Episode 22 – Climate Refugees and the Economic Solution to Xenophobia With Fadhel Kaboub

Macro N Cheese – Episode 22 
Climate Refugees and the Economic Solution to Xenophobia With Fadhel Kaboub 
June 29, 2019 

Fadhel Kaboub [intro/music] (00:00:03): 

The question is, do immigrants qualify for job guarantee? Because we have to realize that there are millions of undocumented immigrants in this country working in slave-like conditions. 

Fadhel Kaboub [intro/music] (00:00:18): 

And if it means within a decade, those companies will automate away those miserable workplace conditions, then that’s something to be celebrated, that no human being will ever have to work in those conditions. And there should be robots doing the dirty jobs. 

Geoff Ginter [intro/music] (00:00:41): 

Now let’s see if we can avoid the apocalypse altogether. Here’s another episode of Macro N Cheese with your host, Steve Grumbine. 

Steve Grumbine (00:01:33): 

All right. This is Steve with Real Progressives. My friend Fadhel Kaboub will be joining us. We will be talking specifically about climate change. We will be talking about immigration. We will talk about how United States policy and neoliberalism has created a refugee crisis around the world. We’re going to also talk about how regular people, the people that are impacted by these rules and regulations, these laws, these changes, these policy decisions, how we end up interpreting it and how we end up seeing each other as the enemy, instead of identifying clearly the real enemy, which is neoliberalism.  

So without further ado, let me bring on my guest, Dr. Fadhel Kaboub. Welcome to the show, sir. 

Fadhel Kaboub (00:02:21): 

Hi, Steve. Thanks for having me on the show. 

Steve Grumbine (00:02:24): 

Goodness gracious. It is absolutely a pleasure. You’ve been on here many times. And you know, obviously we share tremendous amount of the same concerns, and this is a very, very big one right now with ICE going in and taking children. This is not anything new, unfortunately. I’d like to make it, you know, that this is the first time this ever happened.  

This has been an ongoing problem. Our nation has not respected immigrants. They have not respected people that are running from bad situations. There has been a tremendous amount of xenophobia in the United States and really quite frankly, around the world, but in the United States in particular, which is founded on being a melting pot, which is founded on bring us your tired and your weary, bring us your tattered rags, and we’ll be the shining light on the hill.  

And that just hasn’t been the case. We’ve allowed neoliberalism to steal our humanity. Tell us a little bit about the crisis of refugees into the United States and maybe some of the history of why it’s happening. 

Fadhel Kaboub (00:03:28): 

So this is really the irony of the situation for the United States and in particular, to be a nation of immigrants from the beginning in this day and age in 2018, to be treating people who are political refugees, people who were seeking asylum or regular immigrants with this level of inhumanity is, is just unbelievable and unbearable to watch and to hear and to read about this stuff.  

It’s just outrageous. To put it in the broader context, because this is not just an issue in the US obviously we’ve seen the refugee crisis in Europe and the aftermath of the Syrian conflict and some of the conflicts in the Middle East, but it’s really a global refugee crisis. You know, it’s happening in Australia, it’s happening in Europe, it’s happening in the US; and it’s important to remember that we’re all in this together.  

It’s not like, you know, something bad happened in some poor country and all of a sudden, they all want to come to the United States, or they all want to come to Europe. And we have to remember that quite a bit of the root causes of why people end up leaving their home. Cause you have to remember, most people don’t want to leave their home.  

Most people don’t want to leave their country, their neighbors, their friends, their culture. There is a push factor and there is a pull factor. The pull factor is something to be proud of. You know, you have a great economy, a great society, a great place to live in that other people aspire to that standard and would like to come to a country like the United States.  

So it’s not like if we want to slow down the flow of immigration, we should make our economy miserable or society miserable to stop them from coming here. That’s not the way to do it obviously. So we should be proud of the level of economic prosperity that we have here and continue building on more prosperity for everyone, for those who are here and for those will come in the future.  

The other aspect of it is the push factor. What are the things that are pushing people to leave their homes, to leave their families, to come to the US or to come to Western Europe? Some of it is military conflict, like the case in Syria, but some of it is sort of hidden factors that a lot of people don’t see right away; one of which is the impact of neoliberalism on economies in the developing world.  

