Rescuing the 1%


lsaverIn an earlier essay I suggested we just forget the 1%. This was an idea not entirely supported by the commentary that followed. On reflection, I’ve decided it isn’t the right approach after all. What we really need to do is rescue the 1%.

They may seem like the last people who need rescuing, but when you consider the facts it becomes clear they really do need to be tossed a life-preserver. The problem is their basic business model is self-annihilating. This is not a new observation in history, but it is worth thinking through again. CEOs and board members are required by fiduciary law to maximize profits for their shareholders. If they fail to aggressively pursue this goal with every business decision, they might actually get sued by an angry shareholder deprived of his maximum return on investment. So maximizing profits is the order-of-the-day—every day. This imperative has been dramatically reinforced (and distorted) over the past three decades—as explained and illustrated by William K. Black—by evolving corporate compensation rules awarding huge bonuses to upper level managers based on the short-term profits their business and “accounting” strategies are able to generate.

There are clearly many different strategies for maximizing profits (including, as Professor Black teaches us, convoluted accounting tricks) but the most straight-forward strategy which CEOs and board members really have no choice but to employ is minimizing the labor costs of their business. It’s just plain, simple, mathematics: the cost of goods, materials and machinery, electricity and fuel, are beyond their control. But they do have control over the level of wages they pay their labor. They are also—in the increasingly digital/robotic world we live in—able to reduce the amount of labor they must employ, further cutting their labor costs and maximizing their profits.

Taken to its logical conclusion, the quest of this business model will grow ever closer and closer to eliminating labor costs (and human labor) altogether. Obviously this becomes a serious dilemma for the 1%’s business model because “labor”—in addition to building the widgets or providing the services companies sell—also comprises the consumer market that purchases those widgets and services. And the money that “labor” needs to make those consumer purchases comes from the wages they are paid. So you can clearly see the snake eating its own tail here, which is why the 1% business model is self-annihilating—and why, whether they realize it or not, the 1% desperately needs our help. If we don’t help, somewhere down the road their markets will inevitably collapse—if they aren’t ravaged first by rioting throngs of the unemployed and destitute who used to be what we are here referring to as “labor”.

So how can we help? Modern, sovereign fiat currencies, in fact, make possible a very effective answer to that question: We can solve the 1%’s self-annihilating dilemma by providing them with the one thing that, long term, would make their business model really work: a perpetual supply of consumers who have Dollars in their pockets. If this were provided, American business could continue to minimize its labor costs without worrying about the consumer market collapsing—or riots in the street. But if labor continues to be increasingly underpaid and under-employed (to maximize profits) how will labor obtain the Dollars it needs to perpetually purchase the widgets and services of American enterprise?

This “Catch 22” can be resolved by the “Job Guarantee” (JG) program advocated by many Modern Money proponents. Here is a brief summary (in my own layman’s terms) of how the JG program—which has been proposed in detail by economist L. Randall Wray and others—could rescue the 1%:

Every citizen who desires to work, and who is otherwise unable to find suitable paid employment, will be hired by the sovereign government to do something useful for the collective good in their local community. What these jobs entail would be determined by the local communities themselves. To avoid the potential of the JG program competing for labor with local businesses, the JG pay scale would be just under the federally mandated minimum wage—and that minimum wage mandate would then be eliminated! It is no longer necessary because Private Sector businesses can now hire workers out of the JG labor pool—should they see an opportunity to generate profits by employing new workers—by simply offering a wage somewhat higher than the JG wage. This creates a de facto minimum wage without need of any federal enforcement. When the Private Sector economy is clicking on all cylinders, most of the JG workforce is hired by private business. And when the Private Sector cools off, for whatever reason, the JG program absorbs displaced workers back from the Private Sector.

JG workers would have bank accounts into which their weekly pay would be deposited by the Federal government. They would receive standard work benefits, job training if necessary (which they would be paid to attend) and would be “managed” by what used to be called the local Unemployment Office, but which is now the local Employment Office. The local Employment Office would track and document the work and training of each JG participant, and the resulting database would be made available to local businesses searching for employee candidates.

