FORGET THE 1%

By J.D. Alt

All this talk about the 99% versus the 1%? I say the easiest—and likely the most useful—thing to do is just forget the 1%. Write them off. Let them have their gated communities, their mega-yachts, their island retreats and off-shore bank accounts. What do we need them for?

For one thing, we DON’T need their money. Even if we could get it—which we can’t because they steadfastly refuse to use it for anything other than casino gambling in their private and secretive financial networks. We wonder why we have a “jobless recovery”? Does it have anything to do with the fact that such a large percentage of our “capital” has, for all practical purposes, been removed from the economy?

Even when the 1% decides to invest some of their Dollars to manufacture or build something, they rarely decide to manufacture or build anything we really need—only things we really don’t need. Like strip-mines in the Bristol Bay salmon fishery, or pipe-lines across Nebraska’s freshwater aquifers, or rocket-planes for space-tourism. Thanks, but we really don’t need—or want—any of it. We’d much rather have fresh wild salmon (rather than the artificially colored hatchery-stuff) than more copper and gold, fresh water instead of tar-sands oil, and the good-old week-at-the-beach is just fine for a vacation.

President Obama adds to our confusion by claiming we need to tax a bunch of the 1%’s Dollars in order to pay for a minimal laundry list of hodge-podge programs to train unemployed people to do jobs that don’t exist—and which the 1%, whether you tax them or not, have no intention of creating—ever. Why doesn’t the President just forget the 1% and start investing Sovereign Dollars (not tax Dollars, mind you) in the lower and middle economic strata he claims to care so much about? The 99% can have its own life—and a very good one to boot—if we’d just ignore the 1% and get on with the job of paying ourselves to build the things we really need.

Here’s an example: It turns out the United States—which has the largest and most complex electric power network in the world, and which is completely and utterly dependent upon electricity for its daily survival—does not have the capability of manufacturing the single most crucial component of its electrical grid: the TRANSFORMER. To be exact, we can make little transformers, but the really big ones that are necessary to push electric current across long distances (which our electric grid is totally dependent on) are somehow beyond our ken. Or, to be more accurate, the 1% have no interest in building the plants and hiring and training the workers to manufacture the very large-size transformers.

They (the 1%) apparently reason that they don’t need to go to that trouble because in our globalized economy there’s somebody else who can build the really big transformers. It turns out that somebody is South Korea. So when, recently, Pennsylvania badly needed a new very-large transformer they placed an order with the Koreans, who promptly began building it. Two years later, the 400,000 pound item was put on a ship and transported for 26 days at sea to the port of Newark, New Jersey, where it was loaded by crane onto a railcar bound for Pennsylvania. (“Heart of U.S. Grid Difficult to Replace”, W.S.J. March 4, 2014.)

This little tale is made even more interesting by the fact that these very-large transformers—usually situated inside a compound protected by chain-link fencing—are easily destroyed with a few rounds of fire from a semi-automatic assault rifle. Thankfully, semi-automatic assault rifles are difficult to come by in the U.S., otherwise there might be cause for concern. The seventeen transformers recently shot to death in California (we can’t explain how this actually happened, since the NRA is only marginally active on the West Coast) are a cautionary tale: If this were repeated on just a little bit larger scale, the Department of Homeland Security has determined, our entire electric grid could be down for months—or even longer. (Come on South Korea, hurry it up…. We’re waiting!)

So my example is this: Why doesn’t President Obama propose that since the 1% have no interest in doing it, the U.S. sovereign government build a plant to manufacture very-large transformers, hire engineers to train unemployed people to do the labor, pay those unemployed trainees for making the effort to learn how to make a giant-sized transformer, then hire those newly trained workers to run the manufacturing process? We could build a backup supply of these critical electric grid components so that in the (increasingly likely) event some crazy, anti-government sociopath seizes the opportunity to turn out America’s lights, we could turn them back on in fairly short order.

That seems sensible. And it’s total nonsense to imagine that we have to depend on using ANY of the 1%’s gargantuan stash of Dollars to do it. Like I said, just totally forget them. Let them play their Monopoly game while we get on with the task of building the world we want to live in.

53 Responses to FORGET THE 1%

  1. I don’t know whether this piece makes any economic sense but as the one-percenters dominate our political system, how can they be ignored? The operative words in this piece are “Why doesn’t President Obama propose…”

  2. Marianne Stanley

    EXCELLENT piece!

