There are some big problems in this country that cannot easily be fixed. We either currently lack the ability to solve them or have the ability, but the cost is high and will take time. I'm talking about things like cancer, climate change, and "reality" t.v. shows. These are not things that even in a good economy could be solved quickly. However, there are a lot of problems in this country that we know how to fix. We also have the ability to fix these issues. The problem is that we hold ourselves back because we believe in fictional constraints.
Let's do a thought experiment. I'm going to tell you about a group of people on an island. This group of people have 2 problems. One of their problems is that there are not enough teachers at the one school to accommodate all of the children of the island. There are only 4 teachers trying to mange hundreds of kids. The teachers are all burned out and the kids aren't learning anything. That's 1 problem. Now here is the second problem the islanders are having. Many of the adults on the island live off the work and charity of others because they can't find a job to support themselves.
Question: Do you think you can come up with a solution that would solve both of the islander's problems?
If you couldn't come up with a solution, let me give you one more detail about the people on the island. Many of the people who are out of work have experience as or training in teaching. Now can you come up with a solution? What's that? You say give the out-of-work adults a job at the school? Well congratulations, you're now smarter than an American lawmaker.
It would be laughable, if it wasn't so harmful to our country. How is it possible that our country can have a problem with classroom sizes that are too large(e.g. New Jersey and Florida) and yet at the same time there is an ever growing number of unemployed teachers. All of this despite the research showing the positive effects of smaller class sizes.
We have other weird combinations of problems that shouldn't be possible in a world of rational decision making. The Great Recession has increased homelessness in every part of the country from Michigan to Tucson to Oregon. We also have another problem. 11% of all houses in this country are vacant. That's 18.4 million houses that are vacant despite being up for sale or rent and it's causing home prices to plummet. So the resources in the country exist to put the homeless in some type of home. How is it possible to have both problem with homeless and vacant homes? The increase in homelessness is not due to a lack of ability to produce homes(as demonstrated by vacant homes), nor is the housing crises due to a drop in people demanding homes(as demonstrated by homelessness).
Another example: the unemployment rate in the construction sector is humongous. And yet, we see reports of crumbling bridges, pothole infested roads, and other infrastructure in disrepair. How can this be? Why aren't all those unemployed construction workers being put to work fixing this stuff? It can't be from a lack of cement production because those factories are closing due to a lack of demand!
So what is going on with these things? The answer of course, is money. We believe we lack the money to do these things. That we can't AFFORD to do anything about these problems. We act like we're too broke to educate our children, give children and working families a home, and fix our deteriorating roads. But if you would for just one moment, temporarily, stop thinking of money restraints, you could see that we have the ability to do all these things if we only had the money.
What an indictment of that human invention we call 'money'. Money is supposed to make trade easier and more convenient. How is that money is the thing holding us back from the things we all want done and we have the ability to do.
Washington politicians believe that they are in a bit of a bind. If they do nothing they leave these resources idle and continue fixable human misery. If they raise taxes to pay for these things they're afraid that the taxes will damage other sectors of the economy and potentially bring back a recession. It's an understandable fear and not one that is (completely) without merit. Conservatives lean towards ignoring human suffering while (some) democrats seem to lean towards taxing the wealthy to pay for the things I've mentioned.
There is of course an "unspeakable" alternative. The federal government can deficit spend and do things to either directly or indirectly resolve these problems without damaging other sectors of the economy. Unfortunately, this alternative seems to be "unspeakable" because they are afraid of inflation. How sad is it that we are willing to allow continued human suffering because it might hurt our currency? What do they think is going to happen to our currency when bad schools churn out ignorant and unemployable adults, roads deteriorate until they are unusable, and increased poverty starts spreading into "wealthy" areas.?
The good news is that the federal government can create money at will. Which means that the federal budget is constrained by inflation, not revenue. Even better is that fixing these problems wouldn't be as highly inflationary as our congressional friends fear. The kind of inflation that is as large as they fear occurs when the government and private sector demand more than can be produced. But as we've seen from the 3 examples above, the economy can afford to produce these things. We have enough teachers, construction workers, and houses to prevent demand exceeding supply. So even deficit spending to get these things would cause very little - if any - noticeable inflation. Even if it did rise a little, inflation is so low from our recent recession that we can afford to let it go up a bit without damaging our economy. What we need to do is stop worrying so much about our currency, and look at whether or not the resources needed to do something exists.
So again, I ask, what is holding us back? Our economy can afford these things. Inflation is low enough that we could allow it to go higher. The only thing holding us back is either the continued belief that the federal budget is constrained by revenue, or we worship our currency so much that we're willing to allow continued human suffering in order to avoid the slightest, slimmest chance that the value of our dollar might go down - which it still will in the long run anyways.
This diary is from the Money and Public Purpose group blog on Daily Kos. The diary, like others in the group, is influenced by a concept called "Modern Monetary Theory" or MMT for short. If you'd like to know more please follow us as we discuss MMT and the solutions it's understanding presents for a properly functioning economy.