The proposed Job Guarantee program is made possible by the actual workings of today’s modern, sovereign fiat currency. Dollars for the program do NOT come from Federal tax collection, nor are they “borrowed” through the issuing of Treasury bonds. The Dollars are simply created electronically by the Central Bank and deposited in the accounts of the JG workers. Any inflationary pressures which might arise would be alleviated by Federal tax collections and Treasury bond sales. This is not a theory of how our national monetary system could work, but a description of how it actually is working today if we’d take off our wrong-way glasses, see it for what it is, and begin to intelligently utilize it for our collective good.

The big question is why would the 1% not embrace this policy? Look at the benefits: The current amorphous pool of “unemployed” people—many of whom have gotten out of the “habit” of work and forgotten basic responsibility skills—is replaced with a pool of labor regularly and gainfully employed doing useful things in their local communities. A simple example of a possible JG work project: growing fresh vegetables in urban and rural “food deserts.” In each case, the JG work is something which otherwise is NOT undertaken or provided because Private Sector business does not find it profitable to do so.

Many JG workers will have received specialized training—for example, how to operate and manage a hydroponic vegetable-growing service—and this labor pool is documented in a searchable data base made freely available to Private Sector businesses. How much easier can you make it for a local business to find a talented, available employee when they need one?

Welfare programs—which the 1% seems to object to on purely ideological grounds—could be dramatically reduced since more and more people currently on welfare would become fully self-supporting providing useful services in their local community. Many of the services that local taxes pay for (street crossing guards and public garden maintenance, for example) could be provided by JG workers—meaning local taxes could either be reduced or put to other uses.

Most important of all, however, the Job Guarantee program would rescue the 1% from the inherent, self-annihilating contradiction of its basic business model. No matter the extent of its success in minimizing labor costs, a strong and stable consumer market would perpetually exist for its profit-making products and services.

In exchange for this life preserver, the 1% should be willing to accept Federal rules that eliminate, once and forever, the moral hazards associated with its current business model—specifically, the linkage between the calculated measurement of short-term profits and corporate management compensation packages. If these new rules were adopted, American business—without changing its implicit need to maximize profits—could begin making decisions based on rational, long-term profitability goals rather than short-run scams and deals. Banks, for example, could once again become businesses that make loans rather than bets.

I do not mean to suggest here that rescuing the 1% means everyone else should inevitably work for minimum wage. In a recent, thought-provoking essay Dan Kervick writes, “Improvements in productivity are continually creating more leisure, but that leisure is continually creating new kinds of formal employment”—suggesting that even as business minimizes labor costs, new opportunities for the employment of labor are continually created. The JG program could easily feed into that process, spinning new for-profit start-ups out of work projects originating as non-profit services in a local community. In other words, “Rescuing the 1%” is a formula for reimagining how, and for what purposes, we are collectively utilizing our sovereign fiat monetary system. A better way of putting it might well be: “Rescuing the 100%”.

35 responses to “Rescuing the 1%

  1. Shame it met with such hostility! Forget the rich really is the best way to move forward with an agenda, but guess revenge seeking/anger take precedent…
    It does not matter, the JG is perhaps the most important idea in recent times, (well it’s the ONLY new idea I’ve heard in recent times) and is best for the whole country.

    Agreed that the 1% either needs to drop the ideological battle and accept a JG in exchange for being left alone, or they can be benefited/rescued and accept regulations. Either way, Im all for no longer wanting to tax and burn them, but they gotta stop the class warfare against us all

  2. More fundamental than the JG is “predistribution” (see ): 100% of us have an equal right to the the vast wealth that is the common inheritance on which our economic productivity is based (see _Unjust Deserts_, by Alperovitz and Daly, for one part of the big picture).

    • Conelrad, thanks for this link. I’ve just read it and find it very compelling. I like the framing the term “commons” creates, and the idea of “enclosure” is a powerful “explainer” of why things are going in the wrong direction. Wouldn’t the Commons movement be further empowered with the idea that their sovereign currency is a “commons” as well?

