What’s The Plan?

By Dan Kervick

The politicians always seem to be the last people to get it.   But anyone who actually works in the corporate world knows that the central economic concern these days, the thing that is holding us all back economically, is not uncertainty about tax rates.  They also know the core problem is not frustration with regulation and red tape.  Nor is the problem an epidemic of nocturnal terrors about government deficits.   The problem is this: not enough customers.  And the problem of not enough customers right now is exacerbated by the fact that there is also low confidence that there will be more customers in the foreseeable future.   With low confidence that broad prosperity will return to customers, the willingness to invest and hire aggressively is limited.  And since so many businesses perceive the world the same way, the combined effect of their general unwillingness to hire is persistent high unemployment, and a self-reinforcing perpetuation of the low demand that is the cause of the unwillingness to hire in the first place.

So one thing this country needs is the political determination to act at the national level to inject demand into the economy by putting increased purchasing power into the bank accounts of those most likely to make use of that purchasing power.  But something more is needed.  It is not sufficient to bestow a little temporary stimulus on the economy, because businesses do not invest for the long term in people and equipment just to satisfy a temporary uptick in demand.   A more convincing form of national leadership is called for – something that convinces investors than sustained and durable demand is on the way.

In a period of crisis, insecurity and confusion, people need an answer to one particular question above all others: “What’s the plan?” The crippling stagnation of the present era, in both the US and Europe, is due above all to the fact that we are afflicted with timid, conformist, weak and bureaucracy-minded politicians who serve the decadent status quo and don’t lead.  There is no plan.  The people with capital to invest, and whose ambitions and integrity urge them to seek more than unearned returns from parasitical rent-farming, often don’t know what to do with their capital because no one knows where we’re going as a nation.

Things seem even worse in Europe right now than America, since the Europeans have been following an absurdly destructive policy of attempting to dig out of public and private debt by monkey-wrenching the productive potential of their own economies.  They have been digging their debt holes deeper in the process.  At least prior to the recent French election, European leaders have seemed weirdly captivated by Frau Merkel’s preference for moralistic punishment over continental vitality and activism.   The Europeans still have no plan.  But there is no plan in America either.  Neither Mitt Romney nor Barack Obama, a pair of programmed and detached conformists, each competing with the other to prove he is an emptier suit than his opponent, is putting forward anything that deserves to be regarded as a real plan.

Planning is as American as an apple pie slice-o-matic gadget.  For all the vaunting of ceaseless change, innovation, risk and creative destruction in the official American ideology, real-world businesses crave and thrive on security and predictability, and they organize their activities around strategic plans. Investment projects are often time-consuming and very expensive, and require a substantial commitment of capital. Outside of the financial sector with its casino-borne pathologies, most business managers are not the risk-loving gamblers of legend.   They are cautious and thoughtful managers who seek to minimize risk.  Businesses need more than some reassurance that some potential customers somewhere will be coming into more disposable income. They need more than calls from politicians to let a thousand flowers bloom and to get the national government to get out of the way. They need some clear and reliable ideas about what people will likely be buying over the medium and long term and what they won’t be buying.  They need a national strategic plan.

Consider the national highway system built by Eisenhower or the space program launched by Kennedy.  The highway plan wasn’t just some generic spending or “stimulus” that put money in people’s pockets.  It was that too, but it was more than that.   It was a targeted plan to build particular things in particular places.  The specificity and grandness of the project meant that anyone desiring to build a roadside restaurant, a chain of gas stations, or a residential development knew where to build it. If there is no plan, then people have to sit on their capital and wait until something pops up and a clearer picture emerges.  Similarly, if the government says, “We’re going to be spending billions of dollars on going to outer space,” then an army of potential investors in the ancillary technologies of space exploration has clearer ideas about what they can do to make money and build their enterprises.  People who were thinking that maybe the government would be spending money on something other than space exploration are no longer in doubt. They can get off the dime and act.