  3. Marianne Stanley

    Excellent piece….hope it’s seen far and wide until it takes root and grows into reality!

  4. If I didn’t know better I’d think you ripped this from me, ha! Been saying “Forget the Rich” for years now.
    Both in real life and on the forums it seems like 90% of liberal’s discussion is how to tax the rich, or generally being angry at them. “Can’t we just leave them be (since we can’t touch em anyway) and focus on the 99%?” but no one wants to hear it. In fact, it’s not just liberals, much political talk is about either taxing or defending the 1%, it’s frustrating. What a distraction from our real issues…

    Thank you JD I wish this message could get out to liberals, and all in the 99%, forget the rich! Let them live in their bubble world, um no pun intended, isolated from us lowly masses. Let’s move on without them, both catering to them and trying to punish them.

  5. How can we forget about the institutions which perpetuated the housing crisis, if they will not forget about us? They will continue to skim dollars from the middle class if we continue to underregulate them.

    Even in a fantasy world where we don’t need tax dollars or congressional approval for the programs your advocating, we cannot simply pretend the 1% aren’t there.

    That’s what we did leading up to the housing boom, pretending systematic risks to our economy didn’t matter because everyone was doing OK with bubble growth. We all live in the same world, we cannot just forget about people who are willing to make a quick buck at the expense of society as a whole…

    • Ben, the fantasy world where we don’t need the tax dollars is the world we actually live in. I don’t know if you’re a troll, but perhaps you should read the primer linked at the top of the screen.

  6. Gregory Long

    I disagree with one point in the article. I would very much like to travel in space one day.

    • Hah! I was going to say that same thing. Although his point still stands, a trip to the beach is more affordable, practical, and probably more fun for most folks. :) On the other hand, the only way we’ll ever get “affordable” access to space is a space elevator, and the r&d and capital costs (and risks) necessary for the first space elevator will likely be something only a sovereign government can do (at least for a long time).

  7. Johannes Gerlinger

    Hey J.D.

    your’re my man! Others are also right, but not as entertaining.

    This is a real refreshing approach to the 1%.
    What the 1% don’t know yet: Their money doesn’t really exist! It’s just a mind-game.
    Actually, they are poor devils. Nobody loves them, they’ve got no friends, only people on the payroll.

    Let’ s pray for them

  8. techniknoergler

    What you declare to be an evil decision of the rich is a rational decision – to buy from those producers with lower prices (under consideration of transportation costs).

    What you declare to be an act of resistance to the rich is just protectionism.

    You may be right in monetary questions – but regarding the real economy you are living in another world.

    Of course we need pipelines, of course we need mining. They are not build for evil reasons. They have no use for the rich if there isn’t someone who wants to buy the services and products. Those pipe-lines are not financial scams.

    Why has MMT to be combined with those left world views or – even worse – green greenness based on the assumptions of the Club of Rome written down in The Limits to Growth – a “studie” largely disproved.

    • It is claimed that the “free market” makes rational decisions. The proposed Pebble mine in Bristol Bay, Alaska, is a perfect example of why this isn’t true. The alleged “profits” the mine will produce do not take into account the “costs” to the salmon fishery. Those are, in strategic corporate economic terms “externalities”. The great thing about “externalities” is that CEOs and shareholders don’t have to pay for them. The CEOs and shareholders get to pocket the “profits”—but other people, and other life-forms, have to pay for the “externalities”, often forever. Because this is true—and even considered a fiduciary (or legally binding) obligation on the part of CEOs and Board Directors—corporations are driven to make extremely irrational decisions when viewed from the perspective of the collective good. The same is true with the proposed Keystone XL pipeline. We already have enough fossil fuel reserves to make a strategic transition to renewable energy. The profit-rational “free market”, however, is not motivated to make the transition: they are motivated to make their short-term profits while we—the rest of us—have to pay for the “externalities” of climate change.

  9. The House is going to remain in GOP control and the Dems might even lose the Senate. It’s over, man. We lost.

    • No Tyler! We haven’t lost. We face the same challenge whether Congress is controlled by the Democrats or Republicans. BOTH parties are operating with the same antiquated model that taxes pay for Sovereign Spending. As the new realization (MMT) slowly begins to take hold, the politicians will be forced to alter their positions and revise the topic of discussion.

      • Thanks, J.D.! I needed that. I was feeling discouraged yesterday, but I’m back in the fight!

