters"? No, that would be silly. You say "GE makes toasters," and that's the truth of it. So government produces *lots* of things that would not exist without it...from the Post Office to Nuclear Power / Bombs to computers to the internet to vaccines, etc.
As for the inflationary impact of just issuing money: according to its own audit, the Fed issued $16 - $29 trillion to cure the frauds in the financial sector in 2007-8 (net $10 - $13 trillion in subsidies for the financial sector, says the Dallas Fed). They obviously didn't create goods / services to match that multi-trillion-dollar gift to the financial sector. So where's the inflation? (Hint: neither government CPI figures, nor [private] Shadowstats, nor [non-government] MIT's billion-price index show any surge in inflation). Nope, the bidding is where you'd see the effect of that money. The banksters speculated with it, or held it as cash reserves.
Notice, incidentally, that there's never this fretting about "Financial Responsibility" (capital letters!) when multi-trillion-dollar Middle East wars and/or financial sector bailouts are the issue. Only when social safety nets are discussed. Doesn't that seem even a little fishy to you?
How about paying off the national "debt" by issuing trillion-dollar coins? That would cause inflation too, right? Obviously not. The "debt" dollars have already done whatever bidding they're going to do. Paying off the national "debt" would not have any impact on inflation. On the other hand, providing Wall Street with safe assets where it can park its profits is a service provided by government. If you really want to hear a bankster squeal, do like they did in Australia and threaten to pay off that "debt."
The financial sector spends enormous amounts of money concealing these facts, but they are pretty obvious if you're not blinded by their propaganda. Deflation favors creditors and the banksters are, by and large, creditors. It also favors vulture capitalists who can pick up foreclosed assets at fire sale prices from homes to Greek ports.
The deflationary bias of propaganda shows just how completely our society is a plutocracy. There have been attempts to change this--William Jennings Bryan's campaign for "free silver" was an offshoot of the very large Farmers' Alliance and Peoples' Party in the late 19th century...crushed by McKinley, Mark Hanna and the gold-supporting banksters. But the people understood very well what it was to be a debt peon, and why democratic control of money is so fiercely resisted by finance.
So... I've tried to be respectful here, but I believe you're missing a lot if you don't see how the banks got a boatload of free lunches. Google for yourself.
April 22, 2015, 4:14 pmdemockracy:
Your ideas of "frauds" are novel, to say the least. From the dictionary "In law, fraud is deliberate deception to secure unfair or unlawful gain." No such deception exists in reality. Here are the answers to your points:
1. By "future demographics," I'm assuming you mean SS taxes need to support the program. This is, in itself, an obviously fraudulent argument. Taxes do not support government. Obviously. Where would taxpayers get the dollars to pay taxes if government didn't spend them out into the economy first? Taxes make the money valuable. They do not provision government. Government is the source of the dollar money!
2. How can such a "belief" be a fraud? Don't people who paid into Social Security (validating they had the income for a claim) get Social Security (unless for a disability)? This just looks like circularity: "If my other arguments are true, people are believing a lie"...but your other arguments aren't true.
3. Why is "The same dollar cannot be spent twice" an issue. Government makes the money! It can make it in literally unlimited amounts. According to the Fed's audit, it made $16 - $29 trillion to cure the frauds in the financial sector in 2007-8. It doesn't need to "spend twice"... It can make as much money as it needs any time it needs it. It is a creator of currency, not a user of currency. It's a fundamental difference.
4. The disability function of Social Security is completely unrelated to "bankruptcy." Governments with sovereign, fiat currencies (dollar, pound, yen, but not euro) can, by definition, never be involuntarily insolvent. They can never be "broke" or "bankrupt" or "busted" or any other synonym. By definition. If their debts are in currency they can make at will (typing a one followed by 12 zeroes in a computer down at the Fed = one trillion dollars), then they'll never be involuntarily unable to pay the debt.
