Home > Uncategorized > Modern monetary theory—pandemic edition

Modern monetary theory—pandemic edition

from David Ruccio

Modern Monetary Theorists are having a moment, as governments (many of them run by conservative regimes, such as Donald Trump and the Republicans in the United States) are running gigantic fiscal deficits in order to combat the economic crisis occasioned by the coronavirus pandemic.*

This time, with the $2 trillion CARES Act, the U.S. federal government has taken an additional step down the road of Modern Monetary Theory, by having the Federal Reserve buy an unlimited amount of Treasury bonds and government-backed mortgage bonds — whatever was necessary “to support smooth market functioning”—in other words, by simply creating the necessary money.

But, as Michael Hudson et al. explain, the idea that is being celebrated right now—that running government budget deficits is stabilizing instead of destabilizing—”is in many ways something quite different than the leading MMT advocates have long supported.”

Modern Monetary Theory (MMT) was developed to explain the logic of running government budget deficits to increase demand in the economy’s consumption and capital investment sectors so as to maintain full employment. But the enormous U.S. federal budget deficits from the Obama bank bailout after the 2008 crash through the Trump tax cuts and Coronavirus financial bailout have not pumped money into the economy to finance new direct investment, employment, rising wages and living standards. Instead, government money creation and Quantitative Easing have been directed to the finance, insurance and real estate (FIRE) sectors. The result is a travesty of MMT, not its original aim.

By subsidizing the financial sector and its debt overhead, this policy is deflationary instead of supporting the “real” economy. The effect has been to empower the banking sector, whose product is credit and debt creation that has taken an unproductive and indeed extractive form.

Let me back up for a moment. I’ve been an advocate of Modern Monetary Theory ever since I began to study it (at the prodding of friends [ht: br]), as can be seen in various of my blog posts. In particular, from the perspective of the Marxian critique of political economy, two formulations that represent both critiques of and alternatives to those of mainstream economics are particularly useful: government deficits and bank money.

Perhaps the best known (and, in many ways, most controversial) aspect of Modern Monetary Theory is the logic of running budget deficits. The mainstream view is that the government imposes taxes and then uses the revenues to pay for some portion of government programs. To pay for the rest of its expenditures, the state then borrows money by issuing bonds that investors can purchase (and for which they receive interest payments).** But, neoclassical economists complain, such borrowing has a big downside: budget deficits increase the demand for loans, because the government competes with all the loans that private individuals and businesses want to take on—thus leading, in the short run, to the so-called crowding-out effect and, in the long run, an increase in government debt and the potential for a government default.

Advocates of Modern Monetary Theory dispute both of these conclusions: First, they argue that governments should never have to default so long as the country has a sovereign currency, that is, so long as they issue and control the kind of money they tax and spend (so, e.g., the United States but not Greece). Second, taxes and bonds do not and indeed cannot directly pay for spending. Instead, the government creates money whenever it spends.*** Clearly, this is useful from a left-wing perspective, because it creates room for government spending on programs that benefit the working-class—including, but certainly not limited to, the much-vaunted jobs guarantee.****

The second major contention between mainstream economics and Modern Monetary Theory concerns the role of banks—in particular, the relationship between bank lending and money. As Bill Mitchell explains,

Mainstream economic theory considers banks to be institutions that take in deposits which then provides them with the funds to on-lend at a profit. Accordingly, the ability of private banks to lend is considered to be constrained by the reserves they hold.

In other words, banks are seen as financial intermediaries, funneling deposits and then (backed by reserves) allocating a multiple of such deposits to the best possible, most efficient uses.

From the perspective of Modern Monetary Theory, private banks don’t operate in this way. Instead, they create money, by making loans—and reserve balances play little if any role.

A bank’s ability to expand its balance sheet is not constrained by the quantity of reserves it holds or any fractional reserve requirements. The bank expands its balance sheet by lending. Loans create deposits which are then backed by reserves after the fact. The process of extending loans (credit) which creates new bank liabilities is unrelated to the reserve position of the bank.

This is exactly the opposite of the mainstream story, with the implication that banks create loans (and therefore money) based on the profitability of making such loans, an activity that has nothing to do with the central bank’s adding more reserves to the system.

Both points—concerning the financing of government spending and endogenous bank money—are well known to anyone who has been exposed (either sympathetically or critically) to Modern Monetary Theory. In my view, they fit usefully and relatively easily into modern Marxian economics, especially in terms of both the theory of the state (e.g., government finances) and the theory of (fiat) money.

