Public art of the day

Blu

Cartoon of the day

 

Special mention

Man = Carrot Circus

Tomorrow, we’re headed to Glover, to see Bread and Puppet: Cheap and Political Theater in Vermont

Toto, we’re not on the gold standard anymore

In the context of the debate over fiscal deficits and debt, Barry Finger explains how fiat money works:

What is not appreciated by the public is that current state operations are in no way operationally dependent on the prior withdrawal of funds from the private sector.  Whatever may have been true when currencies were backed by a fixed metallic content, modern money is a state-issued, state-enforced fiat currency.  It is no longer commodity money and is not exuded by the system through the spontaneous functioning of the private sector. . .

fiat currencies shatter and invert the inherited logic of the metallic-based monetary system.  Fiat currencies are not a byproduct of private commerce.  They are a creature of the state, which has a monopoly on its issuance. . .Given that understanding, fiat money-issuing entities — such as the US, Britain, China, and the EU — have to spend in order to inject liquidity into the system in sufficient quantity to accommodate the interests of commerce.  They have to spend, that is, prior to their ability to tax, reversing the polarity of economic causality.  With the advent of fiat money, taxation and borrowing no longer exist as necessary adjuncts of state appropriation.

That is, payment due for state wages, for the rental of state buildings, for the purchase of infrastructural products, to fund Social Security and Medicare/Medicaid, to finance the interest due on the national debt, to share revenues with local governments, or, unfortunately, to fight imperialist wars does not require the state to mobilize funds, either in the form of additional taxes or by selling state bonds to the private sector — or foreign governments — prior to meeting its obligations.  These obligations can be met simply by computer-generated entries from the state into the ledgers of its private-sector customers or its own self-administered trust funds, its private and foreign bond holders, and its employees’ payrolls.  This adds to the budget deficit in a way that never has to be repaid, or paid down, and does so at a zero rate of interest.  There is no “crowding out” — no competition with the private sector for loanable balances — simply because there is no need to fill the gap between spending and taxes with borrowed funds.  It is with this recognition that wars are, as a practical fact, “financed” until they become so unpopular or counterproductive that politicians conveniently awake to the discovery that the treasury is “out of money.”  All of which suggests that even mainstream politicians can with the proper motivation come to recognize that there is no functional requirement to maintain the fiction that a complex network of taxation and borrowing is the precondition for the state to function.  The modern state cannot go bankrupt.  The interest owed on the trade deficit is an accounting problem, not a social crisis waiting to happen.  The state does not have to sell bonds to run a deficit.  It does not have to tax its populace or borrow from them to pay the interest.  The entire idiotic kabuki performance of haranguing over debt ceilings, debt defaults, or government shutdowns, or of acquiescing to mass unemployment, or of negotiating down social benefits to keep the state afloat can all be dispensed with.  Once fiat money replaced commodity money, the genie of state financial reorganization was already released from the bottle.

This is not meant to suggest that there is no further need for the state to tax and borrow.  It is rather that these activities properly fulfill different functional requirements: namely to cool down an overheated economy by draining excess demand for consumption and assets that may have been induced by additional state spending.  Functionally, these should be tools not for the appropriation of operating funds, but for the regulation of aggregate demand and the adjustment of interest rates needed to preserve price stability including an access to investment capital commensurate with cyclical moderation.

In other words, with fiat money, there is no intrinsic incapacity to finance growing fiscal deficits. The kinds of debt-to-GDP ratios that are thrown around in the United States and Europe—40 percent, 60 percent, 100 percent—are just that, numbers. They’re arbitrary numbers.

The issue is not what levels of debt are sustainable but how does the state intervene to support (or not) social expenditures and to determine the nature and level of private business activity.

Recoverless recovery

source

Except, of course, for corporate profits, which accounted for an unprecedented 88 percent of economic growth in the first 18 months after economists declared that the recession had ended in June 2009.

Strike of the day

Cartoon of the day

Special mention

Bowling without Gramsci

It’s all fine and good to take up the project of thinking about what civil society means in a globalizing society. But to do so while ignoring the work of Antonio Gramsci undermines that very project.

Daniel Little summarizes what he considers to be the key factors in enhancing civility within a community. They include all the usual suspects: solidarity, a sense of justice, confidence in the future, a sense of dignity, and the need for stable, fair, and predictable institutions. (The same, of course, can be said about capitalism generally. One can argue then that, for capitalism to be reproduced over time, there needs to be a set of ideas and institutions that together make up civil society constituted along the lines Little indicates.) Then, Little tries to imagine what civil society might look like on a global scale:

Is a global civil society feasible? This would be a world in which all persons recognize and respect the human reality and worth of all others—near and far. It is a world in which people are tied together through cross-cutting civil associations—local, national, and international.  These may include labor organizations, women’s organizations, environmental organizations, or religious groups. It is a world in which persons share a sense of justice—they share a basic agreement on the essential fairness of the institutions that govern their lives. And it is a world in which all people have grounds for hope for the future—that there are opportunities for them to improve their lives, that they will have fair access to these opportunities, and that their children will have better lives than they themselves have had. Such a world has every prospect of sustaining stable, peaceful, and civil social life—both local and international.

