By Michael F. Hoexter, Ph.D.
[Part 1 is posted here; Part 2 is posted here; Part 3 is posted here; Part 4 is posted here]
Principles of Mixed Economies and Their Study
The challenge goes out to all of those who claim to know something about the macro-economy and society more generally to refute, dispute, modify or amend these principles listed below. Additionally, after public discussion, having arrived at a perhaps-truer version that accords with the evidence, to go on and challenge in their professional and everyday lives unreal and dysfunctional beliefs about how our economies and human civilizations actually work.
1) Economics as taught in most major universities has had the tendency to emphasize the desire of individuals for personal material gain and the satisfaction of inscrutable individual wants over the social dimensions of economic life.
2) The prototypical individual in mainstream economics, “Economic Man” or homo oeconomicus, is assumed to be a prodigious calculator of his or her own advantage, so prodigious that it would be impossible for people to execute the calculations ascribed to them.
3) The characteristics of “Economic Man” promoted by the supposedly neutral discipline of economics does not correspond to either the micro-level experience of individuals in economies nor does it create a stable framework for understanding the functioning of the macro-scale institutions of economic life.
4) Using these erroneous assumptions, the mainstream institutions and profession of economics have tended in reality to reinforce and even encourage the asocial and anti-social tendencies of people.
5) Human beings are social animals with a genetic endowment that predisposes people towards building social relationships but our genome and its expression also include some asocial and anti-social impulses, which have been celebrated and magnified by conventional economics.
6) Biological selection (survival to the next generation) for humans and other social animals, occurs on multiple levels, both on the level of the individual and on the level of the group.
7) In addition to the drive to form social relationships, the physiology of human beings (as in other living organisms) requires constant input of energy and chemical nutrients to live, grow and reproduce.
8) Because of these energetic requirements, biological drives compel human beings to find, consume and manipulate sources of usable energy and nutrients that become the primary basis of human goals and purposes.
9) More complex social goals are derived from, though not identical to, basic social and asocial biological drives.
10) Human beings’ highly-developed ability to manipulate objects has led to people transforming natural environments for human use, most particularly in the building of shelter, public architecture, cities and roads as well as in agriculture, forestry, and fisheries.
11) Social cooperation and an increasingly sophisticated division of labor have accelerated this ability to transform natural environments for human use.
12) Economics/political economy is in part the study of how people singly and in groups use limited means and various means of communication to achieve these individual and social ends/purposes.
13) People are not always aware of the purposes or ends they seek to achieve nor, if they are aware, do they necessarily set out in a methodical or planned way to achieve these purposes.
14) Economics/political economy, in conjunction with other social sciences, is also the study of the actual, sometimes circuitous, path that people take to act upon the world and society to achieve their purposes, including their natural emotionality, sociality, perceptual limitations, national/regional material culture, and real abilities to calculate and compare potential outcomes.
15) Some ends or purposes are private purposes exclusive to a given individual, some are common purposes that are virtually the same in every individual, while others are group purposes or goals, that only emerge in social aggregates of a given size.
16) The purposes of groups and the purposes of their members can coincide but at points can also conflict.
17) The pursuit of similar individual goals or purposes by different people at the same time can cause conflicts as people compete over available social and natural resources.
18) The purposes and interests of human groups are not identical to the sum of the individual interests of each of its members. Each social group displays in aggregate emergent properties that evolve as part of the interaction of the group’s members, properties which are not necessarily present in each individual member in isolation.
19) Human groups have grown in size over the course of evolution and currently most humans participate in a layered composite of social groups that vary in size from a couple or family to all of humanity.
20) For the last 5000 years, the institutions of the state have become the most developed means of social coordination to achieve large group or common purposes.
21) Macroeconomics is the branch of economics that has attempted to describe and optimize large-group economic phenomena and large group interactions in the economy, in particular as regards the impacts and actions available to governments and groupings of governments.
22) Politics, which in larger groups is most often attached to government, is a means to determine what is the aggregate interest of a given social group. Polities, the social groups where politics occurs, have historically originated by sharing a language or common ethnicity.
23) Politics and the institution of government are means of social coordination that can under many circumstances avoid open violence and bloodshed, restricting or canalizing anti-social tendencies that are also part of the human constitution.
