It seems like OWS is acquiescing to calls to "hone their message" rather than keep their protest more about generic social and economic inequality and injustice. (Which I believe is a far more effective strategy judging from the rapid, global spread of the movement.)
By caving in to media and elitist demands that they specifically define and communicate their grievances (we've all heard the idiotic and phony, "What are they protesting about?" lines), they are rapidly destroying their efficacy, at least in my opinion.
When they declare one of their goals to be "Bringing down the deficit and the debt," they are clearly speaking, unkowingly perhaps, against their own interests. Screw the debt! This is about inequality and the entrenched policies that sustain it! The debt is not the problem!
When they start talking about reducing the debt they are buying into the same propaganda that the 1% has used so effectively to sustain the flow of income and wealth directly their way at the expense of the other 99%.
That being said, I did see this one sign (h/t Ritholtz blog) that correctly sums up at least one grievance (albeit a very large one). I thought I'd share.
If that doesn't clearly state one of the bigger problems, then I don't know what does.
30 comments:
See also David Graeber - On Playing By The Rules – The Strange Success Of #OccupyWallStreet for an authentic history of the origins and early development of the NY #OWS movement.
Mike,
About the debt, I do believe there are different stances to be adopted on the private debt as opposed to the public debt.
Slogan:
"Public Debt - Good
Private Debt - Bad"
MMT needs to be in Zuccotti Park and in the protest areas around the world as much and effective as possible.
I will be in Zuccotti Park this coming Sunday with a sign and and MMT hat spreading flyers and a box of Warren's 7DIFEP he generously shipped. I wish I were unemployed so I could be there every day. :-)
Private debt is bad when income is not sufficient to support it. So when they say, "cut the national debt," they're misinformed--either innocently or they've been manipulated to think that way. (The latter is my personal view.) I saw David Walker on PBS the other day, going around on college campuses telling the kids that the deficit was a massive threat to their future.
Forgot to include this:
Cutting the national debt (one of the stated goals of OWS) will REDUCE NATIONAL INCOME and that will not help what they are trying to achieve, which is greater income equality unless they are looking for a pure, distributional solution (take it all from the rich) and I'm not sure that's such a "clean" solution.
Mike, don't say I didn't warn you in advance the dangers of relying on clueless peasants to try and promote (financial system) reform.
This debate has to be reframed.
We have to stop calling something debt that isn't a debt.
Ordinary people understand debt to be something that has to be paid with real future work and energies.
Call government bonds what they are public liabilities. Just like a $1 bill is a public liability.
There is no national debt to speak of in the US and UK, or in Japan for that matter. Just a load of public liabilities.
@Neil
Agreed, I always use:
"..the so called public "debt".."
These are strictly reformist demands, except for the ones that are wrong according to MMT.
I still think this is a positive development. Reform is a far cry from revolution though.
rvm:
I will join you around 1pm
Could not disagree more, Neil et al. It's a horrible mistake to talk that way. Public debt certainly is debt. Redefining ordinary words that everybody understands like "debt", mysteriously talking about liabilities which are not debt is not the way. It's an easy but ultimately destructive shortcut, that creates unnecessary complications, sows nothing but confusion in the long run, leaves a gigantic opening to commodity-money thinking & violently, violently, explicitly contradicts MMT, good economics & thankfully most current thinkers. The right way is to make people understand again that all money is debt. To hell with framing.
The thing is to make people understand that they have been taught in the last few decades to talk about debt in government finance in a weird way which is NOT the dictionary definition of debt, which is what MMT uses. MMT & the dictionary make it clear that a dollar bill is a debt instrument, as FDR or Thomas Edison & practically everyone else once knew. A major task is to regain & then go beyond the level of economic awareness which everyone once had, before the amazing destruction of economic knowledge a few decades ago.
Mike, the upside of this is may start a debate that will lead to modification of the proposals. It's a chance for MMT to assert assert its position and be heard.
The Declaration a draft proposal for consideration by a general assembly to convene on July 4, 2012. (BTW, the general assembly of the local OWS group convene nightly at 7PM around here and I have attended on occasion.)
The Declaration states, "The final version of the PETITION OF GRIEVANCES voted upon by the Delegates of the National General Assembly MAY or MAY NOT include the following suggested issues:...."
