Doing God’s Work

“I’m a banker just  doing God’s work.”  Lloyd Blankfein. CEO Goldman Sachs Nov. 2009 quoted in The Times.

Last week I had a long conversation with a very old friend of mine who is now a Director of Youth and Family Services in one of NYC’s boroughs.  We hear so much about how Wall Street and its banks are recovering, I wondered how the rest of NYC was doing. I asked him what Mayor Bloomberg’s proposed budget for NYC would mean for the youth and children’s services my friend helps run? This is what he said.

There are several services which work alongside each other in NYC including OST (Out of School Time), The Beacon Programmes and Early Learn NYC. They are mostly community based, which means voluntary organizations who receive public money and then deliver the services in the communities their members come from.  This is the model the present UK Conservative led government is in favour of. It seems to be one Mayor Bloomberg (he of Bloomberg Financial News Network) thinks NYC can no longer afford.

One of the largest services is OST (Out-of-School Time). It currently operates a raft of after school programmes for children in about 400 schools. Mayor Bloomberg’s proposals would close about 175 of them. A cut from 400 schools to about 225, or nearly 50%.  The Beacon Programme which has been seen as a model for many other American cities, this year runs in about 80 schools across NYC. The cuts would reduce this to between 40 and 50 next year.

What this means for children, which is after all what we are talking about, would be about 30 000 fewer children and youths and a further 17 000 fewer children and infants would be able to find a place. 47 000 children would be turned away. What should those children do when school is over? Society tells their parents to get a job but if they have one, what should they do about being a good parent to their children? Or should poor people just refrain from reproducing. Maybe we should have poor people sterilized so they can have sex but not be able to have children. That would certainly cut welfare. But then again think of the chaos this would bring in a generation when there weren’t enough poor people to keep the wages for menial jobs nice and low. Society would have to start importing poor people just to do those jobs.

Now the usual riposte to those who argue against cutting these sorts of programmes is to say – these welfare programmes just enable and bail-out the unwise, anti-social life decisions of drug takers and single parents who have never done a days work and never will but think it fine to burden society with their dysfunctional children. Or sentiments to that effect. I have read versions of this unattractive mantra in many, many places. Now if it was true, that these were the people these programmes generally serve, such sentiments, as uncharitable as they are, would have some scintilla of traction. And of course there are such people – the truly feckless and the terminally failed. I have met them. I have also, however, met their children. In fact I taught some of them. And they were not all carbon copies of their parents. Neither were they all the violent, drug pushing sociopaths much beloved of gritty Television drama and Hollywood films. The kids I taught were …kids. What made them different was that they were afraid. I saw their fear at first hand – and fear in children is a disturbing thing (at least it is for me) – and I saw the reasons for that fear. They had good reason to be afraid. They lived in a frightening place. Many of them by age 13-15 had already learned how to be or at least act tough.

A few years after I was a teacher I was up in the Bronx visiting one of these programmes. While I was in the area I spoke to a young man who was standing on a corner a few hundred yards away from the programme centre’s doors. He was probably 17-19 years old. He was visibly ill at ease with me being near to him never mind talking to him. Some other youths further up the street kept looking at him and at me in a not terribly friendly way. The young man had a poorly concealed weapon.

The young man was obviously a bag man for a local pusher. And I was on his corner cramping his sales. I spoke to him for a while, said thank you for his time and walked off. He was no different form the kids I had taught a few years earlier. When he was 12 he was probably quite a nice kid. He was not very different in character from the kids I sat with in the programme centre. They had probably been together in junior high before they made their different choices. Perhaps critics of these ‘welfare’ programmes should consider that the money being spent in the programmes is not going on those kids who have already chosen to stand a few hundred yards away selling drugs. Some might argue that it should be, but it isn’t. The public’s money is spent on kids who have chosen to try to take a different route. A route of education and of hope and employment.

The kids who come to these programmes, like the kids I taught and knew, already have the courage to fight against a sometimes violently coercive environment trying at the age of 13 to chose a different path. The kids I taught had plenty of opportunities to chose drugs and /or prostitution. Both were there everyday on the street corners. But they were coming to school, trying to learn, trying to believe this other path was not the sucker’s path. Trying to believe that society would see they were trying and might even reach out a hand to them.

According to my friend the Community based services that Mayor Bloomberg and his ilk want to cut, are that hand reaching out to help. The programmes my friend manages not only help kids but are nearly 50% staffed by 17-25 year olds from those communities. Often kids who were themselves in those programmes a few years earlier. In other words the services are not simply handing out cash or ‘services’. The programmes offer employment, meaningful employment, in areas where there are very few jobs. The programmes don’t just offer out of school hours sanctuary and help but offer a way for those kids to get a job and one they can take some pride in.

Do the kids and youths actually do the jobs or its it a pious, liberal fiction? According to my friend, yes they do. The 17-25 yr olds have to be managed like any other workforce. Some are lazy and stupid, while others are intelligent, keen and generous. Like any other workforce.

The jobs they do are to offer help to younger kids with their school homework and help in a wide range of the after school projects such as sports, dance, and martial arts. They also run programmes where the children and youths  help  pensioners in the community with chores in their houses.

What do they get paid? Generally between the minimum wage of $7.50/hour up to $15/hour for those with marketable and employable skills. Though the higher paid are mostly the older professionals.

What do the 17-25 year olds spend the earnings on? Is it just a hand-out for drugs, alcohol and ipods? No it’s not. It is important to remember that the kids and youths who enroll in and come to work in these programmes, are both self selecting groups. They are already those who have chosen to not earn by pushing drugs. Those who come to work in the programmes are those who are trying to avoid that route. And they are helping those younger to make the same choice. My friend told me that many of the youths he knows personally, use the money they earn to pay for their own tuition, often at community college where they are studying themselves.

It is these children and young people and their hopes, that Mayor Bloomberg is trying to impoverish. Why?  Because NYC ‘can’t afford it’? NYC is so busy supporting those who are ‘doing gods work’ they haven’t the money or the care for the city’s own children. Is that it? Cutting these programmes is the reality of those who claim to do god’s work. Because Gods work, as they define it, is what caused the crash.  The children did not take on loans they couldn’t afford nor create sub-prime securities which imploded. The bankers doing god’s work were the people who offered the loans and personally profited from doing so. And those same people are the ones who now advise Mayor Bloomberg on the necessity of  the cuts and closures.

