Australia’s post-war recovery program provides clues as to how to get out of this

I’m running behind, but here’s my latest piece in the Conversation. Although the situation is very different from that of 194t, this, from the White Paper on Full Employment is as relevant as ever

Despite the need for more houses, food, equipment and every other type of product, before the war, not all those available for work were able to find employment or to feel a sense of security in their future.

On the average during the twenty years between 1919 and 1939 more than one tenth of the men and women desiring work were unemployed. In the worst period of the depression, well over 25% were left in unproductive idleness.

By contrast, during the war no financial or other obstacles have been allowed to prevent the need for extra production being satisfied to the limit of our resources.

Under emergency conditions, all sorts of things that were said to be impossible are suddenly found to be necessary, and the objections raised against them turn out to have been excuses for serving the interests of the well off. That’s the case for both Universal Basic Income and a Job Guarantee, both of which now exist in embryonic form.

40 thoughts on “Australia’s post-war recovery program provides clues as to how to get out of this

  1. “If the economy grows at 7% a year”

    That’s a big if. Where is this growth going to come from? The growth of the post war years was made possible by the mass adoption of technologies that were invented in the previous 50 years. Maybe Facebook and Microsoft will come to our rescue, but you would not want to bet your house on it.

  2. Where will the growth come from? Hopefully from where it is needed- information technology, science, medicine, services for an aging population, renewable energy technology etc etc etc …

  3. JQ,

    You article is mostly correct but in my view some extra thinking is required. I understand it is just a Conversation article but let us think a little further.

    Just as generals need to be enjoined to fight the current war and not the last one, so do economists need to be enjoined to fight the current recovery and not the last one. The starting point and prevailing conditions of this recovery are not the same as the last. Some programs from that era will certainly be of use again. New programs to suit this era will be necessary too. The last recovery took place in a world still relatively distant from limits to growth and the limits to acceptable climate damage. The current recovery needs to take place in a world much closer to the quantitative limits to growth and already right on the brink of serious and perhaps catastrophic climate change with all that that entails; meaning sea level rise, mass extinctions and even increased zoonotic disease outbreak risks.

    The assumption of (a possible) 7% economic growth rate may be heroic. Can we turn around the conditions of secular stagnation to that degree? Have these relatively stagnant conditions been only a factor of poor capacity utilization or has there already been something more fundamental at work, like limits to growth and increasing annual damage from climate change effects (droughts, floods, storms, cyclones, bush-fires and so on)?

    A recovery growth rate of an annual 7% (in GDP?) may even be a real concern if it means more pollution, more environmental damage and more destabilizing of biosphere systems and eco-services in general. It is worrying that more growth-ism, without much qualification is always the go-to appeal, it seems, of every economist, even left or heterodox economists, other than those directly concerned with thermoeconomics or biophysical economics.

    One of the real problems is that GDP is next to meaningless on almost any real measure. You have pointed out yourself that counting GDP alone gives no accounting of the gross asset stock of an economy. Others have pointed out that money, the numeraire, is not an objective measure of anything. As yardstick, as a measuring unit, it is worthless for real things and worthless in aggregating real things.

    One of the most profound things we need to do now is to think beyond money. Money is a tool for allocations (once decided) and as chits for rights to acquire and consume (again once the rights are pre-decided). And it is misused even for that. Money accounting, money measurements, are no good for political economy planning or more precisely for democratic socialist planning. We’ve tried letting money, or rather the people who both have the money and make the rules for the money, plan our economy and the world we live in. The result has been a disaster as I know you agree. Instead we need to agree on planned scientifically realistic and required targets and to mandate them by fiat of democratic government.