Now I'll answer your next objection: "B...but if you just type or print money, you'll have [gasp! hyper-] inflation!"
Let's grant the entirely theoretical possibility that government, with its unlimited dollars, could bid up prices, competing with the private sector for limited goods and services. But who else is bidding for the unemployed? Hint: No one.
So government could literally be the employer of last resort, without raising taxes or causing inflation. In a bizarre twist of "conservatism," the right-wing preference is for austerity instead--in other words, the right would rather waste or discard that labor. Just to reassure you: A recent Cato Institute study of 59 historical hyperinflationary periods validates that it's overwhelmingly some balance of payments problem rather than government "over-spending" that's at the root of such things.
And would spending more on SS than government takes in be the exceptional instance when that spending triggers devalued money? Hardly likely. Consider the orders-of-magnitude larger spending for Middle East wars or multi-trillion-dollar financial sector bailouts that have occurred in recent years. Where's the inflation from those--and no, government's CPI, private Shadowstats, and quasi-public MIT billion-price index show no surge of inflation after those trillions left the Fed ($16 - $29 trillion, according to its own audit).
But doesn't it seem even a little fishy-smelling that the only time Mr. Coyote and his harumphing legions get their knickers in a twist is when social safety nets are the issue, not when the orders of magnitude larger wars and bailouts provoke no "fiscal responsibility" discussion.
I recomend the Modern Money Theorists to you. This is not stuff I've made up. Google for yourself.
April 22, 2015, 4:38 pmdemockracy:
I know of private bankster, Angelo Mozilo, who looted Countrywide Mortgage and "earned" $465,000,000. An audit disclosed that 80% of the loans he securitized were frauds. Yet neither Bush 43 nor Obama prosecuted!
When the Justice Dept. threatened prosecution, Mozilo settled for $20 - $65 million in fines (depends on where you read), but without any admission of guilt, which makes civil cases harder to prosecute. He's walking around free now.
Mozilo was part of the largest theft in human history. In the wake of Lehman's bankruptcy, American net worth declined 40%.
It may offend your sense of fairness to know someone defrauded Social Security for perhaps [gasp!] tens of thousands of dollars, but I would counsel you that you have much bigger fish to fry here. Millions of times bigger.
Why so much whinging about social safety net programs? The plutocrats would simply love to privatize or extinguish institutions like Social Security--doing so would make a much larger population susceptible to their tender ministrations. Without those institutions, poverty among the elderly was much more common, and large portions of the population were subject to the virtual slavery of debt peonage. Try Lawrence Goodwyn's Populist Moment for the history.
April 22, 2015, 4:49 pmdemockracy:
To answer one thing at a time here:
Taxpayers obviously do not get their dollars from "the creation of real wealth." Dollars come from the official monopoly issuer of dollars: government. People accept them because they retire the inevitable liability of taxes. I don't make a tree branch into an axe handle (Adam Smith's example) and say "Presto! You are dollars!" That would make me...well, delusional.
Yes, money is a (precise) measurement of obligation / value. No one said otherwise.
Please stop making up straw men. No one, least of all me, is suggesting government take on "infinite debt." A relatively small increase in "debt" would pay for all the social safety nets we need and feed the world as well (only $85 billion a year ends hunger). That's not even a new weapon for the Dept. of Attack.
As a legacy of commodity-backed money, in effect, the Fed (the U.S. central bank) makes dollars for government to spend as it makes, in equal amounts, "debt." So that "debt" is, to the penny, the amount of dollar financial assets out in the economy. That's not exotic economics; it's double-entry bookkeeping.
We don't have to issue "debt" and dollars simultaneously; Lincoln didn't when he paid for the Civil War with greenbacks rather than submit to the usurious demands of the bankers to fund the war. Reducing the national "debt" causes catastrophe in the economy too. See this for the history.
And Ooooh, a solemnly intoned curse! "You fiat money people think you're so smart! You just wait until your father gets home!" Ha ha! Good one.
