The Trillion-Dollar Coin

The thing is, money is all about shared assumptions, conventions that are accepted generally. Even with gold, no one seriously believes that it is intrinsically "worth" such-and-such an amount per ounce. It's just a way of keeping score: if we had to exchange so many bushels of wheat or x-rays or dozens of eggs for a brake job or some such product or service, we'd all have to have huge lists, or databases, with us at all times in order to keep track of relative values. We'd never get anything done.

So, to a certain extent, all we are talking about when we talk about money is our shared willingness to agree on rates of exchange of products, and a quick and easy tool to enable us actually to make the exchanges we need to make.

So, as far as the trillion-dollar coin is concerned, we could just as easily pretend to have it; we could not make it, and say we had. The effect would be the same: okay, you've got this stuff, this "money" that we've all agreed to accept as a store of value and a medium of exchange. So, we'll take it, at convenient times and in convenient pieces, and in return we will mow your lawn or change the oil on your car --or provide you with a new car--; and then you will have what you want. Whatever we want, this stuff will be accepted by the next guy in return for it.

It seems to me that when you look at it this way, all the hand-wringing in Washington about the budget, the debt, and so forth is so much window-dressing. We have too much debt, it is said*. What that apparently is supposed to signify is this: other people have a lot of our debt. We owe other people way, way too much. We can't pay it all off.  So, the people who have our debt might decide they are uncomfortable, and want to get paid. The thing they would want to get paid with is this "money;" which exists only because we create it. So can't we just make some more?

Ah, say the skeptics: you might think we can, but it isn't so. If we make too much of it, people will get upset and will demand a lot more in payment, or stop accepting it altogether and demand something else.

That's where the notion of "full faith and credit" of the U.S. comes in: we are a rich, productive country, and everyone knows this, and so pretty much everyone is willing to believe that we can back up our promises (that is, our money) with our resources. We can create value in the form of things people want. Never mind that a lot of this value is intangible; it's real as long as people think it is real.

A trillion-dollar coin is, fundamentally, no different than a dollar bill. It would represent our contract, in a universally-accepted form, to perform in the future.

Put it this way: if you have a brokerage account, and a 401(k), and so forth, what do you really have? Numbers on a piece of paper, and not much more --in fact, if, like me, you've stopped receiving monthly statements on paper, all you have are images on a computer screen. But you can change these images into bank deposits (another intangible) and eventually into cans of pork 'n' beans; and, ultimately, that's all you care about. The pixels floating out there, or the numbers on sheets of paper, are just a method of score-keeping: they verify your entitlement to that can of beans, whenever you might want to claim it.

There's nothing magic about a trillion-dollar coin; the Mint could strike one trillion dollar coins, or dollar bills for that matter (however, there are laws restricting the amount of paper currency --but not of coinage-- that can be in circulation at one time). It is well-established in traditional economic theory that, in our current circumstances, such printing would not be inflationary; indeed, in spite of a constant chorus of warning, over the past 5 years, from right-wing politicians about hyper-inflation, the dramatic expansion of government "stimulus" and significant annual federal deficits, there has been no inflation. We've even flirted with deflation from time to time. But physically printing all that volume of money would be time- and resource-consuming (even if it were legal); let's just take the large-denomination coin shortcut.

In its function, the trillion-dollar coin would be indistinguishable from debt; but then, all money is, debt, isn't it?

*The federal debt is, very roughly, equal to the current annual output of the national economy. Is that "too much" debt? Reasonable people may differ. But for all the "government ought to be run like a household" people, I have a question: How many of you bought your first house for an amount equal to your annual salary? Did that purchase mean you had "too much debt?" And did you cut back to two meals a day in response? That is, essentially, what we are being asked to do now, by the Right.

