Category Archives: Government and Governing

The “Private Sector” Is Government “Contracting Out” Its Functions

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This was originally posted at Imagine Democracy

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 And Consequences

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This post originally appeared at Government Cheese – “Chronicling the collapse of democracy“

Silicon Valley Bank fails…

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.

Is there a common theme here?

Why Minting the Coin Is A Threat To The Established Order

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I really think the upcoming Debt Ceiling

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:

Our Government Issues Currency

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.

This is the modern way of understanding money: Modern Monetary Theory, or MMT.

MMT Is A Paradigm Shift

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?

PS We CAN Have Nice Things!

What Happened At Southwest Airlines Is What Is Happening To Every American Company

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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!!!
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Regulate Twitter – And FB, Google Etc.

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So Twitter is melting down. Twitter became the de facto “town square.” It was a “public good” where We the People could get news and discuss things.

One super billionaire (plus Saudi Arabia) purchased it and is destroying it. He was allowed to purchase in an obvious attempt to influence what the pubic understands – against the “public interest.” This is because we no longer have a functioning government.

We are SO FAR from remembering that corporations are entirely creatures of law, which means they are created by OUR laws. Nothing more. We the People – government – created the idea of corporations as a way to get investment for large projects – things WE want done. Corporations were created to SERVE US.

We used to REGULATE corporations to be sure that these entities we created act in the public interest. Here we are with such an OBVIOUS demonstration of the need for government to step in and regulate. Quickly. But the concept has been erased from our brains.

We Are Supposed To Be The Boss Of Them.

Government is supposed to be We the People acting to make OUR lives better. It has been “captured” and acts now only on the interest of those who own these entities and so often against the interest of We the People. We allowed corporate money to “leak out” of the corporation and be used by individuals (the executives of the corporation) to literally bribe government officials to look the other way and allow them to loot the corporations and public sphere. That money also feeds a massive propaganda apparatus that brainwashes us into forgetting the very idea that We the People are supposed to be in charge here.

I recently wrote about this here: Understanding What a Corporation Actually Is Can Help Restore Democracy

Spending Is The Purpose of Government in a Democracy

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This post originally appeared at Imagine Democracy Oct 10, 2021.

How often do we hear that “government spending is bad,” or “the government spends too much money”?

The purpose of government in a democracy is to do things for We the People to make our lives better. We the People make the decisions, and allocate resources toward making our lives better. Government spending is the point of democracy. Government in a democracy spends to make our lives better.

Here’s an experiment. When you hear the word “government” substitute the words “decision-making by We the People.”

When you hear, “Government regulation gets in the way of business” try this, “We the People are supposed to decide to regulate business activities to protect US”.

When you hear “the private sector should decide how to spend money,” try this, “In a democracy We the People decide to have roads and rail and solar power, etc.” When you hear that “taxes are theft,” try this, “We the People decide to tax the rich and their corporations so they don’t get so big that we can’t control them.”

This is not how it is today in this country. For decades we’ve been told that government – decision-making by We the People – is bad, that government spending – We the People doing things to make our lives better – is bad, that regulating – We the People protecting each other – is bad. And this has made our democracy weak.

So now many people believe anything government (democracy) does is bad and government spending is bad. That is anti-democracy, and we are living with the consequences of decades of that anti-democracy propaganda.

Budget Cuts = Eating The Seed Corn

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This post first appeared at Government Cheese – Chronicling the Collapse of democracy

Government budget cuts are not what they seem.

Understanding history could also be called ‘wisdom.’ Wisdom told stories about “eating the seed corn.” If you eat the seed corn you can’t plant your crops the following year and everyone eventually starves.

In the early 80s Reaganism/Thatcherism (neoliberalism) convinced the country to drastically cut taxes on the rich and “pay for” it by cutting spending. The US stopped spending on maintaining and modernizing infrastructure – especially transportation infrastructure, on education, on science … on so many things. So we lived off of prior investment for so long. But the infrastructure deteriorated and we certain never modernized it. (Just look at our rail and transportation systems, compared to the rest of the world.)

All that $$ was transferred to the already-wealthy top few who paid for the propaganda that convinced the rest to do this.

Privatization

Another piece of this scam was “saving money” through privatization. Using local trash collection as an example, cities would “save money” by getting rid of public trash collection and contracting with the “private sector” to do this more “efficiently.” What this meant was laying off the decently-paid public employees and hiring them back at minimum wage with no benefits. The infrastructure – trucks etc – to do this would receive little maintenance, collection schedules would be cut back, and people had to drag their trash to the curb instead of having it picked up at the house.

This didn’t actually save money, it shifted it. The newly minimum-wage workers would lose their houses which reduced property prices for e everyone and killed the tax base, they’d go on public assistance, schools would suffer and have higher costs, etc across the board. And poor people can’t spend much so all local businesses suffer, too.

Etc etc etc we can see it all around us now. But it is too late.

See also:

When Government ‘Saves Money’ And Gets ‘Smaller,’ We All Lose

You can “save money” by not changing the oil in your car. But have you ever seen a car that has never had its oil changed? After a while white smoke pours out the back because the rings are ruined. Other parts of the engine are also being ruined. Eventually the engine will seize up and quit and you have to either replace the engine or scrap the car. A simple and inexpensive procedure every few months would have prevented many thousands of dollars in expenses later.

After the Reagan tax cuts we “made government smaller” in several ways that are coming back to bite us now. One way we “saved money” by not “changing the oil” was by deferring maintenance of the country’s infrastructure – the water systems, levees, dams, roads, bridges, airports, ports, rails systems, electrical systems, and the rest of the things we all rely on to bring us safe water, get us to work, ship products and generally move our economy and live our lives.