The children who will lose the chance to go to a safe and friendly place after school, did not engineer a reckless financial bubble and collapse. But those who did, when they were doing God’s work, feel it is fine, to take from for those children what slim hopes they  have of getting a little help in their efforts to better themselves. And those same people, still doing god’s work, feel it is equally fine for them to argue for no limits on the bonuses they pay themselves even if they work for a bank which is only there at all because the tax payer has put billions in to them.

Why is it morally OK to take from those who have so little to start with and yet ask for almost nothing extra from those who already have so much?

This is the reality that lies just out of sight behind the banker’s trite and arrogant phrases. Not just in NYC but in cities across America, in Greece, in Ireland and in Portugal and Great Britain.

51 thoughts on “Doing God’s Work”

  1. Ah Golem, from this, and a comment you made on the previous post, I see you are feeling similar pressures and frustrations to me. I also have 3 sons, 16, 13 and 11, and it’s quite difficult to see the future I’d like for them. In the current world scheme of things my sons are incredibly fortunate. They are the favoured colour for the country we live in, they are being well educated and won’t have to worry about university fees and possibly(grandparents here) won’t have to worry about getting on the housing ladder.

    So why am I worried? because I feel the world is becoming a less safe place and I believe that the source of that is inequality. Apart from finding the ‘race to the bottom’ approach personally distasteful I don’t think the financial ramparts can be built high enough to provide security for the ‘lucky few’.

    My wife teaches at a ‘challenging’ secondary school and my shock at the situations she has to deal with has long since turned to a deep sadness and underlying anger. We’re doing more than failing these kids we’re lying to them from the get go. From an early age they are pumped full of aspirations which we know full well are unachievable. This is heavily reinforced from a material viewpoint via endless advertising in the MSM. We also try to teach them behavioural and moral standards that bear little resemblance to what they’ll encounter in the adult world.

    Kids aren’t that stupid, they know they’re being lied to and they see what’s going on around them. Even the ones with supportive and hardworking parents are, at least, suspicious. If hardwork and following rules is such a great route to success why are their own parents working low paid jobs and living hand to mouth?

    1. This is one of my recurring potential t-shirt slogan themes how we lie to our children and then as they get older the government takes over.We truely are living in a kind of mass, mutually deluding, psychotic state.I suppose it,s akin to the concentration camp guard syndrome and why it,s so hard to get people to acknowledge responsibility and the need to change.

  2. Spot on as ever Golem…

    No doubting the crushing immorality of Wall Street or the City or the effects on societies, but their ability to continue is granted by the slavish politicos – and media moguls – they’ve installed over recent decades.

    Given how bankrupt the Wizards of Oz also are financially, I just wonder when the West will get any politicians in power who question the status quo. No chance in the UK or the US given their reliance on the false power of the “markets”, but will Europe ultimately prove so timid?

    So far so compliant, but as the weekend results showed, it’s getting harder to fool all the people all the time – and in the end mass sovereign defaults are still inevitable and there won’t be an investment banking casino left standing unless everybody accepts massive reductions in living standards and social welfare over unimaginably extended periods of time.

    It will only take one Dorothy – there is nothing remaining of substance behind the “financial” “markets” myth and eventually it will be obvious for all to see.

    But how many of these types of things we’ll have to suffer before we discover a voice I dread to think – as a foster carer, I already see the creeping negative effects of the cuts on the long term prospects of the most vulnerable children, and this austerity hasn’t even really begun to financially bite yet in the UK.

    The internet at least provides another potential outlet – but the complexity of the Ponzi doesn’t sit easily with 38 degress style viral protest to engage larger volumes of voters either.

    Guess it remains a slow process – and so many reasons for ostrich tendencies in the UK and US.

    How many European readers come to this site I wonder? Wish you could get it translated into French, German, Spanish, Italian, Greek et al – surely they’ve got drier matches than us for this Hindenburg?

  3. Sadly, the USA works on division. To divide people, demarcation is necessary. Reinforcing natural differences is part of the process. Welfare cuts always hurt those who are still on the bottom rungs of the ladder of success to God!

    Pumping drugs into cities hurts these folks as do welfare cuts. American Air was the world’s largest Airline. Principal commodity was Heroin. The Taliban forbade opium. Afghanistan was invaded. The East India Company, the company!, used it to force trade on China, making profits for fat shareholders…..

    It also allows the liberal/conservative dichotomy etc. To them as runs the joint, welfare is the Debbil’s poison!

  4. Spot on for reporting the real-life implications of Citicorp’s plutonomy. The UKs press may have fallen out of sycophantic, uncritical appraisal of Cameron and Osborne, but as yet, there are few articles linking up the implications of the dismantled welfare state to us as individuals. However, talk to any teacher and you find a system at breaking point. Gove’s education policies are leaving teachers frightened for their jobs, even more overworked and demoralised… but above all, they are worried sick for the children that they teach.

  5. I have lived in France for the past thirty years now.
    France is a country that definitely believes in the religion of mass education, and whose people believe that salvation lies in that route.
    I feel that at this time our Western civilization is losing faith in the religion of education, and that much of the upheaval we are currently experiencing results from our confused attempt to move out of our beliefs.
    Our family history is telling on this subject : the French ideal, in the middle class, has been for years to manage to send at least one child to the pearly, hallowed halls of l’Ecole Normale Supérieur, the country’s most prestigious educational institution.
    Next best alternative, on the ladder of social promotion, are the professional schools : medecine, the law, etc.
    We have one child in medical school.
    But the other… is in a trade school, learning how to make and repair violins, in a profession that has resisted more than 300 years of.. industrialization.
    Our civilization is in crisis, one that has been more than 500 years in the making.
    We need… new ideas, the old have become.. BANKRUPT. But maybe we need to ressuscitate some old ones ? There is nothing new under the sun, said the man…
    Our children are paying the rather inevitable price for the bankruptcy of our civilization. (I don’t believe in the apocalypse, by the way…)
    It’s not fair, certainly…
    But since when was the world fair ?
    Can we truly do anything about it on a COLLECTIVE basis ?
    Or should we be trying, rather, to find ways.. INDIVIDUALLY to do something to help our neighbor, rather than entrusting our help to institutions paid to do it FOR us ?
    One of the aspects of our current civilizational crisis concerns representation.
    Are we so sure now that paying or electing OTHERS to represent US is the way we want to go ?
    Haven’t we deserted the power we have in our individual lives by going this route ?

