It's Called a Jump to Conclusions Mat
So much happening, I don't know where to begin. I wish I could blog more, but stupid work and life has me out of the blogosphere and into the real world. Stupid, stupid work. As our lives go by, the details of the day-to-day make it difficult to focus on the big picture. We get sucked into stories and fed opinions by despicable agenda-setters. You have to sift through conflicting facts and ideas until you finally give up.
Thankfully, Tom Smykowski is here to help. Tom had a great idea once. He called it a Jump to Conclusions mat. You see it would be a mat with conclusions on it that you could "jump to." In these trying times, this is sure to be as big a hit as the Pet Rock.
Let's look at an event and see how handy the Jump To Conclusions mat can be in your life. We'll head over to Google News and see what's happening today.
A gun show in Tucson will proceed as scheduled following a call for its cancellation from gun control groups. - LA Times
Here are some conclusions we could jump to:
1. Gun owners are racist redneck inbreds.
2. Liberal p*ssies are trying to limit our freedom.
3. Republicans don't care about the safety of children.
4. Democrats want to expand the Nanny State.
See how great this is? You jump to one of the conclusions, and there you go. All set. No thinking required.
Let's try another.
Isreal and US intelligence agencies tested Stuxnet virus on Iran. - Jerusalem Post
Again, jumping to conclusions:
1. They had to take action because Obama is weak
2. Iran would have used nukes on Isreal if it wasn't for Stuxnet and still might.
3. It's the USA's responsibility to protect Israel.
4. Iran must never be nuclear weapon capable.
Ok, one more because we're having so much fun.
British Petroleum swaps reserves at half the price it paid for oil spill damage. - Bloomberg Businessweek
I'm feeling jumpy:
1. Evil capitalism triumphs again
2. Great, now they can go destroy another water source
3. We need more regulation
4. It's George Bush's fault
And I'm tired (my cardio is just not up to snuff.) Now let's look at some real issues.
The Pointlessness of Current Events
I remember high school teachers stressing the importance of following current events. I was told that I would be uninformed and backward if I didn't know what was happening in the world. My high school teachers were wrong.
Following current events without an understanding of human action is pointless at best and potentially damaging. I can think of no better way to become misinformed than by watching mainstream media and following daily events as if they were actually important news.
Without a theory of human action, you might as well buy Smykowski's Jump To Conclusions mat.
I have my theory, developed with assistance of course, that I use to analyze world events. By no means does it make sense of everything, but it helps to filter out noise. The above three articles are simply noise. The events are predictable, predicted, and easily understood in the context of human action.
I'm curious as to your approach to current events? Do you follow them closely? Do you feel informed? What theory or theories do you use to analyze events?
One Interesting Story About the Internet Gods
I like it when the bad guys win. The Internet Gods (my term for the online group Anonymous) have been teaming up with Wikileaks to upset the apple cart. If you're not familiar with Anonymous, see here. The loose alliance of Anonymous and Wikileaks is not entirely surprising, but I admit that I'm pleasantly taken back by how swiftly they can shake up power. The government of Tunisia is their first official victim. I'm skeptical about the immediate impact here. It appears likely that the parasitic Tunisian state will be able to retain their control for now, albeit with a few casualties (the President as sacrifical lamb.) But it is surprising to me that a President of a sovereign nation has been forced to flee his throne thanks to the ingenuity of a few tech-savvy freedom loving nerds. Times, they are a changin...
A Note on Modern Monetary Theory
I promised before the Holidays that I would complete my analysis of Modern Monetary Theory, started here. A few things have come up since then. There is a combination of factors at work here. First, I've been interviewing for positions on the East Coast over the past month. A move to the States appears imminent, though I haven't ruled out anything just yet. I'm taking my time, trying to pick the best opportunity. Second, this has led to changes in my personal life as I have to focus on the immediate future more so than I normally would. That leaves less time for blogging and especially for the level of research and thought needed to do justice to opposing ideas. Although I can whip out a blog rather quickly, it's because I'll spend days ruminating on a subject before writing. Finally, I have to admit that everytime I think about MMT, I feel a bit bored. There really isn't anything of interest there.
Let's look at one example real quick, and maybe this is something I can do in future blogs to relieve the burden of trying to prepare a semi-academic work.
I came across a gentleman named Rodger Mitchell, author of the book Free Money. Let's quote directly from Rodgers' website:
"The unlimited ability to create money is an uncontested fact for monetarily sovereign nations, although at any given time, a nation may or may not choose to use that ability. Economic growth, inflation, deflation, recession, depression and social factors may influence a nation’s decision to create money. A monetarily sovereign nation even can choose to declare bankruptcy, for various reasons, but this would be an arbitrary matter of choice.
Debt hawks do not (or do not wish to) understand the implications of monetary sovereignty. You never will see that term on such debt hawk web sites as The Committee for a Responsible Federal Budget” or the Concord Coalition. If you go to those sites you will see federal debt described in the same terms as personal debt – as an unsustainable obligation. While debt can be unsustainable for you, me, businesses, states, cities, counties and the monetarily non-sovereign EU nations, no debt is unsustainable for the U.S. government. " - emphasis included in original
So far, Rodgers has covered ground that I've already discussed, although he doesn't say why this fact is uncontested (hint: theirs is bigger than yours.) Rodgers goes on to inform you, in case you didn't already know, that the laws of the U.S. government are different than your household:
"While debt hawks may mention sovereign debt, they do not discuss monetarily sovereign debt. Debt hawks suffer from Anthropomorphic economics disease — the false belief that federal finances are like yours and mine.
