Even With Unlimited Spending Some Problems Can't Be Solved
by John Lawrence
Modern Monetary Theory (MMT) has shown that unlimited Federal spending is no problem. The money is there, but it's a question if the productive capacity is there. For instance, since most products are manufactured in China, unlimited spending on products needed to counter the pandemic might only produce inflation. That's a problem of letting crucial industries be relocated to a foreign country and not manufactured here. If you can't ramp up production in a meaningful time frame, even though the finance is not a problem, the ability to produce needed products may be. In this situation MMT predicts inflation. Existing facilities to produce vaccines can only produce so many vials.You could go to 24 hour a day production, but beyond that you would have to build more factories and that takes time. Would the money spent to build more factories be well spent if the production facilities came online only after the crisis was over? No. MMT stands for spending money wisely to solve social problems like the pandemic and global warming, but the time frame within which the problems need to be solved is important. There's no sense in spending money to ramp up production if that production only is available after the problem has already been solved.
Yeva Nersisyan and L Randall Wray write:
"But what happens when ventilators and masks are not available for sale even as companies are operating 24/7? More money may not solve the problem, but the government still has a role to play. During the second world war, the US quickly became “the arsenal of democracy” by repurposing its productive capacity to meet the needs of the war. Through diligent planning “[l]ipstick cases became bomb cases, beer cans went to hand grenades, adding machines to automatic pistols, and vacuum cleaners to gas mask parts”. We were able to cut “production time for Liberty Ships down from 365 days to 92, 62, and, finally, to one day”. We can mobilize our resources once again to build temporary hospitals, and to ensure a sufficient supply of medical equipment and whatever else is necessary to overcome the crisis."
So it may be necessary to shift production from pre-COVID endeavors to provide the necessary human and material resources to deal with the problem. For instance, the restaurant industry which filled the gap from lack of time for home preparation of meals due to both spouses working has suffered the most during the pandemic because more people have the time for meal preparation at home. Those workers are now available for deployment in other more crucial industries such as the renewable energy industry. Other hospitality and entertainment sector workers can also be shifted to more crucial endeavors just as they were during World War II. The economy as it existed pre-COVID was composed mainly of profitable private sector activities, many of which were not designed to deal with the most crucial social problems.
The solution of the pandemic at least in the US has an expected solution within the next year. Global warming has a somewhat longer time frame, but requires much more money to be spent because, from a finance point of view, it's a much larger problem. Changing the infrastructure of the whole world will require much more money but over a longer time span. The time span for solving global warming is approximately 10 years so we have ten times as long to solve global warming as we do to solve the pandemic. The pandemic may never be completely resolved because wiping out the virus everywhere in the world completely may not be possible just as it has not been possible to wipe out a number of other viruses. Over time, however, the problem can become treatable and manageable. The same can be said of the global warming problem. It may be impossible to eliminate every source of greenhouse gas emission in 10 years, but if most of them are eliminated, the remaining problems may be manageable in the sense that the earth may ultimately be salvageable.
What we have learned from the pandemic is that much more money needs to be spent on research and development in virology so that we are better prepared to deal with pandemics and epidemics. Two infectious diseases have successfully been eradicated: smallpox and rinderpest. The rest still exist somewhere in the world. There are also four ongoing programs, targeting poliomyelitis, yaws, dracunculiasis, and malaria. Five more infectious diseases have been identified as of April 2008 as potentially eradicable with current technology by the Carter Center International Task Force for Disease Eradication—measles, mumps, rubella, lymphatic filariasis and cysticercosis. What we have also learned is that there is more of a threat to Americans and human beings in general from viruses than there is from foreign nations, both state actors and terrorists. Therefore, the money spent on the defense department should be drastically reduced while the money spent on human health should be vastly increased. Let's deal with the real threats not the imagined ones.