Maybe this is the opportunity that MMT has been looking for to be heard. All voices are welcome in this assembly, and the m.o. is consensus. Let the debate begin.
When they declare one of their goals to be "Bringing down the deficit and the debt," they are clearly speaking, unkowingly perhaps, against their own interests. Screw the debt! This is about inequality and the entrenched policies that sustain it! The debt is not the problem!
I have tried to make this point several times in my dealings with Occupy New Hampshire. But it is very important to understand the intellectual dynamics of this new movement.
There is a strong current of generational identity and resentment in the Occupy movement. Yes, they understand and believe the stories about Wall Street financial sector corruption. They sort of understand the general issues of private sector debt - but are far more focused on student loan debt, for example, than mortgage debt. They are young, and and few of them have houses.
But these are people who have been told, and who mostly seem to believe, that the older generation has saddled them with onerous public sector debt burdens. Many of them are also attracted to the Ron Paul temptation: i.e. the alleged evils of fiat money, government monopoly of the currency, "funny money" etc. So it's really important that MMT jump into this debate now, with both feet, to offer a clear, convincing and thorough account of how people should think about the fiscal operations of the government, and the role of money in our economy.
There is also very poor understanding, in my opinion, of the causes and nature of the unemployment problem, and the negligent government role in tolerating unemployment. Remember, these are young people who have lived their entire lives in a neoliberal era. They have never in their lives experienced an activist federal government playing a strong role in the domestic economy, and have been trained throughout their lives with ideological biases informing them that an expansive government role in stabilizing and supporting employment and income is unthinkable - an outrageously wrong throwback to some kind of Soviet system.
When I mentioned the universal job guarantee idea to the people I talked to, many were intensely interested. But they had never previously even considered such a thing. They also have many people in their midst of a very libertarian or Austrian orientation preaching the message of small government and non-involved, laissez faire fiscal policies. Given the tremendous suspicion they have of government, these libertarian ideas can be very appealing to them.
I believe the job guarantee idea is a real winner for MMT, and that is another issue on which MMT writers should jump in with both feet.
Finally, the work Bill Black is doing on Wall Street and financial industry corruption is incredibly powerful. I believe it is very important to help people within the Occupy movement to understand that the key source of our economic disorders is private sector dysfunction and malfeasance, and where government has erred is in its failure to do more to regulate the financial sector and support aggregate demand on the fiscal side with spending and jobs programs. The problem is not - as the Paulists are telling them - that government does too much.
@MikeC
Great!
@ Dan Kervick
Second that.
I have been saying for some time that there is huge danger brewing for this reason. The Ron Paul/Austrian/Libertarian view is becoming not only a popular fad among youth, but also it is becoming a defining feature of popular culture. If this takes hold, it will be virtually impossible to overcome, and the only way to get beyond it is for them to experience the consequences of it, i.e., an extremely deflationary environment, until they tire of this experiment through exhaustion.
We are still in the throes of the neoliberal experiment, which many if not most people now see as a failure. It would be a highly detrimental to the future of the US for the next iteration to be further to the right. They don't seem to get that the John Galts of the world are the 1%, and the probability of anyone getting to that level is, well, one in hundred. And for most, it's a lot less than that, based on where most are presently standing, given the practically non-existent social mobility in the US.
One way to tackle this is to concede the principle. Yes, The public debt is a bad thing because the US Gvot chooses to borrow its own money at interest from Wall Street instead of creating its own money interest-free at the US Mint.
The waste of taxpayer resources is tremendous, according to the CBO, $4.5 trillion of projected deficit spending over the next decade will be from net interest payments on the public debt (debt service is closer to $6 billion if you add govt-held and Fed-held debt). The US should create its own money so it can stop borrowing from Wall Street and, likewise, should create its own money to pay the debt service from past borrowing.
Democrats and Republicans can disagree on whether the govt should spend more or tax less; but nobody who isn't on Wall Street's payroll could support paying trillions in unnecessary debt service that comes out of Main Street's pocket, year after year.
We should try to convince the OWS folks to have a nation-wide series of teach-ins on alternatives to neo-liberalism, such as MMT. In NYC this could be downtown nearby at Pace or NYU.