Contemporary American politics has become extremely plan averse.  We have a deluded understanding of our own history.  We don’t think of the future as a vividly imagined and desirable goal that we actively choose and then organize ourselves to create.  We now think of the future as an unpredictable, blank vacuum that will only be filled up by the disorderly and radically decentralized initiatives of a million separate entrepreneurs, each doing their own isolated thing.  We think that plans are something that only bad old Communists had, and that real Americans love the way of plan-free spontaneity. This is a denial of our actual history, an extreme ideological disturbance that is probably the result of post-Cold War, end-of-history triumphalism about a fictional land of utterly free enterprise and unplanned spontaneous organization that never existed.

It is no coincidence that the American economy doubled in size during the 1939-45 period.  People certainly knew what the plan was then: a global war to defeat the fascist powers.  If we now choose something equally bold and equally urgent, but decidedly less martial, a plan around which to organize the vast untapped potential of the highly industrious American public over the next decade, we could probably double our economy again, and generate both enormous prosperity and a more equal distribution of that prosperity.

How we distribute the fruits of our industry will be just as important as what we choose to build with that industry, because the grossly unequal distribution of those fruits drains the demand for more fruits out of the most dynamic parts of the economy, and transforms a key source of economic energy into the inert and expatriated savings vehicles and shelters of the already wealthy.  Inequality also destroys the trust and social solidarity that makes people willing to work as a team and makes them desirous of producing things for others as well as for themselves.  A population that feels like a unified and sharing nation sees in the prosperity of others a source of joy and satisfaction, and a motive for action, not a cause for resentment and bitterness.  Social equality builds social health.  So a more equal distribution of wealth must be part of the plan.

Work for everybody must also be part of the plan.  It is absurd and cruel to accept a condition in which tens of millions of proud and needful Americans, ready and willing to work and contribute their gifts and industry to the creation of our future, eager to participate in the national project, are allowed to languish in unemployment and despair as we inflict upon them the dead-end indignity of joblessness.   There is so, so much to be done, and our instinctive sense of the social contract is based on the timeless law of reciprocity: work for reward, reward for work.   The present system of systematic and persistent unemployment is wrong and stupid.   Where the private sector won’t or can’t employ all, the public sector must pick up the slack.  Genuine full employment and guaranteed work for all citizens willing and able to work must be in the strategic plan.

We call ourselves a “developed” country.  But there are no developed countries.  There are only developing countries and declining countries.  A dynamic and developing nation needs a strategic national plan.  Contrary to the dogmas of the laissez faire macro-theologians who infest much the economics academy, an ever- developing nation needs to be willing to get off the strategic fence and pick some winners.   It needs to survey all the things it could do, and then select some things, reject other things, take some national risks, and provide the central strategic organizing theme around which investment can take place in a coherent, confident and effective fashion.

The leaders of thriving enterprises are not free-wheeling spontaneity addicts.  They are thoughtful planners.   And our nation is a grand enterprise that gives thematic and organizational focus to all of the enterprises that take place within it.  So can we finally get over our fanatical and paranoid political hatred of plans?  Drawing up a national plan is not the same thing as penning a roadmap to the gulag.  An activist plan for strategic national investment is not a black helicopter invasion.  Planning some big things does not mean planning everything.   And the highway plan, the space program, the GI Bill and the defeat of fascism were not Communist plots to sap and impurify our precious bodily fluids.

So if you get a chance to talk to one of those programmed mannequins in suits, throw some cold water in his face and ask, “What’s the plan?”  Ask for something real and bold and concrete and vivid and invigorating and inspiring.   Ask for something ambitious enough to match the capacities of an ambitious people.   His head might bobble a bit, but if we ask him often enough, and stridently enough, perhaps he will eventually manage to transform himself into The Man with The Plan.  We can help him out with our own suggestions.  Surely our imaginations are not so deadened by neoliberal passivity that we can no longer think of anything.

29 responses to “What’s The Plan?

  1. Ironically the UK govt’s response to the lack of demand is a determined effort to increase supply of credit by printing money and giving it to banks. Our present aggregate debt levels are about 500% of GDP, of which public is about 80%. Apparently there is no alternative but to create even more credit. I’m not an economist, so perhaps I am missing some vital piece of information, but it looks to me as though this will go bad at some point.

