California Free Press

Off the Top of My Head

Government Deficit Spending Is Not the Problem: Lack of Labor and Physical Resources Is

by John Lawrence

Since the US dollar is a sovereign fiat currency, the US can never run out of dollars. The debt ceiling is a totally artificial limit which results in the US hoisting itself on its own pitard. According to Modern Monetary Theory (MMT) as espoused in The Deficit Myth by Stephanie Kelton, the only limit on government spending is inflation, and inflation is concerned with the amount and nature of resources available to soak up the money injected into the economic system by the government. According to this theory it makes sense that a lack of labor resources could lead to inflation. Consider that right now there is a shortage of air traffic controllers, and this is leading to a cancellation of flights. If there were more air traffic controllers available, the number of flights could be increased, and more economic activity would ensue. The constraint on flights available because of the lack of air traffic controllers leads to inflation because the money charged for each available flight can be increased. Essentially there is a bidding war for the available flights. If any resource including natural resources like steel and cement is not sufficient for the demand for those resources, then the price of those resources will increase leading to inflation. Right now in the US labor is becoming a scarce resource especially labor of the type necessary in the essential economy, that is the economy of goods and services necessary for the continuation and enhancement of everyday life. As more labor is developed for essentially useless services like the entertainment and social media industries, plumbers, electricians and carpenters are not available for useful services, and, therefore, the cost of those services increases.

Which brings us to Biden's Inflation Reduction Act which allocates $370 billion to rebuild infrastructure and fight climate change. These are all necessary and vital goals, but the question should be asked are the resources for this amount of spending sufficient or will this spending be inflationary. To put it more succinctly is the blue collar labor sufficient for the job? If not, the price of labor will be bid up and the spending will be inflationary. More and more these days students are encouraged to go to college where they end up after graduation working for Wall Street or hedge funds or in the entertainment/social media industry. They are not encouraged to go to vocational technical schools to become carpenters, plumbers and electricians. So they go into industries which are not essential to the real economy. There are shortages of labor for the real economy everywhere we look. In order to overcome these shortages, it would be necessary to step up legal immigration since immigrants by and large fill the jobs Americans don't want to do, and by and large Americans don't want to perform any kind of the less glamorous and remunerative type of labor necessary for production in the real economy. Also outsourcing has made it unnecessary for Americans to perform labor in the real economy. We rely either on immigrants or foreign workers for that.

The next thing is that all this infrastructure rebuilding is going to contribute to global warming as well as reducing it. Rebuilding all the bridges of America will require large amounts of steel and cement. Steel and cement production produce large amounts of carbon dioxide which is emitted into the atmosphere. The International Energy Agency estimates that direct CO² emissions due to crude steel production is approximately 1.4 tons of CO² per ton of steel produced. The cement industry is responsible for about 8% of planet-warming carbon dioxide emissions — far more than global carbon emissions from aviation. If the cement industry were a country, it would be the third-largest emitter of carbon dioxide in the world, after the U.S. and China. So rebuilding America's infrastructure will contribute to global warming while at the same time attempting to reduce global warming. The fact is that alternatives to steel and cement which do not produce greenhouse gasses are not available. Research on these topics needs to be stepped up. But more research in areas like artificial intelligence, of the kind which has no use in the amelioration of global warming, takes place while productive research into materials to replace steel and cement languishes. Also while more electric vehicles are being produced, the electric energy to power these vehicles is coming from power plants that still use fossil fuels to produce it. One form of greenhouse gas production is being traded for another. Nothing is gained unless all energy generating power plants are using renewable and non carbon dioxide producing fuels.

The problem is that limited resources both in terms of labor and physical resources will hamper efforts both in repairing American infrastructure and building infrastructure which reduces the amount of greenhouse gas production. Stephanie Kelton writes: "That's why MMT recommends a different approach to the federal budgeting process, one that integrates inflation risk into the decision making process so that lawmakers are forced to stop and think about whether they have taken the necessary steps to guard against inflation risk before approving any new spending. MMT would make us safer in this respect because it recognizes that the best defense against inflation is a good offense. We don't want to allow excessive spending to cause inflation and then fight inflation after it happens. We want agencies like the CBO helping to evaluate new legislation for potential inflation risk before Congress commits to funding new programs so that the risks can be mitigated preemptively. At its core  MMT is about replacing an artificial (revenue) constraint with a real (inflation) restraint." The artificial revenue constraint is the debt ceiling!

In the above passage the words "inflation risk" could also be replaced with "greenhouse gas emission risk." The CBO should evaluate both kinds of risks. So as the economy becomes more electrified in terms of electric cars and buildings, we need to think about the fact that the electricity generated by these increased demands needs to come from non carbon dioxide emitting sources. Also substitutes must be found quickly - in other words research needs to be stepped up - to find substitutes for steel and cement. To boot, non polluting energy sources must be found for ships and planes. Both human and physical natural resources must be taken into account. Have all these things been thought through?

