Money and Morality

By Brian Werner

Notions of money, debt and morality have a long history together (see Graeber and Atwood).  Money and the desire for it is usually connected with greed and immorality like in the often paraphrased “The love of money is the root of all evil” from the New Testament book 1 Timothy.  But what if a better understanding of what money is can help our country to be moral?

Currently money, or a perceived lack of money, is being used to justify all sorts of cuts in government spending, most recently an effort by the House of Representatives to cut SNAP (also known as food stamps) by $39 billion over the next ten years, a move that would cut off 3.8 million people in 2014, many of whom are children, seniors, unemployed, and low-wage workers, from already paltry benefits.

This should be seen as a moral decision not to provide food for those that need it.  If I have more than enough food but refuse to share it with my starving neighbor, I think most people would consider that immoral. If as a country we can produce plenty of food, but we deny people access to it, is the morality any different?

Let’s think about how people get food in our society? Most people don’t grow all of their own food so they either 1)  work for money to buy food 2) are given money to buy food 3) are given food directly by family, friends, charities, etc.  How about #1?  There are over 21.5 million who can’t find full-time employment.  So, there are lots of people who just can’t find a job right now and there’s no indication that’s going to change any time soon.  The government has refused to undertake spending increases or tax cuts to help the situation (and sequester cuts have moved things in the wrong direction).  How about #3?  While family and friends are important, with the sheer number of unemployed people, it’s unlikely that a community response will be enough.  Food pantries are already stressed with shortages. This brings us back to #2, giving people money to buy food, which is what the SNAP program does (though instead of cash it uses EBT cards than can only be used for food).  And it makes a lot of sense.  We already have lots of grocery stores that want to sell food (and are good at it).  We have people who need food.  All we’re missing is the money to make it happen; that’s where the government comes in.

Conservatives and liberals alike tend to agree that the government doesn’t have enough money.  So conservatives use this as an excuse to cut programs they just don’t like.  Liberals say we can increase taxes on the rich, spend less money on the military, and then spend more on social programs.  Both viewpoints encourage us to justify moral decisions in terms of the government’s balance sheet. Both viewpoints are wrong.

What they’re wrong about is the idea that the federal government doesn’t have enough money, that the U.S. government can run out of U.S. dollars.  This should immediately seem like an odd notion, but it’s been repeated so many times it’s usually taken on face value.  Where does the U.S. dollar come from? Obviously the U.S. government.  So how can it run out? It can’t. The U.S. dollar is a public monopoly.  The federal government can always “afford” to spend by creating dollars and it doesn’t need to tax U.S. dollars from the private sector to do it.  The same is not true for state and local governments which are users, rather than issuers of U.S. dollars.

The realization that the U.S. government is not constrained by a lack of dollars frees us to see moral nature of these policy questions.  We have farmers and grocers that produce plenty of food and want to sell it.  We have millions of people who don’t have money for food and can’t find a job to earn it.  We have a sovereign government that controls and can create (or limit) the money necessary to bridge that gap.  To deny people the fundamental right of food, by failing to provide either jobs or income, is clearly immoral.

The real limits we face are our environment, our citizens, and our ability to utilize them in a productive way.  And people are more productive when they’re decently fed.

20 responses to “Money and Morality

  1. “To deny people the fundamental right of food, by failing to provide either jobs or income, is clearly immoral.”

    But it’s also a failure of joined-up or analytical thinking. In particular a failure to understand the reasoning and the implications of the fact only a sovereign government can pay off its debt with its own IOU.

  2. financial matters

    Well said. One of Graeber’s questions is ‘what do we owe each other’? He views money as originating as a social currency used in human relations and then the conflicts created when this same money started to be used in more of a commercial way which tended to put more of a commodity type value on human relations.

    Neoliberal economics emphasizes this with it’s ‘everybody acting for themselves’ philosophy which isn’t how the real economy works anyway. We would at least seem to ‘owe each other’ a better understanding of money and how it can be used for the common good.