    I disagree slightly when you say that Europe is “attempting to dig out of public and private debt”. Just public debt. There is no consciousness of the vast scale of private debt in the UK or Europe; and therefore no attempt to do anything about it. The entire focus is on public debt. This allows present politicians to blame past politicians when things fail to go well, and because they are not dealing with private debt things aren’t going well.

    And of course because things are not going well welfare bills are up, tax revenue is down, and the slash and burn government is borrowing money at record levels, despite crowing about slashing the deficit by 25%.

    The plan, such as it is, is to use the chaos of the crisis to enable the govt to shrink the state leaving millions of people with no work, and no safety net, and no institutions (public or private) to deal with the fallout. The UK is definitely a declining country at present, and for the foreseeable future.

  2. I agree with Dan’s opening sentences, but not with his “plan”.

    To bring full employment, government just needs to inject sufficient demand. If some businesses fail to meet that demand because they are waiting for a “plan”, I suspect other businesses will quickly enter to market and grab market share.

    Also, stimulus in the form advocated by MMTers is not “temporary” as Dan claims in his second paragraph. Stimulus MMT style involves increasing private sector net financial assets. That increase has a PERMANENT effect, if a permanent effect is needed.

    Of course if the permanent effect is not needed, i.e. if that effect results in the economy overheating, then PSNFA needs to be withdrawn.

  3. Philip Leone

    Words of wisdom Dan!

    We all crave certainty and those of us who grew up a generation or two ago always had PLANS (big, bold plans): get an education, get a job, buy a house, raise a family, get them a better education than you did, put away some money for retirement, and being part of some bigger national plan was a huge motivator and gave us all a sense of belonging to something bigger and more important than our “own plan”. We all need to belong, we all need to contribute and we all need to feel that there is a better future coming for our kids – AND that fair work will be rewarded with fair pay and fair play. As you say; “There is no such plan!”.

    However, there is another plan – and it is private and dark and destructive – and it usurps and takes priority over all other plans. This plan is simple: to keep the political classes in power; and for the neo-capitalists to control all of the capital (with the support of their bought and paid for lackeys in the political classes). The Stiglitz infamous 1% are imposing a feudal form of capitalism on the other 99%. Indeed, if there was a cogent “national plan” it would make the political classes and neo-capitalists redundant.

    Their evil plan has permeated all sections of society, business and culture. They have let us seek succour and refuge through our ingestion of a placebo called “democracy” (which should come with a “health warning”).

    An endless flood of media tripe, ether-net lies, reality TV, mindless uploads and downloads and a narcissistic pre-occupation with social networking and other meaningless forms of propoganda that would make reich minister Goebbels jump for joy.

    The dumbing down of America is almost complete. For example: that icon of American technological and marketing triumphalism, Apple – employees 40,000 Americans, 30,000 of who work in retaill at Apple stores for $8 per hour, while 100,000 Chinese work in Foxconn sweat shops building iGadgets to entertain our dumbdowned society. Apple sits on $80 billion of cash and would rather “put pins in their eyes” than build automated, robotic igadget factories in Austin or Portland or Birmingham. True American Capitalist Hero Patriots – aren’t they!?

    America’s problems are simple and straightforward, but no one can talk in a straightforward manner anymore. It’s always political gobbledy-gook. Simple stuff needs to be done:

    1. America needs to stop pretending that it is a democracy and imposing its form of non-democracy upon the rest of the world through the barrel of a gun (even if these wars were justifiable, and of ocurse, they patently are not), America cannot afford them.
    2. America needs to understand that money spent on education and healthcare has an amazing multiplier effect on the American economy (these are not entitlements stupid, they are almost 20% of the US GDP, and if spent wisely, would create jobs, profits and middle class wealth).
    3. America politics is designed to protect the interests of the 1%, who by the way are all rich enough and ugly enough to take care of their own interests. Why can’t politics take care of the working class underdog for a few generations? Why do the wealthy need to continually remind us that we are too stupid to be caretakers of our own wealth, which we have created through real work in the real economy? Let them be REAL entrepreneurs and suffer the slings and arrows of the marketplace. Banking Bailouts make me puke!
    4. American politics is the ULTIMATE SOCIALIST experiment for all of the mistakes, stupdity, corruption, crimes and avarice and hubris of the wealthy, protected elites have ALWAYS been SOCIALIZED across the hunched, sweaty backs of working class and middle class folks. NEOCAPITALISTS are really NEO-SOCIALISTS, truly wolves in wolves clothing!