Off the Top of My Head

Republicans Hate Socialism ... Except When They Need Help Themselves

by John Lawrence

When Superstorm Sandy hit, then Congressman DeSantis voted against giving help to New York state. Now after the Hurricane Ian disaster, Governor DeSantis is asking the Federal government for every dollar he can possibly get. This is typical Republican behavior. After all socialism is about helping people. Republicans want every ounce of help they can get for themselves while denying it to others. All of a sudden DeSantis is Joe Biden's best friend. Joe wants to help people, but he should think twice about helping DeSantis. First of all a hard look should be given to rebuilding on hurricane prone barrier islands. DeSantis, of course, wants the increased economic activity that rebuilding will entail for construction companies especially if the Federal government pays for it. Building Back Better in hurricane prone areas is not good economic sense. And it will cost a fortune in an inflationary era while only adding to inflation as the Federal government injects more money into the economy.

Robert Reich wrote in a recent email:

"No Republican governor has been more vocal in his opposition to what he describes as “socialism” than Florida’s Governor Ron DeSantis. “I stand against socialism,” DeSantis thundered in Florida’s 2018 gubernatorial election. “Socialist policies have failed time and time again.” In June, DeSantis signed an education bill directing Florida’s Department of Education to develop a curriculum educating students on the evils of socialism (as well as communism)."

But now, when his state needs the money, DeSantis is either a full on socialist or a full on opportunist who, once he gets his, will be against anyone else getting theirs. In 2013 DeSantis said: "I sympathize with the victims of Hurricane Sandy and believe that those who purchased flood insurance should have their claims paid. At the same time, allowing the program to increase its debt by another $9.7 billion with no plan to offset the spending with cuts elsewhere is not fiscally responsible." So now after Hurricane Ian, which will run into the tens of billions, is giving the state of Florida the money DeSantis is requesting from the Federal government "fiscally responsible"? Reich poses the question: "So, would DeSantis call any form of government assistance to those in need “socialism?” Obviously, not when it's his ox that's being gored. DeSantis' hypocrisy is immense here, but it will probably work for him. He will take credit for "getting Florida and Floridians back to normal" as he enters the 2024 Presidential contest. Before Biden gives DeSantis all the money he wants, DeSantis should do a mea culpa, stating that he was wrong to vote against disaster relief for New York state after Superstorm Sandy.

DeSantis website headlines: "Governor Ron DeSantis Requests President Biden Approve Major Disaster Declaration and 100 Percent Federal Cost Share for 60 Days for Hurricane Ian" This isn't the first time that DeSantis has used Federal cash to tout his own agenda. Just prior to the fatal hurricane, DeSantis held a press conference in Jacksonville where he gave $1,000 checks to individual firefighters and law-enforcement officers that were being made available through this year’s state budget. Of course he didn't mention that this was cash the state of Florida got from the American Rescue Plan, Federal money which provided more than $8.8 billion to the state of Florida.DeSantis will likely continue to bash President Joe Biden and the Democrats for pushing policies that he says have caused inflation — which includes the massive spending included in the American Rescue Plan. I've got news for Gov. DeSantis: if he cared about inflation, he would take the money to recover from Hurricane Ian out of state taxes instead of letting the American taxpayer foot the bill while all the time giving Joe Biden no credit. He will take all that for himself.

 

Off the Top of My Head

UN Secretary General: "There is no way a war can be acceptable in the 21st century"

by John Lawrence

Really, Mr. Guterres? Did you forget about the Iraq war that killed over a million Iraqis, approximately 100,000 of them civilian? In the 21st century? That war, by the way, was based on the lie that Saddam had weapons of mass destruction which the Bush administration knew he didn't have. And as far as a dictator goes, did George W Bush have a declaration of war from Congress? No, he did not. There was a resolution ginned up by the Bush administration that was used as an excuse for the invasion of Iraq. As far as war crimes, this war in Ukraine is getting all sorts of scrutiny by the media that the Iraq war didn't get. The fact is that in modern wars more civilians are being killed than military. That's an unfortunate fact of urban combat. It's not like the Napoleonic wars or even the US Civil War in which armies lined up on fields far away from cities and fought it out. The Battle of Gettysburg took place in a rural setting. Pickett's charge was across a hay field not an urban boulevard. The only difference in terms of time period between the Iraq war and the Ukraine war is that we are much more aware now that global warming is upon us destroying lives and livelihoods. So we don't need another war to do that. Probably much more real estate and many more lives will be destroyed this year by the effects of global warming than by the Russian military.