24) The attempt to isolate an “economics” independent of politics starting in the late 19th Century has distracted economists from rational consideration of the role of politics and the institutions of government within the economy, as well as the interaction of their policy prescriptions with the political realm as it actually exists.
25) Economics as taught in most universities in the early 21st Century restricts itself for the most part to the study of markets with the assumption that markets exist as a detachable and independent component of society and the economy, distinct from government and politics.
26) Markets or proto-markets with supporting functions from governments have, to date, been the most developed means of social coordination to achieve private individual purposes.
27) Markets are social institutions by which two parties with divergent roles, a buyer and a seller, find each other and exchange a good or service of value to the buyer at a price that is in the short run agreeable to both parties involved.
28) Markets assume the pre-existence of a currency accepted by buyers and sellers as a representation of value.
29) Most often issued or administered by governments, monetary systems have developed over the past 5000 years to account for debts and as a medium of exchange of goods in markets used by both governments and private actors.
30) As economies have evolved, so have monetary systems, with the most recent transformation in monetary institutions occurring with the emergence of fiat currencies in the 1970’s.
31) Capitalism, our current economic system thoughout much of the world, is predicated upon the predominance of market exchange where the goal of economic activity is the accumulation of monetary units via sale of goods or sale of assets, all denominated in units of currency.
32) Capitalism has been an extremely dynamic economic system that has spurred unprecedented rapid growth in technological development
33) Capitalism has also led to substantially increased material wealth in many societies, the distribution of which varies greatly within those societies and also between societies, over space and time.
34) Market communication and activity are sensitive to levels and changes in prices of desired goods and fixed assets as well as the availability of goods, services and assets overall.
35) Numerical pricing of goods and services enable people to compare the offerings of various goods and to establish ranking of which of their desires or needs can or ought to be fulfilled at any one time.
36) With the aid of stabilizing social institutions including government, markets in capitalism are a flexible and adaptable social institution, combining creativity and destructiveness.
37) Via the activities of entrepreneurs and entrepreneurial activity in general, markets encourage opportunistic use of existing social and natural conditions to achieve goals desired by a segment of the public.
38) Without the provision of public goods, for the most part by government, such as a legal system, a currency, education system and transportation infrastructure, modern markets could not function.
39) Markets are prone to fluctuations, fads, and panics, as the motivation for personal gain and the encouragement of risk taking in the hope of gain, interact with various forms of social influence, non-synchrony between economic sectors, and natural and social limits to any given economic trend.
40) Financial markets and markets for tradable real assets are, in particular, prone to catastrophic failures due to periodic panics combined with the development of excessive indebtedness of market participants over time.
41) Without decisive political leadership, well-designed and implemented regulations and taxation regimes designed to orient market participant behavior towards broader social goals, markets in the capitalist economic system encourage self-seeking behavior and tend to exaggerate social and economic inequality.
42) Those who have lower and middle incomes have the highest propensity to spend what income they receive, while those with higher incomes and greater wealth have a lower propensity to spend per unit currency received.
43) Those with a higher income and wealth have the greatest ability to save a portion of their income, as, by definition, they have the ability to satisfy their basic needs with a smaller fraction of their income.
44) Because of the tendency towards concentration of wealth and assets in capitalism, there is also a tendency towards shortfalls in overall demand for goods and services, as wage levels stagnate or diminish yet continued economic growth requires increased buying power.
45) A “mixed economy” is the most accurate description of major national economies as they have developed over the past 300 years, where there is a functioning state and widespread market exchange. Non-mixed economies include the few remaining state-dominated command economies (North Korea, Cuba) and “failed state” economies (Somalia).
46) A mixed economy is the co-existence of a viable government apparatus with a market system in which a substantial portion of productive assets and financial wealth are in private ownership.
47) The roles of government and private economic actors in the broader capitalist mixed economy are distinct and one cannot entirely replace or displace the other.
48) In a mixed economy, the roles of government and market can be complementary, competitive or conflicting.
49) The government’s monopoly position in the area of legislation, jurisprudence, law enforcement, regulating a common currency, and ownership of public property complement and benefit, under most conditions, the private sector as a whole.
50) Mixed economies can, on the one hand, contain large state-owned industries combined with the propensity to nationalize industries for the perceived public benefit or, on the other hand, virtually no state-owned industries and an ideological commitment to avoid public ownership of industries.
51) The political component of a mixed economy can be formally democratic or autocratic, with the latter ranging from dictatorships of the Right to those of the Left.
