Increasing Minimum Individual Purchasing Power

["John Gelles" <johng@xxxxxxxxxx>]

    If there is one thing the neo-liberal consensus agrees
    on it is individual worth in a world where majority
    and group identities often invite a dictatorship against
    human and property rights.

    A second point of agreement is in favor of competition.
    The neo-liberal may sit in a first class seat in the stadium
    -- but he idolizes the competition before his eyes.

    Others on the outside have no seat at the games, and
    the neo-liberal never really competed for his, but he
    worships elimination games that require of him no more
    than a ticket and of nature a sunny day.

    The third great supporting leg of the neo-liberal stool
    is pre-programming. The neo-liberal wants a system
    to follow pre-programmed perfect rules that no
    lawmaker ever need change in the ordinary course
    of events.

    He is willing to search for these rules in real life
    and literature; but having found Smith, Hayek and
    Friedman, and real wealth all around him, he closes
    the book on adhocracy, and insists there's a "long
    run" and we'll get there soon enough. Until we do,
    suffer and wait as time passes and others bleed.

    So there we are, firmly believing in individualism,
    competition, and our personal good fortune as long
    as it lasts.

    Out there are reformers (we ridicule) who want to
    raise the miniumum standard of living (and the related
    power to purchase needs) from a dollar a day to
    a hundred dollars.

    Is $36, 525 really too much to ask for people who
    have less? How many of your families could live on
    it?  Is it more than the cost of world war?

    Suppose much of it were spent on education and
    recreation at a marginal cost of zero for each extra
    person included?  We are talking about a job, a home,
    a meal, some water, medicinal care, a game of ball,
    a movie and a place to die and be buried.

    So how do the reformers propose to raise minimum
    individual purchasing power (MIPP)?  Some will
    forsake the individual to concentrate on group rights
    and group think. That way is the road to serfdom.
    Forget it.

    Some would replace competition in invention and
    innovation with emotions they themselves know little
    of. In the very act of calling for reform they compete,
    often meanly, to reach the microphone and crow.
    Don't completely forget it. Just moderate it. Compete
    a little Cooperate a lot. Look for the golden mean.

    Virtually all, on both sides of the neo-liberal debate,
    want adhocracy to yield to their own brand of
    mechanistic solution. They have a pet axiom, model,
    equation, or belief, that is NOT a dynamic agenda.
    Rather, it is a kernel of truth that can reliably be
    installed in human society to pre-program success--
    they think.

    The neo-liberal's axiom is "economic markets work
    if you leave them alone". This axiom is so ambiguous
    as to have no meaning at all. The "you" is always
    the "reformer" and "leave them alone" is always
    "rig them in my favor". The meaning varies with
    every neo-liberal alive, reflecting his personal
    need and greed.

    The usual PKT axiom is "raise demand and supply
    will take care of itself".  Of course it won't. Forget
    it.

    My own recipe is "Treat peacetime as almost wartime,
    let government spending drive production for need
    over production for profit only. Allow inflation
    protected saving to remove excess purchasing
    power from the risk averse. Rely on lawmakers as
    an adhocracy to allocate resources for as much of
    the total economy as they find necessary -- as they
    observe conditions all the time."

    One can say, fairly, that my own axiom is the default
    axiom always relied on in war -- allowing that law-
    makers in wartime surrender much of their power to
    decide to the executive branch of government.
    And law is a final authority even in time of peace.

    So if the lawmakers have given neo-liberalism a try
    for far too long, it is their error and no one else's.

    Which leaves us where I started, sitting on a three
    legged stool, wobbling about, as the need for a
    wartime-like model of strategic planning -- apart from
    trivial consumer choices in markets for trinkets and
    junk around the world.

    That model and ad-hoc solutions should address
    Russia's need for economic stability and honesty
    ahead of most others. And in Japan and the USA
    adhocracy would put every soul to work at not
    less than $36, 250 a year. (Warren Mosler said
    the same yesterday -- we can always negotiate
    the dollar amount.)

    The multiplier worry discussed today is largely
    finessed by dampening it with inflation protected
    saving -- allowing government to buy its priorty
    needs as ordinary people save for their private
    estate. Inflation, not deflation, will forever be
    our problem. And adhocracy will deal with it.

    The Japanese banks, discussed also today, are
    protected from any Basle rules by reform -- they
    will be allowed out of the equities market and
    refinanced by government loan or, if they want to
    stay invested in equities, new banks will be financed
    by government wherever local bank credit needs
    help. (A dozen other solutions may be substituted
    for this one -- but assuming we want banks, it will
    be the lawmakers job to reform or create them.)


        John Gelles   www.1944.org