    1. I agree Debra. It has been interesting how much more caring we are in Christhurch since our terrible earthquakes. People are more gentle with each other. But it is only in Christchurch. Outside of Christchurch the poor are still blamed for everything with the latest being our Govt wants those on benefits to be “encouraged” to take long term contraceptives. But if you don’t and have a child during the time you are on a benefit then you will be assessed for taking a job when that child is one year old. It matters not that there are not the jobs there. The blame/punishment mentality is very strong here in NZ. Meanwhile our illustrious PM has reached a deal with Sky Casino who has agreed to build a convention Centre in Auckland on condition that the Govt will allow them to put more Pokie machines in their casinos. The PM organised the deal!

      1. One of the major interrogations we have at this time concerns the value of work in our civilization.
        For the last three hundred years at least, we have subscribed to the belief that work, for everyone… and now, for work exclusively for money, is salvation.
        That “we have no other choice”.
        When we “fix” society in such a way that we perceive only one.. solution to universal human problems, then we individually and collectively suffer from what is a form of totalitarian thought (not limited to political regimes, totalitarianism).
        It is telling that in the 16th century philosophical utopias that were written by More, Bacon, and Campanella (dixit Jacques Barzun… chapter on the Eutopians, in “From Dawn to Decadence, 500 Years of Western Cultural Life”), work is unquestioned as an indispensable human activity.
        We have a deep rooted ambivalence towards work : on the one hand, it is associated with suffering, and hardship (Genesis), and Antiquity looked down upon it as an activity to be performed by slaves.
        On the other hand, it remains the process in which we actively transform our environment, and act, to a certain extent, as creators. Genesis, once again, and our Christian religious traditions. We are divided on the value of work…
        I feel at this time that it is our ambivalence on the value of work… for money, particularly, which is wreaking great havoc on our civilization.
        We have certainly gone to great pains… to make it obsolete, by inventing machines which proceeded to deprive people of… work.
        And yet we cannot imagine a society where men and women could live without toiling for filthy lucre…
        Stuck between a rock and a hard place…
        While it is tempting to look at the financial crisis that is rocking the Western world at this time… IN ISOLATION, I think that an isolated view is reductionist.
        The value of money is intimately tied up with its value as a measurement of work.
        We are not seeing this…

    2. @ Debra

      “Can we truly do anything about it on a COLLECTIVE basis ?”

      Yes, and I’m afraid we must.

      This is because we already live in massive numbers in highly complex & collectively organised ‘industrial’ civilisations. We really have no way back to some simpler existence that would not entail euthanising billions.

      I have seen the ‘Transition Town’/’Permaculture people present population graphs showing less than 1 billion people within less than 150 years from now. Their response to this is little more than grow vegetables, keep a pig, swap within your ‘community’ etc..Quite worthy activities, but a plan for the next century? I somehow think that the 6 or 7 billion people to be excluded will not be going as quietly as they seem to imagine.

      It’s all of us or none of us. To achieve this we need a rapid evolution in our consciousness. To achieve that we need everyone secure past the bottom rung of Maslow’s hierarchy of needs. To achieve that, the institutions of global organisation that operate mostly in the interests of the !% must be reformed.

      “Are we so sure now that paying or electing OTHERS to represent US is the way we want to go ?”

      Well, yes, I do think it neccesary, given our population numbers & the aformentioned layers of complex organisation.

      But, as they say ‘Good idea! We should try it!’ Because political leaders, now, do not represent +us+ – the majority – in any meaningful way. (& only rarely have)

      The snag is that we allow & encourage leaders to enrich themselves into the top few percent club of ‘rent’ seekers. That is, if they aren’t already members before entering politics.

      How we imagine people with such way above average wealth & income can possibly represent the interests of the majority, who, by definition will always need to exchange their labour for an average living, completely baffles me.

      Surely, such representatives should be restricted to some level of average income & wealth, & from engaging in outside commercial enterprise, for life? Same for senior public servants.

      Yet the notion of such vocational conditions seems to get scant interest anywhere. Seems to me an entirely obvious means of cutting out the corrupt motivation at source. Millions of people in caring professions do their jobs far more for the satisfaction than any idea of getting rich. Why do we believe the motivation of extreme wealth is a prerequisite for competence in political leadership? (Doesn’t seem to be much empirical evidence supporting the idea.)

      Of course, what is in my mind is our needs for the future. The next decades & remainder of this century. I see our ‘golden age’ (if that’s the right expression) of fossil fuel exploitation, & all the polluting & trashing of biodiversity & our ecological foundation, as coming to it’s inevitable end quite soon. The next 60 years cannot be like the last 60.

      Humanity faces enormous challenges in managing & sharing resources in a way we’ve never had to before. Yet we are steaming along at full speed into these with organisational structures little evolved from previous centuries. Indeed even trending further backward to the neo-feudal.

      Just the infrastructural changes we need to make it into the next century, without the life expectancy & quality of life for billions plummeting, are huge. They simply will not happen in time, quite possibly, not at all, if we fail to to place the interests of the majority of citizens at the centre of decision making. A deterioration into global conflict & futher environmental destruction is the path we are on now. Witness the rise in ‘far right’, highly divisive, political support in Greece, France & lurking in many other places.

      It’s time for real democracy. And it’s not rocket science, nor is the economics thinking needed either. But it will require citizens to engage beyond the mainstream, & way beyond their neighbourhood too imo.

