California Free Press

Off the Top of My Head

Inflation Probably Not a Problem If Biden Programs Are Carefully Targeted

by John Lawrence, March 14, 2021

Critics have said, "Oh, My your children and grandchildren are going to have to pay back all these trillions of dollars that have been spent by both the Trump and Biden administrations on COVID relief and to get the economy going again." Not True! Modern Monetary Theory has shown that the Federal Reserve can just create the money and the Treasury Department can just spend it without ever worrying about paying it back. Finance is not the problem. The problem is potentially inflation which economist Larry Summers has sounded the alarm about. Most of Biden's relief bill is targeted at the poor which means that that money will be sucked up to pay past due rent and mortgage bills as well as providing a decent lifestyle which should not be inflationary except if you believe the nonsense of the neoliberal Phillips curve which supposedly proves that a certain segment of the population has to live in poverty and penury in order to fight inflation. That has also been debunked by Modern Monetary Theory although most politicians are still on the wavelength of neoliberal economics which has been shown to be fallacious in this and many other regards.

State and local governments likewise will just suck up the money in the relief bill to bail themselves out of debt and provide an adequate level of social services. This also is not inflationary because the money will not be just sloshing around in the economy with nowhere to go. What is inflationary is tax breaks for the rich, but this money can be sucked out of the economy by taxing the rich. What Larry Summers fails to take into account is that the US and much of the rest of the world has a two tier economy. The rich and upper middle class are doing very well, thank you, while the lower middle class and the poor are suffering. The COVID pandemic illustrated this in even starker terms with the so-called K-shaped recovery. The upper classes made money; the lower classes are on the verge of losing whatever financial gains they had made during the Trump economy. Inflation is caused by too much money sloshing around in the economic system. Most of that inflationary money is held by the rich in assets like stocks and real estate. Money injected into the economic system targeted at the poor is immediately sucked out of the system to pay debts and to provide basic necessities. There is enough physical and material capacity in the system to provide basic necessities so this money is not inflationary.

Inflation is caused when there is too much money chasing too few goods. As long as there is the material and human capacity, money directed at those sectors of the economy will not cause inflation. The real problem in future Biden administration bills involving infrastructure and the Green New Deal is that the materials to build out infrastructure, namely, steel, cement and plastics, require fossil fuels to manufacture and the manufacturing processes themselves are inherently carbon dioxide emitting. This comes about from basic chemistry which involves the carbon and oxygen atoms every step of the way. Most basic materials are composed of carbon, oxygen, hydrogen and nitrogen, and the chemistry involved in manufacturing releases large amounts of carbon dioxide. The manufacture of solar panels requires mining high quality quartz and combining it with coal. It's hard to get away from fossil fuels as the Michael Moore movie, Planet of the Humans, pointed out. For this reason spending large amounts of money on infrastructure involving cement, steel, plastics and other materials could actually produce more global warming rather than preventing it. The finances are available; the proper materials are not. The manufacture of wind turbines and solar panels require the release of large amounts of greenhouse gasses.

Because of these fundamental limitations regarding materials, it doesn't make sense to throw trillions of dollars at either infrastructure or global warming mitigation. That would be either inflationary or misguided in the sense that large projects in these areas could produce even more global warming. As Bill Gates has pointed out, money should be invested in promising startups and research that can solve these basic problems and into digital nuclear which is the only renewable energy source that won't result in a lot of greenhouse gasses being created in the first place. Advanced nuclear is the most promising source of clean energy. Gates has invested in a company TerraPower which does research on advanced nuclear reactors. Their mission statement reads:

"TerraPower was founded by Bill Gates and a group of like-minded visionaries that decided the private sector needed to take action in developing advanced nuclear energy to meet growing electricity needs, mitigate climate change and lift billions out of poverty. Advanced reactors and other isotopic applications are now possible with technology and enhanced computing capabilities that were unimaginable a few decades ago. At TerraPower, we are innovating in nuclear to improve the lives of people everywhere and to build the clean energy of tomorrow – today."