We should also try to convince them to use MMT ideas to be be a counter-weight to the austerity-oriented bi-partisan congressional SuperCommittee, i.e. the "Gang of 12". They should make the SuperCommittee and Obama's support of it a focus of their current organizing.
It might not be a bad idea to also try to convince them that they have a historical continuity with Keynes and the New Deal, and that MMT has a continuity with Keynes.
MMT/NEP/Mike Norman blog should post an "Open Letter to OWS" countering the mis-guided ideas regarding debt in Item 8 of their initial list of demands, and focusing on growing the economy as the priority (i.e. functional finance per Abba Lerner).
Tom,
You said
Quote:
are the 1%, and the probability of anyone getting to that level is, well, one in hundred.
You are very incorrect in that statement. The probability is less than 0.0001%
Think about it.
Exactly.
And MMT should spell out exactly what has to be tweaked in the present system to do this, since the second most popular cultural shibboleth is the AMI/Kucinich bill.
The Ron Paul "solution" is to go back to the 18th century, and the AMI/Kucinich "solution" is to reinvent the wheel by multiplying the spokes way beyond engineering requirements for the load. But at least the latter is in the ballpark, even if out in left field.
Right, Clonal. Poorly stated.
I meant to say the 1% is one in a hundred, and that thinking you are John or Jane Galt doesn't change that. The idea that a large number of people can claw their way to the top is silly. There is no way to make the 1% more than 1%, and anyone's chances of getting there from the middle or bottom are minuscule. "Getting government out of the way" would just make it more difficult.
Beo,
There was an article in Op-Ed News which raised this very same issue. The article - Economic Reform Newsletter: Occupy Everything Movement, What is Money?, A Banker-led Lincoln Assassination?, Iceland by Scott Baker
Quote:
Modern Monetary Theory and Georgism, Greenbacking and State Banking
I've been having a rousing debate with two of the founders of a movement called Modern Monetary Theory. You can read in detail what it's about here (click here) but like all good theories these days, it rejects conventional notions of most mainstream economics. Unlike many theories, however, it is actually getting some mainstream traction because it doesn't seek to overthrow current practice as much as to explain what goes on differently and truthfully. Even CNBC had a positive review, here.
Continuing below
Continued from above
Here are some highlights:
1. We have lived under a fiat system since at least 1971, when Nixon finally removed us completely from the gold standard (see below for why gold doesn't work as a basis for money). Under a fiat money system, of course, where federal Governments are the sole creators of money, money cannot run out, since more can always be created. This is a double-edged sword, but at least it is a sword. Well, sharp readers will be asking "Well, what about the money the banks create when they make loans?" Clearly we do have a credit-money contraction when that is curtailed, as now. I would agree, and one of my ongoing arguments with the MMT people is the degree to which we really do have a fully sovereign money system. It is certainly not the money system envisioned by Greenbackers like Henry George, Lincoln or today, Kucinich and Zarlenga (MMT people have problems with the last three of these, and only approve of George on the Land issue; I recently got Warren Mosler, a key MMT proponent, to agree to "consider" changing his call for a Real Estate Tax to just one on Land . I'll let you know what this thought-leader finally decides. It may lead to a significant synthesis between MMT people and Georgists).
2. They agree with Greenbackers in that in a fiat money system, money gets its legitimacy by being the only way to pay your financial obligations, most importantly, taxes. So far, I have not gotten economist Randell Wray or Finance specialist Warren Mosler to agree that issuing Greenbacks directly is a good idea, or indeed, that it is any different from simply allowing the deficit to run up without paying back the debt - which they argue is a fiction anyway, in a fiat money system. But if enough people believe the debt is real, isn't it real? If this existential question is answered affirmatively, even the MMT people seem to agree, it will determine whether deficit hawks plunge us into a depression in an effort to "balance the budget," or else find some way to live with expanding the money supply, even if it means "adding to the debt" in conventional thought. They differ from the Keynesians in this crucial way, by not accepting that government spending can create true debt in the first place, when the government can simply create new money. Money, which they say, is the origin of all money in circulation for later use. What of the banks? Well, they borrow on the interbank market, and in fact, compete with each other in a way that causes interest rates to go down, not up, as is commonly believed. At least that was how it worked until the Fed started paying 2% interest for banks to park their reserves with them. MMT doesn't say that this parking is causing the drop in lending, even between banks themselves, but it seemed that way to me when the Fed started it in 2008, and still seems that way. In any case, MMT agrees with Ellen Brown and other honest analysts in that banks lend money first , and then worry about how to borrow it at a cheaper rate later.
