7/01/2018

signing off!

This personal blog, obviously, has long since entered a dormant stage. With the start of yet another arbitrary new year having come and gone, winter finally subsiding in the Great White North, graduation having come and gone, and a summer heat wave blasting through, it is time to make the transition from temporary to permanent, to join the eternal archive of electronic gunk building up for the nearly limitless pleasure of future historians, anthropologists, and conquering aliens.

Assuming our neoconservative overlords don't send us all back to the stone age in the meantime.

Mostly it is the transition to fatherhood, with an assist on the career side as I attempt to make public policy less a hobby and more a profession. It is one of the great ironies of the soft corruption of careerism. The closer one attempts to move toward areas where decisions can be made to change the system, the more cautious one must be in critiquing that system.

It is why theories of change require thought and strategy as well as insiders and outsiders. We can rage against the machine, or seek to understand it, accept it for what it is, and see what our part can be in improving it. That is my theory of change. It is a systemic failure we face, not one or two tweaks here or there but the whole mechanism that is adrift, listing, more off course every day. Change will arise out of the cumulative effects as millions of us make individual choices that there is a better way to do things. There must be. What we are doing now is not working, or to dress that sentiment up in the facade of cheeriness that society expects, there are substantial opportunities for improvement.

On the blog itself, this endeavor certainly has helped me organize my thoughts, reflect, explore. I have written more than I would have without the effort, although that is perhaps not saying much given how little has actually been written, especially these past few years. Generally I am satisfied with the trajectory I laid out for developments in technology and politics. I am a little surprised that such a personal effort, essentially a journal published online rather than handwritten in a notebook, has found its way into nooks and crannies all over the globe. That's exciting on both the technological and sociological fronts. I am heavily motivated by the belief that we need to think globally and act locally. We cannot change the world, only our little corner of it, and yet, in doing so, that is precisely how the world changes. We are coming together, to know each other, to celebrate our diversity, to appreciate our common humanity, whether those who profit from division and hatred and, most of all, fear, desire it or not.

So I thought I would stick a fork in this particular journey by returning to a particular topic that connects a number of strands together for me. It turned out that one of my major group projects in an economics course in graduate school about social insurance programs touched on issues of income and job guarantees. MMT was one of the last areas I looked into three years ago. In short, MMT agrees with mainstream economics that a buffer stock should serve as a price anchor. It then purports to offer a leftist perspective, critiquing both hard money (gold standard, etc.) and NAIRU (reserve of unemployed people) as worse options for that buffer stock than a job guarantee (JG - Public Sector Employment - reserve of employed people where government serves directly as that ELR - employer of last resort).

A taboo that has long fascinated me in the American context of politics is the intensity with which affluent and formally educated "leftists" in the mainstream left/right construct attack "rightists" for not being evidence-based and so forth yet refuse to hold their own ideas to the same level of intellectual rigor and thoroughness that they proclaim to be so important. To state it plainly: if we are not willing to subject our own ideas to the highest standards of scrutiny, then that suggests a fundamental insecurity about their ability to withstand external criticism, disagreement from beyond the carefully crafted confines in which our idea "works". Or even worse, purposefully misleading people in service of protecting the existing power structure even as we claim to address the immorality and unsustainability of that structure.

Were I to go on to a doctoral program rather than wanting to return to practitioner life, I think this intersection of public policy and labor markets is where I would focus, because there is a fundamental question here which MMT presents as an assumption that is actually quite important to explore. Is unemployment the root cause of our social malaise, or is it a symptom of our poorly designed system? In my economics group, I was the only white guy, and I was the oldest participant. The rest of my group was far more hostile to MMT than me. The obvious solution for my group mates to people not having enough money was to have government give people money (i.e., some sort of basic income approach). MMT is completely dismissive of that approach, not merely disagreeing substantively but failing to treat the notion as worthy of respect and serious consideration.

This is a particularly opportune time to revisit the topic because some of the key US academics pushing MMT over the past couple decades have released a report this year updating their perspective on why some form of a JG program is so important. This is great because it adds some concreteness to what has frequently been a rather vague and ambiguous discussion. However, it also demonstrates the rut in which MMT finds itself. In 50+ pages, most of the interesting questions are sidestepped or ignored. We are in this odd state of academia where writing profusely seems to be valued more highly than writing profoundly.


Following is a top ten set of questions where I would push MMT to provide straightforward answers to be able to deal with differing preferences, experiences, and interpretations of how the world works.


1) What evidence is there that buffer stocks work? Just in recent US history alone, never mind a broader sweep of human history, we have tried six different buffer stocks. Each one has failed to anchor prices. The MMT notion that monetary policy plumbing can override the political process is inconsistent with the historical evidence and inherently anti-democratic in terms of the theory. Gold was devalued in the 1930s, silver was taken out of coinage in the 1960s, the London Gold Pool collapsed in the 1960s, the international gold window was closed in the 1970s, copper was taken out of pennies in the 1980s, and NAIRU (unemployment) has utterly failed to reign in prices for items such as housing, stocks, medical care, and college over the past four decades. This last example is particularly glaring since MMT's JG policy proposal focuses on employment as its mechanism for addressing the problem yet MMT does not offer a coherent explanation for how the labor market currently impacts prices.

Key assertion: MMT seems willfully oblivious to the massive increase in the cost of a decent standard of living and the disconnect of median wages from productivity growth.


2) Even if buffer stocks worked, why should policy makers care? The whole point of freely floating exchange rates in our global macroeconomic system is that nominal prices are irrelevant outside of extreme circumstances. What matters is the distribution of currency units within the economy, not the arbitrary total number of them. MMT authors have been systematically obtuse to the matter of distribution, talking around it or not mentioning it at all.

MMT has apparently been feeling the heat of criticism on this front at least a little bit. In the April 2018 report, the word inequality is actually mentioned (once). Income distribution and poverty are mentioned in a few places. Yet, the authors offer no insight into why we have extreme concentration of wealth and power. How does a 50 page economic report on fixing the economy not talk about what is broken about the economy? Understanding the problem is the most important step in a problem-solving process. Nor do the authors explain how a JG materially changes the power structure. They simply assert that JG would solve poverty and distributional problems.

Here is the uncomfortable truth. Before the JG program, the top 20% of American households control virtually all the wealth in the country. After the JG program, the top 20% of American households would control...virtually all the wealth in the country.

Key assertion: Inequality is a root cause problem. This is not some flippant or tangential issue. It is the core matter to understand and address.


3) Why do MMT proponents make sensationalist claims that they do not back up with evidence, reasoning, and logic? For example, the report claims this:


One full-time worker in the PSE program could lift a family of up to five out of poverty.