Now the American Society of Civil Engineers’ (ASCE) most recent “Infrastructure Report Card” estimates we need to spend $3.6 trillion just to bring the infrastructure up to where it should be, never mind catching up to the rest of the word with high-speed rail and smart electrical grid systems. The bill is getting more expensive every year, and people are dying as bridges, roads and other important infrastructure components fail. Thousands died in New Orleans when the levees failed.

5 ways privatization is fleecing American taxpayers

If people with OK public-employee jobs are replaced by lower-paid workers the community is poorer in the aggregate. More people will need public “safety-net” services. There will be foreclosures. Tax revenue drops because of lower pay but also because poorer people can’t spend as much in stores. Sales taxes drop as stores face fewer customers able to get by.

Reagan Revolution Home to Roost: America Is Crumbling

Understanding What a Corporation Actually Is Can Help Restore Democracy

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This post originally appeared at Imagine Democracy.

“Some corporations do bad things.” “Corporations bribe politicians.” “Good corporations don’t harm people.” “Corporations are greedy.”

Almost everything we read and hear about corporations destructively misstates what corporations are and why we have them. Understanding what a corporation really is has enormous implications for our democracy.

Corporations Don’t “Do” Things

Here’s the thing: A corporation is a contract. It is a legal agreement enabled by our (“We the People”) government. That’s it.

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Inflation and Modern Monetary Theory- MMT

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How many of you have heard about “MMT” – Modern Monetary Theory?

MMT says federal budgeting should look ahead to whether spending will cause inflation instead of just worrying that it will. After analyzing whether spending might cause inflationary pressures, address those causes of inflation – resource & capacity shortages – in advance. Then spend.

That way government can do what it needs to do to meet the needs and wants of We the People.

Example, of you want a high-speed rail system make sure to set up steel & train car manufacturing etc. first, then build the rail systems. If you approach it that way, capacity and resource shortages – steel, labor & other resources – don’t cause inflation.

Address the causes of inflation first instead of trying to “fight inflation” later by forcing people out of work, etc.

Superstitious Fear of Deficits

We have a superstitious fear that we might “run out of money.” We used to use gold (or shells) as money. Kings used to have to round up gold. People still think this is what money is. People think taxes round up gold – “revenue” – and the government that makes money – “dollars” – can somehow run out of the money it makes.

But that is not what money is, and not how a modern economy works. Money is created by government. (We “make” dollars and license banks to “create” money.) Taxes help regulate the money in the economy and (used to) balance its distribution. Dollars are like points on a scoreboard. A baseball game can’t “run out” runs. Our government can’t “run out” of dollars. Dollars are just an instrument of keeping score of how government has allocated our resources.

Unfortunately, the way government budgeting still works now – worrying about “deficits” and inflation instead of addressing problems that deficits might cause – we end up with austerity. We don’t spend enough. We don’t address the needs and wants of We the People. And if we see inflation we do terrible things to fight it. We CAUSE unemployment. We CAUSE poverty. Etc. We try to fight inflation after it begins instead of not causing inflation in the first place.

Austerity Breeds Fascism

Our medieval monetary superstitions and the resulting practices cause us to refuse to allocate resources to address our societal problems. This austerity keeps us from doing things to make our lives better. We don’t fix and certainly don’t modernize infrastructure, don’t provide healthcare or childcare or good education (through college), etc., so people feel government doesn’t work. As we saw in the 1930s and are seeing again now, austerity breeds fascism.

This is a great book to help understand MMT:

The Deficit Myth
Modern Monetary Theory and the Birth of the People’s Economy
by Stephanie Kelton

Also this April, 2021 NYT Op-ed by Stephanie Kelton, warning that our Covid relief budget process could boost inflation:
Biden Can Go Bigger and Not ‘Pay for It’ the Old Way

We CAN Have Nice Things

Take a look at this website keeping track of and teaching about MMT: We CAN Have Nice Things

TED Talk: The Big Myth of Government Deficits

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This is a TED Talk by Stephanie Kelton, TED: The big myth of government deficits.

“Instead of trying to keep the deficit in check, Congress should be trying to keep inflation in check.”

“Instead of asking how will we pay for it, Congress should be asking, “How will we resource it.”

I Quit Twitter. Is Trump In Jail Yet?

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I got off Twitter, for a while at least, and it’s wonderful. My concentration is returning. I’m able to go to the bathroom without my phone. And I’m even writing a blog post! (For better or worse.)

But I have a few questions:

– Has Trump or anyone at the top of things been held accountable for anything yet? I mean actually indicted for their crimes — not “stern letters” from Democratic senators. (Remember that report that detailed how Trump committed Obstruction but couldn’t be indicted because he was resident? Tell the Justice Dept. he’s not president anymore.) (PS His lawyer went to jail for a crime he committed with Trump but Trump couldn’t be indicted because he was president. Tell the Justice Dept. he’s not president anymore.)

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We Need a Department of Democracy

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This post first appeared at Imagine Democracy.

This post expands on 2019’s , a “Department of Democracy,” to protect and promote democracy.

Democracy doesn’t have an advertising agency, and our discourse is swamped by well-funded anti-democracy efforts — done by self-interested parties like the tobacco and fossil-fuel companies. For obvious reasons such interests want to get government and its rules that protect the public from harms (a.k.a. regulations) “off their backs.”

Our elections have become a game in which secretly-funded disinformation, spread by secretly-funded propaganda outlets, in rigged districts, with voter suppression and apathy deciding who rules. Those minority-selected elected officials perpetuate these barriers in a “doom loop” that is ending democracy.

If what’s left of self-rule survives we need a government agency to take on the role of protecting and promoting democracy. Perhaps we could call it a Department of Democracy.

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