52) Informally democracies and autocratic governments can also have the characteristics of oligarchies, plutocracies, or, more recently, corporatocracies, where wealthy individuals or corporations have inordinate informal power, stemming from wealth and social influence over the political elite.
53) Private sector financial institutions and banks are, in many of the wealthiest national economies, some of the most likely corporations to function as informal rulers in contemporary corporatocracies.
54) The quality of governance in a mixed economy (and in any society) depends on the level of development of the institutions of government, the mechanisms for accountability of government, and the commitment of government actors and the polity to rule of law. Additionally the quality of information available to government actors and the public shapes their ability to respond to real social and external challenges.
55) Actions of government in a mixed economy can serve different interest groups to varying degrees depending on a combination of overarching ideological commitment to a social contract, the level of organization of various interest groups outside of government including industry, banking, labor, farm groups, and political parties, as well as direct relationships and channels of influence between these groups and the political class.
56) In cases where the social contract formally denies that a mixed economy can function well or should exist at all, government support for and patronage by economic interest groups will often proceed indirectly, haphazardly, or surreptitiously.
57) A purely interest group-oriented, clientelistic economic stance by government in a mixed economy can work against the refereeing and scorekeeping functions of government.
58) Defining government’s role purely as refereeing and scorekeeping can lead to denying government support for critically important or vulnerable industrial sectors and social groups in a given national economy.
59) A well-characterized understanding of how government should function in a mixed economy remains one of the primary tasks of economists and social scientists more generally.
60) Disputes between various economic schools now currently represented in the academy and in the media (“Austrian”, various schools of Keynesian, neoliberal, neoclassical) are always in reality disputes about which kind of mixed economy is better or ideal, not, as sometimes claimed, whether or not to have a mixed economy.
61) Those economic schools and their followers that assume away the role of government in the economy produce a model of the economy that is inadequate to understanding the real dynamics of the economy with its interaction of public and private sectors.
62) The “mixed economy” concept provides a framework whereby the actions of all sectors of the economy can be observed alongside each other and in interaction with each other.
63) A “mixed economy” framework of study enables variations in international and trade policies between nations to be joined meaningfully with study of the other aspects of the economy.
64) For every national economy there exists three great sectors: the private sector (often represented by markets), the public sector (the government), and the “rest of the world”.
65) One economic actor’s (person, household, business, government or national economy in total) monetary cost is another’s monetary income.
66) Similarly, in aggregate, one economic sector’s (public, private, or “rest of world”) monetary net cost or deficit is another sector’s monetary net income or surplus.
67) Saving, net profit, budget surplus or current account surplus mean that one economic entity’s monetary income exceeds its monetary costs within a given period of time when referring respectively to individuals, businesses, governments, or national economies.
68) Within a given national economy not all sectors (public, private, or “rest of world”) viewed in total can run net surpluses = save = increase overall profit = increase their monetary wealth at the same time: when one sector in total increases its monetary wealth another must run a net deficit. A technical way to describe this is “stock-flow consistent macroeconomic accounting of flows of funds”.
69) In modern economies with fiat currencies, the public sector is the only sector with the potential capacity to consistently run deficits without impoverishing itself or the nation as a whole.
70) In particular in regimes with fiat currencies, the public sector and government institutions more generally can therefore act as an economic “shock absorbers” working to counteract or ameliorate the trends in the private business cycle (countercyclical action).
71) The public sector can dampen shocks that occur endogenously (inside) in the economy itself as well as exogenously (outside) in the multiple social and natural systems upon which economic and human life depend.
72) Institutional prerequisites for government to have the capacity to act as a shock absorber include having the facilities to issue and control a sovereign currency or having the backing of a currency-issuing government or central bank which will absorb government deficit spending in the form of monetization of deficits or their repayment via currency issue.
73) For a given national private sector to grow in net monetary wealth as a whole, either the “rest of the world” must run a deficit with that country (there must be a current account surplus) or the government of that country must run a budget deficit (either monetized as national debt or simply “printed” and spent by government) or both.
74) A monetary economy in which all economic actors, public and private, domestic and foreign, are attempting to be net “savers” at the same time is an economy which will rapidly shrink, as the incomes of all the hopeful “savers” would rapidly reduce, as all actors are restricting their outlays, pushing many towards and below the threshold of subsistence and out of the monetary economy altogether.