Max Weber and the American Polity

In his treatise The Protestant Ethic and the Spirit of Capitalism, Max Weber posited a direct relationship between the religious ethic of the Puritan emigres who settled in Massachusetts and the economic prosperity that characterized the nation that, eventually, followed from that early venture. I won't try to do justice to Weber's argument; it's been fifty years, and although his book, like Emile Durkheim's Suicide, seemed to be found in every dormitory room and student apartment in Hyde Park during the Sixties, I no longer recall more than the bare bones.

Weber started with the notion of the Puritans that prosperity was a sign of the Lord's favor --that the doctrine of predestination, which said that everyone is born with an eternal future carved in stone, actually offered a way for us to find out what our particular fate would be. We couldn't change our destination, be it Heaven or Hell; but we could recognize its signs by reference to our station here on Earth: if you were honest, thrifty, and prosperous, that was a reliable sign that you were predestined for eternal glory.

According to Weber, the result was to encourage people to strive for the outward signs of the Lord's favor; and this striving produced a society of achievers, upstanding, moral citizens: capitalists, whose increasing prosperity would be evidence that they were of the Elect.

It was an ingenious theory, and it had the added bonus of providing a sort of imprimatur for rapacious capitalism: it was our destiny to be prosperous, because we were Chosen.

Americans have always gobbled up this notion. We are prosperous because we are virtuous because God has singled us out, as a nation, for glory, for election, for prosperity, for virtue. A circle, if you will, of endlessly ramifying justifications for being who we are. This sort of thinking has, over the generations, encompassed the often-asserted belief that the U.S. is a shining city on a hill; that we are the indispensable nation; that our destiny is manifest; that we are unique because we are uniquely good.

All those bromides have become the formulae of our national self-expression, found in the speeches of every politician and the unconscious, and un-selfconscious, beliefs of the average American. We are good. We are blessed by God, singled out because of our virtue.

And so, of course, if we do something, it must be good; it must be right, because it is we who do it. I have actually heard people say this.

And also, the typical American believes that what is true of us must also be true of himself, individually. We all believe this, deep in our hearts. Probably the typical Japanese or Canadian holds some species of similar belief; but for Americans it is close to a civic religion.

And, I suppose, it has probably produced some good: the melding of a real nation, after a lot of difficulty, based on some civic ideal rather than on common ethnicity or religion or race. At least, that's what we have always said about ourselves. But I detect a crack in that particular dike, and maybe more than a little water spilling out.

That ideal worked as long as we believed in the "we" part. Today, more and more, there are signs that what we are coming to believe is the "I" part: I am virtuous, and, okay, maybe those like me. But more and more "Americans" are not like me. They are not part of the Moral Majority; they are those people, they are unbelievers, they are (if they would permit abortions, as a matter of policy) killers of children, they are takers, they are socialists, haters of America, Kenyan Muslims.

I think we are creating tribes where we had none. And I think tribes are the enemy of stability and comity in a modern state, because the State typically no longer has an iron-fisted ruler (and, where it does, it also tends to be backward, strife-ridden, often vicious). A State, as we envision it, and as we celebrate our own, has to depend on common purpose; and common purpose is not found where one group regards another as irredeemably Other. So, while we still recite the old harmonious phrases like standard prayers in a liturgy long since rendered an empty formality, we do so either without conviction or (after Ruskin's Characteristics), in an effort to convince ourselves of what is no longer true.

So we now have tribes of fundamentalist Christians, many of whom seem to believe, and who broadcast that belief ever more loudly, that Others who do not accept the Jesus they adhere to, are lost; moreover, they are contaminating the virtuous. We have tribes of fundamentalist Jews, and Muslims, who view one another as worse than evil. We have tribes of Blue-Staters (I am one such) who believe that Republicans, or Evangelicals, or Southerners in general, are benighted and are to be ignored where possible. And of course each of these groups holds out exceptions for those who, although they may look like the Other, have some sort of redeeming feature.