      • “Wouldn’t the Commons movement be further empowered with the idea that their sovereign currency is a ‘commons’ as well?”

        Without doubt! Likewise for MMT, as I wrote to Prof. Kelton less than two weeks ago.

        I’ll pass your post and our exchange on to David Bollier, with whom I’ve been in touch this year.

      • There is an increasing belief that the new battle for the commons involves our personal information. Unless it is enclosed and protected from those that would take it without payment, it will be taken without payment.
        We the community are building our own secure storage site for personal information that is volunteered by members of our community. If organisations want it then they have to pay for it and the money is redistributed back to the member that produced it in the first place.

        If they drink from the well they should pay for the well.

        Our community is building its own well. The labour it requires is being paid in our own community currency that recognises the contribution each person makes. When $cash comes in from outside it is distributed according to contribution.

  3. To avoid the potential of the JG program competing for labor with local businesses, the JG pay scale would be just under the federally mandated minimum wage—and that minimum wage mandate would then be eliminated!
    This is not really part of the JG, and gets things a bit backwards. For as you explain later, the important MMT point here is that the JG wage automatically becomes the minimum wage – for the obvious reason that people prefer more money to less money. The minimum wage becomes superfluous.

    Whether the JG competes or not initially with business is a legislative decision. If the JG wage is high enough, it certainly will, and there is not anything necessarily wrong with that. Keep in mind Minsky’s observation that when there is unemployment, the true minimum wage is zero. One can say then that any JG wage will, should and is designed to compete with businesses offering employment at below the JG wage.

    I agree with the general points of your posts. Was trying to find a source for – perhaps it is apocryphal – FDR’s statement that SS was meant to owe nothing to capital, have labor support itself – which is quite in line with your forget the 1% idea. The real problem is not that the 1% takes from the 99%, as focusing on redistribution misleads one to think, but that the 1% systematically prevent the 99% from building the future for the 100%.

    • If the federal government set the JG wage at some extreme level (for the sake of argument, to $1T platinum per hour) then certainly this would represent a takeover by the government of the labor economy. ..

      • If the federal government set the JG wage at some extreme level …
        Yes, sure, but the federal takeover of the labor economy would be a one time, temporary thing. At first everybody would take JG jobs in order to get their trillions. But it would cause a spurt of superinflation, and then trail off. Eventually, MDs would make more than people on the JG or working at McDs. But the financial and other destructive sectors would shrink and droves of people from them would end up on the JG or other more reasonably compensated jobs. Depending on savings desires & other spending and taxing, the JG pool would shrink and exercise its disinflationary effects.

        If businesses increasingly do not need labor (lower wages AND fewer workers) to produce goods, then why the Jobs guarantee, and not an annual helicopter drop? Thinking as above can tend to incorrectly framing, viewing “private” “business” jobs as “natural”, and government jobs, spending and taxation as an “intervention.” Helicopter drops are inflationary ( on both the “money supply” & “goods produced” sides.) – and thus ultimately fraudulent. A government job offer is a human right, a moral right – and there is always a great deal of highly beneficial public purpose work to do. As the USA has gotten richer it has spent less and less on needed public expenditure, which were too small to begin with even in the postwar “Keynesian” era – the opposite of JK Galbraith’s observations & recommendations then.”Helicopter drops”, BIGs etc are authoritarian, while a JG can be libertarian – the worker gets money when they decide they want/need money, not when an omniscient genius government planner says so.

    • On the competition issue, JG by definition competes with private business for workers. The principle of not competing refers to not having JG workers produce products and services that compete with private business. JG can hire away workers from McDonald’s if McDonald’s doesn’t pay enough, but JG workers should not be making and selling hamburgers. Nor should they fix bridges, clean streets, or do other things that permanent government employees do.

  4. While I support MMT and its JG efforts I think you missed step 1. First, taxes should be completely eliminated on labor. It makes no sense to tax away purchasing power from labor and then offer those who cannot find work a minimum wage job. I think the demand created by eliminating taxes on labor would drive unemployment down to the point where the 1% would lose both political power and wage setting power. This is especially true as we evolve into a service economy. The 1% may be able to get rid of labor in the manufacturing world, but getting rid of labor in the service industries is a bit harder (not impossible but harder).