The problem, it seems to me, arises in the terms of the major complaint registered by Hudson et al.—namely, that government stimulus plans have mostly been directed to the finance, insurance and real estate (FIRE) sectors, which are considered unproductive and extractive, and not to the “real” economy, which is not.

Readers who know something about the history of economic thought will recognize that these productive/unproductive and extractive/non-extractive distinctions have a long lineage and can be traced back, first, to the French Physiocrats and, later, to Adam Smith—in other words, to the beginnings of modern mainstream economics.

tableau-économique-quesnay

Using his Tableau Économique, François Quesnay attempted to show that the proprietors and cultivators of land were the only productive members of the economy and society, as against the unproductive class composed of manufacturers and merchants. It follows that the government should promote the interests of the landowners, and not those of the other classes, which were merely parasitic. Smith took up this distinction but then redeployed it, to argue that any labor involved in the production of commodities (whether agricultural or manufacturing) was productive, and the problem was with revenues spent on unproductive labor (such as household servants and landlords). The former led to the accumulation of capital, which increased the wealth of nations, while the latter represented conspicuous consumption, which did not.

Marx criticized both formulations, arguing that the productive/unproductive distinction had to do not with what workers produced, but rather with how they produced. Within capitalism, labor was productive if it resulted in the creation of surplus-value; and, if it didn’t (such as is the case with managers and CEOs who supervise the production of goods and services, as well as all those involved in finance, insurance, and real estate), it was not. So, the Marxian distinction is focused on surplus-value and thus exploitation.

And that, it seems to me, is the major point overlooked in much of Modern Monetary Theory. FIRE is extractive in the sense that it receives a cut of the surplus created elsewhere in the economy. But so are industries outside of finance, insurance, and real estate, since the boards of directors of enterprises in those sectors extract surplus from their own workers. And those different modes of extraction occur whether or not there’s a jobs guarantee provided by the creation of money by governments or banks.

From a Marxian perspective, then, the crucial distinction—both theoretically and for public policy—is not that between FIRE and the so-called real economy, but between classes that appropriate the surplus and otherwise “share in the booty” and the class that actually produces the surplus.

Right now, in the midst of the coronavirus pandemic, the class that is working to produce the surplus and provide the commodities we need is the one that is carrying the burden—either because they have been laid off and mostly left to their own devices, without paychecks and healthcare benefits, or been forced to continue to labor under precarious and unsafe conditions.

It’s that class, the American working-class, that is suffering from the ravages of the current economic crisis precipitated by the pandemic. They’re the ones, not their employers (whether in FIRE or the “real” economy), who deserve to be bailed out.

 

*Although this is certainly not the first time Republican administrations have run fiscal deficits, and allowed the public debt to soar—as long as they’re in power. They did it under Ronald Reagan, both Bushes, and long before the pandemic with Trump’s tax cuts. The only time American conservatives seem to worry about deficits and debt is when Democrats hold the reins.

**Wealthy individuals and large corporations long ago determined they prefer to be paid to purchase government debt instead of being taxed.

***So why, then, does the government need to tax at all in Modern Monetary Theory? Best I can figure, there are two major reasons: First, taxation makes sure people in the country use the government-issued currency, because they have to pay taxes in that currency (and not, e.g., in some kind of local or digital currency). Second, taxes are one tool governments can use to control inflation. They can take an amount of money out of the economy, which keeps consumers and corporations from bidding up prices.

****But that’s clearly not a new idea. Back in 1943, Michel Kalecki argued that governments had the ability to use a spending program (e.g., through public investment or subsidizing mass consumption) to achieve full employment. But it would likely be opposed by an alliance of big business and rentier interests based on three reasons:

(i) dislike of government interference in the problem of employment as such; (ii) dislike of the direction of government spending (public investment and subsidizing consumption); (iii) dislike of the social and political changes resulting from the maintenance of full employment.

In other words, capitalists are against both the government’s usurping of their private role as masters of the economy and society and the strengthening of the working-class, for whom “the ‘sack’ would cease to play its role as a disciplinary measure.”

  1. Calgacus
    April 18, 2020 at 9:06 pm

    So why, then, does the government need to tax at all in Modern Monetary Theory? Best I can figure, there are two major reasons: First, taxation makes sure people in the country use the government-issued currency, because they have to pay taxes in that currency (and not, e.g., in some kind of local or digital currency). Second, taxes are one tool governments can use to control inflation. They can take an amount of money out of the economy, which keeps consumers and corporations from bidding up prices.

