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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