Society wants cars/antibiotics/furniture/houses/etc but doesn’t want to make them ourselves through our government.
In order to accomplish functions like these that government wants accomplished but doesn’t want to do itself, government “contracts out” those functions. Corporations are those contracts. Corporations facilitate aggregation and manage of resources (huge sums, labor, etc) that are beyond the scope of individuals. We “contract out” through corporate charters to get these things done for us.
When You Look At It This Way
When you look at it this way — that government is the way all of society’s functions are managed(of course it is) and that corporations & the “private sector” are just “contracting out” some government functions — it gives people a way to take back the power in their own thinking. Who is the boss of who? How should corporations be regulated? Who should be regulating them? Etc.
Where Things Went Wrong
Here is where we went wrong. Executives at corporations are allowed to use corporate funds to influence society and pay politicians to allow things that enrich those executives personally.
When government regulates, it does so because the regulations protect the public. So it seems logical the government (us) wants those regulations implemented!
What about when a regulation means there is expensive work to be done? A restaurant needs to be wheelchair accessible. Needs additional smoke alarms and sprinklers?
WE (government) want this done for our protection. Doesn’t it make sense for us to pitch in some $$ to get the job done? (And also to fight resistance to getting it done, and resentment of regulations that protect us…)
We live in a society, and getting things done for society is what government is for. Government is society’s way to make decisions about society’s resources, economy and future. Period. Anyone who tells you you don’t need government, or that government shouldn’t do this or that, is actually just trying to BE the government, for their own benefit.
EVERY decision about society’s resources, econony and future is made by government, one way or another. Period. Every. Single. One. Socialism, capitalism, communism, dictatorship, aristocracy, oligarchy, democracy, etc are just descriptions of how that decision-making is divided up. It’s about who makes the decisions and who gets the benefits. All the “ideological” battles are really just all about keeping the public from understanding that.
In the US, supposedly a democracy where the decisions are ultimately made by “We the People,” we hear about the “public sector” and the “private sector” of our economy. What we call “the private sector” is really just the government “contracting out” the functions of managing society. Corporations are those contracts. From the recent post about corporations, Understanding What a Corporation Actually Is Can Help Restore Democracy,
We the People want to have factories to build cars or toasters. We the People could do this – build the factory, hire the managers, organize supply chains, provide insurance. etc. – ourselves but instead we have come up with corporations as a way to “contract it out” to private investors to accomplish these jobs for us.
Corporations are the contracts government makes when it “contracts out” its functions. Period. Government charters corporations to do things government doesn’t want to do itself. Those charters come with conditions and rules.
Except our currently captured government doesn’t enforce the agreements.
A Currently ‘Hot’ Example
Government contracts out money creation. We charter banking corporations to do that function of government for us. The Post Office could do that as well, but we, for various reasons, choose to let a few “capital” holders – wealthy people – do that and reap the returns.
Corruption allowed the finance industry to operate outside of sensible government oversight, even as the world has experienced the consequences of this over and over again. So here in Silicon Valley and around the world, tech employees are waiting to find out if they’ll get their paychecks or get laid off next week. The world is wondering if contagion will spread that fear. Again. (Last time, because of corruption, not one banker type was held accountable. Not one.)
Also here in Silicon Valley it is raining harder than almost ever – except for a couple weeks ago. Flooding everywhere. I mean, torrential, incredible rain pouring down right now. This is because corruption has caused governments to allow the industry causing this to keep putting more and more carbon into the air even as we all know what the consequences will be.
The news lately has been about train derailments devastating localities. This happens because corruption allows wealthy rail-owners to keep governments from making them operate safely.
Inequality is now completely out-of-control. 60% of Americans now live paycheck-to-paycheck, not even able to raise $500 to cover an emergency like a car breakdown. The government doesn’t raise the minimum wage or otherwise address this because of obvious corruption. Million upon millions are spent convincing these people to blame government for this and vote for those backed by that money, and abolish democracy. “I am your retribution.”
The Supreme Court “rules” that this is all OK. Any amount of secret money is allowed to influence elections. People trying to fix this face millions of dollars spent smearing them in LOCAL elections. This Supreme Court we have is the way it is because of corrupt money spent to put them there.
fight is going to be a turning point of some kind. The right intends to let the country default to stop “government spending.” They mean it.