    Both are sort of right, but the reason is more basic, ontological. There is no money that is not credit. Government money is a credit for government taxes and nothing but a tax credit. Rewriting the question makes it sound properly silly:
    “Why does government need to tax at all to support its tax credits in Modern Tax Credit Theory?”

    The ever present danger is to put the cart before the horse, to think of “money” or “currency” as the fundamental concept that one thinks of economics and credit in terms of. No, it is the other way around. Money becomes simple if one considers it as what it really is and always was – a social relation, as Marx often enough said.

  2. April 18, 2020 at 11:59 pm

    I find it ironic that a claim is made that MMT overlooks FIRE, and then Michael Hudson is quoted, who is an MMT supporter. Read what MMT academics say, and confirm for yourself that they consistently talk about getting money into the hands of the unemployed and workers whose wages have been suppressed, and out of the hands of the kleptocrats. Here is a recent interview with Stephanie Kelton: You’re the Real Job Creator
    https://nplusonemag.com/online-only/online-only/youre-the-real-job-creator/

  3. Helge Nome
    April 19, 2020 at 12:35 am

    All governments of sovereign nations know that they can create however much money they want, using their central bank.

    All governments try to keep that knowledge away from the minds of their general publics because of its potential to upset their apple carts.

    And, if a banana republic without much productive potential tried to do it, money would end up in wheel barrows of people wanting to buy groceries as happened in Germany post WWI.

    Money creation is a great tool for dealing with wars and pandemics, but the balance between goods and services and money flows needs to ultimately be re-established in order for an economy to thrive.

  4. Ikonoclast
    April 19, 2020 at 1:08 am

    I read with interest your support for MMT and Marxian principles and indeed your melding of insights from the two disciplines. I agree with your analysis and synthesis, as far as they go, which is a significant distance of course. I think there is still further to go. In particular, I would bring in insights from Thorstein Veblen and from Shimson Bichler and Jonathan Nitzan. Let me explain briefly.

    Veblen is well enough known. His key concepts are perhaps “conspicuous consumption / conspicuous leisure” and more importantly, in this context, his concept of “industrial sabotage”. Veblen saw “business” and “industry” as separate and antagonistic processes. Industry is the process of actually producing goods and services. Workers are the industrious agents (using machines and tools to enhance productivity) who produce all the “value” of goods and services. (We will come back to “value”.) Industrial sabotage is a standard business tactic according to Veblen. He understood this sabotage as the deliberate and methodical “withdrawal of efficiency” from productive industry for the purposes of profit for the private sectional interests of one or more of the competing capitals. Hence, neither the productiveness, nor the efficiency, nor the equitableness of the entire society is of the slightest concern to competing capitals. Only their own increase is of concern to them.

    To take an example, full competition might be efficient, but an aspiring monopoly will destroy competition by predatory pricing and then raise prices even higher once it has established an effective monopoly. A predatory business may also buy up competitors who are making goods too cheap (in the eyes of the predatory business) in order to gain propriety access to these efficient process in order to either eliminate them or to use them for super-profits. It is very conceivable that the elimination of efficient processes could be the goal if the predatory business is a conglomerate and another arm of that business supplies inputs widely at a lucrative profit and does not want efficient use of these inputs to occur in these and other businesses by wider knowledge and application of the efficient processes.

    Predatory businesses as large conglomerates and transnational corporations also have access to (in the current quantitative easing climate) large amounts of credit, in the billions, at effectively a real zero percent interest rate or below after allowing for inflation. A small entrepreneurial start-up on the other hand will find seeking capital for establishment, research and operations, from banks or the stock markets will cost up to 10% effective. But let us be conservative and estimate the effective difference at 7.5%. Big conglomerates with access to cost-less finance and a 7.5% differential interest advantage over potential new competitors are at a very considerable, indeed often unassailable, advantage.

    The issue of “value” brings us to Bichler and Nitzan. I highly recommend their book “Capital as Power”. They criticize the theories of value in both capitalist and Marxist economics and do so with full scientific ontological validity in my view. They point out that neither the “Util” (Utility value) nor the “SNALT” (Socially Necessary Abstract Labor Time”) is a real unit of a real dimension. (I refer here to the scientific dimensions as laid out in the SI, International System of Units.) This is not a mere metaphysical ontological quibble. It is a real material argument of scientific, empirical import. If we take dialectical materialism seriously (which concept is really about complex material systems and their feedback and emergent phenomena) then we must take the critique of Bichler and Nitzan seriously.

