By J.D. ALT
With the essential collapse of the U.N. Framework Convention on Climate Change in Madrid (“Climate meeting goals go unmet” Washington Post, 12-16-19) we now approach the first day of 2020 with much less to celebrate, much more to fear, and much more to accomplish. Here’s a little parable for the coming New Decade:
“One evening of a December day 2019, several observatories in the International Asteroid Warning Network are startled to discover a cluster of incoming asteroids of massive dimensions. Over the next several weeks, other observatories corroborate the finding. Painstaking digital analysis reveals a 97% probability of a collision with our planet Earth on December 24, 2030—almost exactly ten years in the future. Calculations and engineering projections, coordinated by the Ministers of Space (MOS), suggest the asteroid cluster—now named (of course) “Armageddon”—can be broken up and diverted with a coordinated deployment and firing of 3,000 nuclear laser-cannons. The cost to engineer, produce, test and deploy each nuclear cannon is projected at $6 billion—generating a total cost of $18 trillion.
In other words, to divert the asteroids and save our planet, a very large, focused, and coordinated group of people and businesses need to be paid a very large sum of money to undertake and accomplish the specific tasks necessary. Assuming we want to survive, the next calculation is: Are the resources necessary to build and deploy the nuclear cannons available on planet earth? Obviously, if those resources—labor, technical knowledge and skills, exotic materials and rocket-fuel, etc.—don’t exist, the question is moot and we’re left to live out our fate, counting off Christmases until the very last one. To everyone’s immense relief, the Ministers of Resource (MOR) determine the necessary labor, technology, and materiel are available to produce and deploy 3000 nuclear laser cannons. If expedited to the hilt, the work can be accomplished in seven years—providing three years to spare before the projected collision. This, of course, creates major headlines and celebration! “THE WORLD CAN BE SAVED!”
The only question remaining is: Where will the $18 trillion come from to acquire the materiel and meet the laser cannon engineering, production, testing and deployment payroll? The Ministers of Finance (MOF) are consulted. MOF immediately says there’s a problem. The difficulty, they say, is that there will be no financial return on the $18 trillion investment: no one will buy the laser cannons once they’re produced—so investors could not recoup their capital, let alone make a profit. Nor will anyone rent the laser cannons once they’re in place. There’s no secondary market for the cannons because, of necessity, they’ll be destroyed by the explosive interaction with the asteroids. Building and deploying the laser cannons, in other words, is not only financially unprofitable, it is a total loss. Therefore, MOF explains, the profit-seeking financing mechanisms of private enterprise—which could otherwise create the $18 trillion in a heartbeat—will not be able to participate!
The remaining options to acquire the $18 trillion, MOF further explains, are basically three: First, a new tax could be imposed on citizens and businesses, essentially claiming $18 trillion of their future income and profits for the cause of saving the planet. Second, the philanthropical organizations of the world could step up and donate large chunks of their fortunes—comprising after-tax profits already accumulated—to the cause. Third, sovereign government could borrow the $18 trillion from the existing capital (savings) of private enterprise. If there isn’t enough available capital to be borrowed, private enterprise would be happy to create more, so long as it is guaranteed the loans will be repaid with interest.
More headlines: “PROPOSED NEW TAX REDUCES INCOMES BY HALF!” “CHARITABLE FOUNDATIONS DON’T HAVE ENOUGH DOLLARS!“ “DOUBLING NATIONAL DEBT WILL BANKRUPT OUR GRANDCHILDREN!”
Now people are starting to feel anxious. A year has been lost in the calculations and debates about the $18 trillion—and work on the nuclear laser cannons has not even begun! Some are beginning to question whether the asteroids really exist, or whether there’s been an error in the calculations—or even whether the scientists are being paid-off by the laser cannon industry! At the same time, there’s only two spare years, now, to get the nuclear cannons built and deployed. What can we do? Are we willing to cut our incomes in half? Are we really going to enslave our grandchildren to such a debilitating debt? Maybe we should redo the calculations. Maybe we should build a bigger telescope for a closer look at the asteroid cluster. Maybe there’s another asteroid coming along that will collide with the cluster before it collides with Earth. Maybe we need to elect new Ministers to make these decisions. And now, before we know it, another year has been lost as the debate continues….”
If we replace the asteroid cluster of our parable with the oncoming threat of global climate change, we have a useful operating description of our real-world dilemma today: It’s all about money. It’s not about whether the labor, technology and know-how exist to extract and sequester one trillion tons of carbon from the atmosphere—and transition to a zero-carbon economy in the process. It’s all about where the money will come from to pay for that labor, technology, and know-how—and who’s money it will be, and whether we’ll collapse in debt and inflationary chaos as a result of the spending.
This is why explaining Modern Money Theory is our biggest hope for the coming decade. Happy Holidays and best wishes for the New Decade.