    • “Evolve into a service economy”. Surely you mean the ‘experience economy’ or the ‘knowledge economy’? The service economy is a bit old-hat, no?

  5. > A simple example of a possible JG work project: growing fresh vegetables in urban and rural “food deserts.”

    I have my doubts about the demand of supposedly “healthy” vegetables, after all they are not staple foods.
    Well, maybe there are health benefits associated with the manual labor. Going off too much into ideological directions there though.

    Speaking of deserts:
    Spain has a desertification problem. If only they had the resources to pull off something like a reforestation and irrigation program…

  6. A new study sponsored by Nasa’s Goddard Space Flight Center has highlighted the prospect that global industrial civilisation could collapse in coming decades due to unsustainable resource exploitation and increasingly unequal wealth distribution.

    Rescuing the blighted American civilization may not be as easy as introducing a JG if the toadies and enablers of the 1% in both the halls of power and in the fourth estate are complicit in popularizing the tale that the federal gov’t has a debt and deficits problem and that increased federal spending is anathema to their beloved free market plutocratic nirvana.

  7. Greetings from Manchester, UK.

    Neat idea that we think can be bettered.

    Here in England’s North West, we represent some of the people who want to work but are unable to find paid employment, and we would do what you are suggesting in a slightly different, more English kind of way.

    In general, we would be happy to do the community work you describe but don’t believe government will want to fund it.

    Instead we believe that by coming together as a community of communities and by measuring the amount of community work each of us do by the hour, and by keeping a record of that work in an online account just like LinkedIn, we can persuade businesses to support us, and government to step out of the way.

    We don’t think government would value such community work you see, but that the markets would.

    In effect, by keeping a score of who’s done what, we the community can give each other credit for the time that’s been spent doing the jobs you describe. We think that our market – with its transparent and cohesive measure of social good – will begin to expand as forward-thinking businesses will begin to see the sense in trading with us since it will do their reputation no harm at all – especially since it can be measured using our credits to account for their contribution to making communities stronger.

    By accepting our credit in part payment for their goods and services they will have helped us in community, we the community can help them in return by shopping in their stores and not their competitors. Let’s face it, it’s also worth their while. For a start they won’t have to bother with expensive and over-complicated CSR reports any more, but also our very efficient market will enable them to use our credit as a means of repricing stock or capacity until the market says – ‘yep, that’s a deal i can afford’.

    So it is a bit like the job guarantee programme you describe but done in a slightly more ‘people-powered’ fashion. We’ve had enough of government interference to be honest, it’s really done us no good at all, has it?

    Excitingly, there’s a job for everyone!!

    In communities like ours, there’s all sorts of jobs that need doing and all sorts of people qualified to do them! It’s brilliant! Everyone can muck in and finally do a job that a) they’re good at and b) they enjoy and c) satisfies their need to belong and feel valued.

    All we need to do to balance the books is keep a score of the credits that are earned and the credits that are burned – a big ledger of goodness!

    And as long as we don’t issue credits for anything other than doing something useful for the collective good in the local community then we’re never going to get inflation (nor deflation) and therefore we are never going to devalue our currency.

    Ok, so now you’re thinking “dream on” – this isn’t Shangri-La and you’re not Thomas More.

    What we’re actually building (yes building) is only a Utopian dream until you see what happened to the value of Bitcoin – a currency that’s ‘mined’ into existence.

    Pah – again please, in plain English.

    We want a currency that’s earned into existence and that supports local people by valuing their every contribution no matter how small.

    In our community, loneliness is the only disability.

    There’s a job for everyone. If you drink from the well you should pay for the well.

    We think our currency is going to be ‘relatively’ stable compared to the competition, which let’s be honest, are over-valued and due a correction. So what we’re doing is building a shelter for the 1% to house their money until the storm blows over.

    Now that’s nice of us, isn’t it?

    You give us the credit we deserve and we’ll give you the credit you deserve. That’s our community and that’s our economy. We like to keep things simple.