    • Sadly, the Dems are NO help to us. I wanted to believe hard as I could “they are just tied by those damn Republicans” but more I observe and think about it…the Dems are just marginally better and not interested in these ideas. Preferable to the GOP, they seem loathful of the 99% and middle/lower classes…the Dems at least will throw us a bone.
      So it really is an uphill battle, but gotta keep chipping away. Maybe we can get a larger presence in academia, get the work more known in any avenue possible, (already guys like Minsky have gotten more known and even Krugman is kind of sort of a little bit changing his tune) so it’s not easy…but Keynes was once a fringe crazy right? Same with Friedman right? Economics is an area where there can be a massive shift in thought process, it just may take time, and certainly a lot of work! Mosler has had some interaction with government, certainly more MMT ideas need to get down and dirty and get involved with gov.

      Besides, call me a sucker idealist…can’t give up! I kind of view it as being part of the problem itself, even a link on FB or starting a discussion, at least it’s something, which is better than sitting by and letting the status quo go unchallenged.

  10. spreadoption

    Great idea! Perfectly sensible. But given that Obama and our entire government and the Fed are owned by the 1%, how is this ever going to get done?

  11. There in lies the predicament, Monopoly (the game) rules state that “it is all about collecting property and stealing from your opponents!” (exclamation included). Once you’ve captured the rule committee it simply becomes a dispute over how much torment is dealt out prior to controlling all assets…winning? Gresham’s Economic Law would give evidence that “bad money drives out good” or more exactly those who toil without fraud go directly to jail, do not pass Go, do not collect any opportunity or share of prosperity, whilst the Looting with Impunity card seemingly trumps all politics, domains and public purpose (sovereign or otherwise)…game over.

  12. What an eminently logical proposal this is and all it needs is a President who will do the right thing! I like the image of the 1% isolated with all their money (like Scrooge) just sitting there and doing nothing but counting how much more they have than the others. Let us get on with life.

  13. Absolutely, right on, J.D., couldn’t agree more. With the caveat that the 1% won’t let us forget them. The 1% own a plethora of political and media minions who have created, and sustain, a culture of misinformation or no information. Mosler revolutionized economics. But then the 1%, who always get the good stuff first, used knowledge of MMT’s descriptive side to finance two wars off the books, then went on to line their own pockets with TARP and QE. The Big Bank reserves are overflowing, there is reportedly 32 trillion hidden away off-shore, and the wealth & power gap between the rich and everyone else keeps getting wider. There is no more amazing example of the 1% control over TV/Radio content than the blackout on MMT. Even mainstream liberal/progressive magazines won’t tell the people about MMT. MMT is trapped in cyberspace. Here we are, fast becoming a country of gated communities (gatos) and ghettos, while the 1% use this great revolution in economics only for themselves. How do we get the word out about MMT? Well, we could all make better use of social media. For example, public groups on Facebook have very few members. I don’t know. Pay famous athletes/stars to do commercials for MMT? Where are the MMT marketing guys?

  14. Everything regarding ignoring the .001% was going swimmingly until the mention of going to the .001% to ask the bureaucracy to fix things. The .001% and the politicians they own are one in the same.

    If anything, people could ignore the .001% by implementing a more distributed energy system where a home’s energy is produced on-site. This whole centralized transformer system is inefficient and owned by the .001%. Wanting to maintain and perpetuate their system of energy distribution is again pleading to the .001%

  15. Joe Firestone

    Terrific piece, J. D. We should just ignore them if we can. But we have to break their grip on politics first to get on with the job of creating prosperity for everyone. As for the transformers, thanks for writing about this vulnerability. It’s astonishing and criminal that our so-called Department of Homeland Security hasn’t recognized it and isn’t shouting at everyone in sight to fill the gap.

    • My (limited) reading of history seems to indicate that “security” is often the best way (politically) to justify federal funding for large infrastructure projects, e.g. the interstate highway system. I agree with another commenter (Fred) that we should be moving ASAP to a more decentralized system where much or most of our household energy needs are met by solar roofing panels and household energy storage. We would still need wind, hydro, nuclear, and maybe even the occasional fossil fuel plant primarily to assist the particularly energy dense locations (e.g. downtown areas with not much rooftop space or industrial plants with high energy needs) and for cloudy day backup. But the need for centralized power could be greatly diminished.