  3. What you are demanding is that people have the right to exist.

    While it is perfectly possible to spend new government money into the economy, providing a means for all to purchase food, that money trickles up until it lands on the balance sheet of a saver. That saver wants yield and yield is the accumulation of money transfers from earned income.

    For every excess dollar created, a dollar deficit is created along with a savings yield demand that must be serviced by labor for eternity (the paradox of thrift is more complicated than initially understood). It is unlikely people will be satisfied saving or “investing” money, experiencing risk without yield. This implies that too much money can stall an economy when the amount of money needed to satisfy productive transactions is exceeded. Money must be recycled by means of intelligent taxes, rather than created. Needless to say we are speaking of credit, not physical species, which is recycled when we convert species to credit at the bank. Intelligent taxation forces idle money to be invested productively, not hoarded or sent offshore searching for yield. Unearned income should be limited in scope as it taxes productivity. Think of unearned yield from savings as “promised” labor or an effective labor tax (another’s yield is your debt). There is a limit before negative effects impact the economy. Small countries complain bitterly when hot foreign money enters their economy looking for yield. Labor loses.

    Creating money, to feed people, will not work. Credit must be recycled, like everything else green. It is the great fear of Austerians with bloated balance sheets. Their yield is your debt and your food.

  4. Brian Werner said:

    Conservatives and liberals alike tend to agree that the government doesn’t have enough money. So conservatives use this as an excuse to cut programs they just don’t like. Liberals say we can increase taxes on the rich, spend less money on the military, and then spend more on social programs. Both viewpoints encourage us to justify moral decisions in terms of the government’s balance sheet. Both viewpoints are wrong.

    Let me play devil’s advocate here.

    As to “spending less money on the military,” how would you answer this from the Rev. Martin Luther King’s “Why I Am Opposed to the War in Vietname” speech?

    There is…a very obvious and almost facile connection between the war in Vietnam and the struggle I and others have been waging in America. A few years ago there was a shining moment in that struggle. It seemed that there was a real promise of hope for the poor, both black and white, through the Poverty Program. There were experiments, hopes, and new beginnings. Then came the build-up in Vietnam. And I watched the program broken as if it was some idle political plaything of a society gone mad on war. And I knew that America would never invest the necessary funds or energies in rehabilitation of its poor so long as adventures like Vietnam continued to draw men and skills and money, like some demonic, destructive suction tube. And you may not know it, my friends, but it is estimated that we spend $500,000 to kill each enemy soldier, while we spend only fifty-three dollars for each person classified as poor, and much of that fifty-three dollars goes for salaries to people that are not poor. So I was increasingly compelled to see the war as an enemy of the poor, and attack it as such.

    Or likewise, speaking of “increasing taxes on the rich,” how would you answer this from Michael Hudson?

    Even if central banks could monetize higher levels of deficit spending, there are good reasons not to subsidize unfair tax systems and tax cuts on the real estate and financial “free lunch” windfalls that classical economists urged to be the tax base. Under classical tax policy, Europe would not have had a land-price bubble in the first place. “Free lunch” economic rent would have become the tax base, not capitalized into bank loans to be paid out as interest. Government budgets would have been financed in a way that kept down property prices.

    But bank lobbyists have blocked the Eurozone from creating a true central bank to finance public budget deficits. They also have reversed classical tax policy, un-taxing real estate and finance while putting the burden on labor, corporate profits and consumers by the turnover tax (VAT). These twin financial and fiscal policies have strengthened the wrong sectors and made the current sovereign debt crisis inevitable, turning it into a general economic and political crisis.

  5. “This should be seen as a moral decision not to provide food for those that need it.”

    The above sentence in the article should read, “This should be seen as a moral decision not to provide food for those WHO need it.”

    Here’s the reason why the US Congress wants to eliminate financial support and food for needy folks:

    Destitute/homeless/”street” people DON’T VOTE.

  6. –Decently fed–

    A nice article. Money used for common good is moral but squandering by a few is immoral. This is the state’s responsibility to keep this balance.