    Money itself and markets also need to be taken off their deified pedestals. If not thrown aside they need to be put in very tightly controlled and regulated confines. How to break the religion of money and markets in the minds of ordinary people? That is a key issue. A cognitive and moral philosophy revolution equal to that of the scientific / humanist revolution is required. Nothing less will suffice given the absurd level of faith in money and markets in many quarters. But as I have been saying for some time, we need salutatory demonstrations from the real natural world to convince us to change. We are now getting them. The bush-fires were shot across the bow which took off the bowsprit. The COVID-19 pandemic is a broadside amidships (generally the second most devastating damage a wooden ship of the line could take). All we need now is for climate change and its spawned changes to rake us stem to stern and we will be a drifting, even a sinking hulk.

  4. Just about every sector of society aka the economy has been given a boost by this government. One exception is science. Is this merely an oversight?

  5. “One exception is science”

    Probably because nearly all science is done in the public sector, such as the CSIRO, and there have been no huge layoffs in the public sector.

  6. John, Does part of this program include ideas for getting people back into jobs that are not funded by the tax-payer? It seems to me that pursuing enhanced social security payments and tax-payer funded guaranteed incomes are a lower priority at present than trying to get half the workforce off the public payroll once this virus becomes less critical. There are fiscal imperatives of the current arrangements that are not sustainable and are not acceptible to most Australians. What real jobs can be promptly restarted? Can people return to work in certain occupations without risking a reignition of the virus? The construction sector and the resource sector need to be restarted as soon as possible. Some of the service sector can be restarted with changed work practices. Tourism exports are probably a non-starter for a long time. We urgently need to get the non-subsidized part of the economy up and running if only to repay the public debt that we are currently incurring on an unprecedented scale.

  7. Regarding your last paragraph, I’m reminded of an account I read in a Canadian history course at university in Vancouver. A Canadian WW2 veteran was being interviewed, and he made an observation along these lines: “All through the Depression, we were told that nothing could be done because there was no money to pay for it. And then the war came along, and all of a sudden there was money for whatever the government wanted to get done.”

    That story has stuck with me for probably twenty-five years now, and I’ve been thinking about it a lot in the current situation, as we suddenly find that there is in fact money available to help the poor and the sick and the unemployed – when we’ve been told by the very same politicians in office today that it would just be too expensive to do things to improve the lives of all those people. Here’s hoping there are actually some positives that might come out of all this.

  8. Harry
    >The construction sector and the resource sector need to be restarted as soon as possible.

    These sectors are still working.

    >There are fiscal imperatives of the current arrangements that are not sustainable

    The government can borrow at less than 1% interest. Let’s say the debt rises to $1 trillion. That’s an interest cost of $10 billion a year, which is not nothing, but is sustainable.

    >and are not acceptible [sic] to most Australians.

    How do you know? Have you seen a poll?

  9. Some construction jobs continue? Parts of the resource sector are continuing but there has been a massive cut back in investment, cessation of projects. I can recall the poll held at the last Federal election.

  10. >I can recall the poll held at the last Federal election.

    ROFL. Circumstances have changed, just a teensy-weensy bit.

  11. Harry,

    Which jobs “not funded by the taxpayer” do you mean? Do you mean jobs in the mining industry? They are part funded by the taxpayer through the diesel fuel rebate and other subsidies to mining companies. Do you mean jobs in the tourist sector? They are part funded by the taxpayer via government advertising on the behalf of the tourism sector. Do you mean jobs in the professional sports sector which are funded by government grants and government funded stadiums?

    What fiscal imperatives do you mean? The imperative to pay rich people, corporations and nations back so that they are even more obscenely rich? Do fiscal “imperatives” trump real imperatives? Do you understand that money is notional not real? Do you prefer aligning notional national balance sheets rather than saving real people from real death, real starvation and real homelessness?

    When you refer to “real jobs” do you mean that only private enterprise jobs are real? So public service jobs are not real? So municipal bus drivers’ jobs are not real but their jobs would be real if they drove buses for a private company?

    Do you understand that debt is not real unless it is enforced? Even then it is not the debt that is real, only the enforcement is real. Debt can be avoided by bankruptcy. Debt can be repudiated. Odious debt can be annulled and so on. Debt is notional thing supported by legal laws and rules. It can be anulled by decree by any person or body with the power to annul or evaded by any with the power to evade.

    There are many debts which cannot be paid in money. To obtain herd immunity, the debt owed will be a number of deaths, at least until if and when a vaccine is found.

    I find it amusing when people reify money and believe it is real in pretty much the same sense that real materials and real energies are real. Money is only ideationally and socially real. It is notionally real, not objectively real. It is instituted by rules of ownership and reward, rules of owing and being owed which are entirely humanly invented. These rules can be changed very greatly at least until the point where the invented social object and process called “money” ceases to operate and be recognized as money.

    Your fears of fiscal imperatives are greatly exaggerated. We need to more afraid of inimical real things and less afraid of our own invented notional things which are more pliable, transformable and reform-able then most commonly think when under the sway of free market ideology.

  12. Slightly off topic comment – In this weekends Australian newspaper former nasty hardliner Paul Kelly suggests just meeting interest payments each year and simply leaving government debt on the books forever ,noting that interest rates are at 2000 year lows. As the economy grows over time the principal will become a smaller and smaller proportion thereof – “self imposed flagellation rarely makes sense”. The former enthusiastic proponent of the doctrine of optimistic cruelty said ” we realise … society and economy need each other ,rather than being enemies ” – pure poetry ,shameless – that takes guts.

  13. I mean the government is subsidizing 70% of the median wage for 6 million of our 13 million workers. Are you seriously suggesting this is sound long-term economic management? I am saying we need a plan to move away from this and get people back to work in private sector jobs without 70% subsidies. Are you saying $130b is a trifle? It would buy about 3 NBNs. Sorry Ico but the debts are real and will need to be repaid by your son and mine or else inflated away by the central bank buying the debt.

  14. >the government is subsidizing 70% of the median wage for 6 million of our 13 million workers. Are you seriously suggesting this is sound long-term economic management?

    It’s only for 6 months.

  15. Why do you have to pay the increased public debt back? At least in the next 20 years.

    It’s bad enough what is happening but overlaying this with needless austerity is senseless. And that’s what it will be i.e. increase in the GST, income tax levies and public spending cuts.

  16. Smith 9 The universities have been subsidising research and infrastructure from foreign students’ fees. This was always unsustainable and now the crunch is here. Ask PDFs and PhD students about part-time work that they need to survive: it’s gone. And grants with the private sector are being hit. Ask the NH&MRC about keeping grants running to avoid huge waste in the application process: it’s unaffordable.
    And so on.

  17. Harry,

    Debts are only real if they are voluntarily complied with or enforced. Otherwise they are not real. A debt looked at simply is an instituted rule or set of rules. It is a contract (consisting of rules set in language and mathematical formulae), verbal or written, between two or more parties. It operates at the simplest level such that when x is given by A to B at time t1 then B undertakes to return to A a quantity of x + y at time t2 where y is some percentage of x. The value of y can even be zero or negative though usually it is not. The contract is just an agreed rule set. Rule sets can be torn up, annulled, ignored, evaded, gamed, forgiven and so on.

    Human rules are arbitrary: made by humans and amendable by humans. In Australia, the rule is to drive on the left hand side of the road. In the USA, the rule is to drive on the right hand side of the road. The rule is arbitrary but when everyone obeys the arbitrary rule then individual non-compliance can have real consequences. If the left-hand side of a road in Australia is washed out or under repair then the rule is temporarily annulled for those driving in the direction which makes that the left hand side. The rule is usually annulled and replaced by new (in this case stop-go) rules which are policed, supervised or directed in some way precisely because they are unusual and not the standard or default rule.

    When conditions change, rules are changed. Very few if any human rule sets are “real condition invariant” to perhaps coin a term. Rules can be and are amended for various real world reasons and real world exigencies. To keep rules rigidly invariant, even when they are good rules for some circumstances (usually the circumstances they were expressly designed for) smacks of blind inflexibility.

    When this happens (refusal to change a rule despite a perhaps radical change in real world conditions) then we can be sure that the rule pure and simple has become more important to the rule makers and rule enforcers than the real world condition or requirement it addresses. It is either this or else that the inflexible rule makers and enforcers have a vested self-interest in continued enforcement of the rule even to the point where it might be cruel, unjust or odious to others; perhaps to many others.

    What needs to be protected here? The financial rights to debt repayment for the rich, the quite well-off or even those with “enough anyway” or the human rights of those who will not have even the real basics (food, shelter) if debt is enforced or even re-enforced after too short a debt moratorium? Society and industry will not collapse solely under debt moratoriums and/or debt forgiveness. It will collapse, or break out in riot or revolution, under the wide denial of real needs to real people.

    The biggest danger we face is removing assistance too soon, not removing it too late. The notional debts denominated in the numeraire are meaningless unless those owed those monies make crime or war to get the money back OR unless they are bankrupted. In that case latter case they have the same rights as anyone else to welfare. Any strategically necessary business (perhaps QANTAS) which collapses can be saved by the government by nationalization.

    The idea that economy will only work if very largely private enterprise is a complete nonsense refuted by any number of real world examples. Essential functions, strategic functions, natural monopoly functions and market failure situations can be very workably addressed by state ownership. In fact it is the private enterprise which fails systemically as soon as the heat of war or crisis is put on it. It is a very fragile, fair-weather system useless for tough times.

  18. I missed a shout-out to the GND side of post-pandemic policy. A massive boost to investment in the energy transition is both essential on climate grounds and entirely feasible as a no-regrets economic policy. In context, it’s ridiculous to obsess about a few thousand coal mining jobs that can easily be replaced. The mix of public and private control is secondary. In WWII. the Soviets built T34 tanks in state-owned factories. The USA produced Sherman tanks in privately owned ones. Both achieved their objectives.

  19. @Peter Russell

    Absolutely. The govt can make funds available to invest in public infrastructure like health and education, an investment that will pay well.

  20. James Wimberley,

    Correct, I agree on your first point. We need a Green New Deal. A “massive boost to investment in the energy transition is both essential on climate grounds and entirely feasible as a no-regrets economic policy.” Fully agree.

    However, correction on your second point. Where and how tanks are made (public, collective or private factories) is not important to war aims BUT it is important to peace aims. That is if your peace aims include dealing with economic inequality. Economic inequality is inefficient.

  21. All the professional sports in the land, and around the globe, are belly-aching and crying about the trouble they are in. Soon, the calls will begin for big new subsidies to professional sports. These cries for subsidies to professional sports must be entirely resisted. In fact, we should go further and progressively rescind all existing subsidies to professional sports, which are of course entirely non-essential activities. Every activity of the professional sporting kind represents an opportunity cost. In paying for them and subsidizing them we are losing the opportunity to fund something more essential and worthwhile. For example, every sporting stadium could have been a hospital. Every car racing track could have been a nature reserve. Every professional sporting salary could have been a doctor’s, nurse’s, scientist’s or teacher’s salary and so on.

    Professional sport as well as imposing this kind of opportunity cost imposes negative externality costs. Car racing emits greenhouse gases to no purpose at all other than going around in circles. Horse and dog racing entail serious and unnecessary cruelty to animals. Professional contact sports generate unacceptable levels of injury including CTE (Chronic traumatic encephalopathy). These injuries impose large future burdens on the health system. Professional sports are extensively used to promote drinking and gambling; two more activities which impose heavy opportunity costs and negative externality costs on societies and individuals.

    The case for resisting calls to subsidize professional sports is very strong. Professional sports should subsist entirely on earnings they can make in the market. If they cannot survive like this they should be permitted to go bankrupt. Those left unemployed will have the same rights as any other person: the right to seek an alternative job (one that is constructive, useful and essential) or the right to receive unemployment benefits, a UBI or JG depending on near future social policies.

    Professional sports are non-essential activities. It should not really have taken an immediate grave crisis to teach us this. We now face an existential crisis over the next decades, a crisis of civilizational and human survival delivered by a “perfect storm” of interacting complex processes, all the way from climate change (bushfires) to COVID-19 (first zoonotic pandemic). Humankind’s childhood is over. Mother nature is kicking us out of the nest feathered by resource over-abundance and immunity from the consequences of negative externality damage to the eco-sphere and biosphere. Professional sport is childish in light of the grave crises we face. It is time to put away childish things.

  22. >The government can borrow at less than 1% interest.

    Turns out to be a lot less. The government just sold $2 billion of bonds at 0.27%.
    Investors want a safe asset in times of volatility and turmoil. Who knew?

    >and are not acceptible [sic] to most Australians.
    >How do you know? Have you seen a poll?
    >I can recall the poll held at the last Federal election.
    >ROFL. Circumstances have changed, just a teensy-weensy bit.

    There’s a poll in today’s Australian showing near unanimous support for JobKeeper.

  23. I will throw down the gauntlet! Economic Ontology and Economic Empiricism… sorely under-investigated and under-practiced disciplinary areas and ones which many conventional economists show no inclination to grapple withl. Indeed it seems doubtful if many of them even know what ontology is. At least they show no overt signs of knowing. If you can’t get the ontology of economics right, then you can’t get anything else right after that. Yet serious investigation of economic ontology seems almost non-existent except in some obscure heterodox circles.

    The crude value-prescriptive approaches to economics (Capitalist OR Marxist theories of value) fail the test of ontological realism. What conventional economics and even doctrinaire Marxism assert to be real economic existents (utils or SNALTs respectively) are really only notional prescriptive assertions and not consistent measures of anything objectively real. That is to say they are mental and social constructs stated as prescriptions (not empirical descriptions) and thus they have reality only in that sense. They are pure reason deductions (not empirical discoveries) advancing a normative praxeological/axiomatic base for economics from which are derived the economic theorems.

    Hello? Does anybody know what I am talking about? It can’t be that hard. It would be first year philosophy (specifically ontology) in combination with first year complex systems science by my guess. Should I decamp and go to forums where people want to discuss cutting edge economic ideas rather than rehearse 19th C classical and 20th C neoclassical economic dogma? Why no serious engagement on these grounds? When empirical reality challenges orthodoxy as osrely as it does right now then it is time, not just for necessary pragmatic expedients, but for new theories, new inductions, new hypotheses and new arenas of empirical investigation.

  24. Smith9, “The government just sold $2 billion of bonds at 0.27%”

    Is .27% the yield? Are these zero coupon bonds? If not, what is the coupon rate? Terms to maturity? Were the bonds bought by the RBA?

    I know I can look it up, but perhaps you can answer my questions with less effort because you have obviously looked at the data. Thanks in advance.

  25. Maybe a submission re “Economic Empiricism” here Ikon… to address why they “should be broadened to include personal and corporate income tax matters,”. If you draft a submission now, it can be updated to send to scomo to address “snapback”.

    Feedback to EU Commission’s roadmap to tackle tax fraud and evasion

    The EU Commission has called for feedback from the public on its newroadmap for tackling tax fraud evasion. Recognising that “every year in the EU, billions of euros are lost to tax evasion”, the Commission has outlined an initial action plan, presenting key initiatives to:

    – tackle tax fraud
    – make compliance easier
    – take advantage of the latest developments in technology and digitalisation

    Tax Justice Network feedback to EU Commission’s “Action Plan on fight against tax fraud ” initiative

    With the Corona pandemic exacerbating inequalities and ushering in extreme stress on the budgets of EU member states, the Action Plan of the European Commission is planned during the most severe crisis of the European and global institutional architecture in 70 years, 

    “The scope of the EU Action Plan should be broadened to include personal and corporate income tax matters, including tax avoidance in a legal grey zone. ”

  26. The RBA is buying government bonds on the secondary market. If you look up John Kehoe’s article i’m today’s (Monday 6 April 2020 page 4) The Australian Financial Review, he wrote
    “The RBA will buy a chunk of the government’s AAA/rated debt in the secondary market, though not directly from the government.
    It is targeting a three-year government bond yield of
    0.25 percent.”

    Hope that helps.

  27. Ernestine

    These were newly issued bonds. Buyers were not the RBA. Don’t know the term. 0.27% is the yield. Government will be paying $5,400,000 in interest per year, or 22 cents per Australian, on its $2 billion loan.

    Not exactly ruinous for the borrowers, which is us.

  28. Why does a Federal Government with the ability to print money have to borrow it at all? I suppose reasons might be:

    (1) To give investors somewhere safe to park money. (Don’t laugh, this was the case when Howard and Costello paid down all Aust. Govt. debt but still made government bonds available.)

    (2) It wants to “crowd out” private spending so it can public spend without creating inflation. This would not seem to hold up so well if overseas subscribers took the bulk of the bonds.

    All these measures to manage money smack of artifice but then money itself is artificial so that is a rather futile critique. Should money be protected in these ways? Perhaps it should be protected (to protect holders) in other ways. It seems to me that our concepts have not kept up with what out technology can do.

    Inflation and hyperinflation are trotted out as the bogeymen. Since most money is electronic, why not time stamp it, atleast in some cases? The purchasing power of electronic money could be set by time stamp. If you hold money its purchasing power remains what it was when acquired with the time stamp period set to one month tranches but still limited to one year. That is to say there would a ceiling at one year to the monthly compounding. However, the accounting of this could be complex for the retail sector. Let us think a little further.

    First, only permit this for retail purchases which attract GST. The GST system is already in place. Only permit it for purchases made from savings accounts not credit cards. Only permit it for the first $5,000 in a personal savings account. Do not permit it for cash purchases. Do not permit it for designated luxuries and junk foods. The GST is reduced by the inflation deduction and the deduction could even go negative and become a refund. The formulas would be quite simple and easily calculable by an amended GST system. Banks that offer savings accounts would be required to electronically time stamp savings deposits appropriately on a monthly basis as required.

    This system in effect becomes an automatic stabilizer for essentials and is most effective for persons living on pensions and wages who are buying essentials. Continue the current CPI adjustment for pensioners and beneficiaries also. This money time stamp would be an additional policy measure and an additional stabilizer which increases the social wage to the least wealthy, meaning those who live week to week.

    Capital gains, income from business, income from shares and investments, and income from rents would not attract the time stamp.

  29. The post-war example has a few pointers. It turned out we could build houses etc IF the government stepped in and managed these things. It turned out that if you wanted efficient social security, health care, education and comprehensive infrastructure then the government alone could do the job. The high rates of growth came from rationalising previous arrangements. This came with a major shift in political power (well documented by Piketty). The reaction from the 80s seeks to reverse the political shift; as arrangements revert to the previous piecemeal approach effectiveness suffers, but this is a price those pushing this are willing to pay.

    The epidemic and still more climate change challenge this approach. Only a coordinated response can avert disaster, and only government can coordinate the response and bear the costs. The issue is again political, not economic.

  30. I’ll add that Morrison is saying clearly that everything will go back the way it was after the crisis.

  31. “Morrison is saying clearly that everything will go back the way it was after the crisis.” But then, a month ago he was announcing a $17 billion response that would be over in three months. No political statement has an operative life of more than two weeks these days.

  32. John – sure. But they will certainly try very hard (as they did in 1945 and 1919 and 1348 and…)

  33. Which models should we use to craft a new economic system? Models may be mathematical or they may be metaphorical (really analogical or homomorphic) and couched in general language like English and not specialist language like mathematics).