    A generation without a “plan” has put America into pallative care. America will not recover. The prognosis is a terminal cancer of greed and those in power would rather see Patient America Die, than sacrifice one penny of their ill gotten spoils. When a nations leaders can speak publicly against raiding taxes for Americans that make more than $250,000, than it’s all over.

    Good bye America! You shudda had a game plan!

    • It might not be permanent Ralph. It might just get absorbed into savings. Or there might be a one-time burst of spending that transfers the NFAs from spenders to savers, so the impact on investment is short lived..

      • Dan, You say “It might just get absorbed into savings.” The word “might” is a bit surperfluous: the additional money currently being pumped into the system by governments / central banks IS BEING ABSORBED INTO SAVINGS RIGHT NOW.

        But as an advocate of the MMT solution for recessions I don’t have a problem with that. The solution is simply to have governments / central banks continue feeding money into the system till the private sector has the net financial assets it wants.

        • Dan Kervick

          So right, then. One one-time stimulus might not do it. You need to keep going.

          But, I don’t think it is enough just to do a helicopter drop, and carry out monetary easing through fiscal channels. There is a need for a more thoughtful and architectural public role in the economy. The private sector can’t make a healthy economy alone, no matter how many NFAs are pumped into it.

  4. Very thoughtful post, Dan. But is this really true?

    “Businesses need more than some reassurance that some potential customers somewhere will be coming into more disposable income. … They need some clear and reliable ideas about what people will likely be buying over the medium and long term and what they won’t be buying. They need a national strategic plan.”

    Government should be identifying what people will be buying and what they won’t be buying?

    • The way the government identifies some of what people will be buying and not-buying is by making major purchasing decisions itself, econnobuzz. Suppose the government considers three major national energy infrastructure projects. Just for the sake of argument, say one is a solar-focused project, one a nuclear-focused project and one a biofuels-focused project. Which project is selected will have enormous consequences for where infrastructure is built, what kind of infrastructure is built, and what kinds of materials and skills are employed. Once the government makes the decision, a large part of the private sector will spring into action and get off the sidelines. But until the decision is made, investment is more risky and investors are more cautious. If the government says, “There is going to be a major solar generating station in Sunnyburg, New Mexico, then entrepreneurs around Sunnyburg will start competing to build new housing, new education facilities, new restaurants and supermarkets, etc. But as long as the story is “Well it might be project A, it might be project B and it might be project C”, then you don’t get the same amount of investment divided up three ways, you get caution and unwillingness to commit.

      Similarly, if the government working with other global governments says, “We are launching a major international effort to reduce greenhouse gasses to estimated 1800 levels by 2032,” then all over the world people start investing in the education of a generation of environmental scientists, in the development of the enterprises that will be needed to carry out such a massive project, in the redirection of industries of all kinds to the production of products that will be either subsidized or promoted by regulation.

      Governments are the biggest consumers and investors in existence. So when they make big, long-term spending decisions, and major commitments to national goals, the private sector has a much clearer view of the economic future.

      • Oh, I agree that government spending does in part determine what people will be buying and what they won’t be buying. And I suspect that we agree on the role that government should play in areas in which the private sector cannot or will not make the necessary expenditures/investments. I just thought that the statement in question was a little too broad.

  5. Yes, a plan. We’ve been planning and centralizing for 100 years and that has given us perpetual war, a gazillion in national debt, a deteriorated culture, economic inequality, and crony capitalism. There is no demand because the reserve currency people are using to express such demand isn’t worth anything anymore. First job – restore the currency.

    The plan needs to be to rediscover thrift. Benjamin Franklin described thrift as a secular religion.