    Value is a notoriously slippery concept as we know both in political economy and in moral philosophy. Value, in the numeraire (the dollar usually) does not measure value, as such, in any real or objective way. Certainly not in a way that value comparisons between disparate products and services (and things of nature for that matter) are valid. The problem has to do with the fact that the dollar is a dimensionless value in scientific terms and is only a ratio of value between different items, many different items. Dimensionless value do exist in science in the SI but these are often ratios of dimensioned values where the dimensions cancel out, This raises the aggregation problem well known in science. Disparate items can only be validly aggregated in a common dimension (for example mass when measuring cargo rate for a conveyance). The aggregation in dollars is not valid. If a human life acturially is worth one million dollars and a diamond is worth one million dollars we still cannot say the true value of these two things is commensurate. Any moral philosophy determination would immediately point out that the human life is morally speaking more valuable. We can also note that diamond prices are highly manipulated, rigged is the correct word, and given an artificially high valuation whereas the lives of say poor and marginal people are routinely devalued.

    Bichler and Nitzan argue for a power interpretation of money. Money measures the functional power to purchase, possess and exclude. Because power institutes money (state fiat, state monopoly on violence) and money institutes power in real transactions then money is the numeraire denominated instantiation of power in praxis. How money is used and how it is permitted to be used and not used illustrates the force field of power in a society as surely as iron filings on a sheet of paper align with the force field of the magnet held underneath the sheet of paper. For example, money is now permitted to be used for Q,E. (Quantitative Easing) which only benefits big business, massive business in fact, by giving it cost-less capital at a time when consumers can pay 20% or more on credit card debt. But money is not permitted in the main to be issued via fiscal policy to people in dire need. This says nothing about fiat money which is of course flexible enough for both of these uses. It says everything about the force field of elite capitalist power in our political economy.

    • April 20, 2020 at 2:06 am

      Ikonoclast, I hope you don’t ever explain at length.

  5. Ernest Jones
    April 19, 2020 at 3:01 am

    People need to realize what MMT is. It is not a competing theory to Marxism. It is only a description of how government currency operates.

    There is no need to have the “Marxian distinction of surplus-value and exploitation” as part of MMT. That is out of scope of currency analysis.

  6. April 19, 2020 at 10:45 pm

    https://www.psychologytoday.com/intl/blog/the-me-in-we/201811/normopathy-the-abnormal-push-normalcy by Mollie S. Castelloe, Nov 10, 2018 Normopathy is a fear of individuality. psychologytoday.com

  7. Ikonoclast
    April 19, 2020 at 10:49 pm

    Ernest Jones,

    I understand your point. At the first level, MMT is indeed “only a description of how government (fiat) currency operates”.

    At the second level, many MMT advocates, even prime originators of the discipline like Bill Mitchell, do advance moral philosophy prescriptions for the political economy albeit couched in programmatic recommendations. After describing how government fiat currencies work and can be used, Bill Mitchell et.al. recommend uses of government fiat money power such as the Job Guarantee and deficit spending as stimulus to achieve full employment and better capacity utilization in the economy. Implicit in this program, and in addition to economic concerns about efficiency, are basic ethical principles such as fairness, equality and concern for the well-being of all members of society. Even implicit in this program is the principle of workers’ and citizens’ rights. These are concerns which the entire discipline of MMT shares with Marxian thinking and indeed other ethical systems as well, including for example democratic socialism or the liberal welfarist tradition.

    MMT is the most accurate extant description of the tool of fiat currency in the modern nation state. But a description of how a tool works in practical minutiae (the teeth of the saw cut because of this shape, this sharpness, these offsets etc.) would not satisfy a carpenter who really wants to build something worthwhile. He must also have materials and plans and the cooperation of co-workers. The plans are the key point for this argument. What are the plans of MMT? It does indeed have plans in its fully developed form. I mentioned one, the Job Guarantee. And behind these plans is a moral philosophy for political economy, as indeed there should be.

    At the heart of the argument between various moral philosophy views of political economy, capitalist, socialist, mixed public-private economy and so on, is or should be (after a determination of our moral philosophy views for a fair and economically just society) an ontological argument about what money (and financial capital) actually are. It is the confusion about what money actually is and is not, ontologically speaking which leads to a great deal of confusion in economic (really political economy) argument. If one cannot get one’s foundational ontology correct then everything after that ipso facto is without foundation.

