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- The Deficit Myth - Stephanie Kelton
- This book is making me realize that, due to the way national currencies are organized, there are two parts of the economy in each nation: a local one and an international trade one. The local economy can, and perhaps should, be completely autarkic and disconnected from the rest of the world, with only resource and labour restrictions but no financial (and capital?) restrictions whatsoever, so long inflation is under control. The second part of the economy, or the "second economy" as it is, is related to international trade conducted in the US dollar. This is where restrictions are (except for the US) and where a positive trade balance is favorable. Moreover, the local economy as it grows helps furthering USD inflows as goods and services find their way to the export market.
- This is exactly why I think that, for lack of energy abundane, a country like Egypt should continue to import grain only until it can build enough greenhouse capacity to feed itself from Zone 1 and Zone 2 permaculture. Zone 3 becomes viable only with country-scale regenration or with fusion energy abundance.
- According to this, and I am still not sure I like its assumptions, as fiat can only be sustained within a long cycle, social welfare can be perpetually funded by the government, so long the economy is capable of delivering those services in reality (perhaps not a good idea to have the government deliver the services itself, at least not the central government), and as long as the funding inflows create jobs but not inflation.
- In the case of Egypt, the central government would guaraantee employment, transfer the money to regional (and local) govrenments who will hire contractors to do the jobs and pay workers (directly?). This is a way to push capitalists to find efficiencies in places other than labour.
- Notes for page (15 . 49843)
The Deficit Myth - Stephanie Kelton
This book is making me realize that, due to the way national currencies are organized, there are two parts of the economy in each nation: a local one and an international trade one. The local economy can, and perhaps should, be completely autarkic and disconnected from the rest of the world, with only resource and labour restrictions but no financial (and capital?) restrictions whatsoever, so long inflation is under control. The second part of the economy, or the "second economy" as it is, is related to international trade conducted in the US dollar. This is where restrictions are (except for the US) and where a positive trade balance is favorable. Moreover, the local economy as it grows helps furthering USD inflows as goods and services find their way to the export market.
Perhaps custom duties should be collected in USD.
Such “free trade” agreements entrench global divisions between rich and poor. They shoehorn poor parts of the world into fossil fuel extraction, helping to hasten climate change. They give developing countries little choice but to submit to export-led growth—which, in reality, means exploitative labor conditions to assemble cheap goods on behalf of the wealthy and advanced nations. They even expand the monetary sovereignty of rich countries at the expense of poorer countries.
This is exactly why I think that, for lack of energy abundane, a country like Egypt should continue to import grain only until it can build enough greenhouse capacity to feed itself from Zone 1 and Zone 2 permaculture. Zone 3 becomes viable only with country-scale regenration or with fusion energy abundance.
In theory and practice, lack of food and energy sovereignty are solvable problems. Even major food importing countries with mostly desert climates can adopt a sustainable agriculture program by investing in more water efficient hydroponic and aquaponics food production. And even countries with no oil or natural gas reserves can adopt a renewable energy program by installing solar and wind farms, and by investing in energy efficiency for housing and transportation. And to the extent that we encourage a global effort to contain the effects of climate change, policies that help the developing world to decarbonize their economies not only lessens their dependency on US dollars to purchase fossil fuels, but also enhances global cooperative efforts to reduce harmful carbon emissions that continue to threaten our planet’s long-term survival.
As long as most developing countries have to import basic necessities, they will remain “developing”—caught in a desperate scramble to acquire the currencies of the rich world. Corporations around the world will keep feverishly chasing short-term profits, extracting scarce natural resources, polluting precious ecosystems, and ruthlessly firing desperate people, all in the name of maximizing shareholder value. Left unchecked, the situation is an open invitation for demagogues like Trump to come along, blaming “foreigners” and exacerbating tensions among the world’s people.
