Let the Palmer House (not Fiscal House) be our Guide

By Mitch Green

Readers of this blog familiar with my previous posts know that I love trains. Sure, they’re slow. And after about twelve hours the coach cars start to get a little, well, worn. But, as a mode of conveyance they offer one time to reflect, and if you are lucky a little time to explore a new city.

Source: Wikimedia Commons

Travelling from Kansas City to NYC via Chicago, I had the pleasure of visiting the Palmer House – a fine example of the workmanship of a bygone era. Upon entering the great hall I was immediately struck by the grandeur of its ceiling. I have had the privilege to experience similar wonder and amazement in travels elsewhere, and as far as ornate ceilings this was not my first time at the rodeo – I’ve been to the Sistine Chapel, after all. What struck me the most about that moment in the Palmer House was not driven by my taste for architecture or the fine arts (which is probably ‘vulgar’ by any convention), but that it serves as a lasting example of what society is capable of achieving.

Through the ages we have erected monuments in honor of our ability to generate an economic surplus. That we perennially produce more than we consume, which of course varies in degree and kind depending on the age and place, means that we simply do not live in a world of scarcity. The materials we use to shelter and feed ourselves, and even pay homage to our cultural heritage are themselves the product of human labor and ingenuity. That is to say, how we get our daily bread depends not so much upon gifts from Mother Nature, but in our ability to coordinate social labor. Homo sapiens is a clever species.

When we commit ourselves to the task, we are capable of producing a magnificent surplus. The Palmer House is evidence of that. But, we must recognize that the level and composition of that surplus is entirely dependent upon actual human decisions. As much as we can choose to build ornate palaces, railways and highways, or harness the power of the atom, we can also fail to do so through our failure to act. To quote Milton Friedman, we are “free to choose.”

The recognition that economic systems produce a surplus is empowering. It allows us to master our fate; we no longer have to choose between bad and worse. It makes manifest the liberty and freedoms we claim to cherish. Otherwise, in the world of There is No Alternative, one in which we fail to see the abundance before us, we are relegated to a life of fear, desperation and tragedy. By choice, and choice alone, we move ourselves toward the actualization of the Hobbesian jungle. But, ask any veteran and she will tell you: there is no freedom in a war of each against all.

What modern money theory (MMT) offers is a roadmap out of austerity and waste. It allows us to cut through the obfuscation and mystification that surrounds the financial side of our economic life process; enabling us to step outside the narrow confines of policy that bind us when the solvency constraint governing households is falsely extended to the state.  It allows us to distinguish clearly real limitations from self-imposed limitations, so that we can get on with the business of preparing the economic possibilities of our grandchildren.

So, let’s get on with it. The clock is ticking.

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8 Responses to Let the Palmer House (not Fiscal House) be our Guide

  1. This is correct. Some of the most elegant building in this nation were built under the WPA and the CCC. I know many conservatives that look upon this era (1937-1944) as the golden age of America. When I ask them how they got the US economy to thrive they answer “well, back in those day we could easily print money”. Why is it no longer true in their minds?

  2. Excellent point about MMT being a means (roadmap) rather than an end.
    The Keynes essay about the grandchildren really points to the issues and challenges as well as the possibilities.
    I had never actually read anything by the man before…only secondary sources.
    I really understand now why oligarchs everywhere have hated him so fervently.
    1930’s sexism and antisemitism aside, I think he states the problem quite clearly.
    We are partially there to his 100 years later, but do have a ways to go.
    Thanks for some original source.

  3. casino implosion

    Maybe we should be studying the original supply sider salesmen, like Kemp, Waninkski, Reagan, etc, for ways of selling MMT, since it’s really the same thing done via tax cuts instead of direct spending.

    • Please elaborate, as I don’t see the parallelism between MMT (demand side) and Reaganomics (supply side).

      Yes, they both address capitalism’s business cycles (recurrent economic crises). MMT emphasises endogenous causality, since demand is deficient. Surely, Rosa Luxemburg had a good point, in viewing “the lack of purchasing power of workers as a cause of a tendency of supply to be larger than demand, creating crisis, in a model, which has similarities with the Keynesian one.” Meanwhile, the Reaganomics (supply side) view is one of “minimal government policy or regulation (laissez faire),” the equilibrium belief ” supply creates its own demand (Say’s Law), and the fantastical notion of trickle-down benefits as crumbs shower down to the working-class.

  4. –Homo sapiens is a clever species–

    This is an undeniable reality that humans produce more than consume. Problem since the beginning of this universe has been of distribution: to ahieve that purpose quite often we swing towards capitalism and some times towards socialism/communisn and still at the end of the day some have surplus and the majority is left in paucity

    • What is most puzzling, is that this inequitable distribution of wealth and income is now mostly in the form of debit and credit entries on bank computers. Therefore, what would be the simplest and most effective way of redressing this imbalance ?

      • –simplest and most effective way of redressing this imbalance?

        By accepting the law of Nature — mother Nature feeds its offspring with different doses. However the State can remove these differences to some extent.

        • The law of the jungle (capitalism) still persists in human societies, where the strong prey on the weak. Hopefully one day we shall move to a more egalitarian system that will work better, so that all the people in the world benefit. Elimination of poverty seems a worthwhile goal to me.

          Have you read “Why Socialism ?” by Albert Einstein, written in 1949

          http://monthlyreview.org/2009/05/01/why-socialism

          “Nowhere have we really overcome what Thorstein Veblen called “the predatory phase” of human development. The observable economic facts belong to that phase. Since the purpose of socialism is precisely to overcome and advance beyond the predatory phase of human development, economic science in its present state can throw little light on the socialist society of the future.