    Deconstruct the behemoth. Stop the spending. Get rid of central banking. End fractional reserve banking. Raise interest rates. End the wars. Close the military bases. Allow the world economy to correct. Get back to sound money, savings, and personal responsibility. If those structural changes were made, then I could support some direct stimulus and even some taxation to grease the wheels. But we never do that, and will not as long as we laud democracy as sore sort of noble system.

    It is a simple plan that takes courage in the face of fear and the tyranny of the majority. There will be pain but all important reform that has the foresight to stimulate long-term progress involves some short-term pain. I agree with brother Dan that neither Obama nor Romney have what it takes. Both are pawns of power-brokers who like things the way they are.

    This guy is my new hero, Pedro Schwartz. He has the right plan (and exposes the shifty-eyed Paul Krugman as the co-dependent, Keynesian enabler he is):


    If that is too long for you, try this. A gorgeous woman cleverly makes the point that inflation is theft.

    • With all due respect, it would take a very long time — way too long — to respond to your comment. Suffice it to say that Paul Krugman looks like a genius compared to both Pedro and the young woman.

    • Kevin,

      You, Dan and I probably share the same objective: do away with crony capitalism, end the wars, do away with barriers to full employment, and reestablish the conditions necessary whereby individuals may seek out prosperity on their own terms. But, where Dan and I would depart from you is in our distinction between means and end. The federal budget, the tax codes, monetary policy (interest rates) and the like are all means through which a range of given ends may be achieved. You believe that sound finance, balanced (or surplus) federal budgets, high interest rates are all tools to achieve those higher goals. I do not. In fact, it is my strong conviction, supported both by theory and historical fact, that pursuing those ends through the means you suggest would move us further from those goals, not closer. For instance, if Franklin’s religion of thrift is something that we all agree to be virtuous, then what are the conditions necessary to bring that about? Should the government run a surplus, deficit, or neither? Economic theory tells me that if the private sector wishes to run a surplus, that is to say households spend less than they earn, then either the US must be a net exporting country or the federal government must run a deficit. This is true because of the following accounting identity:

      Private Sector + Public Sector + Foreign Sector = 0

      If federal deficits make you uncomfortable, then naturally the appropriate policy tool is to figure a way to increase net exports, right? But, then you must ask yourself what those necessary conditions are. In order to be net exporting country, on a scale sufficient to allow the private sector to run a surplus, and the public sector to at least balance its budget, then you would need to lower wages considerably. After all, you will never compete with China and the rest of SE Asia in exports, unless you can your wages below theirs. Supposing you can accomplish this, and assuming the increase in net exports more than offsets the decline in the private sector position (because now people earn less income, so they are able to save less), then you must ask the question: does this help further our higher objectives of peace, security, freedom and opportunity? I say no, because now the average US working family is in a worse position: they earn lower wages, which also lowers their purchasing power, so now they must draw down their savings or go into deficit to maintain their standard of living. If they decide to lower their standard of living, they will surely spend less money on discretionary items, an they may attempt to sell their homes and get into a cheaper one, which will, in turn, place downward pressure on prices. Falling house prices, rising inventories, will dampen the expectations of future profitability for investors, causing them to forego planned expenditures or shutdown marginally profitable ventures elsewhere, spurring a rise in unemployment. Again, not a good outcome.

      Suppose we abolish the central bank and pursue a high interest rate policy. How would these two policies help achieve our objectives? First, it’s not clear how one pursues an interest rate target without a CB, but assuming the treasury figures out some scheme to make that possible, what happens if the debt-deflation process alluded to above takes place? Now, falling prices at first blush seem desirable from the consumer’s standpoint: it appears to increase purchasing power. But, since asset values are directly proportional to prices, falling prices drive down asset values. Since assets yield a flow of income, falling asset values constrict that flow of income. Falling incomes can render one insolvent unless one starts to liquidate these assets. But, since no asset can exist without its opposing liability, then we know that balance sheets throughout the economy are linked together like a fabric. What this means is that when some individuals or businesses are rendered insolvent, this can spread through the network of balance sheets, forcing others into insolvency, too. This is the classic debt-deflation process. The primary purpose of the CB is to prevent this sort of thing from spreading like an epidemic. Without it, we would live in a world of wild financial instability, like we do before we had a central bank. It’s true, you can look it up.