  8. The Job Guarantee is a very good idea. One can only hope that humans are rational in the long run and this will be implemented.

  9. If businesses increasingly do not need labor (lower wages AND fewer workers) to produce goods, then why the Jobs guarantee, and not an annual helicopter drop?

    • The helicopter drop would raise aggregate demand, but not the the point of full employment without first causing unacceptable inflation. Only JG will employ everyone who wants to work without causing specific labor shortages that would drive up wages and prices for the goods and services in short supply.

      We need both, at the moment. JG should run at about 3% of the workforce, not 12%. The helicopter drop is needed to get private sector employment back to healthy levels, even with JG.

  10. John Christensen

    The job guarantee provides redress to a lopsided distribution of government spending which empowers one segment of society at the expense of another. The JG forces the addition of an element of balance to the labor market that simply does not exist without it by, directing some government spending toward a group that previously had to accept whatever price the private sector (government spending recipient) was willing to offer for it’s services.

    It’s good to measure and keep track of the value of the services being provided by ‘community’ workers, but why not send that record to the government as a way to help adjust the JG pay rate?
    Why, leave those already receiving their fair share of government spending in charge of pricing the labor of those who are not?

  11. Good luck with the JG proposal when you have well funded groups like “Americans For Prosperity” bankrolled by Sir Charles and Sir David which hammers in the constant refrain that small gov’t is good, big federal gov’t spending, bad.

    • JG is not incompatible with small government. Presented properly, it should be attractive to the small government crowd. Whatever fiscal adjustments are necessary can be done with tax cuts as well as spending increases.

    • @golfer
      But surely we can anticipate the outright possible reaction of the GOP creotards at the House of Boehner, no?

      “Aaarghh! another gov’t program! Where are we going to get the money? Deficits, watch our deficits! Our debt is unsustainable!”

      “Shot it down!”

  12. The JG while noble in cause and manageable on a micro level becomes burdensome on a larger scale. So skip it and go straight to minimum basic income for the 99%. Less logistics and achieves the desired results. Then those who work can make more. But how to pay for it? We’ll we could start by minting one joe Firestone’s $60t platinum coins, pay off the debt and redirect $400b a year in interest to a basic income payment instead of paying rentiers interst for zero risk. That’s $4t over ten yrs put to good use instead of making bond guys rich. Just a thought…..

    • @Jack
      If you look at the details behind most modern proposals for JG programs, while they are federally funded, they are administered at a more local level. This helps to minimize the problem of “burdensome on a larger scale” issues. Bodies closer to the issues (micro level), have a better idea of what is needed than at the federal (macro) level so they can make the recommendations/decisions as to what needs to be accomplished and keep the macro level out of the decision making process (or at least the bulk of it).

      Studies have shown that typically, people are not looking for handouts and do want to be a productive part of society and to contribute something. Just giving them money with a basic income guarantee would not help meet this need while giving them productive employment would. As an added benefit, society ends up with social assets/benefits through a JG program where they do not with a income guarantee.

      • Yes, and we already have a BiG, in the form of a myriad of specific programs. It’s just not a living wage.

  13. It seems to me that there is the potential for an inflation issue in this JG proposal, which I hope to explain as follows:

    Keynes defines full employment as the meeting of two conditions – a) laborers work until they are indifferent to working any longer; b) a worker’s wage is less than or equal to the value of the goods he produces (his marginal product)

    The JG proposal certainly ensures that condition (a) will be met, as all workers are provided the option to work. However, it seems to me that there is potential for a worker’s wage to be greater than his marginal product in the JG program, meaning that condition (b) will not be met. In fact, it seems almost guaranteed that a worker’s wage will be greater than his marginal product in the JG program, since the JG wage sits just below private sector wages, yet the private sector is not willing to hire the worker any worker in the JG program. If the private sector is unwilling to hire a worker, it is because the wage he demands is greater than his marginal product. However, this also likely means his JG wage is greater than his marginal product.

    The issue with wages being greater than marginal products is that this, I think, is potentially inflationary. If inflation is too much money chasing too few goods, when workers’ real wages are greater than the goods they produce, it must be the case that, relatively, more money will be chasing goods.

