Oct 18 2019

Guns or Butter?

Like Quantum Mechanics (or indeed General Relativity), Modern Monetary Theory is a problem for some people because it’s not intuitive and apparently contradicts in some respects lived experience. We know apples don’t fall up for example but that’s simply an accident of failing to observe what is an extremely rare phenomena. The math that predicts that possibility as well as solving some more mundane problems with uncanny predictive accuracy is rock solid, what needs to be expanded is your perception of reality. Absence of evidence is not evidence of absence.

MMT is much less complicated than Quantum Mechanics but also faces this imaginary barrier and I don’t know what happens to you when you talk about Economics but with me people’s eyes generally glaze over in about 30 seconds and by the time I get finished discussing the true nature of money and taxes they’ve either found some excuse to wander away or pass out from boredom. In a nutshell Taxes don’t pay for Government activity, they exist to create demand for currency. There is no theoretical limit to Sovereign Debt or Deficits and the only practical limit is Inflation in non-native Inputs, which, depending on how your economy is structured, can have a greater or lesser impact. Japan would notice Oil Price Inflation quite keenly, the House of Saud not so much.

But why waste your time even with that though there are much stronger arguments that MMT represents a truer model of the current Economy than Classical, Liberal (not what you think it means in this context), Keynesian, Neo-Classical, Neo-Liberal, and Neo-Keynesian (sorry Paul) ones. Skip that argument entirely and explain we can afford nice things without venturing beyond the bounds of Samuelson (who is actually very supportive of MMT in abstract but eventually falls back on the old evidence-free tropes and canards).

I picked this up over at Yves’ Place

Researchers Detail How Slashing Pentagon Budget Could Pay for Medicare for All While Creating Progressive Foreign Policy Americans Want
by Julia Conley, Common Dreams
Thursday, October 17, 2019

The Institute for Policy Studies on Thursday shared the results of extensive research into how the $750 billion U.S. military budget could be significantly slashed, freeing up annual funding to cover the cost of Medicare for All—calling into question the notion that the program needs to create any tax burden whatsoever for working families.

Lindsay Koshgarian, director of the National Priorities Project at the Institute for Policy Studies (IPS), took aim in a New York Times op-ed at a “chorus of scolds” from both sides of the aisle who say that raising middle class taxes is the only way to pay for Medicare for All. The pervasive claim was a primary focus of Tuesday night’s debate, while Medicare for All proponents Sens. Bernie Sanders (I-Vt.) and Elizabeth Warren (D-Mass.) attempted to focus on the dire need for a universal healthcare program.

At the Democratic presidential primary debate on CNN Tuesday night, Sen. Elizabeth Warren (D-Mass.) was criticized by some opponents for saying that “costs will go down for hardworking, middle-class families” under Medicare for All, without using the word “taxes.” Sen. Bernie Sanders (I-Vt.), on the other hand, clearly stated that taxes may go up for some middle class families but pointed out that the increase would be more than offset by the fact that they’ll no longer have to pay monthly premiums, deductibles, and other medical costs.

“All these ambitious policies of course will come with a hefty price tag,” wrote Koshgarian. “Proposals to fund Medicare for All have focused on raising taxes. But what if we could imagine another way entirely?”

“Over 18 years, the United States has spent $4.9 trillion on wars, with only more intractable violence in the Middle East and beyond to show for it,” she added. “That’s nearly the $300 billion per year over the current system that is estimated to cover Medicare for All (though estimates vary).”

“While we can’t un-spend that $4.9 trillion,” Koshgarian continued, “imagine if we could make different choices for the next 20 years.”

Koshgarian outlined a multitude of areas in which the U.S. government could shift more than $300 billion per year, currently used for military spending, to pay for a government-run healthcare program. Closing just half of U.S. military bases, for example, would immediately free up $90 billion.

“What are we doing with that base in Aruba, anyway?” Koshgarian asked.

Other areas where IPS identified savings include:

  • cancellation of current plans to develop more nuclear weapons, saving $20 billion
  • a total nuclear weapons ban, saving $43 billion
  • ending military partnerships with private contractors, saving $364 billion
  • production cuts for the F-35—a military plane with 900 performance deficiencies, according to the Government Accountability Office—saving $17.7 billion
  • a shift of $33 billion per year, currently used to provide medical care to veterans, servicemembers, and their families, to Medicare for All’s annual budget.

“This item takes us well past our goal of saving $300 billion,” Koshgarian wrote of the last item

As Koshgarian published her op-ed in the Times, progressive think tank Data for Progress released its own report showing that a majority of Americans support a “progressive foreign policy” far less focused on decades-long on-the-ground wars, establishing military bases around the world, drone strikes, and arms sales.

“The public rejects the predominant, fear-based framing and policies; instead, they want to see a revamped, demilitarized American foreign policy focused on international cooperation, human rights, and peacebuilding,” wrote Data for Progress.

“Voters want to see U.S. funding go to domestic needs such as healthcare, or to other national security tools like diplomacy, instead of to the Pentagon and more endless war,” according to the report.

Polling more than 1,000 ppl with YouGov, Data for Progress found that 73 percent of Democratic primary voters ranked numerous issues—including economic challenges and the climate—as more important to them than national security and military funding.

Progressive national security proposals proved popular with respondents, including closing Guantanamo Bay, ending arms sales to Saudi Arabia, and leveraging military aid to Israel to force it to adopt better human rights policies toward Palestinians.

“There is a clear appetite for progressive reforms to U.S. foreign policy,” wrote Data for Progress.

In her op-ed, Koshgarian acknowledged that remaking the U.S. military as a truly “defense-based institution, rather than a war machine and A.T.M. for private contractors, will require major changes.”

But, she wrote, “that’s no excuse for continuing to spend hundreds of billions in ways that make our world more dangerous and deny us the ability to seriously invest in things like jobs, healthcare, education, and all that makes our lives better.”

There you go. Spending cuts? I got your spending cuts right here baby, and as Yves correctly points out- “the Pentagon has various black budgets, an “official” one and covert ones.”