We’ve must all, at times, have been in conversation with friends and acquaintances, when we have heard wrong-headed neo-liberal type remarks which have required some response, but not too much of a response. We need something quick, snappy, and easy to understand. After all, we probably do want to keep those friends. We’d like to encourage them to think about what they are saying but not bore them rigid with long-winded explanations.
Hopefully, we’ll get more contributions but these are a few, which immediately spring to mind:
- Governments shouldn’t spend more than they earn
I’m pleased they do. Otherwise, none of us would have any money. I work 40 hours a week to re-fill my bank account with government IOUs. I don’t know about you, but I need that Government debt!
- It’s wrong for Governments to print money
ALL money, except loose change, is either printed or created by keystroke. It would be much less convenient to have to carry around gold bullion to pay the grocery bills.
- A government is like a household etc etc
I don’t have a currency printing press in my household! If I don’t pay the mortgage it’s my problem. If a government defaults on its debt it’s everyone’s problem. The government is an issuer not just a user of the currency. That is a key difference.
- The government will have to default on its debts if it carries on spending like a drunken sailor.
Only if its printing presses break down or if the computers malfunction! Governments with sovereign currencies can create whatever they need to settle their bills. Government cheques need never bounce.
- So you are advocating we copy the economic policies of Zimbabwe?
No I’m saying we learn from Goldilocks. The porridge should neither be too hot nor too cold. She liked it just right.
(Note: It is important to emphasise the need to avoid inflation)
- There are too many inefficient civil servants. The government sector is too large etc etc
Workers emptying the bins, driving buses, teaching children, or whatever, don’t become any more productive if they work for the private sector. In any case that’s a secondary issue. Real inefficiency is having workers do nothing when they could be making a useful contribution to society.
- People should save more to help the Government pay off its debts.
It’s the other way around. For every saver (lender) there has to be a borrower, and vice versa. Higher savings mean higher government borrowings and therefore higher debts
- The private sector has had to tighten its belt since the GFC. It is only fair the government should do the same.
That’s was the accepted conventional wisdom in the 1930’s. The depression only really ended when governments were forced to tear up their neo-liberal text books when the war started. Do we have to have another war to re-learn the same lesson?
- Who is going to pay for it all? We can’t afford it.
It can actually be done at a profit. Higher employment levels means more taxation revenue and less spending on social benefits. In addition the streets could be cleaner, the parks tidier and the environment better for all. There would be less crime. Everyone would benefit from reduced economic inefficiency not just those who gained a job. It is not Utopianism. It has been done before and can be done again.