      1. “But at my back I always hear
        Time’s winged chariots drawing near”… Andrew Marvell, in “To his Coy Mistress”, in the 17th century.
        My personal observation leads me to believe that the more we engage beyond the mainstream, the more we engage beyond our neighborhood… the less we live in our neighborhood, the less we see, do in the physical places where we are leading our lives, and where our bodies are.
        Our behavior is extremely self destructive, sir, and the beliefs that underpin it will continue contributing to taking us down.. further.
        We seem to think that we are large scale creators, and not… creatures anymore. That we… control, can control and WILL control much more than it is.. REASONABLY possible for us to control. This.. hubris is one of our greatest problems.
        But…. we are creatures, with real, physical and spiritual needs which need to be addressed, and are not being addressed in a meaningful way at this time.
        As a friend said one day… it is at the point where we can now send any message almost everywhere on the planet instantaneously that we.. now have nothing to say anymore.
        I believe this. Some people may think this statement an exaggeration.
        For me, it is not. Our civilization is vapid, spiritually and culturally empty at this time, and continuing on this path.
        Odd that on the blogs, and during our last election, nothing ? little ? was said about the euro crisis being.. a political one.
        Is it a coincidence that at the time when the big American colonizer is busy colonizing the world that produced its civilization, and with a.. DEBT that makes European countries’ debt look like a drop in the bucket, the Greek crisis suddenly appeared ?
        When you are going down, what better tactic than accusing your neighbor of being bankrupt, and living beyond HIS means, when your own are in question
        ?
        For historical and ideological reasons, the countries that produced American culture, and colonized the new world cannot attack it as being the economic aggressor it has become… The United States STILL remains the ultimate Enlightenment experiment, the.. NEW ATLANTIS in the European psyche.
        So… we will bite the bullet…and turn our heads in the other direction, while the colony… takes us down…

  6. Desmond Dillon

    it cannot be said to be morally ok or fair or just to take from the poorest to make good the losses of the gambling rich. we are all witness to it and the most debilitating aspect can be an awareness of being unable to do anything about it. it seems that is the challenge. like ‘what are you going to do about it?’

    for me its noticeable that i’m being prompted by my conscience. it could be that a condition of being a member of the elite is that you have a stunted one. or that sociopaths and psychopaths are not troubled by a conscience. anyway i have no leverage over their activities but i do over mine. individually we can become more aware of our own inner feelings and seek to stay true to them in whatever it is that we do. wishing you All the Best.

  7. The process by which this happens is I think fairly inevitable. What we do all the time is a version of us and them, like me and not like me, safe and unsafe. We start this process as babies, it is a basic survival skill to separate safe from unsafe. And we continue to do it in a modified and more sophisticated form as adults.

    What is interesting is how our empathy works – we are most empathic with people in the like me group, and least with the people in the not me group. Again this is about survival.

    What we seem to forget is that we are nothing more than a smart social monkey. A monkey that invented symbolic reasoning – we learnt to talk.

    One of the things about language is that it’s structure, the way it is spoken, also serves to frame reality. It makes some things seem to be common sense, and makes other things unthinkable.

    One of the over-arching paradigms of our wealthy elite is this notion of meritocracy. I am where I am today by the virtue of my own efforts, therefore those who do not succeed must lack some inherent trait which I possess. (actually this stance is quite a common form of cognitive bias present not just in our wealthy elite, but pretty much every smart monkey on the planet)

    And put them altogether and what do you get…

    A mayor who cancels a program because he sees no need for it. Not only is he unable to empathise with this group – it’s very difficult to empathise with a group who you are afraid of – but also the way he frames the world sees this group as being where they are due to a fundamental moral failure. What you will see as a policy result is a call for increased policing, and harsher punishment – if these people are unable to control their desires, then the state must protect us from them.

  8. Again spot on, the logic of banking is all wrong but the same is true of the fallout. When we here of money removed from the most needy in this way it should be presented as ‘money taken from poor to pay for banking losses’ but again the double speak of the banks has won the day. We don’t here this joined up thinking, instead all we here is that sacrifices must be made due to budget constraints. Why we have those constraints is left out, or passed over as ‘well we are were we are’, disgusting.

  9. Golem

    I hope you pointed your friend in the direction of the MMT blogs. (If he is interested to study MMT, I can offer to help, you have my email & skype info.)

    If ever there was a perfect avenue for a program under the Job Guarantee, it is these community programs.

    As MMT tells us, if the idle resources are available (young unemployed in this case), the government is not constrained in any way from hiring them. It does not require ‘taxes’. Taxes do not, & are not required to finance any part of US Federal spending. (I realise it was state/city funding in this case, but the federal authorities can step in just as easily.)

    I find stories like this of such wanton vandalism of young peoples’ life opportunities really sickening. It is completely unneccesary. ‘Financial’ constraints (in fiat, free floating currencies) are a complete fiction created in the interests solely of the top few percent.

    1. Mike

      MMT won’t raise taxes, but they will print money, and then there will be inflation and prices will rise and then we are in a world of trouble. In other words you will preserve the status of the big debtor and rob the savers, pensioners and the prudent to pay for this “full” employment. That solution is perhaps a bigger scandal than the problem. What are you proposing these kids do with their new found jobs ? As Keynes said, get them to dig holes and fill them up again ? The money printers already decimated all industry. You money printers are deluded. You know why there are no jobs ? Because the money printers are the only industry left in town. They are in the business of producing paper derivatives and all they need is a computer and an index finger. They have killed off all proper industry. The printer in the hands of the govt would just make the govt even more corrupt than it already is. Imagine Osborne in charge of the money creation ! At least now they actually have to court the bankers, as abhorrent as that is.

      I tell you that if this economy was fairly arranged , underpinned by Sound Money, the big debtors and paper lenders would go to the wall, money would be freed up. The savers and prudent would put their money to work in productive investments, because if they don’t invest wisely they will lose their loans. All people who wanted to get the skills and work would find a productive job in a now thriving, sustainable productive industry making real things that people wanted to buy. That is fair.

      1. Gary, you say

        “What are you proposing these kids do with their new found jobs ?”

        did you read Golem’s post??? did you understand that there are children growing up in terrible conditions, exposed to drugs and violence, and prone to end up prolongating the same conditions unless they are shown anoher way?
        It is surprising that one has to explicitly say it : those jobs are providing an opportunity to those children, an opportunity to overcome their terrible sin of having been born in the wrong place.