The problem is, Little’s notion of civil society is one-sided. What is missing is precisely the idea that Gramsci brought to the discussion: that is within civil society that consent to the prevailing hegemony is generated. Thus, civil society doesn’t stand in simple opposition to the State (as Little seems to presume), on the side of the marginalized and oppressed, but is, rather, an extension of the State. In this sense, it is the terrain both of hegemony and of opposition to hegemony.

My colleague Joseph Buttigieg has written extensively on this issue. Two articles, in particular, stand out: “The Contemporary Discourse on Civil Society: A Gramscian Critique” and “The Impoverishment of Civil Society” (both published in boundary 2, in 2005 and 2006, respectively). In the first, Buttigieg explains,

Since the mid-1980s, the discourse on civil society has, for the most part, been much less interested in the operations of hegemony than in a theorization of civil society as an autonomous terrain that, on the one hand, defends itself against the incursions of the State (in the sense of government or political society) and of economic society, and, on the other hand, pro- vides the necessary conditions for the emergence of democratizing social movements that impel political society and the economy in the direction of greater freedom and egalitarianism. . .

It is, of course, true that in the modern liberal State, all individuals and groups are free to form organizations, voice their opinions, and work actively to change or preserve virtually any aspect of the existing order. That does not mean, however, that all individuals and groups have an equal chance of being heard, much less of having an impact. In other words, civil society is not a level playing field. Similarly, it is true that in the modern liberal State, radical reformers are free—and, indeed, should be encouraged—to protect the institutions of civil society from ‘‘being functionalized to the purposes of economic or political power.’’ In order for their efforts not to be quixotic, however, they would need to be fully cognizant of, and lay bare for all to see, the overwhelming odds against them, that is to say, the vast array of resources that the economic and political powers that be and their allies have at their disposal (and use with great efficacy) to penetrate and influence every sig- nificant component of civil society. Making all of this explicit would not lessen the obligation to strive hard and incessantly resist the incursions of political and economic power, but it would obviate the error of thinking that civil society is or can ever be sealed off from political society and the economic sphere.

Buttigieg’s point is that, in the United States, far from being radicalized by progressive social movements, civil society is one of the main sources of power of the conservative movement.

In the second article, Buttigieg argues that liberals, who have supported the wars in Iraq and Afghanistan based on the idea of building civil society in those countries, seem unconcerned about the impoverishment of civil society in the United States. We therefore live in

an age in which many intellectuals have betrayed their calling in favor of being close to power, whereas those who continue to oppose and to criticize the powerful are among the most reviled members of society.

At the same time that we might worry about what global civil society might look like, we might also direct our efforts at understanding how civil society operates in the United States itself—and how a movement might be built to challenge the existing hegemony.

Bibliophile of the day

The Internet has returned us to the alphabet…From now on, everyone has to read. In order to read, you need a medium. This medium cannot simply be a computer screen…

One of two things will happen. Either the book will continue to be the medium for reading, or its replacement will resemble what the book has always been, even before the invention of the printing press. Alterations to the book-as-object have modified neither its function nor its grammar for more than 500 years. The book is like the spoon, scissors, the hammer, the wheel. Once invented, it cannot be improved.

Umberto Eco

Throwing grandma under the bus

Neoclassical economists, it seems, want to throw grandma (and grandpa) under the bus.

First, they use the elderly as pawns in their attack on Keynesian economics.

Now, they want to blame the elderly for the budget deficit.

By now, it’s obvious that we need to rewrite the social contract that, over the past half-century, has transformed the federal government’s main task into transferring income from workers to retirees. In 1960, national defense was the government’s main job; it constituted 52 percent of federal outlays. In 2011 — even with two wars — it is 20 percent and falling. Meanwhile, Social Security, Medicare, Medicaid and other retiree programs constitute roughly half of non-interest federal spending.

These transfers have become so huge that, unless checked, they will sabotage America’s future.

The fact is, the Social Security program has been one of the most successful programs in terms of eliminating poverty.

source

Before Social Security, most old people had three options: continue working, spend their last days with their children, or move into the poorhouse. Because of Social Security, elderly poverty has declined substantially from the days before the New Deal of the 1930s. The government’s official statistics go back to the ‘1960s, when the elderly poverty rate stood at about 35 percent. By the 1980s, the official rate had dropped to 10 percent. Or, to look at it the other way: without Social Security, 19.8 million more Americans (including 1.1 million children) would be poor.

So, the program works. But it still doesn’t work well enough. In fact, if healthcare costs were included, more older people would fall under the poverty line. That’s an argument for expanding Social Security and Medicare, not cutting them.

And, while we’re at it, we could just throw neoclassical economists under the bus.