  7. Bayard Waterbury

    Brian, thanks so much for this clear-headed piece which states the obvious. Sadly, the lies propounded continuously by both media and our (bogus) leadership continue to have traction amongst a populace which fails and refuses to use logical thinking to overcome its ignorance of reality. Gee, the FED continues to print new money under our programs of Quantitative Easing, which has a stimulative effect on the prices of stocks and commodities caused by the bidding up of these prices by the largest banks which are the recipients of this absurd program of largesse. Meanwhile the FED, which has a primary goal of public welfare, especially in the area of employment creation, has failed miserably in this particular aspect of its charge. As your article points out, the FED need only to give our government sufficient funds to do things like infrastructure funding, and other employment generators, as well as funds to increase the ability of our government to provide for the (hopefully temporary) short fall experienced by the 46% of our population now living at or below the poverty level. We continue to suffer, while massive profits are raked off by the oligarchies to keep their well stocked larders ever better stocked which our poorest citizens and many millions of children continue to suffer. When will we get it? This website has, over and over again, given us reason to hope, only to watch the media and our government ignore its wonderful common sense solutions. I am worried that it will never happen, and there will be an endless continuation of this needless tragedy.

  8. Thanks, Brian. A nice, short summary of the “deficit” problem.

  9. A government represents an entity with a fuzzy but nonetheless finite net worth. Each monetary unit represents a percentage of that net worth which becomes less each time the number of units increase. What is the MMT position on the effect of a reduced dollar value with respect to our interdependence within the global economy?

    An even more fundamental question is how can such a program be implemented in an oligarchic power brokerage when reduced dollar values would reduce the monetary wealth of those in control?

    • Formula for increased quantity of money is MV=PQ
      As M increases, why do you claim that only P will increase, what makes V and Q fixed in your opinion?
      Either you have no idea how math works or your ideology prevents you from thinking while using math.
      If M is increased, why Q would not increase along P increase?

    • Each monetary unit represents a percentage of that net worth which becomes less each time the number of units increase.
      Nope.
      Yes. This can happen. The quantity theory of money has some truth to it – and this truth is incorporated in, explained in MMT. But, no, that statement ain’t necessarily so.

      MMT, real Keynesianism is NOT inflationism. The dollar value of “the monetary wealth of those in control” would NOT be reduced by MMT policies, above all the JG. IMHO, the MMT thinkers misunderestimate the anti-inflation strength of MMT in modern, advanced economies. It is really hard work for the fraudster oligarchs, their governmental puppets and academic marionettes to create the poverty amidst plenty, the unemployment, the inflation we see and for them to sucker the rubes into thinking it is natural, that TINA. An MMTer-run economy would have the truest, hardest money the world has ever seen.

      • Calg,

        Right on. This is currently underestimated imo too… a lot will change once it is universally known and understood that we cannot “run out of money”… this will not just result in a “tweak” of some sort… rsp,

  10. “To deny people the fundamental right of food, by failing to provide either jobs or income, is clearly immoral.”

    Does that apply also to the iraqi or sudanese or bolivian or albanian poor?

    Should USA taxes be raised or its inflation be increased to provide food, or jobs or income for the poor of every country of the world?

    Or are the poor of other countries not-people who who have no fundamental rights?

    If Brian Werner thinks that the USA government has the fundamental moral responsibility to provide food, income or jobs to the poor of the whole world at the expense of USA citizens, please let us know.

    And if it is “clearly immoral” for somebody somewhere in the world to be denied their fundamental right to “food, by failing to provide either jobs or income”, has Brian Werner followed the clear, unambigious command of the Nazarethan and given all his wealth and all his own income beyond subsistence to provide food, and jobs or an income, for those people, or is his own selfishness “clearly immoral”?

  11. Another way to look at money would be to see it as public initiative. Spending money initiate production of what is spent on. If public (state) wants to feed the hungry, it initiate more production of food by distributing initiative to the needy. If public wants more wars, it distributes initiative to war production.
    But you see, some people hoard public initiative.

  12. Shakti Love Bomb

    I agree with the underlying premise here, but I must raise one objection.