Seriously, in the long run we're all dead, but the Cato Institute's recently issued study of 59 hyperinflationary episodes in human history discloses that (drum roll, please) NONE of them stemmed from government over-spending or fiat money. Typically they were balance of payments problems. Zimbabwe lost the white colonial farmers and had to import food, for one example.
I'd encourage you to get educated rather than argue here. Try Warren Mosler's Seven Deadly Innocent Frauds of Economic Policy
Mosler is not only a guy who knows his stuff (as you'll see if you read it), he made a buttload of money acting on his beliefs.... or you can continue to believe as you do... your choice.
April 22, 2015, 5:08 pmdemockracy:
I'll admit that the lack of social safety nets increases the plutocracy's power to create debt peons, but how are any of your question related to "fraud" or deception. Clearly and obviously increases in productivity (70% since 1972) mean we need fewer workers to accomplish the same thing.
One reassuring note: The Bush 43 administration experienced the peak in U.S. life expectancy. Yep, "Thanks W! We're living shorter lives now!"
If your ideal life is one of "seeking and retaining employment" all I can say is you need to get out more. Employment is not the be-all and end-all of human existence. It may be unfair that some lazy slug gets to defraud a social safety net, but clearly and obviously the plutocrats have orders-of-magnitude more unfairness in their subsidies, lifestyle, and leisure. Where's the complaining about the $16 - $29 trillion the Fed pushed out the door to rescue our banksters? Social safety nets are a rounding error in that figure.
Straining at a gnat while swallowing a camel, I say.
April 22, 2015, 5:13 pmdemockracy:
Yes, and we should just beat them, or perhaps use cattle prods to get those lazy people of color to stop being disabled. Unspeakable bastards! How dare them! Why won't they be white, like me! I deserve to have been born without disability, or illness! Because I'm good.
Do you have any idea how ridiculous such statements sound?
I actually have acquaintances in the Social Security disability-getting business. Typical recipients have to hire an attorney. I don't doubt there's fraud, just as I don't doubt the private sector experiences fraud (I remind you of Enron, Adelphia, Credit Mobilier, and the South Seas Bubble)...but saying it's all fraud, not a small portion. ... not credible.
I'll say it again: governments with sovereign, fiat currency (dollar, pound, yen, but *not* euro) can, by definition, never be involuntarily insolvent, broke, bankrupt or any other synonym. By definition. If their "debts" are payable in a currency they can make at will, then no involuntary inability to pay those debts exists. I've answered the inflation objection to this in previous posts, so take a look at them.
Still no answer to why the sacred CEOs manage to get trillions in subsidies and bailouts and that's all jake, but orders-of-magnitude smaller safety net payments are [shivers] horrifying!
Straining at gnats; swallowing camels. OK, whatever blows your dress up.
April 22, 2015, 5:20 pmRob McMillin:
Oh, hey, look, actual data. You were saying.
Because Social Security advocates trade on it. Pay in any amount, get your "due" back, whatever that works out to.
Innumerate, too? The "trust fund" is nothing more than a promise that future Congresses will find the money under sofa cushions, somewhere.
The prospect that large numbers of people might find their theoretical benefits materially cut because, oops, is for them indistinguishable from bankruptcy. Maybe you believe that unicorns and ponies can continue to operate both the monetary system (itself currently the subject of a large number of late-stage banana republic shell games) and Social Security, but this reminds me of nothing so much as the observation that all gods are false save the current one. Fiat currencies die for a reason: eventually the itch to debase them becomes irresistible.
April 22, 2015, 5:20 pmskhpcola:
Angelo Mozilo should be in jail. Case closed.
Mozilo was part of the largest theft in human history.
Nah, not true. The greatest theft in human history is that of the >100 people murdered by evil assholes that are your heroes.