75) Efforts to reduce public debt or balance government budgets in perpetuity for any given nation necessarily are predicated upon one of the following outcomes: a permanent trade surplus with the rest of the world, permanently elevated levels of taxation or a combination of both a permanent trade surplus and higher taxes and fees.
76) One of the critical stabilizing functions of government is using foresight, i.e. planning, to achieve the public purpose, whether defined in democratic, oligarchic or autocratic terms.
77) The concept of a mixed economy allows for definition of which economic sectors, functions, and historical time where planning is a suitable mechanism as well as where it has limited effectiveness.
78) The use of planning in a judicious manner within a mixed economy does not inevitably lead to a command economy or to diminution of the wealth of the private sector as a whole.
79) In some cases, where government fails to plan or is prevented from planning, private actors/oligarchs will engage in a form of social planning that is amenable to their own private ends but ignores or conflicts with broader social interests.
80) Government actors/the public sector in their planning function can attend to tasks and costs unaccounted for by market actors/the private sector, including medium- and long-term trends that are not yet registered as goals, risks or pricing factors on markets.
81) Governments/the public sector can also attend to concerns of households that lack sufficient monetary means to influence and shape markets to their own purposes.
82) A mixed economy can ideally combine stability and social cohesion with the dynamism and creativity of capitalist markets.
83) Tensions exist between capitalist markets and the government administrative and planning component of a mixed economy which might eventually lead to the formation of a new type of economic system, of a benign or less than benign character.
84) One of the dangers in a mixed economy is the complete capture of government by an economic elite, either under the guise of “free market” ideology or via open practice of political patronage.
85) Another danger is the take-over of the entire economy via the military and administrative functions of the state, suppressing economic initiative in the private sector.
86) Ultimately an understanding of the role of the state and of private actors in the economy more generally can help policymakers and the public avoid producing a malignant form of the mixed economy.
87) Furthermore, critical tasks facing humanity in the next decades require social institutions that enable concerted human action so as to act effectively to enable human survival and flourishing.
Endorsed by:
Michael F. Hoexter, Ph.D.
Pertinent to Point 1 (and other points) E. O. Wilson’s new book:
The Social Conquest of Earth, 2012, Liveright Publishing Corporation, New York, ISBN 978-0-87140-413-8
I’ve also been reading that book.
Excellent. Now I can recognize that I “have been pushed below the threshold of subsistence.” Oh, well.
I’ve enjoyed reading this 5 part piece, and while I mostly agree with your conclusions, I want to nit-pick a little concerning point 6) “Biological selection (survival to the next generation) for humans and other social animals, occurs on multiple levels, both on the level of the individual and on the level of the group.”
While this idea has seen a resergence recencly due to Sloan’s article that you link to, I think Steven Pinker did a good job of showing that biological selection does not operate at the group level. You could also read Jerry Coyne’s take on Pinkers article.
Group selection is a contentious topic in biology and I would hesitate to use controversial topics from another discipline to support a marginalized topic in economics.
Abram,
This discussion distracts a little bit from the main point of my piece but I will answer your criticism.
I’m not particularly convinced by either Pinker’s or Coyne’s arguments… I think what is “shown” in these pieces are ideological prejudices and defense of established evolutionary positions that “reify” the individual as the only unit of analysis in evolutionary biology. Pinker in one of his more solidly grounded works (which I cite in the Manifesto) actually makes the argument for the evolutionary impact of group membership for human beings. In “The Better Angels of Our Natures”, he uses the human fossil record to show that human-on-human violence and violent death has been radically reduced by the emergence of the state, a large-group phenomenon. The huge rise in human population and the transformation of the earth by humans (and to a lesser extent other social species) would be unthinkable without our ability to participate in large social groups. Whether this is “selection” per se is to me a moot point: societies (for better or worse) are transforming the earth.
I interpret Pinker’s (weak) effort to “refute” multi-level selection via attacking “group selection” as a bit of motivated reasoning on his part as he has a considerable investment in evolutionary psychology which has an unquestioning loyalty to an individualized view of humans and society.
An individualized evolutionary causal narrative whether put forward by biologists or a psychologist like Pinker has no decent explanation for WHY certain species are social and why they are successful. They often present speculation based on an individualized story about speciation and reproductive fitness but this is the same story that is told for non-social species. Furthermore, understanding why certain groups are more successful than others is also critically important. This success may or may not be based on genetic differences but it does have an effect on the survival of organisms and also their genes. It also now critically important for the survival of our own species.