        You may have a point on that excessive increase in money produces inflation, nobody is really denying that. But I think you should try to look at the world in a slightly less narrow way, not everything can be solved by productive investments producing goods that people can willingly pay for.

        1. CArratiaM

          So, you think printing money will NOT further impoverish the nation and make things worse ? Read this by a man who spent a lifetime studying inflation and unsound money. Do you recognise some of the elements in your plea ?

          “Inflation, to sum up, is the increase in the volume of money and bank credit in relation to the volume of goods. It is harmful because it depreciates the value of the monetary unit, raises everybody’s cost of living, imposes what is in effect a tax on the poorest (without exemptions) at as high a rate as the tax on the richest, wipes out the value of past savings, discourages future savings, redistributes wealth and income wantonly(ed: to the money printers), encourages and rewards speculation and gambling at the expense of thrift and work, undermines confidence in the justice of a free enterprise system, and corrupts public and private morals.” – Hazlitt

          1. Gary you’re getting really boring (will skim your comments even faster ) as I get the distinct feeling that you’re just another survival of the fittest, dog-eat-dog right wing libertarian.Whether it’s fiat or gold if the system encourages the accumulation of ‘wealth’ (sick) as its raison d’etre then it’s all just more of the same old same old.Please change the record (hard drive,whatever).Go cuddle someone!

        2. You say these people live in terrible conditions and they have to have jobs. I am telling you that with your mmt/govt/printing money solutions there will be even less jobs and more poverty.

          If that is not your point then I have no clue what you are talking about. I don’t think you even know what your point is. You talk in circles. Enough !

          1. You ask what are the jobs for.

            What you understood from what I say is:
            “You say these people live in terrible conditions and they have to have jobs.”

            That’s not exactly what I said. I said that the children live in terrible conditions. The jobs are for those who educate the children. I add now that the children that live in terrible conditions have to have education.

            That makes point 1: The jobs are for educating the children.

            I then conceded to you the point you keep repeating, which makes point 2:
            “You may have a point on that excessive increase in money produces inflation, nobody is really denying that.”

            I lastly added point 3: “not everything can be solved by productive investments producing goods that people can willingly pay for.”

            But at the end I agree with you. It’s enough.

          2. No, Gary is not at all correct in repeating ad nauseam the inflation mantra.

            The mantra is repeated because most people do not understand either macro economics or the monetary system.

            Rather they have been brainwashed by mainstream media & the failed economic thinking that’s caused the present mess, into a Pavlovian reaction to the word.

            New money, either with debt or debt free, can be issued into circulation without causing inflation so long as there are idle resources to be purchased. It’s that simple. To suggest otherwise is to deny that supply & demand curves function in the micro economy (particular resource) in question.

            Expansion of the money supply is a requirement for growth, however it comes about.

            In the current situation we have vast numbers of people available who want work. We will not approach inflation until they are fully hired. That is some years away.

            Except that for goldbugs, inflation drops out of trees, cracks in the ground, everywhere, except (they say, without much evidence) under a gold standard. And they could care less however many people are unemployed.

            Notice, they never talk about this or anything much to do with the real economy of ordinary citizens. Except to raise ‘phantom’ issues like inflation.

            In the real world, even moderate to high inflation is not an issue for most people. What matters is whether the economy can give them the opportunity to work & provide real goods & services for their families.

            In Argentina, still recovering from economic collapse that had many causes in parallel to using a gold standard (peg to US$), has 15% plus inflation. A lot of structural problems remain to be resolved (after decades of kleptocracy & corruption), but their President’s popular support remains at a level that ‘Western’ political leaders could only dream of.

            Inflation & its effects is a far more complex issue than the Pavlovians want people to see, or by considering some bogus one-dimensional ‘quantity of money’ idiocy.

            Additionally, ‘debating’ or advocating something that has not the slightest chance of implentation is an incredible waste of time. But that may well be part of the goldbug agenda. They have no interests in the wellbeing of the majority of citizens.

            ‘Gold standard and fixed exchange rates – myths that still prevail’

            http://bilbo.economicoutlook.net/blog/?p=2562

          3. Mike

            Printing money ALWAYS leads to inflation from the first minute you turn the presses on. Because not every loan leads to growth. Most loans fail and those loans are inflationary. By definition. 9 out of 10 start-ups fail. You get inflation from day one.

            BTW : printing money without growth is called stagflation. What we now have.

            If printing money led to growth then Zimbabwe would have been the most successful economy ever known.

          4. More garbage from you Gary.

            “Printing money ALWAYS leads to inflation from the first minute you turn the presses on.”

            No, it doesn’t, inflation occurs, or not, at the point of transaction – price discovery. And at that point it depends on whether the market is ‘free’ & can supply what the money is to be exchanged for.

            “BTW : printing money without growth is called stagflation. What we now have.”

            No, we don’t, money supply in US & Europe & other areas in recession or stagnation all have much reduced money supply metrics.

            “If printing money led to growth then Zimbabwe would have been the most successful economy ever known.”

            No, because +before+ Zimbabwe started printing they utterly destroyed the production capacity of their economy, largely their agriculture sector. People had to throw whatever quantity of money they had to compete for a meal to survive the day.

            If you think your country is like Zimbabwe, I suggest you leave immediately & go and sit on your gold in a cave somewhere until the paranoia recedes. Preferably one without internet access 😉

            Increasing the money supply (whether by debt or issuance), for a given rate of circulation, is a requirement for growth. Whether it happens or not depends on what can be, or is, bought with it.

          5. “BTW : printing money without growth is called stagflation. What we now have.”

            No it doesn’t Gary and we don’t have stagflation – that’s not how the monetary circuit works.

            Check M3, which has to grow at 5% PA for the economy to stand still – it’s currently at 3-4% PA.

            When there was real stagflation in the mid 1970s it was growing at 30-40% PA.

            China has used MMT since 1980 to finance projects for it’s China Investment Corporation. Infact, this method has been central to it’s 10% GDP growth PA!