No, actually, it couldn't. This statement demonstrates such a poor understanding of personal finance that it calls into question the credibility of the entire report.

$31K a year in the US context is a subsistence level wage for one person. The notion that five people can live comfortably on that income depends upon such a warped definition of poverty as to render the word meaningless in leftist thought. The cost of housing alone would blow up the household budget, never mind education, healthcare, transportation, retirement, and food. It's like the economists and financiers pushing MMT have never actually done anything related to personal finance. Or perhaps they have and are purposefully advancing a deceptive framework anyway?

Key assertion: MMT proponents have to sensationalize the benefits of JG programs because they don't actually accomplish that much, particularly if compared fairly to alternative courses of action.


4) Why does MMT ignore major causes of inequality? Public policy isn't some ambiguous exogenous shock. It's a series of concrete decisions made by real people about budgets and regulations and executive orders and so forth. Where is the discussion of restoring progressive income taxation? Where is the discussion of prosecuting financial fraudsters and war criminals? Where is the discussion of waste and bloat in national security and healthcare? Where is the discussion of systematized and institutionalized racism and environmental destruction?

That is not to say these things are not complicated, or that nuanced analysis is not involved, or that reasonable people do not bring legitimate differences of opinion to the table. Rather, it is to observe the much more fundamental curiosity that MMT proponents appear not to want people talking about these matters at all.

Key assertion: MMT studiously avoids controversial policy areas where the power structure operates.


5) Why does MMT focus on aggregate analysis? While paying lip service to inequality and poverty, MMT resorts to aggregate numbers when it wants to make a concrete claim. For example, the very first bullet point the authors highlight in their Executive Summary says this:
Real, inflation-adjusted GDP (2017Q4 dollar values) would be boosted by $560 billion per year on average, once the PSE program is at full strength (from 2020 to 2027).
Even if numerically true, what is the importance of that boost?

Key assertion: GDP is not a measure of societal welfare. Furthermore, it says nothing about allocation of resources. It's an aggregate argument. We have lots of GDP in the US. The question is how to distribute it.


6) Why does MMT ignore the environmental and public health concerns of working more? One of the more astonishing aspects of the April 2018 report is that they offer no evidence, reasoning, or logic for why we need more labor hours in aggregate.

Is there a shortage of food, for example? No, quite the opposite. We actually face a public health epidemic from having, in aggregate, too much. The 40/40 number highlights this well. About 40% of food production in the US is wasted, and about 40% of all overweight people on the planet live in China. Is starvation and malnutrition a problem under some limited circumstances in some parts of the world? Absolutely. That's a distributional challenge. In aggregate, we humans have so much food that our biologically rooted craving to feast in plentiful times to prepare for famine has created the biggest public health problem facing 21st century humanity. This exists across traditional national, cultural, racial, linguistic, and religious lines.

And that's just one specific policy area. More broadly, the economic question has been solved. We no longer live in a world dominated by scarcity, particularly those of us in the industrialized nations where MMT proponents focus. We have enough to provide a decent standard of living. This requires thought leaders who can shift from the old economic question of how to make more stuff to the new economic question of how to make life more meaningful, equitable, and sustainable.

Even if "more jobs" (rather than more hours worked) was itself a valuable goal, there is an obvious policy solution to that. Namely, continue the progress that we have been building for a couple centuries now of working less. We could reduce the work week from six days to five days to four days. We could reduce the work day from 14 hours to 12 hours to 10 hours to eight hours to six hours. Amending the FLSA (Fair Labor Standards Act) to make a four day workweek and six hour work day the standard job structure for the next couple decades would create more jobs if "number of jobs" is the criterion by which you judge success. We could move to a 20 hour work week. Then a little further down the line, a 15 hour work week.

As our friend Keynes whimsically put it,

"For three hours a day is quite enough to satisfy the old Adam in most of us!"

Key assertion: There is no evidence that we need more work in the formal economy than we already have. What we need are different kinds of work, to shift labor hours from unproductive activities to productive ones. At the margins, increasing aggregate labor hours drives work-related stress and environmental pollution while taking people away from more productive and rewarding activities like parenting, exploring nature, hobbies, civic engagement, and rest.


7) Why does MMT ignore alternative courses of action? Even within the April 2018 report, much of what the authors claim JG solves really comes from other policy avenues. Why not just raise the minimum wage, implement universal health insurance and universal unemployment insurance, provide more grant funding to local governments and nonprofits, raise taxes on the wealthy, prosecute the banksters, and shrink the national security state? This would involve simpler management rather than more complicated administration while directly addressing the public policy challenges.

And of course I've left out some form of a basic income guarantee from that list, which MMT appears so scared of that MMT proponents can't even offer a fair and balanced dissent. It's unclear why they despise the idea of giving cash to people in need, and that lack of transparency suggests an ideological rather than analytical or pragmatic opposition to providing cash benefits. This is particularly odd for economists, since economic theory is quite clear that all else being equal, direct cash payments tend to provide the most utility for recipients.

Key assertion: There are simpler and more effective policy tools to accomplish the goals of a JG program.


8) What is the reasoning behind the assumptions used in MMT modeling? They seem as if picked out of thin air, with no theoretical or empirical guidance. For example, here is how the benefit calculation is described:

The program’s nonwage benefit costs are set at 20 percent.

That's $6K per year. Healthcare alone costs more than that, which means it is intellectually dishonest to claim that MMT provides healthcare through a JG. The JG doesn't add anything to fixing our healthcare system. In fact, JG represents the problem in healthcare. Employment status should not be connected to healthcare delivery.

Healthcare isn't the only odd benefit in that calculation. Childcare, too, is very expensive. For example, check out the EPI childcare calculator. Think a Republican controlled, deregulated state like Kansas for your 'cost controlled' basis. Does any MMTer know the cost? $8K a year. For one child. And since childcare workers are paid a lot less than economists, implementing a JG at $15 per hour means that childcare costs will rise substantially. When you hold headcount and output constant, prices have to go up. Retirement is a major expense as well. Then there's unemployment, workers' compensation, disability, vacations, holidays, sick leave, parental leave, etc. It's like MMTers have never bothered talking to people who are involved in compensation and benefits.

Key assertion: JG numbers don't add up. This suggests a lack of analytical rigor regarding programmatic details.


9) How, exactly, does MMT propose for decentralized administration to work? We have lots of organizations now, and they are doing a great job of creating a labor market characterized by enormous income inequality. Those same organizations are going to magically equalize compensation practices once a few million JG workers are floating around?