Maybe the most important takeaway from MMT, or Greenbacking, is the understanding that we are not only not broke, it is actually impossible for a truly sovereign* (*Our loss of sovereignty can be traced from 1913 when the mostly private Federal Reserve was created .) country to be broke. Unfortunately, the Left (http://storyofstuff.org/broke/) as well as the Right buys into this fiction, which makes us into a nation of Pie Slicers . The Left wants more of the pie for social programs and the Right wants more for defense and well, frankly, some pet projects they won't admit to (neither party has a good track record in reducing the deficit, especially lately). What we need is to bake a new pie with new ingredients, with bigger slices for most people.
One suggestion on messaging: Instead of just saying, "The debt issue is overblown," or "Governments sovereign in their own currency cannot involuntarily default," and the like, say things like, "There is no debt crisis! The government is lying to you!" or "Democrats and Republicans in Washington are destroying our government with austerity!" or "Pete Peterson and the Bowles-Simpson Commission represent the 1%."
Calg,
How do you reconcile debt and borrowing... are they synonymous?
I dont like the word "debt" either as related to govt bonds... as to me, it implies "borrowing"... trying to understand.... Resp,
Interesting article Clonal.
The politics of a federal property OR land tax are a bear, the legal issues are even worse. The only way to achieve a national land tax is with bribes, give a 100% federal tax credit for any STATE land taxes paid. Any state that doesn't shift tax burden to land would be forcing its residents pay more in federal taxes than they have to.
Beo
Another brilliant brain wave - A property tax holiday and at the same time shifting to a Land tax, and getting increased revenues to State and Local Government. The land tax then curbs home prices from escalating.
One just has to look at home prices in Pittsburgh over the last 100 years (2011 is the 100 year anniversary of land taxes in Pittsburgh) to see its beneficial impacts.
Compare 32 years of home price appreciation rates in Pittsburgh to Philadelphia.
Philadelphia has a standard property tax.
Here are a few suggestion for slogans from Tom Hickey and Bill Mitchell.
"The government chooses the rate of employment"
"Private saving is the inverse of public spending"
"SPENDING =INCOME"
apparently this is the latest and greatest from Ron Paul writing in the WSJ.
Thoughts?
http://online.wsj.com/article/SB10001424052970204346104576637290931614006.html
a central theme to MMT is zirp and the inefficacy of monetary policy. However many, many people feel that zirp creates bubbles. MMT needs to address this concern head-on somehow....and frankly other I myself haven't heard much about how MMT handles this possible point against zirp either....Mike? Tom? Beo? etc.??
people of my generation are really into RP and there's just seemingly no way to talk to them otherwise. They really think they've got it "all figured out" with RP and Austrian econ.
clonal I went to school in pittsburgh and my mom is from pittsburgh....it's a really nice town and I miss it often (I'm in LA now)...except for that weather there!! sheesh!! And compared to LA my wife is not so into the "styles and fashion" of pittsburgh!!! LOL
help me out here though....without all the history as I don't have time to read it all...what is the difference in calculating a land tax versus a property tax? I am assuming you just tax on the land and not the home? And land prices are a lot less volatile and more reasonable so the taxes are both steady and doable? Is that what you're driving at here? I'm interested and must say that if it wasn't for the weather I could probably convince my wife to move back there....I have great memories with all the steel city (there are some great contemporary poets that live and work in the 'burgh amongst those abandoned steel factories too...some of the best in the world in fact).
cheers!
Mario,
A good introduction to Land Value Taxation can be found at a talk given by Dave Wetzel at Feasta in Dublin, Ireland. This can be seen at - Dave Wetzel - Beating the Bust: Land Value Taxation
Another talk by Fred Harrison (Renegade Economist) - Land Value Tax (part1)- Fred Harrison, Karl Deeter and Stephen Reed
and a third one by Dan Sullivan - Dan Sullivan - Capturing the value of the commons
These should answer the questions for you.
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