So when the Biden administration gets around to their initiatives on infrastructure and global warming, they need to heed Bill Gates' warning about traditional manufacturing methods involving cement, steel and plastic. Energy from solar and wind are inadequate to solve the problem for many reasons. Large scale demonstration and build out of nuclear energy reactors should be the order of the day, They are the only clean energy source that has the potential for diminishing the world's reliance on fossil fuels.

Off the Top of My Head

It's Not About Radical VS Moderate. It's About Neoliberalism VS Social Democracy.

by John Lawrence

Joe Biden is not a moderate. He's about the continuation of neoliberal policies that got us to where we are today: the biggest economic inequality of all time. Neoliberalism is laissez-faire capitalism. The wealthiest 3 American families now own as much wealth as the bottom 50% of all Americans. Bernie Sanders is right about that. Social democracy is about evening out the distribution of wealth in this country. Joe Biden will continue the same policies that we have now: unending wars, nibbling around the edges of the income and wealth distribution, acceding to Mitch McConnell who will say "no" to every progressive policy. Going along with tax breaks for the rich and letting corporate lobbyists determine US environmental policies.

Since the 1980s the US has charged ahead with neoliberal policies which give tax breaks to the rich and subsidize profitable corporations because their lobbyists demand it. With Biden as President students will still be smothered with student loan debt. In 2005 Republicans led the way to taking away bankruptcy protection from student loan debtors. 18 Democratic senators broke ranks and cast their votes in favor of the bill. Of those 18, one politician stood out as an especially enthusiastic champion of the credit companies who, as it happens, had given him hundreds of thousands of dollars in campaign contributions – Joe Biden.

Joe Biden never met a credit card company he didn't like. He was known as the Senator from MBNA. All the credit card companies are headquartered in Delaware, Biden's home state. They will be enthusiastically cheering for him to win the Democratic nomination. In the 2003-2008 senatorial election cycle, Biden received more than $500,000 in help from credit card companies, financial services and banks. So this is the guy who is going to rein in Wall Street? Wall Street will get everything it wants under him including the continuation of student loan debtors without bankruptcy protection or relief.

It will be business as usual under a Joe Biden Presidency. Moderation means business as usual with neoliberal self serving policies enthusiastically supported. People that want radical change in this country including a Green New Deal, Medicare for All, student loan debt forgiveness and free child care paid for by taxes on the wealthy should get behind Bernie Sanders and/or Elizabeth Warren. Warren said, “At a time when the biggest financial institutions in this country were trying to put the squeeze on millions of hard-working families, Joe Biden was on the side of the credit card companies.”

Social democracy does nothing to inhibit entrepreneurialism. The socially democratic Scandinavian countries have created their share of entrepreneurs and businesses. The Washington Post reported:

Finnish Prime Minister Sanna Marin is a big believer in the “American Dream,” and she thinks it’s a lot easier to achieve now in her country than in the United States.

“I feel that the American Dream can be achieved best in the Nordic countries, where every child, no matter their background or the background of their families, can become anything,” Marin told The Washington Post in an interview on the sidelines of the World Economic Forum in Switzerland last month.

“We feel that the Nordic model is a success story,” said Marin, who became prime minister in December at age 34, making her briefly the youngest world leader (she lost that title in January when 33-year-old Sebastian Kurz returned to power as Austrian chancellor).

Bernie Sanders is a fan of the ‘Nordic model.’ Finland’s leader says it’s the American Dream.

Marin is hardly the first to claim that it’s easier to live the “American Dream” in Nordic countries. British politician and former Labour Party leader Edward Miliband said it in 2012. A New York Times opinion piece last year dubbed Finland a “capitalist paradise.” And presidential candidate Sen. Bernie Sanders (I-Vt.), a self-declared “democratic socialist,” has often said that the United States should be more like Scandinavia.

Not only are Scandinavian social democratic economic systems more conducive to business creation but also their political systems bear looking at. Proportional representation in a monocameral Parliament may be far more democratic than the dysfunctional US system where the Republican Senate routinely vetoes anything the Democratic House passes. The winner take all US system discourages third party representation and boils down to all out war between two bitterly divided rivals. Is this any way to run a country?