      Returning to interest rates. Suppose we do have a high interest rate policy. How then would that help us achieve our objectives? Most sound money types think high interest rates = little to no inflation = strong currency = high purchasing power = prosperity. In reality, they raise the cost of borrowing which raises the cost of doing business for most productive activity. This is because firms usually finance their wage bill and other working expenses with short term credit. By increasing the cost of production, you will increase the price of final goods, which has the opposite effect you seek. And because we have already established that in order to run a surplus in both the private and public sectors you need to be competitive in exports, then we must have a low wage policy. Low wages plus high prices does not add up to prosperity. Nor does it make much logical sense, because why would firms continue to employ people to produce things if people can’t by them because they can longer afford it?

      The point I’m trying to make here is that you need to ask the right questions. More importantly you need to be able to distinguish between an objective, and the means by which we choose to pursue it.

      • Kevin,
        You, Dan and I probably share the same objective: do away with crony capitalism, end the wars, do away with barriers to full employment, and reestablish the conditions necessary whereby individuals may seek out prosperity on their own terms.—

        Potentially, we have agreement. As a systems thinker I wish for structural reform first, with an accompanying change of attitude. Starving the beast will stimulate the structural reform like nothing else. Take away the enabler, and the addict has to get treatment.

        I want to create conditions in which there is less demand and less consumption so our economy does not have to depend on addiction in order to survive. My brother Dan once described this as “turbocapitalism”. Pouring more alcohol down the throats of addicts so they can keep the edge (and so their enablers can keep their power) seems like precisely the opposite approach we should be taking. It amazes me when I see brilliant people like Krugman making such a claim. If I took this approach as a family therapist with my clients I could be sued for malpractice.

        I find the Icelandic solution intriguing, although I am wary of the psychological effects of any cash transfer program (free money). They locked up the bankers, confiscated much of their ill-gotten cash, CUT FEDERAL SPENDING dramatically, lowered taxes, and offered direct fiscal stimulus to citizens. Not to unions or government boondoggle job programs, but to people directly to spend as they chose. Small business is responding to real needs and desires and their real economy is now growing again. The artificial economy is shrinking in proportion to real economy growth.

        Would you guys support cutting spending on boondoggle programs and getting the cash directly to consumers to actualize their own desires?

        • I would absolutely support cutting spending on boondoggle programs and directing that fiscal support directly to households. One of the most immediate ways to do this is to abolish the payroll tax. Will that increase the deficit? Probably, at least in the short term. But, it will provide households with further room to pay down their debts, which is an ongoing process and responsible for much of our slack recovery. To quicken the process, a universal principle write-down program would be a tremendous boost for households and main street alike. Some may object on moral grounds – how is fair that Mitch Green gets to renege on his financial commitments? After all he made a deal, so he should stick to it! That’s reasonable. And I would respond by saying, look, “I will gladly continue to fulfill my contractual obligation. But, I entered into this contract on the assumption that these bankers were not going to engage in fraud, and on such a massive scale, that they triggered a massive financial crisis resulting in the destruction of trillions of dollars in wealth. As a result, the house I entered into a contract to purchase is now worth a fraction of the outstanding balance, and so I cannot sell it. How is that fair?” The morality of contractual obligations gets a little muddy. Anyway, there are ways to fix this issue, and to do it without the help of crony capitalists. We just need to figure out what our common set of values are and agree upon a course of action that provides some kind of workable, equitable solution.

          And I also agree that the average US consumer consumes too much – both on ethical and ecological grounds. But, under the existing set of institutional arrangement we have, reducing that consumer demand will make us all poorer. There are ways to deal with this, but they require radical transformations in they way we produce and provision our necessaries of life. Once you start to push that issue, people start screaming “commie! commie!” ultimately precluding any possibility for meaningful debate.

          Now, back to my studies. Kevin, it’s been a pleasure.