    MMT does an excellent job in making crystal clear the completely notional nature of money in ontological terms. Modern money may created ex nihilo (out of nothing) and destroyed ab nihilo back into nothing. The trouble is that capitalist ontology reifies money, treats it as having a real and concrete existence of its own. This leads to all the ideological nonsense that budgets must always be balanced (or in surplus), that governments must always tax or borrow to spend and that government debts must always be re-payed. MMT’s exposition demonstrates clearly and practicality that this is not the case. However, this is not the end of ontological project for economics or political economy. There remains the value controversy: the controversy about value theory.

    Conventional economics and Marxist economics, with their “util” and “SNALT” respectively have failed to solve the value theory paradox. The Capital as Power (CasP) theorists, Shimshon Bichler and Jonathan Nitzan have solved it at stroke by demonstrating conclusively that money does not and cannot measure value (a subjective category anyway), it measures (social) power because it instantiates a social power of a particular kind; the power to possess and exclude. This power to purchase, own, possess and exclude is always backed ultimately by the state’s monopoly on force, sometimes called the monopoly on violence. If you disobey the socially-legally instantiated power and prescribed operations of money (by say stealing it from the bank or forging it) the police come find you, if they can, and drag you away. We might add here that banks steal from people all the time (sometimes steal by legal definition and sometimes steal by moral definition) and oftentimes they get away with it. The law and the state force that back it is unevenly applied.

    In summary, I would say MMT provides a very useful, elaborate and ontologically accurate description of modern money and its operations. MMT does more than this and develops a moral political economy theory which in parts draws even on the Marxian tradition. However, a complete “Instauration of Economics” (“instauration” means the act of renovation and renewal) must begin with Bichler and Nitzan’s empirically justified (and ontologically sound) solution of the value controversy by abolishing the fallacy that money measures value.

    In “The Great Instauration”, Francis Bacon, 1st Viscount St Alban, renovated a natural philosophy which was dogged by scholasticism and alchemy and inaugurated, or at systematized, the ideas of scientific empiricism and scientific method in Western Europe. A similar service now needs to be performed by a great modern philosopher-scientist for the discipline of economics which stands in dire need of a complete revolution and renovation. The conventional economics of capitalism needs to be completely overthrown and replaced. Theorists from Marx and Engels, to Bill Mitchell, to Bicheler and Nitzan have prepared the way. The time is ripe for a revolutionarily empirical, ontologically sound and morally sound economics.

  8. April 20, 2020 at 2:22 am

    There is a difference between a boss who is not on the factory floor and, for example, a private equity fund.

    If the boss is doing his job, he is contributing organisation to a team and making it more productive. His contribution is therefore productive.

    A private equity fund may simply buy a company, strip its assets and sell off the shell. It is parasitic.

    The FIRE sector has become extremely parasitic (and destabilising) since deregulation. I made a couple of simple estimates (comparing financial market trading rates now with before 1971, and asking how often a firm’s shares might need to be traded). Both suggest the financial markets trade roughly 50 times faster than they used to, or need to. Thus only around 2% of trades are about efficiently allocating capital. The obscene rise in inequality is testimony to the consequences.

    See Economy, Society, Nature, rh column

    [btw economic modellers: you can do useful economics without fancy models and high accuracy.]

  9. shivz
    April 20, 2020 at 3:58 pm

    The Coronavirus effect and Kelton’s Greenspan query are one and the same, namely, how a country pays for the consumption of an increasing (old age) or overwhelming (pandemic) number of people who do not, or are not allowed to, work.

    To which, the MMT answer is very simple, if not brilliant: money! but then, as Kelton says in her lecture (re Greenspan), notwithstanding the sovereign’s unlimited power to create money, someone must produce the corresponding ‘real’ stuff.

    However, in both cases, Greenspan and the pandemic, the problem is not ‘getting people back to work’ but, on the contrary, maintaining/supporting/supplying the living standards of more and more people who do not work, either because of the pandemic (today), or old age and automation (in the foreseeable future).

    Which brings me to Ruccio’s Marxian surplus value. If government deficit spending is not intended to be inflationary, then, Greenspan-Kelton’s ‘real’ stuff, with which non-working people could be ‘fed’, is realisable only by some kind of surplus. For Ruccio, the most famous one, the Marxian, is self-understood.