Moreover, what truly local organizations invested in the community need is long term capacity, not short-term, transient labor. The best way to help small local governments and nonprofits is to give them grants of dollars to invest broadly in line with their missions and strategic priorities, not a JG program offering a narrow and restricted scope of support. Similar to benefit costs, it's like MMT advocates have not bothered talking to local public and nonprofit professionals.

Key assertion: If we're going to decentralize, then actually do it. Give unrestricted funding to local organizations rather than doing a restricted JG program.


10) Where do unions fit into all of this? Neither unions as entities nor collective bargaining as a worker right are addressed by MMT. Organized labor has decreased dramatically in our society over the past few decades. Essentially, the JG undermines one of the few tools remaining in the union toolbox - the threat of a strike. Why would management care if workers strike if there's a pot of other workers ready and willing to stand in for them? Creating this reserve army of the employed is precisely what MMT seeks to do.

Key assertion: The silence from MMTers on their desired role for unions in the 21st century speaks volumes.


Concluding Thoughts

The MMT JG is a solution in search of a problem. As described in this most recent report, it will not materially change the concentration of wealth and power in the US. In many ways, the report doubles down on ignoring the main drivers of inequality while running pointless economic simulations. Designing a public jobs program whose terms and conditions of employment don't apply to all publicly funded jobs is nonsensical at best and purposefully deceptive at worst.

Wake me up when an MMT economist or financier offers a reasonable theory of human capital for why they should be paid so much more than childcare workers. Until then, this blog is in hibernation.

Stay curious folks.

Çiao

1/28/2015

the treatment of Jeffrey Sterling

Jeffrey Sterling has been in the news recently due to the completion of the trial phase of his prosecution by the Obama Administration under the Espionage Act. That in itself is noteworthy since so few Americans have ever been tried under that particular piece of legislation born out of the war preparations for what was supposed to have been the great war. But like the Selective Service System and the USA PATRIOT Act and the FISA Amendments Act and all the rest of the national security state, these things have a tendency of becoming permanent.

A typical headline and lede goes something like this:

C.I.A. Officer Is Found Guilty in Leak Tied to Times Reporter

WASHINGTON — Jeffrey A. Sterling, a former Central Intelligence Agency officer, was convicted of espionage Monday on charges that he told a reporter for The New York Times about a secret operation to disrupt Iran’s nuclear program.

Now, that's from the paper whose reporter himself published the information in question. Sterling wasn't found guilty of espionage. He was found guilty of whistleblowing. And of course, even that is circumstantial. Remember how hard it is to prosecute the financial fraudsters and war criminals because we don't have airtight cases against them? Well, when the government actually wants to, it prosecutes people on rather flimsy evidence. If you're interested in the details of the proceedings, Marcy Wheeler has been following this in depth.

What I want to do is tell a little more about him and government employment. Something I haven't seen in the corporate media at all is anything that would humanize him or tell an actual story about him other than ooh, spy convicted. (In fact, if an American really was spying on America for America's Enemies, why hasn't he been tried and hanged for treason?).

You see, Sterling is a graduate of Washington University in Saint Louis, my alma mater. He grew up in Missouri, Cape Girardeau, not Virginia, where he's being tried. He received a law degree in 1992. He worked for the public defenders office. And he had a respected career in government service until something happened. Was it incompetence? Nope. Did he steal something? Nope. Did he sexually harass a colleague? Nope.

Sterling is a black man. Now that shouldn't matter. But it does still matter in our society. When he filed a discrimination suit against the CIA, all of a sudden, the government started not liking him. That's the real story here. An employee tried to exercise their right to anti-discrimination, and the government responded by pursuing that employee aggressively for alleged leaking of classified information - a pursuit not sought with the same vigor against others who might also have been the source of the leak.

And, oh, what was this leak? Yeah, well, the government doesn't want you to ask. See, they classified materials in the discrimination proceedings and the leak proceedings. Because, you know, public information doesn't belong to the public. It belongs to the Fearless Leaders of our great country.

This is where we are at. The US commits acts of war against Iran. Dedicated public servants are denied their right to pursue nondiscrimination in employment. When someone leaks information that was improperly classified in the first place, the obvious solution is to go after the guy making waves.

That's called retaliation when a private sector employee does it. But when the government does it, it's called national security. Literally, it is a secret of the state. Just another tidbit for MMTers to consider. How, exactly, will employee rights be guaranteed by a government that is so secretive, vindictive, and authoritarian that it prosecutes someone like Jeffrey Sterling?

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1/19/2015

Current Limits of Modern Money (MMT)

Two years where nothing has happened.

That's sort of what it feels like, a brief microcosm of Francis Fukuyama's End of History. What was silly about that was the permanence of the sentiment, this notion that This Time Is Different, but there's a lot of truth to temporary periods of stagnation. It's not that there aren't things happening at an individual level, it's just that the details are all that differ. The same soup warmed over just keeps happening, like we're stuck in a holding pattern waiting for reality to do its thing to unsustainable arrangements.

I haven't even logged into the blog in a while, and I was surprised to find that according to Google's analytics, they send traffic here from time to time, my little personal journal that hasn't seen a new article since before Stephen Colbert decided to go get a real job. 145 links last month? Wow.

So you're reading a bit of an intro or disclaimer I normally don't provide on my thoughts here just in case my little ramblings get picked up by the Google Magic Machine and transported across spacetime. Especially given the recent case study of Marco Ament whereby legitimate and thoughtful criticism was twisted into a variety of things it was not. I don't embrace the conservative takeover of America, the radical right, whatever we want to call it. I believe in market-based economics, not fascism (or communism, for that matter). I'm centrist for a Millennial, but I'm pretty far to the 'left' as far as the general American public goes.

However, I disagree with some of the ways that leftist thought leaders, we might say, have been trying to counter the changes in American political economy over the past half century generally and the past couple decades in particular. What I see is a blindness, an ignorance, almost willfully so, to cast aside or under appreciate how some ideas can be so easily twisted to serve the authoritarian purposes that have been undermining Constitutional governance and creating a dangerously high level of concentration of wealth and power. MLK laid out the clear connection of class that still hasn't fully permeated upper middle class, educated thinking, in tying together racism, militarism, and economic injustice. It's one of the reasons I think of this on MLK weekend. Selma - seriously, go see the movie if you at all have any interest in movies - is so far away, yet so close to home. The two-tiered justice system isn't a relic of the past. Young black men are victims of systemic targeting by our legal system today.