      The idea of simply requiring certain parts come from American manufacturers for strategic reasons reminds me of the “Industries with a Strategic Purpose” section from Mosler’s 7DIF. Much simpler and seemingly more effective than import tariffs or standard subsidies.

    • Call me paranoid, but I still believe there is an intentional/orchestrated media blackout of MMT. Why? Because a media blackout is necessary to keep the public in the dark about this economic REVOLUTION that has been totally hijacked by the 1% to shore up assets in the financial sector. MMT sites link to each other and we all talk back and forth, but where is the organized outreach via press releases, coalitions, etc.? The progressive New Economy Coalition has 92 member groups and enough funding to offer $5000 grants to students online. Yet, if you read through their list of members you will not find any MMT advocates. WTF? If you search their website for modern monetary theory, you get zero results. WTF? It makes me wonder if the real purpose of the NEC isn’t to funnel young economic activists into the endless game of buying local, planting gardens, bitcoin, pleading with politicians, etc., keeping them unaware while the fed continues to pump billions into the FIRE sector. For the 99%, it’s like throwing money into the FIRE.

      • John Christensen

        I would tend to agree regarding some sort of coordinated effort to keep MMT out of public view.
        Most intelligent people get the drift of MMT and can see the truth in it almost immediately given even the most bare bones explanation during a one on one conversation; politicians however, generally won’t discuss it once they see were you are coming from. This is often because the party they belong to has had a long history of using the 7 myths in election time polemics whilst sparring with their political opponents, which the general public would instantly punish them for at the polls if truth were suddenly revealed.

        I know some in the media are aware of MMT, and I have watched in stunned disbelief as a respected correspondent from a major news organization who I feel likely has heard about it, was asked by an anchor if any economists have proposed alternatives to the austerity policy status quo, to which he replied “not any good ones”.

        The moderation on some major media comment boards has a clear bias against comments supportive of MMT and for those clearly trying to discredit an MMT oriented comment.

        The public education process is going to be a long slow one, winning one person at a time or perhaps small groups in town hall type gatherings. The only politicians who can embrace MMT are independents or those belonging to fresh parties, and have yet to have been sucked into the national debt or intergenerational debt based straw man arguments.

  16. No, no, and no.

    The rich did not get to be rich in a vacuum. They did so in large part because they were able to influence public policy makers to institute rules and laws that allows them to accumulate wealth. Wealth hoarding by the few can only mean impoverishment for the rest of us.

    If half of the apple pie gets eaten by only one person, how will the 99 others in the room divide the other half?

    Bits and crumbs.

    • Fair point, but a JG and other MMT policies do provide a way to help the “99%” if you want to use the term without having to really worry about the rich. It’ll boost us all from the bottom up. To use the popular term, it’ll make that pie bigger. This is also a good selling point, (remember if we actually want to bring change, have to sell it) we all love to make that pie bigger. This way is superior to supply side and etc since we actually will get a good chunk of this increased pie.

      As said in the recent Wray article, let’s take care of the 99 and 1% on separate paths. If we keep tying them together, “gah you hate the rich!” will always be our downfall. They can be dealt with separately, like restraining finance, regulating banking, speculation etc

      • Brian,
        Expanding the GDP without corresponding adjustment on how the wealth is shared will give you the same result of income inequality. Yes, I agree that we must take care of the 99 and 1% on separate paths but we need to take care of both at the same time.

        See also Dan Kervick’s post below.

    • We’re not dealing with an apple pie that we all have to somehow share. Nor are we dealing with a finite amount of “money” that we dig out of the ground. The logic of the essay is suggesting—a bit tongue-in-cheek, mind you—that since the 1% has seen fit to “sequester” such a large quantity of our “circulating” cash in off-shore bank accounts and financial-derivative poker-chips, we should just replace that “sequestered” money with new Dollars paid directly to the lower/middle classes for services rendered building things we really NEED as a collective society. The unstated calculation is that Sovereign Spending of this magnitude would NOT be inflationary because it is simply replacing currency the 1%–in playing their Monopoly game—has taken out of the Private Sector economy.

      • JD,
        I love reading your other essays on this site but I disagree with you on this one. Sure, I am all for increased sovereign spending but what’s the guarantee that the huge chunk of those would not eventually end up in the pockets of our plutocrats? I agree with Dan Kervick’s post below. Wealth is power. And most of the time, power corrupts.

