Two big events this week, one of which almost everyone knows about – the Democratic Convention in Chicago – and one that almost only economic policy wonks know about – the annual Jackson Hole Economic Symposium attended by most of the Federal Reserve governors.
Certainly, attempting to micromanage dozens, hundreds, or thousands of aspects of a national economy is not practical. However, there is one simple, discrete policy that, if implemented, would likely accomplish 90% of what we are hoping to achieve: a progressively accelerating tax on public and private wealth.
The money supply is a public utility, supplied by the government to conduct the nation’s business. It’s not intended to be hoarded by a few, beyond all need or reason, to the detriment of all else.
Essentially, this means delegitimizing the profit motive. I realize this is the foundational sacred cow (or better “golden calf”) that our country was founded upon. So I don’t expect a lot of initial enthusiasm for the idea.
Profit may make sense during the initial building phase of any endeavor – be at a career, company, or country. Yet when such an entity reaches maturity, the continued relentless search for profit eventually becomes cancerous and destructive. We need to do better
RE: "Essentially, this means delegitimizing the profit motive." I think "profit" is too loosely used in many economic discussions. Narrowly, "profit" is the difference between revenues and costs. In a well functioning market/trading system, some "profit" is a necessary incentive for taking risks (I know this is a bit simplistic and in real life, market failures are rampant, but still this type of "profit" has existed in real life for thousands of years). What is problematic is when "profit" is defined to include economic rent, "excess" earnings due to monopolistic practices, siphoning off funds through financial manipulation, "gaming the system" through laws (rules), etc. I think our discourse would be more productive if we were always careful to distinguish the type of profit Adam Smith would have approved and accretion of wealth through these other means.
Interesting article and I credit the author for wanting to improve our current societal and economic challenges. I tend to agree with many of the observations, particularly the comment regarding the ability of governments to generate specific economic outcomes, or take more action, being limited without further expansion of its powers. Where I fundamentally disagree is the suggestion that expanding government power would in any way improve our country or any healthy society, especially long term. What this article does not acknowledge is that both governments and corporations/ private sector are all controlled by people, and unfortunately, people are fundamentally flawed. As such, both entities are motivated by the same limiting inherent human traits: envy, greed, power, and fear. The difference between Governments run by people and corporations/ businesses run by people is that a corrupt and dysfunctional Government will ruin an entire society whereas corrupt and dysfunctional corporations/ businesses will eventually go out of business (or jail). I'm not saying that corrupt business can't hurt people, they certainly can. I'm saying the magnitude for Government ruination and destruction is exponentially more dangerous than a corporation/ business. The founders of our country (even with their flaws), understood this principle and tried to limit the scope and responsibility of the Federal Government in our Constitution to the point of specifically enumerating its powers and delegating all other powers to the various state and local governments. They understood that Governments work best when their powers are limited and the elected officials are close to the jurisdictions they represent. Over time, we have completely moved away from this principle and given our Federal Government way too much power. Businesses are at least accountable to their shareholders/ employees, and certainly their customers over time. Business that do not function well will eventually go out of business and/ or lose market share. Large, bloated governments are not close to their citizens and effectively unaccountable, especially the agency bureaucracies that our government has created. In most cases, many of the domestic crises we have experienced in this country have been a direct result of Government involvement, overreach or over-correction. Businesses react to market conditions and regulations. Competition motivates them to push the boundary, innovate, create, and produce. Governments do none of that. Governments create nothing and produce nothing, with nearly all of them (with the exception of the Hoover Dam) incapable of being self-sufficient or supporting. Taxes are a necessary evil but not when they punish success, stifle innovation, and prevent individuals/ companies from taking risk. People don't mind "paying their fair share" especially when they know the dollars are being spent wisely and managed appropriately to avoid waste, fraud, and abuse; something that big Federal Governments do not manage well. Governments do play an important role for society, but not when they are picking winners and losers and not when they become unaccountable to citizens. Their role is to facilitate and maintain predictable, stable conditions and regulations, preserve market competition and freedoms, and protect their citizenry. Government will never be able to satisfy the innumerable choices, needs, desires, or wants of 300 million people. We need to get back to the basics and founding principles that restricted the Federal Government's power and deferred the remaining powers to the State and local Governments. We also need to stop demonizing each other if we are ever going to make progress to fix the real issues that are hurting our citizens. Our media has turned politics into a 24/7 reality show and forced people into distinctive political camps that are not consistent with real life and how ordinary citizens live day-to-day with their own families, neighbors, and co-workers. The media rewards and covers negativity while punishing politicians on both sides who actually try to work constructively on real issues. This construct is not healthy and sets are horrible example for our kids and grandkids. We all need to do better if we are ever going to fix this.
Jonathan. I absolutely agree that we should be wary of expanding government power in all cases, as government is the sole collective grouping that claims a monopoly on the use of force and we should all be mindful and wary of when we delegate that power.
National debt means something completely different than household consumer or commercial debt. The latter are loans that must be repaid. National debt however is simply the nation’s money supply, since we have a debt-based currency system. Trillions of dollars of national debt simply means that trillions of dollars of economic activity is occurring. “Pay off” national debt, and there would be no circulating money (except for the 3% that exists as coins and paper bills).
I highly recommend Stephanie Kelton’s new documentary “Finding the Money“ for a thorough explanation of this.
