Gulliver 2016

Lilliput is torn between to rival factions, the Big-enders and the Little-enders. They have been at war for many decades, fighting over how Austerity is to be achieved.

The Big-enders, so-named for breaking their soft boiled eggs on the big end, want to cut and ultimately eliminate all social spending, anything to remove what they consider as a terrible burden on our economy.

The Little-enders, the hoi poloi who break their soft boiled eggs on the little end, want to raise taxes and reduce military spending, all in order to reduce the deficit and retain what little is left of social spending.

Gulliver needs to put his foot down, between the two factions, and end this issue once and for all. Prosperity, not austerity, for all the Lilliputians.

Money, Credit and the Real Economy

"There is no limit to the services we can perform for each other... Real wealth, for any nation, is everything you produce domestically, plus whatever the world sends you, minus what you have to send to them - your exports. So, the imports are the real benefits; the exports are the real cost." -- Warren Mosler

When you work, you provide a service to other people, directly or indirectly. It doesn't matter if you're a security guard sitting in a chair or an iron worker riveting steel, you are contributing to the real economy.

I've spent my whole life in the private sector, except for my service as a soldier in the US Army. All production and distribution of the goods and services in our society is driven by demand for that production, demand expressed in terms of purchasing power or "money".

We all have what's called a "survival constraint", or "profit constraint". We, the private sector, need to generate at least enough income to cover our spending and our desire to "net-save".

We can borrow spending power if we need to, create money for a house or car for instance, by issuing our own private security (mortgage) which a bank will only grant based on our income projection. When we pay back the loan, or default, that debt (and money) is extinguished.

This is why federal spending, specifically deficit spending, is so important. Our private sector thrives within a framework of public infrastructure-- which includes civil law and citizen benefits.

New money is created by federal spending. It enters the private sector by purchasing resources, goods and services (labor). This money remains in the private sector where it is spent or saved, and extinguished when we pay federal taxes.

Hence, federal debt is necessary for the private sector to retain any "net financial assets" beyond the private debts of individuals. We can prevent recessions, provide full employment, invest in cities and states, and expand citizen benefits as long as there are people willing to perform services for each other...

+/- the international trade balance, but that's another issue.

Secular Conservatism and the Modern Age

Anti-Greed, Anti-Trust, Anti-Life

These are the section headings from Ayn Rand's novel Atlas Shrugged, a book with enormous influence over modern conservative thinking since the early 50s and the foundation of the "libertarian" movement.

Rand's objective was to present a "moral argument for capitalism" bereft of empathy or compassion. She advocated the "morality of greed", the morality of private monopoly, and that the only moral function of government is, not to protect life, but to protect property.

In spite of her focus on creating a "moral code", Rand was an atheist, which put her opposite of traditional Christian conservatives at the time. This is why I use the term "secular conservative" to describe the libertarian movement today.

Rand set up two very large strawmen as the cause of humanity's moral decay: collectivism, and altruism. She wrote extensively about returning to a gold standard, the aggregate effects of free market capitalism, and the implicit evils of democratic governance.

In my youth, I was mesmerized by this ideology, which offered me an "individualist" moral code. I realized early on, however, that her followers were very much a collective, that a "cult of individualism"" was an oxymoron, and that "enlightened self-interest" was an ineffective dodge for real feelings of empathy and compassion that I had toward others, especially friends and family.

Rand's contribution to our modern discourse is seen all around us. GOP Senators and Congressmen adore her. The Koch Brothers revere her and see themselves as the romantic heroes of her novels. Anarcho-capitalists don't believe that Rand was moral enough, that all government and citizenship, our Constitution, has no value to life, liberty and the pursuit of happiness.

Fact is that monopoly is bad. It is authoritarian. It relies on the compassion and empathy of the Aristocracy that Rand claimed was corrupted by altruism. In a word, it's just Calvinism updated for the industrial age.

Liberty and democracy are not opposing ideas. They are essential to each other, like two sides of the same (fiat) coin. The "golden age of capitalism" was the period from FDR through JFK, a period when we left the gold standard domestically and invested in public infrastructure and jobs.

Democratic capitalism is much better than the authoritarian, monopolistic capitalism that hails back to the dark ages, when religious conservatism ruled over Europe. We should return to demand-side federal deficits, and dispense with the supply-side deficit strategy of the past half-century.

Life is more than property. It is the whole reason for human society. A peaceful, growing industrial society requires a vibrant public infrastructure, which includes citizen benefits to pensions, medical insurance and education.

It took me a lifetime to figure this out. Hopefully those who read Ayn Rand don't take as long as I did.

The Age of Democracy

The "Golden Age of Capitalism", born in the Great Depression and ending with the Reagan Revolution, is often referred to as "an excess of democracy", a period where the rights of American citizens expanded and the nation prospered.

Allied victory in World War 2 spread democracies throughout the world. The golden age of capitalism was also the age of world democracy. The United Nations was formed by international treaty as a world senate, establishing a confederacy of independent nations committed to world peace and human rights.

As a nation, we are no longer in that golden age, and haven't been since the early 1970s. The 60s rebellion had been diffused, and a new age of Monetarism, rooted to Austrian economics (and legacy), emerged. It's populist face is anti-democracy, authoritarian,  led by the same sentiment that caused the US to reject the League of Nations and  the deep, ideological hatred we see toward the UN.

This monetarist regime has led to a situation that causes us to question what is meant by "moral hazard". Our nation is hit by cyclical recessions that contract the economy and pump wealth to the top. Bank deregulation has put us all at great risk, and as responsible citizens I think we should do something about it.

The 70s was also the beginning of the end for truly civil society. Civic groups were common, and formed the basis for all politics. The days of FDR, Truman, Ike, JFK and LBJ were stopped, and a new order came to rule US fiscal policy.

As the floating exchange rate was imposed by the "Nixon shock" for international settlements between central banks (basically a market for competing currencies, called the "fx market"), federal deficits were poured into the economy on the supply side, using upper-end tax cuts and direct subsidies to the financial sector.

Enormous deficits were incurred under GOP presidencies from Reagan onward, followed by periods of austerity (deficit reduction) under DP presidencies from Carter to the present. Wage-productivity has flatlined throughout, marking the passing of our golden age when public infrastructure was a national priority.

The age of monetarism is also the age of privatization. This is supported ideologically by both the Austrian and Chicago schools of economics.  The libertarian movement, in all its forms, has advocated for the privatization of basically everything.  

It's a bad idea.  There is nothing to prevent this "aristocracy of greed", as Ayn Rand called it, from consuming our entire democracy, and the world.

Yet that is precisely the direction humanity is heading now-- the private, corporate state.  America had it's golden age, and it's been downhill ever since. Time for some new perspective, maybe look at this democracy thing again, rather than surrendering to another dark age.