So the west wants to get off of Russian oil? Then why aren't they building green infrastructure and converting to non polluting energy as quickly as possible? The answer is that the fossil fuel corporations are lobbying hard to get us not do that. And they have billions of dollars to spend to get their way whereas the green protest movement has pennies to spend by comparison. The renegade Democrats, Joe Manchin and Kyrsten Sinema, themsleves have profited by Big Oil's huge donations to their campaign funds. But for them we could have had a substantial effort to rebuild American infrastructure along non-polluting lines. But Joe Biden presented himself as not someone who wanted to go full steam ahead to get off of fossil fuels. No, he wanted to do it in a more moderate way, a way that did not inconvenience the American people in any way. They could still have all the toys and appurtenances they were used to. As opposed to the progressive wing of the Democratic party which wanted to go full steam ahead to green the economy. So the Big Oil executives are on the same page with the Russian government. Both could care less about global warming because both are profiting immensely from the sale of fossil fuels.

So why is there not a concerted western effort to get the poor and elderly civilians out of the war zone where they are sitting ducks? The young and the rich have already got out. Only the poor and elderly remain. There is plenty of money for weaponry that the US and other NATO nations are sending into Ukraine. No effort, diplomatic or otherwise, is being made to get the poor and elderly civilians out. There have been some humanitarian corridors, but the poor and elderly don't have the money to support themselves even if they got out. Someone else would have to pay for their transportation and for their support even if they got out. Why isn't that forthcoming? Does NATO want them still sitting there in the war zone as a deterrent to the Russian army? That's nonsense and suicidal. There needs to be direct talks between Ukraine, the west and Russia about getting those civilians out. Then the two armies can fight it out. Instead, western media bemoans the fact that civilians are being killed while doing nothing to get them out. I repeat only the rich and the young, those with the means to pay, and probably pay bribes, are getting out of Ukraine and are able to support themselves outside of Ukraine. Money should be forthcoming from NATO to get the rest of the civilians out of there. They are effectively being used as human shields. I have not heard Biden or anyone else speak of money being set aside for this purpose. Only more money for weapons.

Off the Top of My Head

Tie Build Back Better Aid for Americans with Weapons Aid for Ukraine

by John Lawrence

Funny how all the concern about inflation doesn't apply to the billions being spent with US weapons manufacturers for javelins, stingers, howitzers and other weaponry. The aid for Ukraine is not money being spent in Ukraine. It's money being spent right here in America going into the coffers of the military-industrial complex. Then the deliverables are shipped to Ukraine, not the money. Since it's being spent right here in the US, it is increasing inflation because more money going into the money supply increases inflation. But hardly anyone is concerned about the inflation that that is causing. When it comes to Biden's Build Back Better plan, it's dead in the water because that would cause inflation. Congress persons are so concerned about that inflation, but they're not at all concerned about the inflation being caused by the billions being spent to make weapons of war. The original BBB package was supposed to be tied with the physical infrastructure legislation that has already passed. They were supposed to be approved in tandem, but they never were. This was a huge failure and huge mistake by the Biden administration which essentially sold out the progressive wing of its party in order to get something, anything, passed. As a result, physical infrastructure, but not human infrastructure, alone got passed, and, more importantly, a huge amount of the global warming infrastructure didn't get passed. So now why don't they tie BBB to the expenditure for more weapons for Ukraine?

According to resources.org:

"The [BBB] legislation allocates $1 billion over the next few years to the US Environmental Protection Agency (EPA) and the Federal Highway Administration for efforts that support the use of low-carbon materials in highway construction projects. It authorizes $4.225 billion for the US General Services Administration (GSA) for its acquisition of green products and its portfolio of environmental sustainability programs, including initiatives that range from securing fuel-efficient vehicles for the federal fleet to setting net-zero energy and water targets for newly constructed GSA properties. An additional $8.98 billion are slated to go toward the purchase of electric vehicles (EVs) and associated infrastructure (e.g., charging stations) by the GSA and the US Postal Service."

Not too much to ask, really, to save the planet. By the way subsidizing the purchase of electric vehicles for consumers would help offset the price of gas at the pump. The US may help Ukraine to win the war or at least achieve a protracted stalemate, but at the same time it is letting global warming proceed with minimum intervention. So what is more important - influencing the outcome of a war between two countries or dooming every country on earth which is what will happen if we don't proceed full steam ahead to forestall global warming. Is funding the war in Ukraine being penny wise and pound foolish? Better, if all countries put their money towards combating global warming instead of weapons of war, there might be a slight chance of saving the planet. As it is now, the human race would rather fight wars than save the planet. War is one addiction the human race is not willing to give up even if it means our grandchildren will inherit a planetary hell.