We have a President who, although he is pretty conservative --certainly quite conservative if compared to, say, Richard Nixon--, is a Kenyan Socialist Muslim because, well, because he's a Democrat, at least in name (that's the reason that we allow to be voiced, anyway --many of us believe there's a more basic reason). And, for another tribe, that President is an appeaser of the Right, a timid half-stepper, a handmaid of big Money; but, after all, he's a Democrat, and for Gad's sake, he's Black. So we have to overlook the things we don't like. Notice that we are not overlooking what we don't like because it is outweighed by what we like, but primarily because of who he is. And for the other side, we don't like his ideas because they are his, not because of their substance.*

So here's where we appear to be going: Anyone who does not look and sound like us, is irretrievably foreign and not to be trusted, supported, or cooperated with. And we are carving up the "like us" definition into smaller and more rigidly-defined pieces. Several mainstream center-right politicians have had distinguished careers ended lately because of a single vote, or even because of no vote at all, but because of an insufficiently warlike attitude in Congress, or perhaps because of a compromising disposition or a willingness even just to befriend a member of the other party.

This is, for a democracy, the road to ruin. It makes normal governance impossible, because only one person can possibly have the right view, or policy: me. And there are over 500 of "me" in the U.S. Congress.

We are building walls around ourselves, in ever-smaller groups. And, like any gated community, those within those walls eventually forget what the rest of the world is even like. And the stories they tell themselves drift further and further from reality. Ultimately, there are small groups of the virtuous, ready to fight to the death against those who are not Elect. This is not the only recent import to the U.S. that ties us, ever more closely, to the politics of the Taliban.

*This attitude was expressed most forcefully by Thomas E. Mann and Norman J. Ornstein, in their 2012 book It's Even Worse Than It Looks. In their introduction they describe the fate, in 2010, of a Senate resolution to create a bipartisan task force that would "fast-track" a procedure to resolve the so-called "debt problem." Ignoring the merits of the plan, it had broad bipartisan support. Until, that is, the President endorsed the idea. Once Obama indicated he was in favor, seven Republican co-sponsors voted against their own bill. So the resolution died, because even though it "carried" by a vote of 53-47, that is no longer enough in a Democracy. Like all Senate bills, these days, 60 votes are required for passage.

Archie and the NRA

Back in the '70s, it must've been, Archie Bunker was a cultural icon. Played by Carroll O'Connor, a Hollywood journeyman who was, in fact, a leftie of the old school, Archie was the paterfamilias in a situation comedy in which the gimmick was his recurring arguments with his son-in-law. The son-in-law's name is lost, at least to me: Archie called him "meathead," because he was a classic liberal while Archie was an unreconstructed bigot at a time when that was still common enough to be funny.

The 70s were the heyday of airplane hijackings, the safe kind where the airplane actually landed, eventually. So hijacking was an issue; and Archie's solution, the subject of a vehement argument in one episode, was to "arm all your passengers." No hijacker would dare try anything if he knew that there were 100 or 200 guns on the plane.

Archie was played as satire; but it is worth noting that many viewers missed the satire and agreed with Archie, on this as on many other issues.

The President of the NRA, Wayne LaPierre, said today that the solution to "a bad guy with a gun is a good guy with a gun." Every school in the country, he said, should have an armed guard; and Congress should immediately appropriate the necessary funding.

So, let's see, here: according to the "Back 2 School Stats" from the National Center for Education Statistics, there are about 99,000 public schools in the U.S. To make the arithmetic easier, and noting that private schools are not included here, let's say one armed guard for each of 100,000 schools.  On one NPR broadcast today, I heard someone estimate a cost of $85,000 per armed guard, counting salary, benefits, equipment (the gun!), the entire training and supervision infrastructure.

So, that's $8.5 billion. Per year. Add private and parochial schools and we are clearly talking, say, $15 billion or so. But what the hey: spare no expense to protect our children.