And related to that is the impact of climate change. So just to give you example, in terms of the Syrian conflict, which a lot of people think has to do with democracy and freedom and, you know, dictatorship and all that, which, which is true. I’m not denying that, you know, the people are not rebelling against dictatorship and are seeking democracy, but we also have to remember that Syria, and this is the lesser known factor.  

Syria used to have self-sufficiency in food production, which is an important thing for a country to have, and not many developing countries have that. Between 2006 an 2011 Syria experienced one of the most intense droughts in the history of the region, 3 million people were affected, 1 million people in Syria experienced food insecurity, 1.5 million people were displaced from rural areas to urban areas within Syria.  

This is before the Arab Spring, this was before any of the conflicts in the region had even begun. Agricultural yields in irrigated areas, in irrigated land, dropped by 32%, which is massive; and it dropped by 80% – yields, agricultural yields, dropped by 80% – in agricultural areas that relied on rainfall.  

So it turned Syria into a net food importer, especially wheat, which is a basic staple in the region. So that means that now you depend on the rest of the world for your food consumption or your basic nutrition, essentially. And this happened at the worst time that you want any of this to happen because it happened right around 2010, which is when food prices were skyrocketing globally.  

So you become a net importer of food when food prices are highly inflated. So that put a huge economic burden on the country and intensified social and political tension. Agricultural production in Syria during that time period, less than 10 years, dropped from 25% of GDP to 17% of GDP. And that’s not because GDP was growing.  

The economy was in a recession to begin with, a depression. And that’s the extent of the damage. Livestock in Syria, 85% of livestock died during that drought. So you have millions of people losing their livelihood in rural areas, no jobs, no food, no rain, no water. And they’re moving to large urban areas putting additional pressure on resources, food, rent, housing, schools, public health, you name it.  

Everything is now under stress and the economy is under stress. So when the Arab Spring happened in 2011 in Tunisia and Libya and other places, the spark was there. But the fact that climate change had intensified the political and social tension has made things much, much worse. So this is something to remember that refugees leaving because of military conflict – that doesn’t mean it’s just about politics and democracy and war and peace – it’s also related to economic issues that are related to climate change, the effect of climate change.  

And we can go down the list of many different parts of the world that have experienced similar sort of intensification that led to pushing people from rural areas to urban areas because of droughts, because of all kinds of negative effects of climate change on people’s livlihoods. 

Steve Grumbine (00:09:23): 

Obviously in the United States, we pay our farmers to not farm, to not produce goods. Typically we keep a buffer stock of food. We keep a buffer stock of a whole bunch of things. 

Fadhel Kaboub (00:09:36): 

Right. 

Steve Grumbine (00:09:37): 

We have a mature economy or an economy that can do different things. We have robust resources and we have robust infrastructure to actually supply chain that to where it needs to go to. Other countries don’t have that. These countries in particular, that we’re discussing right now have either been besieged by war, or just simply are not quite up to snuff in terms of getting things where they need to go to, and the people suffer.  

As progressives in this country, as people that are advancing what we’d like to believe is an equality based society, a society based on people being worth their value, because they’re people, as opposed to what they can contribute, as far as to the capitalist environment, what do you think is the reason that within the United States, given all those readily accessible facts and figures and data points that you just laid out, why do you suppose people in the United States are so resistant to people coming up from the Southern border or from other Middle Eastern countries?  

It is unfathomable to me that when we understand what’s going on that we would shut that off. Something’s happening to make this mental thing happen. What is the genesis of that, Fadhel? 

Fadhel Kaboub (00:10:54): 

Well, because the majority of the population has been trained, maybe even brainwashed, into thinking that there’s a scarcity of resources, especially when it comes to what the government can afford in terms of funding education, infrastructure, public health, that if we’re going to accept a larger group of immigrants, let’s say into the country, we’re going to have to support them financially in terms of education and health.  

And the idea is that this is coming out of taxpayers’ money, that we’re going to tax somebody else, the middle class, the working class, the rich, corporations, whatever it is, and that tax burden is going to fall on the average person. And that’s how communities divide people into opposing what has made this country the country that it is.  