Dr. Hoexter — An excellent conclusion to your series. I am sending this piece to several of my friends. If we, the people, don’t take control of our destiny as a nation we will rapidly complete our descent into a third-world, failed state. We are well on the way already.
John,
Thank you very much… I am hoping this will help provide a basis for a defense of many of the good things that we currently enjoy, the ability to meet new, very large challenges coming our way, and as a means of improvement of our lot overall.
Bill Mitchell in a piece a week or so ago at least inferred our trends in the US are those of a failed state based in part on the stagnation in wages since the mid seventies and the continuing high unemployment, even from that time but greatly accelerated in 2008. Personally I don’t see how one can deny it any longer. I find myself repeating some big numbers over and over, like twenty five million unemployed, fifty million plus in poverty and without ready access to health care. This has been going on for years now, but the PTB are more interested in eviserating each other than tending to the public purpose. Can you suppose we will be the dominant nation on earth indefinitely when others are “catching” on? I would have to guess China will surpass us first. But the west, it appears, is in for a long autumn and harsh winter short of a revolution in thinking.
It is hard for me to comprehend why so called patriots allow this to go on and even ply the populace with false promises of Valhalla once the debt is under control and our enemies have been put in the ground. I have scant knowledge of economics but seeing what is happening is beyond belief when so many postulates on money and the way out are self evident. I have little use for members of that profession or the “arguers” , in general, save a few who practice MMT.
So, if the seventies saw the beginnings of this thing they call neo liberalism, it is time we did away with it – – totally.
Can’t help but note that there are eight items short of the 95 theses. Even so, the manifesto is of the equivalent quality as its historical predecessor if not quantity. Have you any Federal Reserve Doors on which to post the manifesto? The poops on Wall Street and in Washington are not going to like this.
Thank you.
Someone should nail them to the doors of the WH, Congress and suitable Cathedrals accross the land.
I enjoyed your series Michael. Keep it up. Thanks,
I keep going back and forth between modern money theory and modern Marxism a la David Harvey. Are we still trying to save capitalism from itself – from its inherent excesses – as Keynes was so self-consciously trying to do? Why? The growth machine has taken us to the brink of planetary meltdown – not just economically but thermodynamically. MMT could be more than just a shock absorber. It could be our transition to a future steady-state economy that meets our own human needs rather than the needs of capital accumulation.
I appreciate the breadth of scope Dr. Hoexter has brought to these subjects. He certainly gives us a lot to think about.
6) Biological selection (survival to the next generation) for humans and other social animals, occurs on multiple levels, both on the level of the individual and on the level of the group.
Selection is but one process in evolution. Biological evolution is dominated by cooperation both expressed in genes recombination and the drive to maintain alive the greatest possible number.
32) Capitalism has been an extremely dynamic economic system that has spurred unprecedented rapid growth in technological development.
It can also be said that technological development spurred unprecedented rapid growth of capitalism.
Which of these two statements stand historical analysis?
33) Capitalism has also led to substantially increased material wealth in many societies, the distribution of which varies greatly within those societies and also between societies, over space and time.
It can also be said that technological development led to substantially increased material wealth in many societies, capitalism tending to widen the distribution of wealth within those societies.
PG,
Thanks for taking up the challenge to create better “theses” here. Certainly capitalism seems to require a certain level of technological development so it may be that technological development in certain forms “causes” or pre-disposes societies to become capitalistic. On the other hand, rapid technological development or at least widespread adoption of certain technologies seems to be spurred on by capitalism.
An interesting issue that your restatement of these theses brings up is whether the government component of mixed economies is actually the critically important element in technological development beyond a certain basic level. Government research as well as deployment of certain technologies has been a seemingly necessary element in technologies like the Internet, computer chips, spin-offs of the space program as well as the infrastructure that enables the development of industries such as the automotive industry (i.e. roads).
I think this is very well thought out and instructive. A few things came to mind that could be added for the sake of completeness or just to help get it up to 95. I’m not sure of how to word them, and I don’t want to be misinterperated as arguing against government’s role in providing macrostability, or in planing or promoting equity.