Certainly, attempting to micromanage dozens, hundreds, or thousands of aspects of a national economy is not practical. However, there is one simple, discrete policy that, if implemented, would likely accomplish 90% of what we are hoping to achieve: a progressively accelerating tax on public and private wealth.
The money supply is a public utility, supplied by the government to conduct the nation’s business. It’s not intended to be hoarded by a few, beyond all need or reason, to the detriment of all else.
Essentially, this means delegitimizing the profit motive. I realize this is the foundational sacred cow (or better “golden calf”) that our country was founded upon. So I don’t expect a lot of initial enthusiasm for the idea.
Profit may make sense during the initial building phase of any endeavor – be at a career, company, or country. Yet when such an entity reaches maturity, the continued relentless search for profit eventually becomes cancerous and destructive. We need to do better
RE: "Essentially, this means delegitimizing the profit motive." I think "profit" is too loosely used in many economic discussions. Narrowly, "profit" is the difference between revenues and costs. In a well functioning market/trading system, some "profit" is a necessary incentive for taking risks (I know this is a bit simplistic and in real life, market failures are rampant, but still this type of "profit" has existed in real life for thousands of years). What is problematic is when "profit" is defined to include economic rent, "excess" earnings due to monopolistic practices, siphoning off funds through financial manipulation, "gaming the system" through laws (rules), etc. I think our discourse would be more productive if we were always careful to distinguish the type of profit Adam Smith would have approved and accretion of wealth through these other means.
Interesting article and I credit the author for wanting to improve our current societal and economic challenges. I tend to agree with many of the observations, particularly the comment regarding the ability of governments to generate specific economic outcomes, or take more action, being limited without further expansion of its powers. Where I fundamentally disagree is the suggestion that expanding government power would in any way improve our country or any healthy society, especially long term. What this article does not acknowledge is that both governments and corporations/ private sector are all controlled by people, and unfortunately, people are fundamentally flawed. As such, both entities are motivated by the same limiting inherent human traits: envy, greed, power, and fear. The difference between Governments run by people and corporations/ businesses run by people is that a corrupt and dysfunctional Government will ruin an entire society whereas corrupt and dysfunctional corporations/ businesses will eventually go out of business (or jail). I'm not saying that corrupt business can't hurt people, they certainly can. I'm saying the magnitude for Government ruination and destruction is exponentially more dangerous than a corporation/ business. The founders of our country (even with their flaws), understood this principle and tried to limit the scope and responsibility of the Federal Government in our Constitution to the point of specifically enumerating its powers and delegating all other powers to the various state and local governments. They understood that Governments work best when their powers are limited and the elected officials are close to the jurisdictions they represent. Over time, we have completely moved away from this principle and given our Federal Government way too much power. Businesses are at least accountable to their shareholders/ employees, and certainly their customers over time. Business that do not function well will eventually go out of business and/ or lose market share. Large, bloated governments are not close to their citizens and effectively unaccountable, especially the agency bureaucracies that our government has created. In most cases, many of the domestic crises we have experienced in this country have been a direct result of Government involvement, overreach or over-correction. Businesses react to market conditions and regulations. Competition motivates them to push the boundary, innovate, create, and produce. Governments do none of that. Governments create nothing and produce nothing, with nearly all of them (with the exception of the Hoover Dam) incapable of being self-sufficient or supporting. Taxes are a necessary evil but not when they punish success, stifle innovation, and prevent individuals/ companies from taking risk. People don't mind "paying their fair share" especially when they know the dollars are being spent wisely and managed appropriately to avoid waste, fraud, and abuse; something that big Federal Governments do not manage well. Governments do play an important role for society, but not when they are picking winners and losers and not when they become unaccountable to citizens. Their role is to facilitate and maintain predictable, stable conditions and regulations, preserve market competition and freedoms, and protect their citizenry. Government will never be able to satisfy the innumerable choices, needs, desires, or wants of 300 million people. We need to get back to the basics and founding principles that restricted the Federal Government's power and deferred the remaining powers to the State and local Governments. We also need to stop demonizing each other if we are ever going to make progress to fix the real issues that are hurting our citizens. Our media has turned politics into a 24/7 reality show and forced people into distinctive political camps that are not consistent with real life and how ordinary citizens live day-to-day with their own families, neighbors, and co-workers. The media rewards and covers negativity while punishing politicians on both sides who actually try to work constructively on real issues. This construct is not healthy and sets are horrible example for our kids and grandkids. We all need to do better if we are ever going to fix this.
Jonathan. I absolutely agree that we should be wary of expanding government power in all cases, as government is the sole collective grouping that claims a monopoly on the use of force and we should all be mindful and wary of when we delegate that power.
Yes.
Is there much talk these days about recreating the basic functions of the Federal Reserve?
Why, including you, is the national debt being ignored. Our multi-trillion dollar debt is about 95% of our GDP.
Certainly, both candidates are simply pandering to the electorate.
National debt means something completely different than household consumer or commercial debt. The latter are loans that must be repaid. National debt however is simply the nation’s money supply, since we have a debt-based currency system. Trillions of dollars of national debt simply means that trillions of dollars of economic activity is occurring. “Pay off” national debt, and there would be no circulating money (except for the 3% that exists as coins and paper bills).
I highly recommend Stephanie Kelton’s new documentary “Finding the Money“ for a thorough explanation of this.