If anything, things are trending worse again, not better, since the advances of the 1950s and 1960s. Highly educated liberals - with the fancy degrees and certifications of higher education serving as impressive gate keepers - in the Democratic party control our nation's major cities, and that is ground zero of much of the oppression and injustice and preventable suffering in contemporary America. It should be neither controversial nor shocking to express such a sentiment, but yet, sometimes it is. The Republicans are not the problem. Conservatives are not the problem. Racists are not the problem. Evangelical Christians are not the problem. Libertarians are not the problem. Gold bugs are not the problem.

We all are the problem. It is an American problem we face, a time to answer again for our era what exactly we mean by created equal, by a more perfect union, by liberty and justice for all.

There's also an interesting personal angle to me for MMT. Growing up in KC, where UMKC hosts the Center for Full Employment and Price Stability, MMT has a bit of a home town feel to it. And there's the interesting related but different approach between business and economics. The business student is interested in what works, in implementation, in how to put things in practice. It is focused and driven by results, by outcomes, by the meaning of what is accomplished. But MMT comes out of the more academic side of theorizing and a bit of the math and physics envy that plagues the social sciences generally and economics in particular. That's a personal connection for me especially since one of Professor Randy Wray's major influences was Professor Hyman Minsky, a long time academic in the economics department at Washington University in St. Louis. One of my most memorable interactions with econ professors was at Washington University when Professor Murray Weidenbaum, who passed away this spring, spoke in our Honors in Management seminar about government regulation and so forth. A business student asked him what he thought of one of the big contemporary issues of the day - Enron - and the gist of his answer was that mistakes probably were made but it didn't amount to fraud. That unwillingness to call a spade a spade, to name crime as such, caught my attention then and I continue to see it today, across a wide swath of political rhetoric and intellectual frameworks. It's almost like explaining the past couple decades as a pedestrian crime wave committed by a bunch of run-of-the-mill criminals rather than some complicated phenomenon by SuperSmart People implicates everyone whose reputation is tied up in our system, from corporate executives to Democratic politicians to tenured professors to police chiefs to prosecutors to judges.

Saint Louis County Prosecutor Bob McCulloch isn't some outstate Republican with no education beyond high school, nor is he some crazy right-wing economist or pundit. He's a white upper middle class Democrat with an advanced degree. And what is notable about his conduct is not that it was outside the mainstream. Rather, what is notable is that he is very representative of the two-tiered justice system. Hard prosecution of petty crimes allegedly committed by people in poverty combined with light prosecution of serious crimes allegedly committed by armed government employees, big time financial fraudsters, and so forth. And lest anyone in the heart of the problem, the NYC-DC nexus, think this is a flyover state problem, that canard is unfortunately put to rest quite easily.

What follows is very specifically my perspective on current limitations in modern money. It is very specifically framed that way because I don't think the whole thing is simply bunk, nor do I think it is impossible to address these matters. Rather, what I am pointing out is that this perspective is currently limited, as if admiring a beautiful landscape by holding a hand over one eye. So far I have been rather personal and vague. One of the core challenges of discussing modern money in detail for critical analysis is that the details differ from one proponent to the next. There is no periodic table of the elements or constant speed of light to serve as base and reference point.

So I'm going to summarize four key points of MMT as I would describe and synthesize them:

1) MMT observes that good monetary policy must utilize a buffer stock policy. In other words, there must be some price anchor attached to a fiat currency issued by a sovereign government. The government can of course create as many currency units as it wants, but this must be checked by that price anchor. Some of the most common such buffer stocks are gold, unemployment, and full employment (AKA ELR, AKA JG - a job guarantee, the acronym I'll use from here on out for simplicity sake). But the key here is that just about anything can be argued to serve this purpose in theory, from silver and copper to wheat and soybeans.

2) MMT observes that, since we have to choose a buffer stock, we should choose the best one. The best one is full employment (JG).

3) MMT observes that not only does JG serve a monetary function, it also solves non-monetary problems. Unemployment, homelessness, poverty, inadequate healthcare, skill deficiencies, etc. Giving people a job gives people access to overcoming these barriers. In short, work in the formal economy is valuable in and of itself, not just for the income such employment provides.

4) MMT observes, at least in some circles, that balanced budgets are inherently bad. In other words, it's not just that the government can run a deficit, but more than that, that the government ought to run a deficit. Not over short or temporary periods of time, but forever. I will generally refer to this as net deficit spending (i.e., where spending - the creation of currency units - exceeds taxation - the destruction of currency units).

What is immediately obvious and troublesome to me is that points 1 and 2 are closely linked. There is a clear line of thought connecting those two claims. But 3 and 4 are independent. This is not an abstract or theoretical problem. One of the major issues in the labor market is that there are millions upon millions of jobs that have low wages and poor working conditions. We also know that Americans work far more than our peers in other industrialized nations. And finally, we know that single-income households (breadwinners) are more stable than households where all adults must work. Meanwhile on item 4, one of the major issues in government budgeting is that we are already running massive deficits, right now. The Reagan-Bush-Obama era, in fact, is defined in some ways by consistently spending far more dollars than are raised through taxation. In a very real sense, MMT seems easily used to augment the authoritarianism, not reject it.

This post is also titled current limits because it is not that MMT provides poor responses to critiques of the JG so much as it refuses to consider some kinds of criticism at all. For example, Professor Wray explained his thinking in the following manner:

“I’m not going to say more about these final two arguments against full employment as I’m convinced both are fallacious, and because neither of these critiques offers a price-stabilizing anchor for the currency in place of the JG/ELR.”

In other words, MMT does not explain why philosophical and practical objections to JG are incorrect. Rather, the theory handles disagreement by defining it as fallacious and lacking a price anchor. In other words, MMT is aimed at people operating within the mainstream of economics, those that accept point 1 above. So far, it does not appear interested in perspectives that are outside of this mainstream view.

Below, I present three Ps, if you will, that offer different perspectives or insights into the problems posed by JG. In summary, they are philosophical, practical, and political.

On the philosophical front, JG theorizes that idleness is bad. It asserts, by definition, that time spent employed in the formal economy is necessarily better than time spent doing something else. On the practical front, I present a comparison between the actual functioning of two parts of the government – the Social Security Administration and the National Security State. If one views the situation from a different perspective, it appears clear that social insurance, in practice, works much better than direct employment. Finally, there is a political point worth considering that social insurance has proven its staying power within the confines of the acceptable range of policy options available in US culture. A JG, in contrast, has never been tried. The most expansive programs we have, like the WPA or the Vietnam War, have either been temporary or controversial (or both).