Sometimes a market clearely suffers from a well studied source of market failure for which most economists have agreed upon a remedy, but for some reason government intervention in that market does not follow the recomendations of academic economists and instead makes the market less efficient and less fair. I don’t mention this to discourage the public from improving the administration of government programs but I think there are some failings endemic to democratic governmence. Many government programs were started with good intentions but have had negative consequences due to public choice problems (I’m thinking of farm subsidies, occupational licensing requirments, zoning restrictions, community redevelopment boards, and the drug war). I don’t know how I would phrase this as a principle, and some of the principles on the list already adress this at least in part. But some recognition of agency problems, of incumbent market participants hamstringing new entrents, of information problems faced by governments, and of moralistic backlashes against unpopular markets, would probably be helpful in elucidating the dificult choices that citizens have to make in supporting or opposing certain proposals.
Ian,
Thanks for your very thoughtful contribution to the discussion. Addressing these issues would make a valuable addition to the list. Also it seems as though getting to 95 is important for a number of reasons…as well as the need to create a fuller picture of mixed economies and their dilemmas.
It seems to me that certain important components of our society are best funded by government. They come under the general heading of Public Goods. Such widely distributed infrastructures such as our highways and the Internet, basic research such as the space program and scientists funded by the National Institutes are things that are best funded by the federal government. Also, support for those members of society who are unable to support themselves (with some degree of comfort), referred to these days as the “safety net” (a term I hate), should be fully funded by government. What these activities all have in common is that if you apply the principles of for-profit private enterprise to them, you will seriously impair any chance of doing them well and humanely.
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Thank you for this excellent piece. You have made clear issues which need to be understood and for which the for profit media is unwilling to discuss except in negative and distorted ways.
However, there is a fundamental piece which you are missing.
The reasons for the right agenda attack; on the financial structures of democratic institutions and on democracy itself and its replacement by corporate power; are human, social and spiritual values which do not contribute a penny to their bottom line dollar denominated profits.
It is an amorality tale of terrible proportions.
Morality is comprised of human, social and spiritual values none of which can be measured in terms of dollars, and it has three positions. Moral, which means one knows what it is and does it; immoral, which means one knows what it is and doesn’t do it; and amoral, which means one never considers morality in the first place.
There can be no better example of amorality than one for whom dollars are the only value considered before decision or action.
Corporations are amoral and are making money fist over paw for the wealthiest elites by being amoral. In fact the more amoral they are the more money they extract and suck up.
Democratic government is responsive to the will of the people.
People vote for their elected representative based on their human, social and spiritual values and expect their elected representatives and governments to reflect these values, or in other words to act morally.
Therefore, unmolested, democratic government has the ability to be moral.
What fuels the corporate extreme hatred of democratic government is that national democratic government not only has the capability to be moral it also has the capability to force corporations to be moral!! The absolute proof that democratic national government has the capability to force corporations to be amoral is provided by the corporations and the wealthy elites which control them.
In a recent year 80% of the shares traded on North American exchanges were owned by the top 10% wealthiest individuals; when one speaks of corporation one speaks of wealthy elites – almost without exception.
These are people who wouldn’t spend a penny unless there was a dollar in it for them, yet they spend billions of dollars a year in North America alone to corrupt democracy and prevent democratic government from acting morally or forcing them to be moral.
Corporations are not amoral because the individuals involved are necessarily evil but because they only consider dollars before decision or action they lack all capability for moral actions or decisions ex democratic government force majeur.
This would be true even if saints ran the corporations.
Their first victory was their taking the capability to create money away from national governments which began in the 1970’s and is almost complete at this time.
During the 1960’s the Canadian government nationalised a totally private health system and there was no national debt accrued because the national government simply had the Bank of Canada up the balance in their account and paid “cash” without debt attached.
This was at a time in which the Bank of Canada had full economic production as it’s goal, a big advantage for middle class and poor workers.
Now the goal of the bank of Canada is simply to “contain” inflation.
Let’s examine inflation.
Say a middle class worker purchased a house for $100,000 and a year later it was worth $110,000 – where’s the beef? Where’s the problem? There is no problem!! Asset value appreciation is good for the owner of the asset and bad for money owners. If you had 100 billion dollars to invest in assets and next year it cost you 110 billion dollars for the same assets, you would have a problem! So, outside of extreme inflation which can be remedied by extreme, or whatever, taxation necessary to take “excess” money out of the economy by state/provincial and municipal governments (as the national government is a monetary sovereign and has no need to tax or borrow to spend and therefore their “tax room” can be used by lower non-sovereign governments).