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  18. Robert Avila

    I would like to suggest that if taxation really is not needed to finance government spending, but rather to help maintain the value of the currency, that there might be other non-fiscal reasons as well. As a political policy tool it has long been said that if you want less of something tax it. The idea of a carbon tax is a sase in point. The US from 1913 until the early 1980s had high to very high marginal income taxes. The argument against these high taxes which drove their repeal was that they did not raise much money. So what did they do. Judging by the global economic and political success of the US during the period in question they did not discourage creative economic activity. I would suggest that what they did do was go along way to solve the agency problem. Individuals could be trusted to run major corporate enterprises because the tax strongly discouraged significant transfers of corporate wealth to its executives. What sane board of directors would increase the salary of a CEO if 90% of that increase would go to the government? Once the confiscatory high marginal taxes disappeared executive pay went out of sight. This newly acquired executive wealth went into Hedge Funds which in turn further hollowed out corporate organizations. There are other economic policy objectives involving the power to tax than the ones so brilliantly identified by MMT. No, the income tax was not passed to raise revenue to finance the government, but it was passed to dampen down the rampant, unbridled greed that characterized the age of the “Robber Barrons.” And it worked breathtakingly well. I only wish some ambitious academic economist would take the time to give high marginal income tax a closer look.

    • You have this exactly right! This is a point that I think Mr. Alt is missing. There are plenty of studies out there now on the corrosive effect of wealth concentration on societies. I remember a ‘Ted Talk’ with lots of data, demonstrating this.

  19. Wealth is power. To ignore the wealthy is to ignore power.

    • Dan Kervick

      In other words, the rich don’t just use their wealth to have bacchanals behind their gated communities; they use it to purchase influence and to consolidate their economic control over the rest of us. A decent life of true freedom, democratic and shared prosperity is impossible outside of a broadly egalitarian framework for the sharing of social political and economic power.

    • Dan, I agree “wealth” is power—but only one kind of power. Another kind of power was exerted by Gandhi and King and, most recently, the Ukrainian Maiden. The difficulty the “other” kind of power has always had is that when it momentarily gains control, it doesn’t know what next to do next—it fails to seize the moment and institute a new agenda. MMT (from my perspective) explains the reason for this failure—but more importantly, it also explains an aggressive strategy for positive change: If you change the way we understand “money” you change the fundamental definition of “power”.

      • Dan Kervick

        JD, I don’t believe that a deeper understanding of the monetary system contributes all that much of importance to the fundamental problems of concentrated capital, plutocratic political power, social domination and control, endemic corruption and gross social injustice. MMT hasn’t discovered a magic money fountain that can heal our sick society without the need for socially fraught and painful institutional changes and class conflicts. MMT is a branch of macroeconomics; not a comprehensive analysis of society and its power structures.

        • Dan, you can believe that deeper understanding doesn’t contribute much, but you’re wrong. It’s not “Wealth is Power”, but “Knowledge is Power.” Another favorite saying is “The most potent weapon in the hands of the oppressor is the mind of the oppressed.” There really isn’t any other power, any other weapon.

          MMT has discovered the magic money fountain. Whether using the fountain will entail all the fraught restructuring etc is a difficult empirical social question. But using it need not be painful to anyone at all, unless you count the loss of pleasure from seeing others suffer as pain. For one can say – and see very clearly – that if we just instituted a real JG – say $15 / hour at socially productive jobs that ordinary people decide on – that the rule of the 1% is over. Their game is lost. The denouement is obvious, the endgame is resignable.

          A real JG is more important, will do more than all the other less-well-baked bright ideas for social justice put together. It is a completely “egalitarian framework for the sharing of social political and economic power.” People can get economic power, and all the social and political power it entails – when they want it, not when a 1%er says.

  20. You are more or less right, but the issue is THEIR control over OUR money (credit-creation). So I would suggest to bring into circulation our own IOUs (Promissory-Notes) instead of accepting those of the TBTF-Banks which the FED converts into legal tender (Banknotes). So dump that paper and issue your own “letter/bill of exchange” in your local communities and get rid of all that things you won’t really need.

  21. John Christensen

    There are those among us who live the life you write of here J.D . They are few in number and have no political influence whatsoever but they mostly ignore not only the 1% but also just about all the rest of us too. They are true survivors living in social isolation. But we can’t all be mountain people living off the land can we?