        • Personally, I think we need an expansion of federal spending – not on boondoggles, whatever they are exactly – but on public investment. I suspect most of the things we call “boondoggles” are useful and important public works projects that wouldn’t get done otherwise, and that the people in one district resent because they went to another district. One man’s boondoggle is another man’s development project. My suggestion for people who are miffed about the spending in other districts would be that they replace their members of Congress with people who are more effective in shaking cash out of the public treasury and bringing it back home to their districts.

          The private sector and a laissez faire approach can’t develop a country and keep it moving forward. They never have and never will. Over-reliance on, and under-regulation of, the private sector are associated with private debt bubbles and social under-investment. The random flow of individual spending desires and consumption choices is no substitute for organized public purpose, and is no way to run a country. A country needs a strategic investment plan spearheaded by a democratic government.

  6. Have the genius’ in Washington send you and me a big check and we’ll spend every penny and watch the rubber hit the road. Waiting for the government to plan anything is a waste of time.

    The average consumer is broke, his net worth is bouncing around negative territory and he thinks the government is the enemy and wants him to work himself to death paying through the nose for government services he doesn’t qualify for.

    Just what do you think he’s going to buy with any new plan that the gang in Washington can come up with?

    Yes, some leadership would be nice and barring an cataclysmic event it looks to be a mess for awhile. (How’s voting working out for you?)

    Now if you have a plan better than bailing out the broke dick taxpayer I’d like to hear it. (frustration runs deep, I’ll admit.)

  7. My plan of choice along the Eisenhower model of the national highway system, is a massive buildout of nuclear power. This would end forever America’s dependence on fossil fuels. I know the catalogue of objections, they are virtually all fear-mongering myths (combined with hyperbole on ‘fracking’ — the current bubble getting ready to pop). I could address them one by one, but it would be a book … there are plenty of sources online if one actually would like to learn something. The main problem is that there is no strong vested interest in nuclear power. Despite what you hear about the nuclear ‘industry’ there is no such thing. There is a lot more money riding on continued fossil-fuel use by entrenched interests and with our current political system … money is all that matters.

    • jcmccutcheon

      I like this idea. We could use the nuclear power to charge plugins/EV’s + electric rail lines everywhere1!!!

    • Dan Kervick

      I’m not 100% sold, but I take the nuclear option very seriously. There are big downsides; but are they worse than the fossil fuel downside?

  8. Dan, you make some good points here. I agree we have two empty suits wanting to lead this country, but we have become so locked in political combat we cannot escape it. And I doubt either of these two ever heard of sectoral balances. And I know (bc he told me more than once) our President thinks the economy is just a household. We certainly need something to inspire the nation. Heavens knows where that comes from.
    I see us heading down a road to permanent low employment at low wages as more and more jobs are outsourced to the rest of the world. The (X-M) part of the equation in hurting us and substituting low paying jobs for higher paying ones. It is realtively easy for Apple to outsource jobs for pennies. There are still enough high paying jobs here to buy the i pad but the average pay in real terms is falling. In a sense we are helping the rest of the world while hurting oursevlves. I no longer see imports as a benefit when we have twenty five million looking for work. Perhaps some are just not ready to work for minimum wages. This outsourcing trend is another form of forced austerity in my mind and is helping lead us to greater income inequality. The larger the deficit, the more we import, as if we are supporting the rest of the world. If that is the “free” market, count me out. Call me nuts.

  9. This all seems sensible enough, what kind of projects might the government sponsor though? Personally (and without knowing much about it), I would suggest a national, energy efficient, high-speed rail system. Seems a hell of a lot more useful than a space program, and I’d love to ride on one!

  10. How’s this plan:

    1. Eliminate FICA
    2. Medicare — parts A, B & D — for everyone
    3. Send every American citizen an annual check for $5,000 or give every state $5,000 per capita
    4. Long-term nursing care for everyone
    5. Free education (including post-grad) for everyone
    6. Salary for attending school
    7. Eliminate corporate taxes
    8. Increase the standard income tax deduction annually
    9. Increase federal spending on the myriad initiatives that benefit America

  11. Great blog post, Mr. Dan, and to phrase it in a pithy fasion (and to lift a sentence from an outstanding biography on Alexander Hamilton), “..speculators draw liquid capital away from commercial activity…” — and don’t we see the speculator class in ultra-hyper-overdrive, destroying everything progress-related today?