This country was built by immigrants. If you effectively managed to get everybody in this country in the United States, who’s either an immigrant or was born outside of this country before becoming a US citizen, or maybe is a first generation, second generation immigrant, just to go on strike for five hours and see the economic impact in this country.  

I mean, the whole country is run by a melting pot of people from all over the world. So it’s just insane to say that we need to stop the inflow of immigrants, and I can dig into some of the economic reasons in the next few minutes that we have. But before I do that, I wanted to say a few words about, leaving the Syria issue aside, which has mostly effected the Europeans; I mean, to some extent, the US, too, in terms of the flow of immigrants, but in the case of the US it’s really the crisis in Honduras, in particular, in addition to other Latin American countries.  

But I’m going to pick on Honduras for a second, because this has been the largest inflow of immigrants in the last few years, especially unaccompanied children crossing the border, and people just don’t understand why are these parents sending their kids across the world? And you have to think about it.  

You know, why would a parent do that? If they’re not desperate to find a peaceful, safe place for their kids; and the peaceful, safe place that they think of is the United States, right? So in the last hundred years or so Honduras, I mean, with all due respect to the good people of Honduras has been effectively a US colony with the impact of neoliberalism since the 1970s and eighties, which has intensified the colonial aspect of the US-Honduras relationship has just made life unbearable for people in Honduras.  

I don’t mean this in any disrespectful way, but a lot of people in US foreign policy think of Honduras and referred to Honduras for decades as USS Honduras or Pentagon Republic, because that’s how they treat the country. It’s the elites and the military dictatorship that ruled the country is essentially in business with the US government and has been for a long time.  

And when some positive democratic change began to happen, I believe in the late nineties, that government was overthrown with US approval, right; not any disapproval from the US. So that continued to make things miserable for people economically, politically, and then in terms of personal safety, because of the so-called war on drugs that the US continues to support and fight in many countries south of the border and especially Honduras.  

So the war on drugs was a whole other topic, but it’s really related here. We treat it as a military exercise when you think of drug addiction in this particular country, and in other parts of the world, which should be a public health crisis, a public health issue, as opposed to a military national security type of issue.  

And it’s been the wrong war to fight from the beginning, instead of fighting it as a public health crisis, the US decided to fight it in a militaristic way and just made things worse in the last three or four decades since the war on drugs began. So we have to keep these factors in mind that we’ve created an unbearable, unlivable situation for people in their home country, to the point where they can’t think of any other possible solution than to literally separate from their kids and send them away to safety.  

And then that’s how we welcomed them in this country. I mean, they’re seeking refuge in this country and we treat them like criminals. So not only we have, you know, as a country, the United States has a responsibility in what’s happening in that country. But on the receiving end, we treat people like criminals when they’re literally running for their life, running for safety.  

So that’s something that needs to be brought into the mainstream public discussion so that we know what we’re doing. It’s not about kids in cages and all of this outrage, which is warranted, but we have to think beyond the images on CNN and Fox News, and think of the root causes: that there are serious economic policy choices that the US has made over the decades to make life unbearable in developing countries in general and Honduras in particular, in this case.  

And it has to do with agriculture. And the reason why I started thinking about Syria with agriculture and climate change, because when you think back of the free trade negotiations between rich and poor countries, starting in the sixties and seventies and eighties, let’s say free trade and everything but arms and farms, right?  

So we can trade in everything. Good luck to you guys, developing countries. What do you have to trade in? Well, arms was not an issue for most countries, but farms, agriculture was the base for many of the former French colonies and British colonies. So as soon as those countries became independent, it turned out that France now depends for its own food consumption on its former colonies.  

And those former colonies started to sort of flex their muscles in negotiations saying, “Well, you need food from us. We need this from you. Let’s negotiate.” And that’s when they cut off the food part of the equation and CAP, which is the Common Agricultural Policy, which is a European Union Common Agricultural Policy, essentially made it impossible for developing countries, for the former colonies, to export to Europe.  

And that’s when the subsidies for European farmers began to build up European agriculture because it’s part of national security and is considered national security it’s not just food security. And that effectively made it impossible for non-European farmers, mostly the former colonies, and this is true also for Latin America; this is true with NAFTA and Mexico, and that made millions of farmers around the world unemployed in developing countries, lost their livelihoods.  