  10. A modern day Grapes of Wrath.

    Steinbeck would be ashamed of the world we’re now in.

    Truly disconcerting.

  11. I don’t see the problem as the uncaring rich against innocent poor children. The overriding difficulty facing these children is a lack of a father. It used to be that if you had a strong back and and a good work ethic you could provide for your family as a man. Strong backs have been replaced by machinery and women are better at sitting behind desk than many men are. Bloomberg and Blankfein are a side show in this production, the problem is the marginalized men.

  12. Another great article. Hate to be a nit-picker, but it should be “riposte”. Not “repost”. (para. 6)

  13. In this barse-ackwards world Mr Bloomberg makes perfect sense.

    It costs $40 thou a year to keep someone in jail in the US. Privatise the prison service and those 47 thou kids will provide you with potential earnings of 1880 million a year!

    Hey, let’s crack open the champagne and watch Rome burn!!!!

  14. Excellent article.

    One thing is that finally, “the young” are not going to stay that way.
    Most adults people are “expecting” other adults to find solutions.

    It doesn’t work that way.
    My own experience (Teaching in London’s dock area, way back in the 60’s) where there were social pressures to conform to the stereotypes of the day – “daddy was a lighterman so “you” will be too” – also led to Michael Caine and Sean Connery (they lived in a flat close by). Part of the “social – and social mores” revolution that started in 1968.

    The young will inevitably take charge.
    The big question is; will it be for a better world or a worse one?
    Whatever. As the financial system is bust and politics and corporations wallow in corruption as well, either there is a total rejection of the 1% (for lack of another way to describe them) and the repression they are installing, or, we end up in a truly fascist state.

    One of Golem’s points above, is that there are TWO types of reaction possible (by the young, drug runners or becoming responsable). “We” are not the ones who will choose which.

  15. Mike can you explain to me, a non economist, what is the difference between a government borrowing money overseas on specific terms and conditions to build infrastructure and printing money to build that same infrastructure on the same specific terms and conditions. Why would anyone pay interest to a foreigner when that same interest could be going back to the government (the people). I do not know why Governments borrow. What do they do with it? Do they lend it on? While I realize these days governments don’t print, they electronically transfer, what happens with fractional reserve banking? Who starts off the electronic transfer. The Government? The Banks? If the Banks do it where did they get that authority? My mind is in a twirl trying to come to terms with all this and whenever I do, never on this site, people get very abusive. Abuse never helps my thought processes! If I have asked these questions before please forgive me. I forget a bit these days.

    1. I tried to add a bit but the computer cut me off! If inflation is the terrible thing they say it is doesn’t the Reserve Bank have that tool to stop that now? If inflation is caused by printing money is it not also caused by borrowing? It is all so confusing.

      1. Patricia,

        You’re asking about the operation of ‘fiat’, ‘free floating’ currencies, that UK, US, EU etc. have been using since 1971, when the post war Bretton Woods (gold standard type, fixed exchange rate system had to be abandoned).

        In the commercial (high st) banks, loans are ‘created’ from thin air, & themselves create corresponding deposits. New money thus enters the economy, as credit. But note, repayments to the principal ‘extinguish’ money. Banks get to keep the interest, credited to their own account.

        ‘Reserves’ are accounts that commercial banks keep at the central bank, which facilitates the payments system, ‘clearing’, between banks.

        Commercial banks must keep sufficient reserves to always meet their obligations. But the central bank always stands ready to supply (create) them with reserves, at a certain interest rate. Note also, loans create corresponding deposits, which provides reserves +somewhere+ in the system (unless withdrawn & +held+, as cash). Banks also lend between themselves to meet their reserve requirements. In practice, banks are not reserves (or deposits) influenced either way in deciding to lend. They are capital constrained by various conventions & rules typically internationally agreed (‘Basel’ etc), and may be somewhat influenced by the profit potential between costs of reserves & interest to be received on a loan. (Plays partly into the fundamental risk/reward ‘creditworthyness’ decision.)

        Commercial banks receive their ‘charter’ or franchise from the central bank, which in turn receives its charter from government (law).

        In reality, whilst the government ‘Treasury’ & Central Bank are separated, they are, in +effect+, one entity. Issuance of currency is a monopoly granted or franchised by Government authority.

        So from this stand point, Government, if it wishes, can spend (cause issuance of) money without any recourse to borrowing or use of pre-existing money. In funcional terms, in effect, this is exactly what it does.

        In functional terms again, any decision to borrow (issue bonds) has only two purposes, relating to ‘monetary operations’, neither relate to ‘needs’ for spending. These are 1) maintenance of a target ‘base’ interest rate, and 2) provision of risk-free interest bearing deposit facilities for financial institutuions. (Risk free, because an issuer of currency can by definition, never involuntarily default.)

        So, to answer your question concerning a Gov choice to borrow from some foreign source – meaning inherently in a currency it does not issue. I think from the above you can see why the only reason it might do this would be to purchase something which requires payment in that foreign currency, not its own. To purchase something available in its own domestic economy, it makes no sense whatever to use a foreign currency to do so.

        So, Gov actually spends, debt free money into the economy. But it also removes money, either permanently by taxation, or (potentially) temporarlly (the loan ‘period’) by ‘borrowing’ (issuing bonds). I say ‘potentially’, because in the long run, it is never repaid, rather rolled over indefinitiely & do realise that this term ‘borrowing’ has rather different meaning to that in our household finances.

        I hope you can also see from this that new money spent into an economy, whether issued as debt, with a repaymment obligation, is very little different in inflation potential to new money, issued debt free. Inflation occurs at the point of transaction. (Until, spent, price is not ‘discovered’.) But at that point the ‘market’ does not know whether that money came from a source which required debt repayment, or not.

        The key question is that of supply & demand in the market of the ‘good’ to be purchased. If there is ample supply at the time of purchase, & the market is free of monopoly or other rigging, there is no reason to expect an increase in price.

        Usually, a modest sum of new money is always entering an economy. Providing there are available resources in (new) labour & materials, the spending of it increases the supply of goods & services. We call this economic growth. Demonstrably, this is the normal situation & in the aggregate works reasonably well. (That is if this ‘real’ economy does not get screwed over by the extractive behaviour of a bloated financial/wealth sector to no productive purpose.)

