In the interest of spurring another round of pretend-debate on economic order, I'm willing to mention that I've been listening to Limbaugh lately. Driving home from Philadelphia last week, I heard this clip, which features a pair of very brief interviews, conducted by a WJR reporter in Detroit:
Yes, picking on mentally handicapped people isn't very nice, but I think the reporter's line of questioning is actually fair: where does money come from? How can monetary policy -- printing or refraining from printing money -- "save the financial system," as so many NPR reports have suggested? What is money?
I think I won't be wrong to suggest that a majority of conservatives think of money as a real reflection (in a market economy) of subjective values. To the question, "where does it come from," a conservative answers, "from mutually agreeable exchanges -- from profit." I have $20.00, and you have a pair of old bowling shoes that I want. You'd rather have $20.00, and I'd rather have bowling shoes. You probably would've sold them for $10.00, but I was happy to pay $20.00, because they were worth at least $30.00 to me. Both sides win, and new value is created in the process. You have a day and good health to labor for ten hours? I'll give you $50.00. Want the job? No? Got a better option back in Mexico? Both sides win; new value is created.Here's the source for that chart. It's a fairly conservative estimate; I've heard that the number is actually closer to 50% -- in any case, we're approaching the point where half of Americans will pay no Federal income tax. Will not contribute to the IRS revenues.
It's much less clear to me what progressives think of money. Where do they imagine it comes from? What is the source of money? Is it "labor-hours," as Marx suggested?
Yesterday, in response to a question from a New Orleans resident asking why there was not a hospital in a particular part of the city, President Obama said, "I can't just write a check--" (here people cheered and yelled, "why not?") and Obama continued, "There's a little thing called the Constitution."
Apparently, Obama thinks the only thing keeping him from writing big fat checks for everybody is the Constitution -- he assumes that "reality" would have no objections. This is where I differ most severely with what I perceive to be Obama's economic attitude: money cannot be created out of thin air. The answer to the WJR reporter's question is very clear and easy: any checks given to the citizens of Detroit comes from the IRS's revenue -- i.e., from collected taxes. If you've ever seen the videos of people in the Weimar republic carrying wheelbarrow's full of money to the market to buy a loaf of bread, you'll understand why printing money is bad policy. [the same, in my view, goes for creating jobs with public money; it's a net-zero project, at best. If it were anything other than that, Obama could simply end the 9.8% unemployment problem with a bill.] Then, here's a problem:
What's the problem with that? It's a problem identified a long, long time ago: "The American Republic will endure until the day Congress discovers that it can bribe the public with the public's money." --Alexis de Toqueville, Democracy in America, 1835. If half of the people are not burdened by taxes, there is literally nothing but thin air and "morality" (yeah right) keeping them from taking as much as they want from the minority (<49%) population.
Conclusion: money is a symbol for really-existing value... until it's not. And when it's not, make sure you know where all of your gold is buried.