    • There is that potential, as there is that potential in the non-JG economy whenever government demand is greater than tax receipts, or whenever there is a balance of payments surplus. Final consumer demand is determined by after-tax earnings, and savings desires. When full employment is reached, and inflation begins to be a problem, taxes must be raised (if receipts don’t rise enough automatically), so that the aggregate of workers’ and business owners’ after-tax income will no longer be greater than the value of the goods produced.

      And it’s not the value, per se, it is the price. What Keynes should have said is that “in the long run” wages will always be less than sales, in the profit-oriented private economy. That isn’t necessarily true for a non-profit. If most JG workers are doing things that are done today by volunteers, services that nobody is paying for, then the value of the work doesn’t matter, economically (it matters a lot to the recipients). Our way of measuring GDP by spending misses all this activity today, and will miss more of it under JG.

      We would still have to be conscious of the danger of inflation, as we are today. Under JG, though, we’d be doing it at full employment.

  14. I live in nj. Administering a JG’s federal funds at a local level just means trouble in most places, and especially in nj…….:-).

    See, as a former business owner who felt first hand the impact of demand destruction, I’m thinking f it from a different perspective . It’s not “just giving” a person money, it’s about injecting purchase capability in the most direct method. Sufficient demand creates employment. Just my thought on it.

    • Administering someone else’s money always means trouble, not just in NJ, and not just in government. I don’t think JG will be the first-ever corruption-free government program. It’s still something we should do.

      “Sufficient demand creates employment.” Absolutely right. Income –> sales –> jobs. Government could do it without JG, to a limited extent, enough to make business owners like yourself quite happy. But not enough to employ everyone without causing shortages and inflation.

  15. JD, I see you going through the 5 Stages of Loss and Grief with this series:

    1. Denial and Isolation: Diagrams and Dollars!

    The perfect description of our monetary system, with zero regard for the political (domestic and global) economy of the last 30 years.

    2. Anger: Forget the 1%!

    No, really, the ultimate MMT Manifesto!

    3. Bargaining: Rescue the 1%!

    Right, because paying below the current minimum wage of $7.25 will teach the 1% about workers’ ability become “fully self-supporting”! Government assistance programs like SNAP, Medicare, housing assistance, etc — collectively known as welfare to the general public — are already being fully utilized, by the working poor. For a reason. That’s a feature, not a bug, btw.

    More lessons for the 1%: Paying below the minimum wage guarantees increased sales for Wal-mart and Taco Hell. For the former, China will love you (at least for now) as well as Wal-mart heirs, who already own more wealth than the bottom 40%. As for the latter, no reason not to expand the demand for the “service economy” that already occupies our top 3 employers, all of which pay minimum wage and hand-out gov asst apps as part of the hiring process. Need more income to purchase your own output? Just borrow it!

    Rinse and repeat. So take THAT 1%!

    4. Depression: About the 1%, Again. 🙁

    You realize that maybe — just maybe — in a global economy where 85 people currently hold as much wealth as half the planet, we may be missing something. That like monetary policy which doesn’t have a transmission mechanism to the real economy (outside of increased asset prices for the rich!), massive fiscal deficits that end up as windfall profits for big corps, which are subsequently cashed-out to execs and shareholders, very well may be missing a similar transmission mechanism as well. Also known as wages, which is what allows workers to participate in economic gains, of which 80% of the workforce has not seen in decades since 80% of workers were subjected to negative effects of globalization via stagnant wages while 20% were not. See? It’s just the 80-20 rule of the Parento Principle!

    Then you take the Krugman Yacht Economy Challenge and discover you don’t have an answer:

    So am I saying that you can have full employment based on purchases of yachts, luxury cars, and the services of personal trainers and celebrity chefs? Well, yes. You don’t have to like it, but economics is not a morality play, and I’ve yet to see a macroeconomic argument about why it isn’t possible.