        To repeat then, whether this type of inflation, called ‘demand-pull’ occurs, depends +primarily+ on whether goods or services are available to meet demand. Quantity of (new) money (entering by any means, debt or not) +can+ affect demand, but does not determine +whether+ inflation occurs, rather +how much+,not +if+ it occurs by its +primary+ mechanism.

        The difference then, between the effect of debt or non-debt issued money, comes down to the +time+ factor of loan ‘maturity’ (when it must be repaid – money extinguished) vs what, in our great ingenuity, in the meanwhile, we can do to provide growth in goods & services for sale (thus ‘keeping pace’ with the new demand from new money).

        But note also, with regard to debt-issued (net) new money, loan maturities, in the aggregate, are as haphazard & random as the rest of our complex ‘dynamic system’ (always changing) economies. Aside from the noting that few loan maturities of significance are less than three years typically, many are much longer. So someone attempting to determine what inflation ‘might’ be in three years time should be called ‘Mystic Meg’, not an economist. (Even more laughable given the state of ‘mainstream’ economics modeling, considering their ‘all steady’ predictions mere weeks before the global crisis blew up!)

        Now, recall, that whilst Gov spending issues new debt-free money, taxation +removes it+. if inflation arises, at some point (years) in some indeterminable ‘future’, Gov has the ability to quickly remove money from circulation to rebalance the purchasing power/ available resources equation. What’s more, it can do this, identifying the sector(s) out of balance, with infinitely greater precision than the present blanket efforts attempting to reduce money available in all sectors equally, regardless of whether they are inflating or not! (The latter needlessly reducing economic activity in areas not inflating.)

        Ok, that’s ‘demand-pull’ inflation. Let’s talk about really important type – called ‘cost-push’.

        Cost-push is inflation – price increase – caused by external factors. Goods & services that is, supplied/produced not in our own economy, but elsewhere, or in our own economy, but subject to limits we cannot control. (Note also there are often ‘knock on’ effects – these goods are required as inputs to other products. ‘Overall’ inflation is notoriously difficult to estimate. This is one of the reasons. Further evidence that ‘one size fits all’ inflation ‘targeting’ is pretty stupid.)

        Let’s look at another effect of ‘cost-push’ inflation. Say, that caused by rising oil prices in net-importing countries (most of us).

        Pushes up the price of fuel & energy & most other goods and services to some extent or other. But very hard to measure its precise overall effect.

        If we do not allow our domestic money supply to expand where needed in sectors affected, economic activity in those areas will tend to shrink. People will lose their jobs. Then they have less money to spend, so more will lose their jobs, and so it goes in a downward spiral of diminishing activity & production of goods & services.

        Yet this is precisely the kind of crude & damaging approach the inflation hyper-ventilators, ‘quantity of money’ targeting goldbugs would have us take

        The present, single arbitrary inflation target (regardless of inflation type) to be ‘controlled’ (as if) by a single base interest rate, for an entire continent, is nearly as dumb. (Unless you are one of the top few percent who could care less happens in the real economy.)

        Hope this is of some help?

        Do have a look at the MMT blogs, esp Bill Mitchell, as well.

      2. When Mike Hall starts talking about inflation it becomes comical. He ties himself up in knots with his “demand-pulls” and “cost-pushes” and everything in-between, eventually does not know which way is up. In fishing they call this a birds nest, when you overcast and the line bunches up into a tangled ball . Good luck disentangling that one.

        Mike try this and sort your head out : inflation is the oversupply of money. Period.

        1. Gary

          “Inflation, to sum up, is the increase in the volume of money and bank credit in relation to the volume of goods” (from your earlier Hazlitt quotation). Inflation is not an oversupply of money, “period”; it is, as your quote explicitly states, an oversupply of money relative to the volume of goods available to be purchased in the economy. Since these goods include the labour of the working population, inflation cannot be considered a serious risk until 100 per cent employment has been achieved. The fact that your own quotation supports what Mike Hall said rather suggests that it is yourself whose thinking is tangled up in knots.

          1. Pat,

            I get accused of repeating myself, but obviously I don’t repeat myself enough.

            When I say “there is an oversupply”, of course it must be referenced to something, I just left it out because I have said it so many times , I thought it was understood. Obviously not.

            Inflation is actually an oversupply of money wrt to the DEMAND for goods and services in the economy. The demand for goods and services is equivalent to the amount of transactions that are demanded and there has to be the corresponding amount of money to consumate these transactions. If there is more money then there is inflation, less and there is deflation.

            But, nowhere from this is your conclusion about labour and full employment and inflation valid. It is illogical. All the consumer demands are ALWAYS satisfied by a smaller subset of goods and services than that would require full employment. Because in any case there is ALWAYS a component of people who are consumers of goods and services that are not in the labour market. eg. They call them pensioners and the retired. That blows your theory out of the water. It makes yours and MMT premise false, and probably makes all that flows from this false premise also false.

            It is this Marxist/neo-classical notion of full employment that leads us to Keynes concluding that some people are going to have to be employed digging holes and filling them up again.

          2. BTW : the fundamental flaw in MMT and all related economic theories is that they start with a model (the more complex , the more clever they think they are) and then try the fit the real world into the model. They end up with a contorted mess. Instead they should do what the Austrians do and assume that economic calculation is too complex to model. You would have to find the meaning of life itself to model it. Working from that premise The Austrians then say the only way to “manage” an economy is to ensure that the market is free to do its calculation. The market is the model, the model is the market. What is The Market ? People going about their daily business. To let people be free to do this, is the most democratic thing in the whole world.

            The statists cannot see this, because they have a model and the world has to fit into their model. That is the most draconian , anti-democratic concept in the whole world. But they seduce the people, they promise them a chimera of cradle to grave state support, and of course it always turns out to be a lie and the whole shebang always collapses in ruin.

    2. Patricia,

      My .02c.

      Governments borrow because they cannot raise enough taxes to cover spending.

      The banks get their monopoly power from the govt.