    Apparently, it is crystal clear, namely, a quantity of goods produced by unpaid labour: “All surplus-value is in substance the materialisation of unpaid labour” (or more mildly, as Mill put it: “If a capitalist supplies a party of labourers with these things, on condition of receiving all they produce, they will, in addition to reproducing their own necessaries and instruments, have a portion of their time remaining, to work for the capitalist”).

    But there was another Marx: “It also has to be postulated (which was not done above) that the use-value of the machine [is] significantly greater than its value; i.e. that its devaluation in the service of production is not proportional to its increasing effect on production.”

    Wherein, by ‘its increasing effect on production’, Marx seems to be borrowing from Adam Smith’s much more explicit language: “the intention of the fixed capital [Marx’s machine] is to enable the same number of labourers to perform a much greater quantity of work” – in fact, costless, arguably non-exploitative, surplus, (assuming that Smith’s ‘greater quantity’ significantly exceeds the fixed-capital’s ‘devaluation in the service of production’).

    Contemporary economics can only add cosmetic change to Smith, e.g., ‘the intention of the fixed capital is to enable less and less labourers to perform greater and greater quantity of work’.

    If Greenspan and Kelton are looking for the real stuff, then, the costlessness of Smith&Marx surplus is the sole factor on the back of which, governments could safely create money ex-nihilo, e.g., for supporting non-working people (whereas for infrastructure, for example, traditional borrowing is warranted).

    Governments, indeed, do not own the surplus, but on the other hand, its legitimate owners, the capitalists, cannot on their own generate the corresponding household purchasing power, because ‘costlessness’ implies, ipso facto, the absence of income-generating expenditures. Their problem, therefore, is that without an increased purchasing power they could hardly transform their physical-surplus into money-surplus, i.e., profit. Instead they would have to reduce prices, transferring thereby the costless goods to the public at large, gratis as it were (to be sure, the surplus is not really costless, given the immediate environmental and ecological damages and the potential catastrophe of climate change).

    But then, if household purchasing power is directly or indirectly supplied/increased with public money,* as it should (and actually happened in the last decades), the machine owners would, quite properly, rip windfall profits. And this is, in our time, just the beginning of Smith&Marx’s costless surplus saga.
    ___________
    * Also, and at times, mainly, bank money, but this beyond the scope of this comment.

    • April 20, 2020 at 5:05 pm

      “Someone must produce the corresponding ‘real’ stuff”? Nature must be allowed to reproduce the real stuff faster than we use it! What a few of us can and do do is transform the real stuff into something more consumable, and get it from where it is reproduced/transformed to the consumers. What we are not doing is returning the left-overs via recycling so that Nature’s reproduction maintains the resources necessary to keep pace with our increasing production. This not about not enough people being employed (if it is only 2% then there is plenty of redundancy in the technical sense), it is about what they are being employed on. Money doesn’t come into the picture except as an accounting medium. If we don’t know what we have used we can’t begin to know what we are asking of Nature; but that of course isn’t even half of the story. We are taking consumable fuels and creating non-biodegradeable plastics …

  10. April 23, 2020 at 3:23 am

    Michael Moore Presents: Planet of the Humans, 1 hr 40 min https://youtu.be/Zk11vI-7czE?t=177 A wake-up call from Michael Moore! Happy Earth Day!

  11. Ken Zimmerman
    April 30, 2020 at 11:56 am

    David, you set the stage but then go nowhere. You focus on “government deficits and bank money.” Interesting theoretical debates that do not help us at all in dealing with the problems we face. But you touch on the important question to be addressed. When any cultural institution fails (economic, governmental, religious, etc.) who ‘deserves’ to be helped and who does not? It’s a fundamental question in any culture. For most of its history the answer for the USA was those with sufficient money, political power, or both ‘deserve’ to be helped. At least in terms of ‘official’ governmental help. And sometimes even for help from voluntary sources (charities, begging, etc.). Mostly, that answer has not changed a lot in the 20th and 21st centuries. There is a bit more racial and ethnic diversity in terms of who is counted in the group of “wealthy enough and powerful enough.” But generally racial and ethnic minorities are still seen as not deserving help. As are the poor. And that is despite a half century of efforts by “progressive” groups in the USA to change this. The situation is the result of a dozen or more cultural threads; some going back to the beginning of the country. Government deficits, debts, and bank money are the results of these threads. They are not the threads themselves.

    marc1seed, one question for you. When you say Michael Moore’s movie provides a “wake-up call,” what wake-up call is that?

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