According to this, and I am still not sure I like its assumptions, as fiat can only be sustained within a long cycle, social welfare can be perpetually funded by the government, so long the economy is capable of delivering those services in reality (perhaps not a good idea to have the government deliver the services itself, at least not the central government), and as long as the funding inflows create jobs but not inflation.
Greenspan was concerned about the demographic changes that are leaving the US with a smaller number of workers to produce our national output. The dependency ratio is a legitimate concern here, not because there won’t be enough money but because we might struggle to make enough of the real goods and services that people will want and need in the coming years. Greenspan understood that it’s not enough to pay monetary benefits to future retirees. The value of that money matters, too. To guard against the age-old inflation problem of “too much money chasing too few goods,” we need an economy that is productive enough to supply the mix of goods and services we’ll need. How do we do that?
First, we must decide what our priorities are. Polling suggests that entitlements rank high on our list of social goals. Second, we should think about how to achieve them, while at the same time making sure our economy is productive enough to meet them without causing inflation.
In the case of Egypt, the central government would guaraantee employment, transfer the money to regional (and local) govrenments who will hire contractors to do the jobs and pay workers (directly?). This is a way to push capitalists to find efficiencies in places other than labour.
What we envision is a highly decentralized Public Service Employment (PSE) program that offers paid work at a living wage (we recommend $15 per hour) with a basic package of benefits that include health care and paid leave. Both part-time and full-time work should be offered, and work arrangements should be sufficiently flexible to accommodate the needs of caregivers, students, older workers, those with disabilities, and so on. While funding must come from the top (federal government), the jobs themselves would largely be designed by the people living in the communities that will benefit from the work that is performed. As we explain in the report, “the goal is to create jobs in every community, and to create projects that are beneficial to every community, [so] it makes sense to involve local communities in these projects, from the proposal stage through to implementation, administration, and evaluation.”
The program budget could reside within the Department of Labor (DOL), and DOL would specify the general guidelines for the kinds of projects that would qualify for funding. The goal is to provide jobs that fulfill unmet community needs. As we envision it, all of the jobs should be oriented around an overarching goal: building a care economy. We are an aging society in the midst of a climate crisis with more than enough useful work to be done. We can address our good jobs deficit by creating millions of good-paying jobs that care for people, communities, and our planet.
When it comes to creating those jobs, we think it’s important to recognize that the federal government is not in the best position to identify the community’s most pressing needs. The people who live and work in the community are. That’s why we recommend that government agencies work with community partners to assess and catalogue unmet needs so that jobs can be tailored to meet the needs of the community. Together, states and municipalities would work with their community partners to create a repository of work projects. Think of it like a massively scaled-up Shelf Project, but instead of binders full of pay-fors, the shelves would be filled with a wide variety of available jobs. The idea is to keep the shelves stocked with enough potential work to allow people with different skills and interests to walk in without a job and walk out with one that fits them.30
Notes for page (15 . 49843)
Argentina’s Jefes de Hogar plan wasn’t a full-throated job guarantee either, but in 2001 it became “the only direct job creation program in the world specifically modelled after” the proposal developed by MMT economists.35 The program was launched as an emergency measure following a financial crisis that plunged the economy into recession and drove the official unemployment rate above 20 percent. It was inspired by the work of Warren Mosler and designed in consultation with MMT economists—Pavlina Tcherneva, Mathew Forstater, and L. Randall Wray—as a way to quickly put people back to work. A first of its kind, the Jefes de Hogar plan created a federally funded, locally administered jobs program that guaranteed four hours of daily work in exchange for 150 pesos per month. As Tcherneva explains, jobs were limited to heads of households with “children under age eighteen, persons with disabilities, or a pregnant woman.”36 At its peak, the program employed some two million people, about 13 percent of the labor force. Almost 90 percent of the jobs were in community projects, and 75 percent of the participants were women. Just six months after launching the program, extreme poverty had fallen by 25 percent. Within three years, half of the participants had left the program, most for jobs in the private sector.37