For me, the unwillingness to defend philosophical objections to JG is the most powerful indictment of the current limitations of theory built around modern money. It demonstrates either a tremendous lack of understanding about the core assumptions and values that one brings to political economy, or, a lack of intellectual seriousness and rigor. Formal employment is inherently authoritarian. That’s the point – one person hires another person to do what he or she says to do. This can work very well in a system of equality and rule of law where employees and employers form consenting agreements to produce a valuable outcome.

However, the inherent dangers of centralized power should not be taken lightly. Slavery, indentured servitude, physically abusive working conditions (“sweatshop labor”), theft, discrimination, harassment, and child labor are some of the more commonly understood problems of too much unchecked authority. It is easy to rationalize away the oppressive nature of work as something that is in the past. But it’s not. More human beings are enslaved today than in the 19th century, from domestic servants to children caught up in sex trafficking.

The authoritarianism of the workplace is prevalent in less extreme cases, too. There is a direct link between stress of overworked employees and mental and physical health problems. Indeed, the trauma inflicted by workplaces where employees have little power is eerily reminiscent of the description that Wray himself offers of the problems of unemployment:

“…divorce, deteriorating physical and mental health, abuse of children and spouses, gang activity, and crime.”

How the JG works isn’t the only issue. There is also the matter of what the JG will accomplish. It is a rather dull and depressing view of humanity to posit that human beings are only properly motivated and organized when employed. Formal employment can be good. That does not mean it is necessarily good.

Indeed, the exact opposite approach would seem most in line with human progress and civilization. It is the productivity of agriculture and commerce and so forth over the years that allowed people to pursue higher callings in the arts and sciences. Our curiosity and creativity as a species requires rest and idleness and leisure and spontaneity and failure; the very opposite traits maximized by employment-based resource allocation. It is better for the government to pay someone to pursue their own hobby than for the government to pay someone to do work that is of little interest or value. The range of activities that humans engage in outside of formal employment is as vast as the imagination, from very obvious pursuits like parenting and volunteering and civic engagement to more particular passions such as a faith community or visiting relatives or painting or singing in a choir or going hiking or running for school board or coaching a little league team or exploring the stars or writing a novel or any other myriad of such activities.

Finally, JG inherently sidesteps the issue of inequality. Excessive inequality is one of the core problems facing our society. JG entrenches inequality in a system where some people have ‘good’ jobs that pay much more than the compensation earned by the less fortunate workers stuck in the JG positions. The trick is that the higher one sets the minimum bar of wages, the more employment then shifts from the private sector to the government. It is a dynamic variable, not a static constant. It’s not just the 10 million people who are unemployed.

80 million workers make less than $30,000 a year(!). Does MMT really propose that the government hire that many people? How about the 100 million workers who earn less than $40,000? And what about the other 90 million adult Americans who aren’t in the labor force at all? Why not just increase the minimum wage and taxes on the wealthy instead of all the effort involved in being an employer of last resort?

The government's own data shows quite clearly that some workers make far more than even $40K a year. The 'mean annualized wages' for an economics professor is $100K! Health profs make $106K. For legal profs, it's $122K. These are massive wage differentials amongst workers whose jobs are based upon government policy, not private sector employment.

That doesn’t mean that critiques of how and what the JG accomplishes are necessarily right. But it certainly demonstrates that JG proponents must defend it on these grounds if they wish for those of a different perspective to take the JG seriously.

If the above discussion is too heady or vague for your taste, then let’s turn our attention to practical concerns. I will characterize these in two ways – first, concern about the efficiency of the price anchor, and second, concern about the projects a JG would pursue.

I fundamentally reject point 1 above, the MMT notion that a system of political economy must choose some sort of buffer stock to serve as a price anchor for the state’s currency. Quite simply, I would suggest that price anchors don’t work. Thus, they are irrelevant. Whether it’s hard money like gold, silver, copper, iron, wheat, corn, or some other physical commodity, or fixed foreign exchange rates, or unemployment, or full employment, there is simply no theoretical or historical record of price anchors actually preventing a political system from spending whatever currency units it desires. After all, that’s the point of fiat currency – issuance is dictated by the government. This is what makes freely floating exchange rates so valuable! What matters is not the price of resources. Rather, what matters is the distribution of those resources. In other words, inflation is managed by the denominator (the productive wealth of society) not the numerator (the currency supply). Taxation, rule of law, floating exchange rates, in short, the checks and balances of Constitutional government, is what serves as the 'buffer stock'. That these are external constraints to the monetary system is a feature, not a bug.

But for the sake of argument, let’s say that you do have to choose some specific mechanism to buffer currency issuance. Once we actually analyze government employment, it becomes painfully obvious that direct employment is a very inefficient mechanism for handling money.

The Social Security Administration employs about 65,000 people. In contrast, the National Security State employs about 4 million people (exact numbers here are of course difficult since the thing is so big and secretive that no one knows exactly how big and secretive it is). Why compare two parts of the government that have such wildly different employment levels? Because they spend almost the same number of dollars into the economy.

Think about that for a second.

The OASI and DI trust funds of the Social Security Act together accounted for about $823 billion in spending last year. The actual direct costs of the National Security State (discretionary security plus war on terror) were about $811 billion in 2012. That’s a remarkably similar amount of monetary impact for two very different employment levels.

In other words, each Social Security employee generated about $12 million of “monetary work”. A National Security State employee, however, only generated about $200,000! To say that differently, one social insurance employee generated the same price anchor effect of 60 direct employees. If we truly want a system with an effective price anchor, social insurance is the way to go. Benefit payments are much easier to tweak than employment levels.

But the problems with the National Security State are not confined to it being an inefficient spender of dollars (ha, think about that one for a second!). There are a whole range of indirect costs incurred by the National Security State that do not happen with social insurance that I will cover below in the third part about politics. But before getting to that, the other practical problem is how many more projects of the same size we will have to create and manage. This gives us a handy unit of measure in our ballpark estimate: 4 million jobs = 1 NSS.

So in order to implement JG, we would have to create 5 new projects of the size of the National Security State if 20 million people signed up. If 40 million people signed up, we’d have to create 10 new projects. If 80 million people signed up, that would be 20 NSS! Our system has trouble managing 1 NSS project. How exactly could it manage even 2 or 3 of them, let alone 5 or 10? Those details are critically important to any serious policy proposal that the government guarantee a job to everyone who wants one.

Lastly, we come to the political problem with JG. Quite simply, JG is untested. Sure, there have been specific instances where the government has hired a bunch of people. But such systems have never been guaranteed employment, they have never been local employment, and they have never been permanent employment.

