New Economic Perspectives has published the amazing article Keeping It Real: Law, Coercion, & The Frontiers of Public Finance by Raúl Carrillo.
When we recognize that federal taxation and borrowing are functionally separate from expenditure, the moral landscape changes. We can go deeper and deeper. If the federal government has excess funds and there is no threat of inflation, what is the compelling argument against a right to the minimum level of purchasing power necessary to ensure a secure livelihood? If the federal government doesn’t need the money to fund other programs, what is the compelling justification for why working people should suffer from regressive taxes like the payroll tax? At the very least, Modern Money breathes new life into legal arguments against socioeconomic discrimination.
There is no doubt that many wealthy individuals need to be taxed and disciplined in the interest of democracy, but we need not make social spending dependent on those taxes. It’s functionally unnecessary. To quote Johnson again, “the sheer amount of new federal money provided to states under the stimulus, and the conditions attached to some of these federal funds, raise questions about the federal government’s expanding power to shape, through spending, a broad set of institutional arrangements at the state and local levels.” Considering it’s all new federal money, that statement is even more important than Johnson seems to indicate. The scope of our discussion about public finance needs to be magnified.
For example, although at the end of the day, poverty is relative, there is now much we can do to end absolute indignities, given sufficient knowledge of the legal-financial matrix. As Emma Coleman Jordan has stated, what passes as rational conversation about economic policy choices these days is “devoid of all understanding and empathy for the choices of people who have no choice.” I’d add it is also devoid of institutional perspective and accuracy regarding modern money, functional finance, and national accounting. In the words of a recently deceased human rights activist, Yuri Kochiyama, consciousness is power, and with a revamped economic education, social justice advocates can build tomorrow’s world.
But these are my normative opinions. The chief point is that we need to have an honest conversation based on a shared mechanical understanding of the nuts and bolts of the economy, as well as its legal framework. Having subscribed to that, we can debate about what we want. As Justice Oliver Wendell Holmes once protested in another era of rampant inequality and mythmaking, the 14th Amendment did not enact Herbert Spencer’s Social Statics. The Constitution shouldn’t be read as reliant upon an outdated and unsound doctrine of public finance either. We need to plug into reality, and then we can discuss what we want to do to change it, if anything. Beyond the myths about money, beyond the intellectually impotent and incoherent conceptions of government intervention, deregulation, and redistribution, we can have that real talk about who gets what, when, where, how, and why.
There will be those who protest this article simply because they just know that what is said here just cannot be. If you are willing to ask yourself why exactly it is that you know this cannot be, then you are ready to think deep thoughts.
Just remember this quote from my quotes page.
- Mark Twain
- “It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.”