Let There Be Money, Joe Manchin
Bathtubs, Modern Monetary Theory, and UBI
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Picture a bathtub.
Now hold that thought for a moment.
And put off Joe Manchin too. I’ll get to him at the end.
Because I’m going to do my best to summarize the top points from Scott Santens’s brand new book, Let There Be Money: Understanding Modern Monetary Theory and Basic Income. Santens has been a full-time basic income advocate since 2013. He has a blog, a podcast, a Patreon account, and the ear of many. He has pursued and cultivated countless angles that bring him back to the wisdom and realities of UBI, universal basic income. This is the latest.
Before we get back to the bathtub, there are some basic things about money Santens wants us to keep top of mind:
- Money is a human construct.
- It’s a way we assign value to the stuff we exchange it for.
Okay, most of us can easily agree on the above two points. But what about these?
- The federal government can spend money into existence without taxing or borrowing it first. It creates it.
- The federal government isn’t funded by our taxes (but state and local governments are).
Wut? Yes, the last two points are fundamentals of Modern Monetary Theory (MMT), which Investopedia describes as:
“… [A] heterodox macroeconomic framework that says monetarily sovereign countries like the U.S., U.K., Japan, and Canada, which spend, tax, and borrow in a fiat currency that they fully control, are not operationally constrained by revenues when it comes to federal government spending.
Put simply, such governments do not rely on taxes or borrowing for spending since they can print as much as they need and are the monopoly issuers of the currency. Since their budgets aren’t like a regular household’s, their policies should not be shaped by fears of rising national debt.”
Now, the bathtub. Imagine it filled to the brim.
That represents our economy operating at peak, sustainable capacity, our resources (labor, time, materials, technology, knowledge, etc.) used most effectively to distribute and circulate the things we want and need most while humans are optimally engaged in suitable productive work and we properly tend to and maintain our environment.
Bathtubs have faucets and drains.
Faucets let in water, that is, government spending adding to the economy.
Drains release the water, that is, taxation removing money from the economy.
Given inflow and outflow, we want as much water in the tub as possible without spilling over (inflation!).
This tub you’ve pictured? It’s a special adaptive, responsive tub that grows bigger as water approaches the rim, helping to ensure no spillover.
If the tub can always grow bigger, then do we ever have to worry about it spilling over? I mean, do we need to worry about inflation? Well, yes, because there are inflationary and deflationary forces affecting the bathtub’s growth and not all money is the same or has the same effect on the economy at large. Consider, for instance, the differences among paying off credit card debt, buying medical goods at inflated markups, purchasing intellectual or digital intangibles, and buying food or other commodities.
Santens is great with metaphors. Some of my favorites are in his essay, An Engineering Argument for Basic Income: Utilizing fault-tolerant design in critical life support systems.
Anyhoo, to get to the heart of this: Some back-of-the-envelope math (all points are further developed and supported in the book) suggests to Santens that the U.S. could give all adults something like $24,000 a year in basic guarnteed income without flooding the bathroom floor with out-of-control inflation.
“What happens when everyone starts getting $1,200 a month to spend via newly created money? The answer if you haven’t figured it out already is that there’s no certain answer. It all depends. Anyone who tells you otherwise is selling something. [emphasis Santens’s]….[T]he economy is a complex adaptive system, not a static unchanging machine. Many changes are temporary as new equilibriums are reached.”
Yes, there would be inflation but not enough to offset the notable increase in buying power this scheme would mean for most Americans. At the same time, this plan serves as an “invisible tax” on the wealthy, that much smaller segment of Americans for whom the resulting inflation would represent a decrease in buying power.
Enough inflation, enough bathtub. You can read the details in the concise 67 pages of the book ($5.95 in paperback/$4.99 for the book). There are two more highlights I want to point out to pique your interest so that you read his entire treatment of the subject.
First, our economy, our society, needs another metaphor: kids and chores. We provide for our children’s basics (food, shelter, clothing, healthcare, education, etc.) but we often expect them do chores for the extras, for their discretionary spending money. This is a concept behind UBI. Everyone gets enough to have their basic needs met. Working should be reserved for making the money required for the extras. Our wants. Luxuries. Living better than the Joneses.
As we aim for that theoretically perfect, optimal capacity, to-the-brim bathtub economy, such a UBI scheme, justified with Modern Monetary Theory, can help us embrace automation; ditch BS, back-breaking, and meaningless work; and enter a new era of human well-being and productive engagement.
Second, just because we can produce all the money for all the things, there would be harm at just throwing money at every policy and program that pop into mind. As a society, we would need evidence-based policymaking and spending that employ incentives and disincentives in service of our priorities. Tall order! But we can figure that out as we go, right? As new equilibriums are reached…
Third, I want to insert a point about deserving that’s not made in the book.
“Will you reward us for the virtue of starving while others ate? No man earns punishment, no man earns reward. Free your mind of the idea of deserving, the idea of earning, and you will begin to be able to think.”
― Ursula K. Le Guin, The Dispossessed
As I read comments this morning to a New York Times article on how four families used the Child Tax Credit during the pandemic, I was struck, but not surprised, by how many writers had opinions on what their fellow American deserved or what they should/should not be spending our tax money on.
Ideas of earning and deserving are very wrapped up in our identities and notions of morality, but perhaps we should detach a bit from those and take another look. Begin thinking anew as the Ursula K. Le Guin quote suggests.
First, according to MMT, our tax money does not fund the federal government, meaning these child tax credits and other programs do not take from us to give to them. Next, about deserving. All we have to do is look around and see that there are many who have more than work, effort, skills, talents, morality, whatever suggest they deserve. And same on the flipside. All around us we see just how many have far less than their work, efforts, skills, talents, morality, whatever suggest they deserve.
Finally, back to Joe Manchin.
Members of Congress know the ideas of Modern Monetary Theory and use them as it suits them. And, they know how far those ideas sit from the minds and thinking of average Americans. And they use that as it suits them too.
So this week we have Joe Manchin not voting with his party, shooting down the Build Back Better spending plan with the rhetoric of too much national debt. He knows better. This is about other things.
I say, let there be money, Joe Manchin.
Build Back Better is fine, but there is something I like more.
Just giving people money. Universal basic income.
Streamline government. Eliminate many programs, bureaucracy, documentation, measurements of deserving.
Let’s give each other these collective gifts. The gift of having all of our basic needs met. The mutual gifts of choice, autonomy, self-determination, and trust that come with no-strings basic income. The gifts of sustainability and human thriving that millennia of human progress allow us if we choose to accept them.
Sharon Woodhouse is the owner of Conspire Creative, which offers coaching, consulting, conflict management, project management, book publishing, and editorial services for solo pros, creatives, authors, small businesses, and multipreneurs. To support more writing like this, please consider signing up to become a medium member. It’s just $5 a month and you get unlimited access to Medium’s content.