This is perhaps the biggest elephant in the room when MMT discusses government employment projects. These projects are only successful when the political process desires to use workers to invest in the public commons, to produce an output that increases the productive wealth of the nation. When the political process has other motives, then we see the terrible consequences that manifest themselves, from waste and corruption to environmental destruction to sexual harassment and discrimination to prisoner abuse to undermining of Constitutional rights. The extreme growth of the National Security State poses a direct threat to the Republic. Constitutional governance is withering away, especially in the “post-9/11” era. MMT assumes good political stewardship when it is precisely a political crisis that confronts us.


In short, we have a management problem, not a monetary problem. That’s the sound bite version for what is currently lacking with MMT analysis – it is a set of policy prescriptions chasing the wrong problem. The solution is not to further entrench the employer-based monopoly on living a comfortable and meaningful life. The employment monopoly itself is part of the problem.

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11/23/2012

our comedian-in-chief


CBS captures a couple great quotes in this article.

"[T]here is no* country on earth that would tolerate missiles raining down on its citizens from outside its borders..."

"So if we're serious about wanting to resolve this situation and create a genuine peace process, it starts with no* more missiles being fired..."

* whereby "no" excludes places that the Obama Administration and partnering governments like to bomb.

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7/14/2012

stone savages

We checked out Oliver Stone's new movie. It reminds me how raw the drug war is for me. For some people, it's child abuse, others clean water, others the rainforest. My thing is the drug war. Who knows what makes us drawn to our particular pet causes. A form of specialization of labor, so to speak.

That powerful men can so mercilessly implement such terrible policy is nothing short of sociopathy. That we have so aggressively prosecuted this war will confuse future generations just as much as we are confused about how racial and gender equality could be anything other than obvious.

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6/20/2012

microsoft's challenge


Well, Microsoft finally released it. The WinPen, no, Pocket PC, nope, XP Tablet, huh-uh, Smart Display, ha, Project Origami, oops, Courier, nada.

I refer, obviously, to the Surface, Microsoft’s vision of the future that was released yesterday. No, wait, in 2008. And it’s not so much released as it’s teased.

Microsoft deserves all of the sarcastic comments that can be thrown at it. They’ve been working on the basic current tablet form for over a decade, and in the meantime, Apple’s angle from the old Newton line not only came to market first, but the iPhone reconfigured the entire cell phone industry, and the iPad actually exists, now, in the present. For sale. By the time the Mac had been out for five years in the 1980s, Microsoft was already out with version 2 of Windows.

I’ve been working on a long piece ever since I started chewing on the whole Windows RT is called Windows but doesn’t-run-Windows-software-except-when-it-does strategy announcement. The reason is that for all the poking-fun to be had here, I think Microsoft really is moving forward with an innovative approach trying to transition to the next stage of computing, in stark contrast to most other companies (and most other industries, for that matter).

The short of the story is that the initial personal computing paradigm that developed in the late 1970s and early 1980s was a time of vibrant innovation and competition. What’s so remarkable about the business of the computer industry is that virtually every company died. Apple and Microsoft are basically the only two major companies that survived with any meaningful level of influence, and one way of understanding that survival is that they both were able to transition from an initial successful product to a second, improved product.

Same end result, but they got there in very different ways. Apple reinvested earnings from the Apple line of computers into the Macintosh line of computers. Microsoft leveraged its market power in MS-DOS to transfer market power to Windows.

Apple’s strategy is repeatable: a company can continually improve the customer experience over a very long period of time, if that is the focus of the company from the top down. Indeed, that’s what a market-based system of political economy is supposed to provide.

However, Microsoft was dependent upon a unique set of circumstances, a perfect alignment of the stars. Odds are that the legal, business, and technological environment of the 1980s will never appear again. Microsoft, unique among all of the tech companies, didn’t make ‘computers’ – they only made the operating system. It was IBM’s brand in corporate America, not anything technological in MS-DOS, that gave Microsoft market power. It’s also important not to forget Intel in the story, since the 1990s were really a Wintel duopoly more than a Windows monopoly. For three decades, Microsoft has sold MS-DOS and then Windows not to consumers, but to manufacturers, because being compatible with the IBM standard was paramount.

Today, IBM no longer even makes personal computers, and corporate buying represents a smaller overall share of computing purchases. Accessing networks (such as the internet, wi-fi, and cellular communications) and providing mobile form factors are the primary tasks assigned to an increasing number of devices. There are also a much greater number of users who have made their mobile computing choices today than had made their personal computing choices a quarter century ago. Microsoft’s challenge is how to make the next transition, how to be relevant in the mobile computing paradigm and beyond (assuming, of course, it wants to do that).

Does it try to leverage the market power of Windows to sell manufacturers on the next product, or does it try to make a device itself that will appeal directly to consumers? Both strategies are interesting, and personally, I think Microsoft could execute either one reasonably well. What I think is critically important to understand is that these strategies are completely incompatible with one another, and there are tradeoffs between them. I wonder if Microsoft’s senior executives understand that, or if they have actually drunk the Kool-Aid and think they can simply muscle into mobile touch-based devices the same way they transitioned to the mouse and desktop. In other words, would Microsoft accept being a top five manufacturer of mobile computing devices? Or would they rather bet the company trying to reclaim the glory years of the 1990s?

As a long-time Apple user, I do enjoy the delicious irony that Microsoft management has appeared increasingly trapped over the past few years by the very success of that silly toy of a user interface.

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6/05/2012

back to where it started

(P) One of the reasons I did not support then Senator Obama in the Democratic primaries was his embrace of the Establishment way of thinking with regard to using American power to force sovereign nations to obey edicts from Washington. This kind of power projection not only makes us less safe as it incentivizes the very foes we are supposedly fighting to oppose us more directly, but moreover, it undermines our position of leadership by wounding the most important levers of our credibility. The true greatness of the American century was in our persuasion of nations to voluntarily join us, aligning economic, legal, environment, and human rights policies with our own, sometimes literally rebuilding countries in our own image.

In particular, the Senator spelled out his obeisance in a Foreign Affairs article in the summer of 2007. [Unfortunately, it is behind a paywall - funny that you have to pay for the privilege of accessing Conventional Wisdom. It's like they don't really want you to know what the DC crowd are thinking. But you can go to your local Elite University and find publications like Foreign Affairs easily enough, assuming the University Police don't taze you out of the library first.]

While broadly embracing that fun phrase The American Way of War (such as, for example, never actually using that little three letter word), Obama's article singled out one country in particular for action - Iran.

Five years later, we basically have confirmation that President Obama personally authorized war against Iran. Specifically, he instructed the development and release of a malicious computer program that targeted uranium enrichment equipment in the country. This worm, Stuxnet*, accidentally became public a few years ago - apparently the Obama Administration originally thought they could do this and keep it secret forever - and so the guess was that the Israelis and/or Americans were involved. This weekend, the Corporate Media paid homage to what Glenn Greenwald brilliantly calls Obama the Warrior as that guess became more like a sure thing.