    It’s become unethical to enforce the modern equivalents of the “hut tax” as the cost of participation in a modern economy, when that economy and it’s currency generate ever diminishing returns for our efforts. The currency loses more of it’s value to the 99% with each day. As such efforts to limit the effect of the 1% upon the ability of the remainder of society to survive and thrive are fair game, especially in light of the political influence being almost completely controlled by money.

    The answer in my opinion is for the 99% to trade exclusively with one another for most goods and services as producers and consumers. Most of the ability to produce our needs rests in the hands of the 99% and yet following the rules of the game we allow the 1% to dictate how our human and physical resources are used. With a little help from each other we could create an alter economy the delivers what we really need.

    Let the 1% have their mega yachts,office towers, jets etc yes, let them live in their gated communities, anything they can build by themselves as the separate and independent social group they seem to view themselves as that is.

    We have to excuse the behavior of those who don’t yet get that the economy wasn’t created as a game that is to be ‘won’ by any means possible. But we don’t have to play along with them. The time to form the 99% traders club has come.

  22. An idea just hit me. Instead of increasing demand, why not just lower supply by shortening the work week to four days?

    • That’s the French approach. Less material goods, more free-time. Good or bad? Depends on how you define quality of life.

  23. “Sovereign government”? Asking the President to do something for the 99%? Creating jobs? Building things we need and are beneficial but yield no great, instant profits?
    I’m sorry, but author has obviously confused America with some other place.

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  25. Can’t agree with this, for reasons others have stated. The 1% use wealth to buy political influence, so policies and programs that benefit working people are not going to happen. Also, unless their ‘gambling’ is completely disconnected from the banking system (maybe that could be done?) that we rely upon, ignoring it is to invite disaster.

  26. Interesting idea.

    My first job out of engineering school was working for PEI, a small minority owned firm, building large transformers and rectifiers for subway systems across the U.S., in addition to huge, high precision power supplies for Sandia National Laboratories.

    It was literally and figuratively, a colorful group of people that represented the population of Los Angeles. I recall working on the design of a new high tech rectifier and transformer combo that was used by the Seoul subway system.

    I was soon laid off during the downturn of the early 1990′s, and the company’s bankruptcy followed a year later. My former boss ended up at a local satellite manufacturer, I ended up at one of the pioneers of rapid prototyping. We would get together for lunch at various ethnic restaurants across the city. He kept in touch with the former owner of PEI and said the one contract he still had going was that rectifier for South Korea. South Korea didn’t want the transformers anymore, just the rectifiers.

  27. I’m curious to know what Bill Black might say about this idea. Professor Black gave an interview to the Real News Network about tax evasion. The interviewer asked him about tax money lost to tax evasion, Professor Black answered:

    BLACK: Well, that’s actually much more complicated, ’cause in truth we don’t fund the government with tax proceeds. I know everyone thinks we do, but that’s not in fact how we do it. So that isn’t really the issue. The issue is one of fairness and, of course, of integrity.
    So one group of folks get to avoid much of their tax liability, and we call that group the ultra wealthy. And then the rest of us don’t get to do that.

    http://therealnews.com/t2/index.php?option=com_content&task=view&id=31&Itemid=74&jumival=11535

    Something seems wrong about Alt’s proposal. I understand the financial argument, but I think a kind of paradox exists. Thus, people writing here on NEP reveal that we don’t have a finance problem, but instead we have a serious political problem. Once you understand that we don’t have any financial constraint on social programs, you have to conclude that we have political problems, ones that are impeding implements fair and decent social programs.

    So . . . to go from there to saying we ought to “ignore the one percent,” seems to simply ignore the political problem that is revealed by a correct understanding of money and taxes.

    I raised Prof. Black’s comments, because on one reading it sounds like Alt is not considering the justice and fairness issues that would arise if we “ignored the 1%.”

    (I think this is my first comment here. I found the NEP website through Naked Capitalism.)

    • I appreciate this comment—and the many others along the same vein—very much, and couldn’t agree more. I obviously (apparently not obviously enough) was not LITERALLY suggesting that we forget the 1%! I was attempting to use that rather startling notion as a way of dramatizing the simple fact that we don’t need to collect their tax Dollars in order to “fund” Sovereign Spending on things we really, even desperately, need (like the back-up transformers). The essay was a response to President Obama proposing to “pay” for the miserly few items he’s put in his budget by increasing taxes on the rich. There’s all kinds of reasons why the 1% should be substantially taxed—I especially resonated with Robert Avila’s observation about the connection between higher taxes and corporate responsibility. I also believe, however, that the challenge we face isn’t persuading the 1% to change their behavior, but to figure out ways we can make progress in spite of them. As the reality of MMT begins to seep into more and more 99% heads, I think that will begin to happen.