      This govt is not borrowing much from abroad, nobody is inclined to lend to it, probably because with total debt to GDP of 1000%, mostly private debt. The foreigners are either themselves broke or consider this country a risk because we cannot raise the taxes to repay the debt. This country is getting its money mainly from QE where the Central Bank prints money and buys the govt debt through its member banks.

      This policy is inflationary , with all the attendant side-effects. Bottom line they are looting the savers and pensioners to pay for the govt debt and they are further decimating industry and growing the banking sector.

      This will end very badly indeed. Maybe consider taking refuge in hard assets that hold their value eg. gold IMO

  16. One solution (?) that comes to mind is deflation. One of the principal reasons given for “anti-deflation” policies seems to be that “growth” would be impaired. However, the reality of “growth”, is that it is comprised of increased production, combined with a decrease in the labour force. Which can be summarised as an increase in the profit margins of corporations at the cost of labour, and with a high social cost attached.

    “Growth” seems mainly beneficial to the 1%, not the population by and large. Is “Growth” a compound “interest” scale, so that the 2% of yesterday is not the same as that of today? (similar to the cost of living index which we no longer even hear of.)

    A decrease in prices, would benefit the majority, make life more liveable. It would not noticibly change the buying rate of the rich either. You can only eat one beefsteak at a time.

    Obviously, the reply is – but what about the production costs?
    In fact they would not change much. The producers are already squeezed, by the middle men and powerfull corporations. (Think also of the kickbacks and the necessity to buy top-of-shelf space in supermarkets). They could NOT reduce – so where would the price fall have to hit? On Supermarkets and big corporations – those that make a profit in the middle. Most of whom practise tax avoidance anyway.

    (Examples; Bananas – produced at a giveaway price, then sold and “re-bought” by cover companies in the Caribbean, who then sell onwards with an undeclared price rise, into UK and EU markets. Pharmaceutical companies double-dipping. The “maison mere” includes a first hidden profit and then “sells their products” to their own distributors who have to make the “declared” profit on top, etc.)

    One advantage of deflation, would be that more people would be able to buy – thus increasing demand. Particularly for locally produced goods. Giving the potential for a corresponding increase in the labour force.

    The second factor would be hard “assets”. But would it necessarily be a bad thing if they are devalued – as, a) they would decrease in value only in relation to a nominal rate. The underlying value would remain.
    b) Other assets? What are they? CDO’s, EFT’s or other paper variations made (-up) by the Banks to allow off balance sheet trading? Would it be a bad thing if Large Corporations and Financial compaines faced with a certain devaluation of their holdings were forced to put their hidden reserves back into circulation?
    c) I am less sure what it would do to the liquidity sloshing around. But since this would be a problem for Big finance – I am not sure I would worry about it anyway.

    Too good to be true? OK. Tell me it wouldn’t work, but why?

  17. Thank you all for the intellectually and morally intelligent discourse.

    I see more mention of the moral dimension in macroeconomic and socio-political discussions these days. I feel that the moral dimension of ordinary life has been under appreciated for decades. In striving for freedom, we’ve been mildly embarrassed to admit we follow a moral compass. We baby boomers thought morals were shackles and threw them off. They weren’t “cool.” Yet, while we pretended to abandon them, most of us quietly retained values of decency as we progressed through life. What is so dangerous and devastating to many out-of-work people is that the moral map seems so utterly broken now. Where in the past the ordinary practical sacrifices of study, work, planning, saving propelled us ahead, now we find ourselves adrift in a world without traction. The moral universe is so tilted and our shoes just don’t grip. There is a Gresham’s law in effect in the moral “currency” of institutions. Charismatic bullies who may or may not be clinically psychopathic have shaped a culture, legislative matrix and jurisprudence which mal-distribute rewards to the bully class.

    Normally too squishy a topic for economists, more and more I do see threads of discussion about a change of consciousness. Greed and bullying come from, among other influences, self-loathing and fear. The big bad theme on the planet is scarcity. The big hopeful secret is that human creativity can outsmart scarcity and human compassion and cooperation can outlast scarcity.

    It is a puzzling paradox. There are real and realistic limits to human growth within the paradigms we choose. For example, a global economy based on extraction and wasteful consumption is recklessly unsustainable. In the paradox, we need to humble ourselves and remember we depend on our fragile planet. We also need to celebrate our creative genius as we transcend our limiting models and beliefs and find solutions in places we never dreamed of looking. Yes, there is plenty of work ahead in the widest gamut of human activity from the mundane practical to the moral and even mystical.

      1. Thanks for the link.

        It’s 1hr 20mins, but I would really recommend watching.

        Especially those struggling with the kind of questions Patricia was asking above. A far more extensive answer than I could give here, all well explained in plain English.

        I really like Mary’s concept of ‘Sufficiency Economics’.

        (It’s all MMT consistent, correctly describing the true functions & possibilities of the monetary systems we already have,)

  18. Naturally, I do no know how much the programs described in the top post cost, but generally speaking, such services are not expensive, even for such a large number of children. In any State or local budget it is a very small line (salaries are low, buildings are paid for out of other budgets, no transport is involved, etc.) Moreover, programs of this kind deliver a huge bang for the buck, though that is of course hard to measure. Some
    argue that they deliver a better return than…school itself.

    Cutting half the funding doesn’t save much money, but will rapidly create (besides the direct effect on children and families) expenditure elsewhere – unemployment, police, emergency, medical costs, repairing vandalism, fostering, prison. I cannot judge but guess that these extra costs will surpass the original outlay very quickly. Policy makers – even in the US – know this. They know it. Note that the extra costs will, for a large part, be paid to repressive, controlling bodies.

    Cutting in half is typical. It looks ‘reasonable‘ – one does not deny the positive aspects, or the existence of, the programs, but sadly, the money is no longer there… Depending on how the cuts are made, one either saps the whole system which then can no longer function, leading to its demise, or one creates differences between different user groups, different localities, etc. thus promoting strife, competition, etc.

    So the motivation for the cuts rests on beliefs, plans, considerations.. that fall out of the scope of what is commonly seen as ‘proper social policy.’

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