    The US government does not, as you are well-aware, simply create dollars. It borrows them, with interest attached.

    It could simply create them with no interest attached. Hell, the Constitution unambiguously says so. Yet it doesn’t. Why not?

    Without resorting to an analysis one would likely hear from a libertarian or Tea Party activist, I nonetheless disagree with economists who regard this as a mere technicality.

    First of all, the interest attached to every dollar created is inflationary (since more dollars must eventually be created to pay the interest). This is not necessarily a bad thing, but it certainly can be. Inflation should be deliberately increased and decreased as needed, not inexorably built into the system of money creation.

    Second of all, giving banks the exclusive authority to create money grants them enormous economic and political power. This is not good for the common folk.

    I understand that any claim that the US government can run out of money or become incapable of paying back its debts is a myth. However, I still object to the monopoly that the banking industry holds over money creation.

    Perhaps your proposal for food stamps should include a recommendation that our government cut out the middle-man and create money for hungry people directly, as it is Constitutionally authorized to do, rather than borrow it at interest.

  13. Glen,

    Thanks for the questions. I wasn’t commenting directly on the value of either of those policies, just the logic used to argue for them.

    On your first point, there is no doubt a cost involved in military spending, but the cost is not government dollars. What we’re losing out on is the energy (both physical and mental), the resources, the people that could be utilized elsewhere.

    Not quite sure what you’re asking with the Hudson quote, but in short: yes, income distribution does matter and how govt spending/taxation is implemented has an effect on it.

  14. There are the immoral, their misinformed wannabes, and a small handful who can tell one from the other in this world. The trick is to get the misinformed wannabes to understand how they have been had by the immoral.

    There is no real advancement possible for humanity without a recognition of our mutual dependence and of our dependence on a healthy environment. Money should be viewed as an instrument to help with this, acting not like the carrot driving the donkey toward some arbitrary masters goal; rather, like the grease to keep the social-economic gears turning in a way that never leaves anyone hungry or unable to contribute to our common well being.

  15. @mikeriddell62

    The time may well come when government decides to issue its own currency without interest, but why wait?
    Here in the UK, and all across Europe, complementary currencies are being developed which give credit to those that deserve it (which in our case is pro-social behaviours). This means that the currency is earned into existence giving it a moral and ethical foundation which we believe creates shared value since for the community that has created it. Whether or not other members of the community decide to accept it or not would be their choice, but a if a municipal government decided to accept the currency in part payment for local taxes or business rates then real demand for the currency would increase and more pro-social behaviour would result in savings for the local government concerned.
    It takes a leap of faith to build such a currency from scratch, but that’s what’s happening right now, over here.

  16. Brian,

    Great write up here, righteous … one thing:

    That Greek Scripture from 1 Timothy “love of money” is in the original Greek scripture “philarguron” or “fondness for silver”… I can’t find a word in the original Greek scriptures that can be imo accurately translated into the English word “money”… Paul never mentions “nomisma” or the word for the state currency back then here (doesnt mention it at all as far as I can find) only “silver”… and I can find no equivalent metonym to the word “money” in the Greek scriptures…

    “For a root of all the evils is the fondness for silver…” 1 Tim 6:10

    “Have a pattern of sound words, which you hear from me…” 2 Tim 1:13

    Using the word “money” is not maintaining Paul’s “pattern of sound words”… it is metonymy and can obviously be confusing to many.

    rsp,

  17. I know this isn’t directly related to your post (which was very well said), but you touched on local and state governments being users of money, as opposed to issuers like the federal government. I’d be interested in reading a further unpacking of the consequences of this, and how we should expect local and state governments to function and maintain their services and infrastructure. They’re not quite business in that they don’t make a product and aren’t expected to make a profile, but they’re not the federal government and can’t issue money to buy whatever is needed by their citizens (or to keep their citizens at full employment, if that’s the broader goal). Especially in light of larger and larger municipalities filing for bankruptcy and states feel large pension burdens, I think it’d be useful to get an outline of how a non-federal government should or could run in a financially sustainable manner.