      • (Thanks very much for responding. I appreciate being brought into the discussion. I like talking about this stuff, and enjoy learning about money and taxes.)

        There are two other things, this idea “forget the 1%” makes me think of. First, I immediately thought of Keynes’ phrase “euthanasia of the rentier.” Unfortunately, the first thing my Google search turns up is a blog post of Krugman’s discussing the quote . . . According to Krugman, Keynes suggested that permanently low interest rates, (quoting directly from Keynes) “would mean the euthanasia of the rentier, and, consequently, the euthanasia of the cumulative oppressive power of the capitalist to exploit the scarcity-value of capital.” (http://krugman.blogs.nytimes.com/2014/01/22/the-euthanasia-of-the-rentier/?_php=true&_type=blogs&_r=0)

        I suppose this is a parallel idea to “forget the 1%.” By eliminating the oppressive power to control finance, perhaps “we” could attack the injustice in a round about way.

        Second: (I commented to the same effect on Naked Capitalism that) according to Gar Alperovitz, all over the country, people are being forced to “forget the 1%.” In fact, what is going on is that “the 1%” have given up on the rest of the population. In some cases, some very exciting cases, people are developing democratic ways of organizing industry, and figuring out how to do it without support from the financial elite. Alperovitz recommends the website Community Wealth for information about the thousands of worker owned and or controlled enterprises springing up all over the country. (http://community-wealth.org/) And his personal website has a lot of information, too. The point is that people are, as a matter of practical necessity, working to build wealth for themselves, and not directly trying to “go after” the super wealthy.

        Now just to pose a question and tie it to finance: Alperovitz frequently cites a figure regarding credit unions (which tend to have a one person, one vote rule), indicating that they hold in aggregate assets ($1 trillion (http://community-wealth.org/content/credit-unions-rise)) that put them inline with the largest of US banks. Is there some way that knowledge of how the money and tax system work could be useful to a coalition of these credit unions, allowing them to provide the financing to the growing democratic, or at least, worked owned enterprise and industry?

        Anyways, for all the “theoretical” discussion of this post, maybe it is already happening . . .

  28. But the problem is that the 1% don’t just own most of the money, they also own most of the oil wells, the best farmland, the mines, the prime downtown real estate, the debt that most of the 99% owe, … well need I go on. Sure, the 99% could try to ignore the 1%, their money and their possessions. But only if the 99% is prepared to give up any claim to all those natural resources and default on the debt that they owe to the 1%. That would be an extremely high price to pay even if the 1% was prepared to ignore a debt default of that size.

  29. There’s one reason why we can’t ignore the 1%. Because they are very, very interested in us. Just one example, the Koch brothers spend hundreds of millions of dollars telling us what we ought to think and how we should vote. This is true not just for the Koch brothers, but across the spectrum of the ultra rich. They want to mess about in our daily lives. They want to tell us what to eat, what to drink, what to do with our bodies. They want to meddle in women’s health care. They want to escape from the laws that we have have to obey. If they left us alone, we could ignore them…BUT THEY NEVER LEAVE US ALONE!!!

  30. Mostly, in the past, U.S. government tax policies were employed to offer incentives for productive investments of one kind or another, rather than as actual tax collection schemes. While I do understand the inveterate obstruction and immense perversity of Republican politics, I do not believe that it will continue. Republican politicians’ unpopularity is becoming legend. And something’s gotta give. When it does, I hope that we do not slaughter the fatted calves of our oligarchy with willy-nilly tax collection. Rather, policies must again be deployed to guide capital pools into tax write-offs. There are some very sexy opportunities for road building and bridge & tunnel infrastructure improvements that could be even more lucrative than charter schools (where hedge funds can now double their money in five years or so.)

  31. I don’t know if it is yet clear to the majority of Americans that the one percent control America. They spend their money wisely and that includes keeping enough politicians aware of their wishes (i.e. tax at a minimum). Once this is accepted, there is no reason why very large transformers can’t be built by the Government anyway. And, also,taxing the mega rich and building home made very large transformers are not mutually exclusive.