[Millions of people grafting the taxpayers for disability] > [crony capitalism as practiced quite enthusiastically by your ideological masters]
Try Lawrence Goodwyn'sPopulist Moment for the history.
Nah. He was just another dead leftist piece of shit that did his level best to glorify Marx. There are plenty of living leftist pieces of shit more dangerous to liberty and prosperity. But you keep on idolizing murderers, thieves, and liars. It's all that you know-nothing leftist fucktards have, because you certainly don't have history or facts on your side.
April 22, 2015, 5:22 pmdemockracy:
...and as you'll see if you read Nassim Taleb, efficiency and resilience are inversely proportional...
The Fed audit citations are pretty old, but I bet if you used "the Google" you could find 'em. I also assumed you could find the Wikipedia link yourself. It's a website with a search box. Try it! There is a link to the Norwegian prison citation.
If you want more, try Warren Mosler's Seven Deadly Innocent Frauds of Economic Policy
April 22, 2015, 5:24 pmskhpcola:
You are incapable of understanding reality outside of your perverted, sclerotic, leftist bubble.
April 22, 2015, 5:26 pmdemockracy:
There's a way to implement a jubilee without screwing creditors: issue $50,000 per tax-paying household that would apply first to debt. The effect of stimulus would be to end the de-leveraging currently going on.
Economist Steve Keen, source of the suggested jubilee strategy, also winner of the Revere Prize in economics (no, not issued by Swedish banks, as is the "Nobel") for predicting the Great Recession outlines something he credits to Hyman Minsky: In stable times, people take on debt, spending more than their incomes. They take on increasing levels of risk until, come the crash, or bubble burst, they must pay off that debt and spend less than their income. Since demand runs the economy (and my spending is your income) this describes a cycle, not equilibrium, experienced here on planet earth.
He's all over the internet and Youtube. here's a pdf of one paper. Google for yourself.
The lender of last resort is the Fed. We've also had public banks who could lend at will (North Dakota, the Reconstruction Finance Corporation). The private sector doesn't always have to control the money.
April 22, 2015, 5:30 pmdemockracy:
And you are a poopyhead!
April 22, 2015, 5:32 pmAndrew_M_Garland:
If you are going to support your statements, you will have to do a more
targeted job than pointing me to your library for support. As far as I
am concerned.
The whole idea is that you make a few well supported statements to give the rest of us something to think about.
"here is everything and the kitchen sink" supported by "read these 5 books" is just not effective. So, I don't believe you.
April 22, 2015, 5:33 pmAndrew_M_Garland:
You have wandered far away from my point. Who supports (the people of and purchases of) the government.
You think it is largely self-supporting. But, you have chosen not to say how this happens.
April 22, 2015, 5:36 pmdemockracy:
So you're saying that you're my hero?
April 22, 2015, 5:37 pmAndrew_M_Garland:
You say above "Taxpayers obviously do not get their dollars from "the creation of real wealth."
How could I forget? Just this morning I went to the local Federal Reserve bank to get my stack of dollars issued by the kindly monopolist of all money.
April 22, 2015, 5:38 pmdemockracy:
Citing a Mercatus paper hardly qualifies as "actual data"... but it doesn't matter even if it's accurate. As for the popular misunderstanding about how money works...that's by design. It keeps the plutocracy in power.
...and the "oops" equivalent to bankruptcy doesn't pass the sniff test. There's nothing to prevent public policy from shooting itself in the foot. Voluntary benefit cuts are certainly possible, but y'all are the ones lobbying for that. You're only worried about "fiscal responsibility" when it comes to safety nets, not the orders-of-magnitude larger bailouts and wars.
The Cato study about hyperinflations doesn't validate your "inevitability" meme, either.
April 22, 2015, 5:42 pmRob McMillin:
"Source: OASDI Trustee Report, Table IV.b2, ssa.gov, accessed May 21, 2012"
I take it you also have a reading comprehension problem.
April 22, 2015, 6:54 pm