Biden’s choice is to let that happen, cave like Obama did, or enforce the Constitution, which says the govt has to pay its bills.
Gimmicks
For those insisting that “Mint the Coin” as a solution to this is a “gimmick” – (as if the debt ceiling wasn’t just a gimmick) – compare that to what we do now:
The idea that the constitution providing the power to "coin money" implies the ability to charter Federal Reserve Banks that can issue paper currency and open book entry accounts is much more of a gimmick than just… coining money.
Our federal budget is not like a family “kitchen table” budget. We stopped using gold as our currency a long time ago. We don’t mine or “round up” money at the federal level. Our government does not get “revenue” from taxes. It does not “borrow” money, it prints it.
(In this clip economist Stephanie Kelton explains that our government does not operate like a family “kitchen table” budget):
We (representative democracy through our Congress) decide that we’re going to allocate our resources toward accomplishing something, and we issue dollars as an exchange medium toward that. There are things Congress should do along with issuing currency (which we are not doing because of neoliberalism): Make sure we allocate resources we have (allocate toward steel increasing capacity before allocating toward using more steel than we have) and tax enough to balance the distribution (tax the rich) and soak up some of those circulating dollars.
Breaking away from the idea that the federal govt operates with “kitchen table economics” is a paradigm shift. You see it completely one way (deficits, debt, govt spending are bad), and then when something clicks you can’t see it that way anymore, only the new way (MMT, govt issues currency), and then you are frustrated seeing so many getting it so wrong.
Our government issues currency. So of course we could just “mint a coin” to issue dollars to pay off bondholders. But if we did that, the most dangerous question arises: If we can just issue money to pay bondholders, why can’t we issue money to … do things that people want and need?
Shake The Foundation
Minting platinum coins with a face value of $1 trillion and depositing them with the Federal Reserve is Constitutional and solves the problem. But it brings up questions that shake the foundations of neoliberalism. If we can “mint coins” to pay bondholders, why can’t we mint coins to do things that people want and need? Instead of just relying on private capital (the rich) to make investment decisions and get things done in our economy?
So Biden can do the right thing and just … pay our bills. But then the neoliberal order breaks down. If We (through Congress) can decide to … you name it, then why are we depending on “the investor class” (capital) and “market solutions” etc to decide where to invest, allocate resources, do the planning and everything else?
It is argued that the way around the “debt ceiling” argument is for the government to mint $1 trillion platinum coins and deposit them with the Federal Reserve. This would then reduce the “national debt” by $1 trillion for each coin minted.
The problem people have with this is people just don’t understand what money -IS-.
Money Is Created Not Mined Or “Raised”
I hope everyone reading this understands where banks get the money they loan out from. The answer is they “create” it. They are not loaning out deposits. They create the money out of thin air. If you don’t believe this, go look it up and come back when you understand it.
Like banks, the US CREATES money; it doesn’t get money from taxes or borrowing. The US does not round up gold to trade for armies anymore. The government doesn’t have to “borrow” money or get it by taxing. It just doesn’t. It creates it.
Our “money” says right on it that it is “legal tender for all debts public and private.” It doesn’t say you can trade it in for gold or something, it says it IS the money.
The US govt “appropriates” spending. Money is CREATED to use as the intermediary – the token – of that appropriation. The money the government spends minus the money it taxes bak is the amount of money in circulation. (Think about what “paying off the debt” would mean – it would require taking $30 trillion out of circulation.) Stephanie Kelton does a good job explaining all this in her book about Modern Monetary Theory (MMT).
Republicans Understand Money
Republicans understand money and know that Democrats and the public do not. This is why they ALWAYS use deficit spending and then beat Democrats over the head for “borrowing.” They do this so they can deliver things to the public and keep Democrats from doing the same. They do this every time, and Democrats respond by being “responsible” and imposing austerity on the public.
MMT and Inflation
One last important point. MMT does NOT say we can just print all the money we need. It explains that our govt needs to analyze spending for inflationary effect BEFORE spending. Like how China built tens of thousands of miles of HS rail – they ramped up steel plants etc first. What we do now is superstition – don’t spend “too much” or you “might trigger” inflation. And then you “fight” inflation by putting people out of work.
So Why Can’t Leaders Admit This?