    5. Acceptance: Rescue the Government From the 1%!

    As all MMTers know, the government is not revenue constrained, which is exactly why a high marginal tax rate on excessive income (wherever and whenever it rears its ugly head) works so well. Producers are then finally free to reinvest excesses back into the real economy before paying the government. Who knows, maybe they’ll even increase wages before voluntarily handing it over to the statists who will then need to spend it on gov assistance programs (remind them of ‘the horror’ of such programs!) because of excessive accumulation at the top. Even if wages are increased on accident, it still counts.

    And to which the meme — TAXES DON’T FUND THE GOVERNMENT — could be put to much better use as opposed to shoveling wealth (extracted directly from the productive economy) straight to the top, never to be seen again outside of yacht and car elevator purchases.

    Am I projecting? I wouldn’t rule it out. 😉

    • Trixie, I sent you a reply, but forgot to click the reply button, so it just got put down below as a comment.

    • financial matters

      Nicely put. I’ve always enjoyed JD’s writings but didn’t realize I was following a progression/transformation.

  16. John Christensen

    If not a job guarantee, why not full direct government financing for micro enterprise startups? Why should past beneficiaries of government spending always be in the position of deciding who gets access to startup capital in the business world, when startups are nearly always a crap shoot to begin with, and, then get the lions share of the rewards if it succeeds?

    It’s my understanding that in Canada at least the securities regulators now have their sites set on regulating crowd funding as source of startup finance.

    Why should the person born into a working poor family, who works his tail off to get an education and has ideas, be faced with a choice between half a lifetime of self sacrifice, or to beg borrow or steal, to get that one shot at success, when others get to try as long as the family fortune holds out?
    At the very least this would make the world a more interesting place as new ideas take hold, but new employment opportunities should arise as well; at least for the ones who manage to get a micro enterprise started .

  17. Trixie, sincere thanks for the therapy session. (Really 🙂 !) I neglected to include in the essay the idea that the minimum wage—before it got abolished with the JG program—would be set at the level of a “living wage”. I don’t know if that would ameliorate or reduce the despair of stages three and four—I left it out because I don’t consider myself expert enough on the details of this topic. I just kind of go for an over-all design for things. (Even when I design a building, I hire smart people to do the really hard parts—like figuring out how to keep it from falling down in an earthquake, or how to get water pressure all the way to the top floor without the pipes banging in the walls. Who knows how all that stuff works?) As far a stage 5 is concerned, this is the second time a commentary has noted that particular benefit of taxing the hell out of the super-rich, so I think I’d better start paying attention. Even so, I believe I’m still struggling to get out of stage 4, and would like to get back to stage 1 where, actually, I felt a lot more comfortable.

  18. I just bought Thomas Piketty’s important new book Capital in the 21st Century, and would recommend everyone give it a look.

    I think it is important that we all begin to move beyond the limiting idea of “economics” as a self-contained field of inquiry that addresses specialized problems whose solutions can be achieved without addressing fundamental questions about the structure of society. We also need to avoid the idea that there are adequate programmatic band-aides that can be applied to our society’s economic wounds with “interfering” with the private sector. That’s like imagining we address public health issues without interfering with the world of bacteria and viruses. There are good microbes and bad microbes, but any significant improvements in public health are always going to involve interfering with the microbial world in a very big way.

  19. “We also need to avoid the idea that there are adequate programmatic band-aides that can be applied to our society’s economic wounds with “interfering” with the private sector.”

    I think you meant to say “without” not “with”.

    And I think you’re splitting hairs. If your analogy is the microbial world, then you are strictly correct, but that is not the sense in which the “free marketeers” warn against interference. Their position is more like that of doctors who caution against using too many antibiotics, because they destroy the good bacteria along with the bad. We obviously need interference to combat fraud and to properly allocate costs that the market does not, but we don’t need restraints that inhibit all the good things that the private sector does.

    Government by its very economic nature “interferes” with the private sector. It commands resources and imposes tax burdens that affect incentives. It takes from some and gives to others. The biggest cause of our problems today is that government is the bad bacteria that, by overtaxing, is creating excessively high unemployment. We need the medicine of MMT to eliminate that bad interference without also killing off the good bacteria of the private sector.