December 16th, 2014
in Op Ed
by Dirk Ehnts, Econoblog101
J.D. Alt has published a very nice text recently that sums up the problem of popular delusions regarding money. This is a three page version of what could be a 200 pages book, namely the argument that the (US) government does not face a budget constraint and hence neither privatization nor austerity policies make sense.
If we would let the government just spend the money that is necessary the effects on society would marvellous (or, better, awesome):
With each of these examples I seem to be suggesting that direct sovereign spending-the issuing of sovereign fiat dollars to pay for collective goods and services-ought to be buying things which, by any measure, seem astronomical in "cost." $3.6 trillion is the bill for just repairing our infrastructure. Modernizing our infrastructure to meet the pressing needs we face in the near future-flooding coastlines, water shortages, non-fossil fuel energy systems, for example-will cost at least that much again, and likely much more. The current student debt for higher education tops $1.2 trillion. After retiring that out of hand, what would be the further "cost" of paying for a secondary education for 21 million college students every year? The numbers seem staggering-and what would be the result IF Congress directed the U.S. sovereign government to simply issue the required dollars, by fiat, and SPEND them?
Well, one set of results would be that our young-adult citizens would stop dropping out of the skilled labor market, we'd get our bridges repaired and maybe a good start on preparing for and mitigating against rising sea-levels. Another set of results would be that a very large number of teachers, educators, bridge repairmen and flood-control engineers (to name just a few) would get paid new fiat dollars for their services-perhaps, in aggregate, lowering U.S. unemployment by several percentage points.
Let me add that apart from lowering US unemployment getting the civilian labor force participation rate back up where it used to be a huge success in terms of general welfare and well-being for US society: