Tuesday, November 11, 2014

Money lessons from the military

It is a bit of a mystery why we treat our military and our federal government in such polar opposite ways. 

The military is granted a virtually unlimited budget, while our federal employees and programs are constantly under attack to eliminate or reduce their budgets.

The military and its employees are considered our national heroes and held in highest esteem (and honor is certainly due for their courage and sacrifice), yet many other federal departments and employees are often derided or even despised, despite the lifelong sacrifice many give to serve us. 

We are greatly exercised over the rise in size and power of our elected officials and government programs yet we often have little concern about the size and power of our military and the industrial complex that it supports. 

Both are part of our "government", but we seem to love one and hate the other. We seem to have two standards when judging the separation of powers. 


Perhaps it is because the military parades its employees and hides its generals & policies, whereas the federal government parades its officials & policies and hides its workers?

Perhaps we need to take a page from the military's playbook and push out on social media a "hero of the day" featuring our teachers, FAA engineers, court judges and staff, environmental workers, and bank regulators. Perhaps if we made them our heroes we would begin to see the good we actually do together, and we would inspire more of the best to step forward and serve.

Do we realize the sacrifice of those who give up higher paying jobs in the private sector to educate our children or expose pollution in our drinking water or fight an army of lawyers and smear campaigns to expose criminal activity in financial institutions? 

Our brave soldiers deserve our respect, and so do our public officials. Perhaps by doing so, we would elevate service and responsibility and efficiency and all the things we deserve and wish for from our government. Perhaps we reap what we sow.

Whatever the reason, a parable may help us see that what works for one can, in fact, be used for the other, opening up possibilities of national well-being and prosperity.

Protecting freedom by sidelining the army

We easily recognize a foreign threat when something blows up: Pearl Harbor; World Trade Centers. 

But freedom is no less under attack when our financial system is blown up by runaway deregulated financial institutions. When 800,000 people are losing their jobs every month as was the case after 2008. When savings and retirements are wiped out or taken fraudulently. When education is out of reach financially without a lifelong debt burden. When the jobs available don't pay for the cost of living, let alone providing for our children's futures. When one medical problem leads to bankruptcy and poverty for an entire generation. Freedom is under attack and out of reach for tens of millions of Americans today.

So what can we learn from the part of government we call the military?

Imagine if our free land were attacked by two powerful nations from each coast, and we responded as follows:

  • Since we are afraid of giving our military too much power, we decide not to allow it to intervene in our defense. "It's just too much power in the hands of government officials." 
  • We need money so we cut the military budget and have the armed forces stay on their bases.
  • We instead give tax breaks to citizens and businesses so they can go to the market and buy guns and ammunition to protect themselves.
  • If enough people do this, we believe we will create strong free market-based militias to fend off the invaders, although we realize the enemies will probably have made huge inroads into our land by then. 
  • We realize that many people in many parts of the country may never actually be able to fend for themselves but that's just the cost of ensuring that the military doesn't use the war to take over the whole country and we lose our freedoms. 
  • The wealthier pockets, especially the corporations that have more resources, will be able to protect themselves. The smaller businesses and population see these safe areas and ask for help, and the corporate militias do so in exchange for taking over the small businesses.
  • Of course most citizens simply build bunkers, hide, or cloister together in small scattered groups and so few unified militias actually form and so the tax breaks have no effect on stimulating a strong resistance force.
  • Eventually, the corporations sue for peace with the invaders, working out a way to keep growing while leaving the population under occupation. A new equilibrium forms with a relatively stable land, large scale servitude, and small pockets of freedom and excess for the wealthy. 

Imagine the national outrage at such a response! 

If such a military invasion occurred we would release our powerful military forces that were created for this very purpose. We would marshal every resource in our nation, build and buy whatever we needed for the war effort, and employ every able bodied citizen in the fight until we had thoroughly defeated and repelled the invasion. 

Would we worry about deficits and national "debt"?  Of course not. What matters isn't the money but our land, our people, our liberty, and our way of life. Money can and will be created at will to pay for whatever is needed to ensure our national survival and prosperity. We have, in fact, done just this with every war.

So why do we not respond in kind to our economic plight? Why don't we release our powerful monetary system that was created for this very purpose to dispel the forces of unemployment, failing infrastructure, accessible education, and all the other threats to individual liberty?

What works in war also works in peace

In fact, we can and we should use the federal budget in this very same way. It can rise and fall as needed to marshal the real resources of our nation to be utilized in such a way that provides employment for all workers, incomes for the elderly, medical care for the sick, education for the eager minds, transportation for the future energy paradigm, and so much more.

This is actually how the system is designed to work. The term Functional Finance has been used to describe the proper use of the government's operations of spending, taxing, buying, selling, and borrowing. Each operation should be used ONLY with regard to the EFFECT it has on the real economy and the wishes of the public, and not with any regard to any irrelevant ratios of one factor to the other (such as borrowing and taxing in ratio to spending).  

  • Tax because we want to take spending power away or shift resources from socially undesirable production/consumption. 
  • Buy because we wish the government to build or own something (like roads or oil reserves).
  • Spend because we want portions of our population to have more income. 
  • Borrow because we want to provide interest payments to savers and trading partners.

None of these operations need to be measured or adjusted in relation to any other. Each can be evaluated separately for its effect on the economy and on real needs and wants. This is exactly how modern monetary systems work. We just need to get out the instruction manual and start using it properly, as we always do during war time. 

And unlike the military and its industrial complex, we can actually do so without enormous centralized bureaucracy! We can use money to protect individual liberties, provide equality of opportunity, and enhance families, local communities, and states -- all without centralizing control in Washington DC.

As we remember and respect all that our military does for us, let us learn the lessons it teaches, and release ourselves from senseless financial limitations that crush our people and take their liberty. We have the most powerful monetary system ever created that can permanently end unemployment and fund any project we need to ensure our free and prosperous future, so long as we have willing people and the real resources available to deploy.