But schools aren't chosen by wackos because of an animus against education; they're chosen because a reliably dense supply of people can be found there. Churches work, too; witness this year's shooting at a Sikh temple in suburban Milwaukee (the doofus thought the Siks were Moslems). So, while we're at it, we'd better protect the churches, mosques, temples, synagogues, meeting houses, and so on, too.

The Hartford Institute for Religion Research tells us that the best estimates say there are about 300,000 religious congregations in the U.S. Of course, most of those only have significant attendance once or twice a week, so let's estimate that we could do with part-timers to cover them. Maybe 50,000 to 100,000 full-time equivalents (this is complicated in that the vast majority of congregations meet at more or less the same time, so we would have to have a lot of part-timers).

But then, what about all the other places people congregate? Movie theatres, for instance, and shopping centers, and sporting events. We'd better have armed guards --lots of them, because these places have a lot going on, lots of entrances, lots of different people in charge, to varying degrees.

I expect we are going to need, maybe, a half-million armed guards, more than the police and private guards we already have. After all, we've got to have an adequate supply of good guys with guns, because, as Mr. LaPierre said, there are bad guys out there, with guns.

But I wouldn't be surprised if we could handle the whole thing for around $50 billion per year, which is chump change. Maybe we could even save on that, if we used, you know, community-watch volunteers.

Like that guy --Zimmerman?-- in Florida. We could just deputize them all. So, pretty much everywhere we would go, there would be a friendly, helpful, competent, well trained government employee keeping us safe. And don't forget, we'd all have guns of our own!

And it would be easy to pay for: just raise the price of every bullet sold, by the necessary amount.

The Secret

Something is going unsaid in the flurry of stories about guns in America, and the justifications, the real and important need, for unfettered access to them, for "protection."

But first, let me readily acknowledge that if I lived on a farm in central Nebraska, I would consider it only sensible that I have a firearm: the nearest law enforcement authority, even perhaps the nearest neighbor, would likely be a long way away, and the response to an emergency that I am used to in Hyde Park --often a matter of 5 minutes or less--, would not be forthcoming. That does not necessarily mean I would require a 30- or 100-round clip for my "semi-" automatic weapon. let alone that I would need 20 or more guns. But perhaps an absolute ban of the type we have had, until recent Court rulings, in cities such as Chicago might not be proper.

Those arguments are not heard, though. We hear undifferentiated claims of need for protection, at all times and everywhere. Indeed, there have been laments that the kindergarten teachers at Sandy Hook were not packing heat. The people making those kinds of statements would seem to envision a school full of Diamond Lil-type gals, Glocks tucked into their garters; because, after all, if it were in the desk drawer, or the purse, way across the room or down the hall it would not likely do the job, would it?

The real argument isn't being made: it is that a significant number of people in this country believe that they must protect themselves from the government.

They believe Obama will attempt to drive them into the salt mines of socialism; or that black helicopters will descend to enforce martial law on Happy Valley; or, like the Texas sheriff recently, that the U.N. will attempt to take over his county by force. And if they are too rational to buy into any of these widely-held fears, they believe that the government will simply attempt to ban all weapons and confiscate all those now in the hands of the populace.

They won't say this, at least not many of them. But there are deeply-held fears that the always-at-hand "they" are coming to get "us." The fact that the president is a Negro has exacerbated these fears, no matter that Obama is not Malcolm X; hell, he isn't even Al Sharpton or Jesse Jackson. But once you have such a fear, any attempt at any kind of regulation is viewed as confirmation of the belief.

And so the primary response, across the country, to the killing of a couple dozen six year-olds in a school in Connecticut has been a run on large-capacity magazines and rapid-fire weapons.

Scalia, Sodomy, Bestiality, & Murder

To be fair, the distinguished Justice said that he wasn't equating sodomy with murder. He was just showing that banning one of these practices was much the same as banning the other: both prohibitions would simply be an expression of community morality. The Associated Press (as reported by Slate) quoted Scalia as saying, "If we cannot have moral feelings against homosexuality, can we have it against murder? Can we have it against other things?" 

He was saying that it is legitimate for communities to express their moral feelings via legislation, prohibiting those things to which they object. His example was murder; but how about smoking, or listening to rock and roll, or uncovering a woman's face in public?

Leaving aside the imprudence exhibited (not for the first time) in his speaking publicly on an issue that is currently before the Court, it is instructive that Justice Scalia is willing to follow Rick Santorum in making comparisons between things that have fundamental differences. Santorum, as widely noted at the time, asked how, if we were to allow homosexuals to marry, we could legitimately prevent a man from marrying a monkey. He was ignoring the most obvious feature of the comparison he attempted to force: that of consent. It is present in a marriage between humans, but a member of a non-human species cannot, we understand, give its consent. The same is true, of course, in the case of murder: both parties typically do not consent to the act (if they do, we call it "assisted suicide," and we sometimes allow it). If my morality would forbid some private action by other individuals, Scalia seems to think that I have the right to ban it.

But even ignoring this basic issue, it is hard (though not impossible, I admit) to believe that Scalia would endorse, for example, laws against interracial marriage. Segregation itself was generally a matter of, well, morality, as the majority would have had it, when the Court ruled it unconstitutional. Why was Plessy v. Ferguson wrong and Brown v. Board of Education right, when the former represented an endorsement of widely-held community standards and the latter repudiated those same standards?

Scalia appears, in short, to be saying that the rule of law under the Constitution is whatever the majority says it is, regardless of the rights of the minority.

A Letter to My Senator

Senator Durbin -- on one of the talk shows today you argued (1) that the Medicare eligibility age should not be raised, and (2) that Medicare should be means tested.

As to (1), I agree with you, and not mainlly for the reason you gave (to avoid a coverage gap for retired 65 and 66 year-olds), but because it would save the government very little money. 66 year old people are not the expensive Medicare beneficiaries; various commentators have estimated the savings at such small amounts that such a move sounds just, well, stingy, a suitable first step for a Republican whose actual agenda is to destroy Medicare.

As to (2), means-testing an "entitlement" turns it into a welfare system rather than a universal right. Don't go down this road; it's just the first step, again, in a Republican design, first to denigrate the program's participants as recipients of "welfare," then to destroy the program by "ending welfare as we know it" --substitute "Medicare" for "welfare" and you have Paul Ryan's call to arms. As a defender of traditional American social values, you should not, I think, be willing to place yourself in such a position.

Thank you,

Tony Walters

Business, Small (or, B-S)

Okay, it's time to parse one of the big recurrent themes of the Republicans in Congress, and what Pat Buchanan would call their "Amen Chorus" in the pundit class: Raising taxes on the top 2% would hurt Small Business (the phrase is always, like the name of the deity, capitalized --we will follow that custom here, out of a deep respect for American Religion).

The argument goes more or less like this:

• Most "Small Businesses" are, in fact, flow through entities (e.g., sole proprietorships, limited liability companies, partnerships), the profits of which are taxed on the returns of their owners. Hence, they are taxed at the individual rates.
• Therefore, increasing the tax on upper-income individuals means increasing the tax on their companies, in all these cases.
• When you increase taxes on Small Business, you prevent those companies from hiring more employees. So you stifle growth and employment.

Now, I suppose the first thing to point out are the underlying assumptions:

1. The Small Businesses in question are profitable enough to generate at least $250,000 in profits for (each of) their owners, assuming they file joint returns.
2. Given the opportunity to increase the business by, say, gaining a new customer that would require hiring a new employee, the owner would gladly hire the new person if the owner faced a tax rate of 35% on the extra profits thereby generated. But he would forego that opportunity if his tax rate on the resulting profits would be 39.6%.

As it is only the profits in excess of $250,000 per owner that would be taxed at the higher rates, the additional tax on, say, a $300,000 profit would only be 4.6% of $50,000, or $2,300. Not zero; but not exactly confiscation.