The single-member district voting system has been on the wane worldwide because it has a number of serious drawbacks. It routinely denies representation to large numbers of voters, produces legislatures that fail to accurately reflect the views of the public, discriminates against third parties, and discourages voter turnout. All of these problems can be traced to a fundamental flaw in our system: only those who vote for the winning candidate get any representation. Everyone else -- who may make up 49% of the electorate in a district -- gets no representation. This new reform is also beginning to get some attention: replacing our present single-member district, winner-take-all election system with proportional representation elections. Political commentators writing in The Washington Post, The New Republic, The New Yorker, The Christian Science Monitor and USA Today have endorsed it. Grassroots groups in several states are now organizing to bring proportional representation to local elections.

With the US Congress at loggerheads with itself, a new political system as well as economic reform needs to be undertaken. The Scandinavian social democrats may be way ahead of the US both in economic, political and certainly in social terms.

Off the Top of My Head

How Come Democratic Socialism Works So Well in Scandinavia?

by John Lawrence, March 2, 2020

Bernie Sanders is being blasted by the old bugaboo of capitalism vs communism. This is a pitched battle which is so 20th century. The reality today is that what we have in the US and around the world is neoliberism, a virulent form of capitalism which is "an account of human nature where economic competition is the highest value [which] leads to a political theology where the prime duty of the state is to enable, and indeed mandate, such competition, and the result is a world wherein individuals, firms, and states are all continually constrained to express themselves via economic competition." Neoliberalism is a system in which "more and more people — especially young people who were born and raised in the neoliberal era — have started to question a system that has left their generation drowning in debt, burned out and mentally exhausted, and stuck in an endless loop of precarious uncertainty."

So what is democratic socialism? It is widely practiced in the Nordic countries of Sweden, Denmark, Finland and Norway. Currently, the Nordic countries are described as being highly democratic and all have a unicameral form of governance which use proportional representation in their electoral systems. There is  support for a universalist welfare state aimed specifically at enhancing individual autonomy and promoting social mobility; a corporatist system involving a tripartite arrangement where representatives of labor and employers negotiate wages and labor market policy mediated by the government; and a commitment to private ownership within a mixed economy.

Far from discouraging entrepreneurialism, these countries are hotbeds of it. The Scandinavian countries of Norway, Sweden and Denmark are regularly ranked among the best places in the world to start a new business despite their high-tax environments. Well known businesses Spotify, Just Eat and airline Norwegian have all emerged from this part of the world to international success. Somehow, these small, Northern European nations have managed to pursue large income redistribution without disincentivising hard work and corporate invention.

So there you have it. Democratic socialist countries are arguably more democratic than is the US and countries modeled after it due to its unicameral legislative branch based on proportional representation as opposed to the winner take all two party system in the US. There is a spirit of comaraderie and cooperation instead of a spirit of solipsistic competition. A spirit that "we're all in this together." There is more social mobility than in the US. Harvard professor Raj Chetty proclaimed:"If you were an immigrant choosing where to go and have the best chances of climbing the income ladder, then statistically you’d have a better shot of achieving ‘the American dream’ if you’re growing up in Canada or in many Scandinavian countries than the United States." In addition you would have universal health care and free college education. Pretty much many of the elements Bernie Sanders advocates.

Many of the elements of democracy and common purpose that the US was originally founded on are better exemplified in other socialist democratic countries than they are in the present day neoliberalist US. Conor Lynch writes:

Neoliberalism is the opposite of solidarity. It encourages an extreme form of selfish individualism that ends up depoliticizing the populace and eroding the collective spirit of democracy. It also leaves the individual isolated and alone. “In a brutal, competitive, and atomized society, psychic well-being is so difficult that success on this front can feel like a significant accomplishment,” observes political theorist Jodi Dean. “Trying to do it themselves, people are immiserated and proletarianized and confront this immiseration and proletarianization alone.”

No wonder so many young people who are drowning in student loan debt and lack of medical care, not to mention a government not the least bit concerned about global warming, are finding inspiration in a more egalitarian system of government in which more entrepreneurial activity is taking place and more upward mobility is being realized than in the United States of America. The real debate is not between authoritarian socialism and capitalism; it's between democratic socialism and neoliberalism. What kind of a world do you want to live in?