This would also, by the way, solve most, if not all, financing troubles for lower – non monetary sovereign – levels of government which provide most of the services needed by a progressive democratic society.
Inflation is only a problem for the 90% if it is consumer price inflation which gets wildly out of control and or out of reasonable proportion to stagnant wages – which generally hasn’t been experienced in decades outside of Germany post WW1 and everyone post 1929 until 1940.
So except for dangerous inflation, say more than 10-15% a year in consumer product prices without a similar increase in wages, inflation is only a problem for extremely wealthy individuals who have a lot of money.
What is the only neocon solution for inflation which is only a problem for the top 10%?
Why, curiously enough, it is to increase interest rates!?
What do interest rates do?
They transfer money from working middle and lower economic classes to the wealthiest individuals!
So, we have a problem for the super rich and weirdly enough the only solution offer by their genuflecting cadre of economic experts and captive media is transferring ever more money from poorer individuals to the wealthiest few!!??
How strange that it should work out this way, don’t you think?
Central banks need to begin to act like the economic agents they can and should be, and national governments should cease to tax to spend, leaving lower government more than ample tax room to support their spending on needed services and infrastructure.
Money needs again to be created by central banks and lent to commercial and private banks at prime rate. Money needs to be destroyed by national governments or taxed away by local/regional governments in case of dangerous inflation which now will have all of the tax room vacated by national governments. This would actually reduce the tax burden on (consumers) working classes while providing for high quality necessary services and infrastructure.
The neocon ideology is at war with democratic government and is winning the war by expropriating money creation for the wealthiest individuals and leaving democratic governments in penury and in such debt that they cannot afford to provide the services that the citizens of a democracy expect from their governments; by manipulating, through ownership, the media to control what people think; and by literally paying off economists and controlling most of the important schools of economics. The Fed pays more than 1,500 economists directly and even more powerfully indirectly through speaking fees, mass book purchases, etc. – literally every way possible. And, oh by the way, if you want tenure in economics at any major university you must be published in one of the 37 journals published by the Fed!?
There are three basic ways of organizing economies.
Capitalism, in which the individual takes the risk and the individual gets the reward; socialism, in which the state takes the risk and gets the reward; and fascism, in which the state takes the risk and a few individuals get the rewards.
In the United States citizens are confused about government because they are told they have a capitalist economy and politically are a “democratic republic”.
Unless Plato was an idiot a democratic republic is an impossibility, an oxymoron. Recent history has shown that Americans have, not an economic or political democracy, but a fascist economic and a republican political organization.
Socrates, who was Plato’s teacher and very, very, good friend, was forced to suicide by Greek democrats because he refused to recant the statement that “not all positions in government should be elected, some require special skills which cannot necessarily be acquired through democratic election”. A pretty self evidently true statement which incensed Greek democrats who forced Socrates to commit suicide.
In reaction to his mentor and close friend Socrates being virtually murdered by Greek democrats, Plato invented a system of government which he called a “Republic”, which is the diametrically opposite to democracy.
Everything democracy is a republic is not and vice versa.
A democracy is run by and for the majority of average people while a republic is run by and for (wealthy) elites,
It is an impossibility and an oxymoron to have a democratic republic – one can have either one or the other but not both simultaneously.
America is a republic with a lot of votes but the elected bodies must work with a system invented to produce a political stalemate and/or an abdication of democratic governmental power to wealthy elites.
If democratic government is continuously stalemated who wins? Rich or poor?
The rich of course because they will continue to make money fist over paw with no need to submit to or even consider morality.
The separation of money from morality and the separation of effective democracy from government are the social plagues of our times which are creating a growing tidal wave of economic dislocation and destruction visited on the middle and lower economic classes by the wealthiest few, who themselves will finally be engulfed by the economic malestorm they have created and are very busy fostering to an economically fatal extreme.
Your analysis is very excellent, but you and pretty much all non-mainstream economists seem to not see the underlying reason for the all out and seemingly winning attack by corporate interests on the viability and survival of democracy.
Cheers,
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Write more, thats all I have to say. Literally,
it seems as though you relied on the video to make your point.
You obviously know what youre talking about, why waste your intelligence on just posting videos to your site
when you could be giving us something informative
to read?