The U.S. was not always monetarily sovereign. Prior to 1971, the U.S was on a gold standard. It did not have the unlimited ability to create dollars, since every dollar needed to be backed by a fixed amount of gold. No gold; no dollars. Similarly, the EU nations are on a euro standard. Their ability to create euros is limited by law. Our states, counties and cities are on a dollar standard. Their ability to create or obtain money by borrowing or taxing is limited by local law, by voters and by lenders.
The financial problems of Portugal, Ireland, Italy, Greece and Spain (The PIIGS), are due not to deficits and debt. They are due to these nations having surrendered their monetary sovereignty, thus preventing them from serving their debt by creating money."
Basically, the State of California, being non-monetarily sovereign, is constrained in a way the the U.S. federal government is not. Same goes for Cook County, IL and for the Jones family in Bumf*ck, Georgia.
But so what? Who cares? Like we don't know that we can't enfore our will upon the U.S. government and create our own money? The only difference between the Joneses/Cook County/California and the U.S. government is that the latter has a bigger gun. That's what monetary sovereignity really means. So why beat around the bush? Just come out and say it. Modern Monetary Theory, in order to hold true on a theoretical and practical level, relies on one party holding a gun to the head of everyone else.
Another MMT idea that I've stumbled across is the Job Guarantee/Employer of Last Resort policy. This provides a federal-government funded job to anyone who wants to work, at a uniform, basic compensation (wages plus benefits). This is repackaged Keynesianism but we'll look at it briefly from L. Randall Wray's blog:
"A job guarantee program is one in which government promises to make a job available to any qualifying individual who is ready and willing to work. Qualifications required of participants could include age range (i.e. teens), gender, family status (i.e. heads of households), family income (i.e. below poverty line), educational attainment (i.e. high school dropouts), residency (i.e. rural), and so on. The most general program would provide a universal job guarantee, sometimes also called an employer of last resort (ELR) program in which government promises to provide a job to anyone legally entitled to work:"
Um, don't we already have that? It's called Job Corps. And it's worthless. Well, what do you expect? No one in Job Corps (or MMT appearantly) has ever studied human action. Continuing on with Mr. Wrong Wray (see what I did there?):
"Proponents of a universal job guarantee program operated by the federal government argue that no other means exists to ensure that everyone who wants to work will be able to obtain a job. Benefits include poverty reduction, amelioration of many social ills associated with chronic unemployment (health problems, spousal abuse and family break-up, drug abuse, crime), and enhanced skills due to training on the job"
I hear that job guarantee programs also make my penis bigger. Where do I sign up?
Now, let's just think about this idea for a moment. If you're an employer of minimum wage/low wage labor, why would you ever hire anybody on your own when the government is willing to do it for you? Under some MMT proposals, the government guarantees the job no matter if you work for them or a private business. Second, how does the government get the money to create these jobs? According to MMT, they spend it into existence. If you are spending money into existence, you are creating money out of nothing. That reduces the value of everyone else's dollars, hence taking money from one group of people and giving it to another. You are removing jobs from one area to put them in another area. Worse yet, you are only "creating" the least economically viable and productive jobs! Egads! What jobs are you removing from the economy to create these wonderful jobs?
With theories this bad, who needs communism?
MMT focuses solely on the nominal representations of wealth and savings, completely unable to understand that savings and wealth creation are actions.
Before I finish today, I want to share a story. A young baseball player, 17 years old perhaps, was trying to catch on in the big leagues. The year was 1910. He found a cannery that was willing to pay him an entry level wage of $20/week as long as he played for the company team on Saturdays. From there, he could get the experience needed to sign with a big league team. (Scouting wasn't the exact - ahem, Ryan Leaf - science that it is today.)
$20/week. That's not a lot of money. Actually, if you think about it, perhaps it is. That was one ounce of gold per week. Or $1350-1400 per week today. Tax free. Suddenly, that doesn't look so cheap.
So why was he poor?
Because if there ain't sh*t to buy, it doesn't matter how much money you make. Simply, America wasn't making enough stuff yet to provide everyone with all their material wants to make a person feel wealthy on one ounce of gold per week. Since that term productivity has continued to increase by astonishing levels. (Consider how much more productive businesses are in the digital age at moving information and resources as compared to one hundred years ago.)
Now, imagine how much wealthier this nation would be if our ancestors had kept the parasitic state and bankers out of the pockets of Americans since 1913. Would "full employment" even be a concern? Full employment was achieved 500 years ago. If you and your family didn't work, you starved. As productivity increased, children no longer had to work. For a while we achieved a nation where the majority of households only had one full time worker.
Full employment is the ultimate fool's gold. It's a pipe dream that's really a nightmare. Trust me, you do not want full employment. You want minimal employment, a nation so wealthy that only one person in every family has to work. That's a nation that is built on savings and investment, not debt and confiscation.
Modern Monetary Theorists certainly understand our current system, the one built on debt and confiscation. They just mistakenly believe that they can make it work in everyone's best interest. They view their work in propping up the confiscation state as somehow noble and radical. It's not. It's the same state theory of money that has been around since kings first discovered the power that comes with control of the subject's money supply.
David in Qatar