    Recommended reading: Alexander Hamilton, by Forrest McDonald
    Battling Wall Street: The Kennedy presidency, by Donald Gibson

    today not-recently-published, but often-missed and eye-opening books!

  12. “Some look at things that are, and ask why. I dream of things that never were and ask why not?”

  13. Commonsense from Dan Kervick! Another excellent article. The opposition to Planning is an ideology of Libertarianism and remarkably the two apparently opposing ideologies of the twentieth century Communism and Neo-Liberalism ( Neo-Conservatism ) share the utopianism of Libertarianism. Under Communism the State would eventually wither away to deliver a perfect way of life for every one and with the true implementation of Neo-Liberalism perfectionism will only be found in the unhindered workings of the marketplace. Both ideologies it is now very clear as we move towards the fourth year of the Great Demand Stagnation suffer from the same unrealistic understanding of human nature, a failure to understand the Egalitarian Code hard-wired into the very core of our human-ness. This Code informs us that over many generations reaching back into the misty recesses of time we evolved a compromise with three central aspects of our nature. These are as follows. Firstly we like to dominate others. Secondly, we resent being dominated by others and we collectively act to counter-dominate the dominators. Thirdly, we are willing to submit to hierarchical leadership. The Code we evolved was a compromise because we agreed to submit to hierarchical leadership provided that the leadership ( effectively either the dominators or counter-dominators ) didn’t attempt to abuse their power. Of course the stability of the tri-partite elements forming the basis of this Code are forever in flux and the Code is continually under threat usually by the unthinking alpha-males and sociopaths human society continues to throw up and counter-dominance checks and balances fail to be put in place in necessary and timely fashion. Usually this happens because of the seductiveness of Libertarian based ideologies which have strong appeal because we love our individual autonomy. We are, therefore, in many ways fools to ourselves by persistently refusing to recognize the darker side of our nature. The opportunity has clearly now arrived to rectify this and reassert the Code compromise or balance we have used so successfully to build human civilization.

  14. I fully concur with the direction this post takes in the analysis of politics, money, finance, banking and congressional lawmaking (or lack thereof). I will add my usual schtick about planning from the bottom up on the way to tossing the current system overboard or as I always say “leave it behind.”
    We should:
    1. Take a clue from OWS and organize to take the above dialog along with the MMT bit and JG into one of education except this time it will be a confrontation with the local powers in your apartment complex, condo, block or with your mortgage holder. Just let them know the takeover will involve displacing the current rent, or mortgage contract with one that is equitable and more along the lines of a co-op. I’ll gladly fill in the details but the end result is the householder is in control and dictates the terms to pay the water bill, electric, maintenance and financing on terms that move profits to a minimum or eliminate them. After all if all costs and some savings (for future repairs) are taken care of the rent holder stake will be nothing.
    2. A progressive party platform should be emerging (poke around on my website for clues or go to any of the blogs on the sidebar and read for about ten days and the thing will appear. The movement should now be to gain a majority vote in the local city councils and boards of education, county board of governors and any local body of government below the state level. None of these should be left behind until the Progressive Party (with MMT and the JG as central planks) has won over.
    3. Move on to the statehouse. Then a second state, then a third.
    Then secede. Let the Feds bring out the guns on 7 million or 25 million if they dare,.

  15. Pingback: Links 7/14/12 | Mike the Mad Biologist

  16. For those of you who are weary of nuclear (as one should be), have a look at thorium. It is more plentiful than uranium, easier to extract, much safer, and leaves less and safer waste. Unfortunately we stopped research on it decades ago because it could not be weaponized like uranium. It still needs a lot of work to make it happen but the possibilities are intriguing to the extreme. Look it up.

    Also, I would not phrase it as ‘picking winners’ as the post has it, but rather ‘picking the race’. When gov’t provides the market for technology we get the Internet, open heart surgery, and satellites. When it is left to the ‘free’ market we get Viagra.