    Metaphors of the economy as (human) body and economy as machine do have their limitations. It is also discussed on some economic blogs how the neoliberal, or market fundamentalist, false mathematization of the economy too has its very grave limitations. If anything, the “understanding” derived by mathematical economics is even worse than that derived from the metaphorical modelling approach if the most apt metaphors are chosen. The mathematical models are pure theory and based on over-simplifying and un-empirical assumptions This is when they are not outright wrong like the absurd assumption of homo economicus.

    In the final analysis, free market dogma and its mathematization is prescriptive and not descriptive. It tells us how to run an economy according to a given value ideology of private property, inequality differentials, ignoring real human and real environmental needs and ignoring negative externalities in general. In contrast, apt language metaphors within a democratic liberal humanist or democratic socialist tradition can easily prescribe a more appropriate, workable, humane and environmentally sustainable approach than the ideological prescriptions and false mathematization encapsulated in market fundamentalist economics. In addition, apt metaphors can function well rhetorically which is useful in debates.

    If we use body metaphors correctly, we can note that all parts of the body are needed to function in cooperation and union to make the whole body and mind work effectively and efficiently as one. If the extremities are starved of oxygen and nutrients they go gangrenous and die. Slums are certainly ulcerous or gangrenous areas on the civic or national body. The people in slums clearly suffer pain and deprivation. We can use a further body metaphor. If the pains and agonies of the extremities of neglected persons are not transmitted to the government (the executive brain of society) then action is not taken to assist or preserve those parts. This is a leprosy-like condition of the civil body where the extremities cannot transmit pain to the brain and more injury and degeneration occur. It is important that the poor and dispossessed protest vigorously and transmit their message and their pain to the insulated elites and that they be assisted by the middle class who exist in that middle, mediating position.

    If we also use machine metaphors, we can note that market fundamentalism is like an over-simplistic auto-pilot system which lacks the self-correction of adequate feed-backs. The feed-backs lacking include feed-backs from the poor (the governmental and rich elites ignore them), feed-backs from the environment (most of these negative externalities are ignored), feed-backs from the insights of moral philosophy (religious and humanist ethics) and feed-backs and predictions from the impact sciences. In addition, we can add the ignoring of feed-backs from internal contradictions within capitalism which internal contradictions capitalism denies even exist. These are feed-backs from increasing unemployment, inadequate capacity utilization, wage stagnation, asset inflation and the over-accumulation of financial and fictitious capital. Free market capitalism cannot even react properly in the “market as auto-pilot” sense to its own internal contradictions let alone to external contradictions (like limits to growth) and external shocks (like the black swan of COVID-19).

    The free unregulated market leads to rampant inequality, regular financial bubbles, crashes in a cyclical fashion AND THEN it fails absolutely and completely to any single serious exogenous shock. This is like a car which breaks down sporadically even on trips to the local supermarket and then breaks down completely and without fail every time you try to take it on a road trip. Who would keep such a car? Well, only the poor who have no other choice. It’s time to give everyone a choice of another economic system. The current system is ready for the junkyard. The new economic system we require is democratic socialism. Spelling out the details of democratic socialism and why it is not equivalent to the Party Dictatorship State Capitalism of China would take another long post.

  34. Draft Number One:
    How a new politcal order could defend itself as not equivilant to Chinese or Russian Dictatorship State Capitalism:
    1.) The lack of individuals with great wealth, or in great poverty.
    2.) Term Limits for political offices
    3.) Jury Nullification to hinder, but not eliminate, the possibility of a ruling party crushing minority viewpoints or groups. Although I do not know how stacking the jury can be prevented.
    4.) Widespread, but not absolute, respect for freedom of speech (including language) and freedom of religion.*
    5.) Seperation of powers. This was tried in the USA but over time it broke down. I would suggest that one of the reasons that it broke down is that the supreame court did not have its own enforcement arm and was forced to rely on another branch of government therefore the balance of power was not properly balanced. Leaders became even less accountable as the other ingredients of power became more centralized. As the ingredients of power are intellegence, communications, armed power, and economic power no one can have an insitutional monopoly on any of these four powers. Yet the actions of the responsible institutions need to be sychronized.
    6.) Waste will be dealt with locally. Shit will not literally, and figuratively run downhill. For example,that means that factory pig farms fouling the local environment, or fracking fouling the environment will be ended. This rule has other impiications as well. Respect for the environment as a whole, including the environment will have to be a key factor that distinguishes a the new green socialsim from the state capitalist old socialism.