Thinking about WHY Biden and Yellen and all Republicans and Wall Street types maintain this illusion that it would be “irresponsible” to mint the coin or get rid of the “debt limit.” It seems that maintaining the public’s “kitchen table” misunderstanding that the US gets money from taxes and borrows the rest, is the underpinning of the neoliberal order.
If the powers-that-be ever admitted that the US creates money through appropriation, and can control inflation by planning, (and therefore give everyone a job with good pay,) that would undercut the ideology that “markets” are superior to public planning, that capital is better at allocating resources than the public.
The website We CAN Have Nice Things explains MMT and links to many sources, articles, videos, etc.
You’re going to need a Math degree to follow this, as with everything about Medicare. Actually I HAVE a Math degree and have trouble following it.
Before I Start
(You can skip this section. I wish I could have. You’ll wish that when you’re turning 65.)
I’m old enough that I am on Medicare. Figuring out what to sign up for was AMAZINGLY difficult. Part A, Part B, Part D (privatized) and then you need a private “Medigap” Supplemental plan. You can get Plan A or B or C or D or E or F or G. I think. See if you can understand this from Medicare.
Note: Medigap plans sold to people new to Medicare can no longer cover the Part B deductible. Because of this, Plans C and F are no longer available to people new to Medicare on or after January 1, 2020. However, if you were eligible for Medicare before January 1, 2020, but not yet enrolled, you may be able to buy one of these plans that cover the Part B deductible (Plan C or F). If you already have or were covered by Plan C or F (or the Plan F high deductible version) before January 1, 2020, you can keep your plan.
Or you can get Medicare Advantage, which are really almost all privatized scams. And then there are private supplements for vision & dental (both absolute scams worthy of another post!!!) Payments for these all come out of my Social Security.
Fortunately where I live we have Kaiser, which is NOT a for-profit corporation so it isn’t a scam and actually is pretty good. I was already on Kaiser so I stayed on Kaiser’s Medicare Advantage.
Everyone please read this Facebook post “from inside Southwest.” It is spot on. It describes how the meltdown happened because the company had been stripped for two decades by executives looking for short-term profits at the expense of the company.
What it describes is not just happening at this airline, though, and not just at airlines. This is what has been happening at HOW MANY companies for a long time! But more than that, it is of a piece with what has been happening to our democracy.
All the incentives are for squeezing everything out of a company to get the appearance of profit THIS QUARTER to get the STOCK PRICE UP to get the EXECUTIVE QUARTERLY BONUS and it is all at the expense of everything else – the customers (obviously) , the suppliers, the employees, and the future of the companies.
Our government is supposed to oversee the way companies operate. They operate under RULES set up by our government.
Rather than get into the specifics of those rules, ask yourself if a government operating in the interests of the people of the country and the long-term good of the companies of the country would allow what we are seeing at SWA and so many other companies to continue? Of course not!!! Continue reading →
This post originated at Imagine Democracy. If you follow all the links, it pieces together.
Over at sister-site Government Cheese, a discussion of capitalism, propaganda and how a few wealthy people keep things under control
Capitalism literally means that the people with wealth make the investment decisions for society & get the return on investment, and the broad public don’t.
All the rest is just propaganda. Capitalism has nothing to do with “markets” or “freedom” or any of the rest.
It’s really so simple. It’s how a few people maintain control of society for their own benefit and it’s been this way for thousands of year, under different labels. It’s what a monarchy is. The King and his buddies control the wealth. “WE should have this and you should not and here’s why.”
It’s why the United States was such a breakthrough. WE THE PEOPLE will decide what’s best for us, not you. Government of, by and for THE PEOPLE. Not the elites, the wealthy, the aristocrats, the priesthood, the monarchy, the warlord, whatever label put on the ruling wealthy. A country run for the benefit of the people in the country. Whatever label we put on that – democracy, socialism, whatever.
That’s all. All the rest is just propaganda.
Read Lincoln’s Gettysburg Address in the context of the monarchies of Europe just salivating waiting for “the Union” – the experiment in democracy – fail so they can get the world back where they want it.
Capitalism: Maintain a “reserve army of the unemployed” to keep wages low. Keep public services (the things government does to make people’s lives better) and taxes at the top down and keep the people from organizing (democracy) to protect themselves.
Capitalism part 2: As life gets worse, bathe the masses in propaganda and point them at “the other” for blame.