So here we are. We can have legitimate policy disputes about the drug war or financial bailouts or warrantless spying or Race to the Top or many of the other Administration policies that I adamantly oppose. But we now have The Paper of Record openly explaining that the President of the United States committed an act of war against a sovereign country. How can anyone who opposed the major policies of the Bush Administration support the reelection of President Obama? How about anyone who believes in basic principles like the Constitution or national sovereignty?

That's going to be a sticky line of thought the next few months.

* Incidentally, Stuxnet in particular demonstrates the law of unintended consequences and how this type of behavior is a direct threat to our national security. Of course there are going to be computer programming errors in a project that complex. That's how this stuff works. Furthermore, Stuxnet is an extremely dangerous worm because it actually destroys the hardware it operates. That hardware isn't some Iranian bomb - it's equipment manufactured by Siemens that is used all over the world for producing nuclear power. We have now proven to every foreign government, organized crime operation, and terrorist group the possibility and effectiveness of damaging control equipment. It's a good thing our own country doesn't depend on any computer systems to keep our infrastructure running!

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5/17/2012

this is pretty funny

This was probably the most entertaining part of the evening.

2/28/2012

tech punditry and investment advice

I am obviously not a daily reader of MG Siegler's ParisLemon as I am commenting on something that was posted last week, which in mobile years might as well be last century. Anyway, the particular post is nerdspasm worthy - if you just so happen to be into both tech and finance.

Conveniently, I am.

Siegler links to Chris Dixon posting Warren Buffett's annual shareholder letter as CEO of Berkshire Hathaway (more specifically, the parts that are purposefully released PR-style for public consumption; the full letter is more detailed). Siegler's commentary reads (mostly)

Ask anyone why gold is so valuable and they’ll immediately tell you that it’s a rare commodity. And that’s true. But beyond its decorative value, which is minimal at best, what value does it actually produce? Very little.

Well, very little beyond selling it to the next fool who will pay more for it.

I don't know whether Siegler is casually interested or follows this more closely, but Buffett's letters are always fun fodder for the investment world and in particular the 2011 letter is quite remarkable. Indeed, this letter is darn near infamous.

First, Buffett yet again exemplifies that being a billionaire does not cause stupidity; it really is possible to be rich and maintain some touch with reality. Specifically, he acknowledges in the letter that he was wrong on housing finding a bottom. Contrast that kind of directness with how Manhattan financial firms operate, like Goldman Sachs Chief Financial Officer David Viniar giving his incoherent explanation of 25 standard deviation moves. Actually, don't contrast them. It will just make you cry (whether over math or the failing of our institutions, is in your hands). It's not that Buffett is always right, but that he puts his thoughts out there.

Second, Buffett has thrown himself in the midst of what has to be one of the greatest not-really-that-important controversies in the history of the internet. Except that if it's not important, why mention it?

And therein lies the rub. Warren Buffett is in the business of profiting off of information asymmetries. He wants to buy undervalued shares and sell overvalued shares. Warren Buffett, in other words, practices the art of the greater fool theory. He believes that fools exist at both ends, in fact! People dumb enough to sell him shares at below real value and people dumb enough to buy shares at higher than real value.

Once you see that Buffett is talking his book, in fact specifically referencing holdings like Coke and See's, the particular commentary on gold becomes even more fascinating. He needs people to put their money in financial assets because that's where he has leverage - political access, business contacts, legal resources, etc. Precious metals are a huge threat to that power base, not because they realize a return, but because they're not in the business of generating returns. Investing is incredibly risky. Saving is an entirely different endeavor - the whole point is to transport today's capital in a form accepted tomorrow, not to generate additional capital tomorrow. There are basically three types of precious metals investors: 1) conspiracy theorists/doomsday preppers, 2) savers, and 3) speculators. Note that while we colloquially use the word investing to describe this, none of these three types of activities are actually investing in the financial sense of the word. What's really dangerous is when people end up investing when they think that they are saving*.

(I of course do not give official financial advice, legal advice, tax advice, marriage advice, cooking advice...but personally, I am a big believer in investing in stocks. That is in no way inconsistent in also believing in saving in much safer vehicles that have nothing to do with equities, nor is it inconsistent with also believing in the value of diversity over concentration.)

It's the relationship between value and price that determines whether 'something' is a good investment or not. The utility of that something for some other purpose is irrelevant*. After all, if Buffett was simply a buy and hold forever investor, how come he sold all that Exxon Mobil stock he's so interested in talking about? If he is so focused on productive assets, why does he invest in companies that are so unproductive that they require government bailouts just to stay afloat?

So Siegler, if you really think gold has minimal decorative value, why is it so valued in jewelry? It rivals diamonds in popularity and global ubiquity even though the gold market lacks the monopoly equivalent of De Beers backing it.

And I would love to know where I can get a list of the companies that are going to be productive over the next decade. If this was known, if there were no risk, it wouldn't be investing. But perhaps most plainly, the greater fools theory simply doesn't make sense. If you bought something, that means you're the fool. The natural conclusion of this advice is to steer clear of the entire (secondary) equities markets.

Michael Dell went into the investment advice business in such a famous way that he singlehandedly demonstrated the importance of knowing when people are talking their books. If someone had shorted Apple and gone long Dell a decade and a half ago, they'd be bankrupt today. In fact, they would have gone bankrupt years ago.

*Note, there are huge incentives to confuse people about this, and not just in stocks and precious metals. The housing bubble was encouraged in no small part by the National Association of Realtors and the Federal Reserve pushing people to think of housing - something of value due to its utility as shelter - as somehow synonymous with the returns of investing and the safety of saving.

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2/13/2012

small potatoes

This post attempts to organize some thoughts regarding where we are headed. It's fun when there is a clear vision, but perhaps the most important times for reflection are when things are muddier. Basically, if we can identify unsustainable trends, we can identify sources of change. While the catch is anticipating what exactly that change will be, having some semblance of the terrain is useful.

One of the analytical approaches that interests me is where the tendency toward optimism/pessimism intersects awareness of reality vs. fiction. There is a lot of emphasis in our culture on the first dimension, almost as if being optimistic is more important than being right. Visually, it puts the emphasis like this, on the vertical columns.


However, an attempt to rationally understand the world around us needs to compensate for that natural cognitive fallibility by emphasizing the horizontal.


Truth requires an ability to interpret events both optimistically and pessimistically, to have a vision of what could be yet also a sense of what might go wrong.