    We can not forget that no matter what the rules are the rules can be subverted. Or they rules can be misused for inappropriate purposes. Therefore vigilance is always required from everyone.

    *A unified school system including a national language for education are actually neccessary. That does not mean that a government needs to oppress alternative languages. Alternative languages can be spoken on the playground, and in the cafeteria, and between classes while at school. But during lesson time only the language of education should be spoken. Of course there should be no limitations on the ability of people to speak another language outside of the classroom. Minority can of course be offered as a second language. In Quebec for example English speakers should be encouraged to take French as a second language. In Kurdistan Turkish speakers should be encouraged to take Kurdish as a second language. In California, Arizona, New Mexico, Texas and elsewhere native Englsh speakers should be encouraged to take Spanish. English speakers should after all recognize that they are previlaged to get not have the situation reversed in those areas.

    Of course this means that every nation will have a defacto national language. It does not have to be called that though. Also private schools can teach in any language that they please. But private schools should only be allowed to operate during hours that public schools are not in operation.

  35. “1.) The lack of individuals with great wealth or in great poverty.”

    I like that one. It is both correct and suitably ironic. If we leave aside the real and supposed differences between Party Dictatorship Crony State Capitalism (China) and Corporate Crony Capitalism (USA), we note their great similarity in creating enormous wealth and power disparities, meaning terrible inequalities. These systems are closely aligned to each other in a fundamental sense. Male oligarchic elitists are running the systems in both cases and generating gross inequalities in the process.

    Both systems have to be called out for what they are and completely rejected.

  36. An additional perhaps ironic thing about a repubic is that although the number of people actually in the military should be a small percent of the population the number of people who have recieved military training should be a large percent of the population. The reason for this is not really so much to be prepared to repel a foriegn invasion. It is more to prevent the aquisition of unwarranted influence in political affairs by people who desire to shake down the citizens of the republic with a phony protection racket. Therefore it is also crucial that this training does not glorify the military or military service. If anyone in a society deserves to be glorified it is life guards at the beaches and swimming pools.
    And right now the cashiers and stockers in our grocery stores. (Except those who are working in grocery stores who are under 10 years old because they are not at any risk from what I have heard over and over. Anyone want to reinstitute child labor? )

  37. Poselequestion,

    If we allow everything to go back to the old ways, we the people will be at fault. Democratic Socialists, Greens and Labor must take this opportunity to implement a democratic socialist revolution in this country of such a profound and through-going nature that the idea of going back becomes inconceivable because patently unworkable and unsustainable. Capitalism is completely unsustainable in every way and proven so empirically at every level. If we go back to capitalist business as usual then the next crisis (for we face a century of rolling crises now) will be a magnitude worse and very possibly destroy us.

  38. Wonderful thoughts Ikon, how it should be without a doubt. I am approaching the 4 score and have never once voted for the vermin however I just can’t see it happening, the seed is not there, the leadership to nurture it, not there. The environment is there if the call was made, the opposing forces are surprisingly weak, pathetic and fearful. Look at the farcical response to the soft “Wellness Budget”, 100% derision and 100% desire to nip it in the bud. How can it happen with what we have?

  39. The third reason capitalism gets blame here is that alternative systems—those not driven by a profit-first logic—could manage viruses better. While not profitable to produce and stockpile everything needed for a viral pandemic, it is efficient. The wealth already lost in this pandemic far exceeds the cost to have produced and stockpiled the tests and ventilators, the lack of which is contributing so much to today’s disaster. Capitalism often pursues profit at the expense of more urgent social needs and values. In this, capitalism is grossly inefficient. This pandemic is now bringing that truth home to people…

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