With a couple decades of general wage stagnation providing the context for several years of very specific economic hardship and dislocation, the strategy of the governing coalition of interests in the US appears both clear and consistent. Outside of the national security nexus (GWOT, drug war, deportation, etc.) neither the Bush nor Obama Administrations are particularly hostile toward or directly targeting 'average' Americans. The 'not Hitler' meme was one of the better ones that Jon Stewart and Stephen Colbert encouraged at the Rally to Restore Sanity and/or Fear. Metal Chris captured this one:

Hitler Sign

In other words, it is not so much that individual political leaders act maliciously toward the citizenry so much as they don't care about us. Apathy is the key descriptor; we are simply irrelevant. All of the energy in government is devoted to marshaling whatever resources are necessary to save the Big Fish. What we are left with is the crumbs; small potatoes, so to speak. You can almost see the political class psyching themselves up to sell the latest batch of small potatoes for the masses as something of remotely similar importance to the efforts to save the Masters of the Universe. The transparency that Vice President Biden accidentally showed at the health care press conference, for example, revealed so much.


It's not that Bush's Medicare 'Modernization' or Obama's HCR 'most important reform since FDR nevermind that Medicare thingy in the 60s' are Terrible Legislation that will Destroy America. It's not that Bush was an Idiot or Obama is a Kenyan Muslim Fascist. It's not that abortion and gay rights renders America ungovernable and/or on a path of moral decay and damnation.

Rather, that's not where the action is. Two successive presidents, from two different parties, pushed massively complicated bills that purported to make the healthcare system significantly better. Yet they didn't actually solve the problem of expensive healthcare that causes preventable deaths.

I learned to hone in on that tactic of over-selling and under-delivering as a teenager, and it has proven to be one of the most insightful observations in comparing words and deeds. It's the 'let your yes be yes and no be no' philosophy: either government should do something (such as guarantee quality healthcare for all citizens) or it shouldn't. Both are legitimate beliefs. So is I don't know/let me think about it/it's not important to me. But to pick bits and pieces from both is to give away that neither belief is sincerely held; rather, they are merely justifications for acting upon an unrelated set of beliefs (like the belief that government should protect the economic interests of the wealthy).

Clarity has been particularly revealed with the financial crisis because we now have so much data upon which to draw. It's a simple statement of fact to observe that the Obama Administration supports the use of law enforcement resources to arrest hundreds of thousands of people every year, from illegal drug users to illegal residents to illegal assemblers. Yet one specific group of criminals stand in stark contrast to this massive deployment of police and prisons: politically connected financial crooks. There are literally more baseball players in legal trouble for testimony given before Congress related to steroid usage than there are top corporate executives and board members in legal trouble for all financial crimes combined. The current Secretary of the Treasury was literally head of the New York Federal Reserve when the proverbial bile was impacting the proverbial turbine. The ongoing effort to enter into a mortgage settlement is designed to give the Too Big To Fail financial firms immunity from liability in court - that's the point, that's what a settlement is - a settling of claims of unlawful behavior outside of court.

The preceding paragraph is neither pessimistic nor partisan. It's simply recognizing where we are at. The past and current Presidents of the United States think cocaine users, whistleblowers, protesters, and immigrants should be treated like murderers while financial fraudsters should be treated like people who don't pay a parking meter.

This is beyond specific policy debates or even broad ideological contests. We are now in the realm of questioning, of bringing to light, the core foundations of the American experiment, in all of its grandiose, exciting, and dangerous forms.

Is the Constitution the foundational pillar of secular governance, or do we now look to something else? Is there a rule of law, or a rule by men? Do we want to participate in a peaceful world order, or do we want to instill an American world order? Our basic systems of property and finance and law are quite literally crumbling around us. It's not pessimistic to point this out, to consider the implications. It's responsible.

We know housing prices got out of control. We know higher education costs got out of control. We know healthcare costs got out of control. If actual solutions to these kinds of problems are not going to be forthcoming, that is important to know, to understand what it really means. If you're a Big Fish, you play things very differently, but for areas of American life that depend upon the broad 'middle class', there are only two outcomes. Either public policy ultimately changes and we start encouraging wage growth again (either directly through employment policies or indirectly through additional transfer payments like universal unemployment insurance), or the asset classes dependent upon wages will simply wither away.

This has to happen*.

Either $20,000 - $30,000 a year has to become what it is elsewhere in the world - a comfortable living - or millennials in aggregate looking for jobs have to have a way to earn much more than that in entry level positions. Xers have to have broadly accessible means of earning promotions and switching careers. Baby boomers need to be able to easily replace lost jobs and find part-time income in retirement.

We have utilized credit to bring forward as much consumption as possible. The distant future is finite, too. And the near-future was spent in the past.

Household formation has slowed. New home sales are at record low levels. Record numbers of Americans do not participate in the healthcare system. The percentage of Americans employed has dropped precipitously. Millennials are even ditching things like cable and phones. Student loans - financial commitments undertaken by minors deemed incompetent to buy a Bud Light - can't be discharged in bankruptcy, ever.

Any asset that depends upon middle class wages, any industry that sells to those last marginal dollars of disposable income, will simply shrivel up to a much smaller core.

That's what I don't follow about some of the more intense hyperinflation perspectives. Massive increases in broad pricing measures ultimately requires the government to get money into the pockets of 'normal' people somehow. But that's not the bailout mechanism this time around. The most well connected players are seeing such socialism, but the general citizenry confronts a dearth of capital. I wonder if our 'capitalist' system can handle such misallocation of resources on such a grand scale.

But what I don't wonder is that it is a misallocation. Undermining the rule of law causes many more problems than it solves.

*It is becoming increasingly difficult to get simple, accurate information. The Consumer Price Index, for example, is so watered down and altered that it's not even clear why it's a good measure. A KC strip steak from grass fed open range cattle simply is not substitutable with a breast from a tightly caged, anti-biotically stuffed, corn-fed melange of chickens. Our political process helpfully focuses attention on the relatively small amount of trinkets from places like China and India when the bulk of American household expenses go to much more mundane domestic sources like housing, healthcare, higher education, food, transportation, and so forth. I keep anal financial records, so I thought it interesting to look at a few specific items of my own. By my various calculations, I had a stretch of rental increases that amount to an annualized rate of 4.8%, tuition and fees at Wash U increased by 5%, the cost of an entry level car increased 6%, health insurance increased 12.6%, and food increased 14.7%. The drawback of course is that by being specific, it's unique to me and just anecdotal. But comparing that against the average annual increase in household income over the past decade - 1.6% - it's obvious to see something has to give.

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