And what did they do? They moved to the cities and how convenient they moved to the cities, because now we’re telling them, “Export led growth, manufacturing, industrialization, low skilled, assembly line, cheap jobs were made available in urban areas.” So now you’ve lost your agricultural base and you’ve become a net importer from countries like France and the United States because these countries now are massively subsidizing their agribusiness industry.  

And they become that exporters, right? The US is a net exporter of food. France is a net exporter of food. And that makes developing countries’ markets impossible to compete in for local farmers. So you continue to destroy their agricultural base. You make them more food dependent. So not only they’re financially dependent because they have external debt in terms of food, they’re also dependent on the West and politically obviously controlled and manipulated and dependent.  

So this becomes the exact opposite of what you want for countries to be able to move towards democracy or prosperity or justice or anything like this. And what makes this even more painful thinking of it from a US perspective, and going back to your question about Progressives in the US, is that we’re told, and we’re made to believe that there is an external threat of those poor people coming here to take away your resources, your luxuries, your comfort, and you’re going to pay higher taxes, and you’re going to lose your job because they’re competing for your job.  

When in reality, the interest of the working class in the United States and the interest of poor people in developing countries is the same. The interest of working class people in the US is not aligned with the elites of the United States, but with this scare tactic about immigration, and you’re going to lose your job, or you’re going to lose your benefits, and you’re going to pay higher taxes – that’s how the elites scare working class people in the US into siding with them in this neoliberal global game.  

And that’s something that we have to understand and realize and fight back against. 

Steve Grumbine (00:19:54): 

So what I want to do real quickly Fadhel is I want to read something, so people don’t think we’re just making this stuff up. A lady, African American descent, a self-identified Progressive, says, “The Latinos in this country demand too much. Many of them weren’t even born here. And they expect the government to bend over backward for them.  

The legal immigrants who came to this country the right way should have the benefits that illegals have. DACA recipients have college degrees and will compete with younger native Americans for the high end jobs in the work field. Our children and grandchildren who seek jobs will be put on the back burner because of it.  

Taxpayer’s money goes to help illegal immigrants in so many ways – that’s taxpayers’ money which should help aid the homeless, senior citizens, and the poor in larger cities. More and more funds are taken away from Americans to help illegals. I’m a Progressive who supports Bernie, but I do support the Republican view on immigration.  

The government must put Americans first.” With this mindset, though, you’d like to just point over there and say, “It’s those guys, cause they’re bad people. They’re bigots. They’re this. They’re that.” 

Fadhel Kaboub (00:21:16): 

They’re our friends. 

Steve Grumbine (00:21:17): 

Yes. 

Fadhel Kaboub (00:21:18): 

That’s the Progressives; it’s people who have all the right intentions, the good intentions. And that’s where the MMT lens becomes really helpful in understanding this. And to be honest, without the MMT lens, we’ll be spinning our wheels forever. And it’s always going to be well, it’s my tax dollars that pay for this and that and the other.  

So what does MMT tell us and how we can use the MMT lens to understand this particular issue? MMT is very clear. And here I’m going to talk about the US in particular, I’m not going to go into developing countries. MMT emphasizes the importance of monetary sovereignty, financial sovereignty, and the only financially sovereign unit in this country is the federal government.  

States, municipalities, individuals, consumers, firms, none of those entities are monetarily sovereign, which means monetary sovereignty means four things. It means you print, you issue your own currency – that’s the US dollar that’s number one. Number two, you’re able to impose taxes on the population denominated in that same currency, that’s the US dollar.  

We all pay taxes in US dollars. Number three, every single debt instrument issued by the treasury, that’s US treasuries and bonds, are all denominated in US dollars and only in US dollars, which means when the US sells treasury bonds, they never promise to pay back in foreign currencies. And number four, the value of the dollar, the exchange rate is flexible, and it fluctuates based on market conditions with all other currencies in the world.  

And we don’t have a fixed exchange rate with gold or with any other currency in the world. You have these four conditions. The US federal government has full financial sovereignty, which means it can afford to purchase anything that’s available for sale in US dollars. And the only limit to the government’s capacity to afford anything it wants is the availability of real resources, physical resources.  

If something is available physically, if we have the know how, the technology, if we have the people to build it, then it’s affordable for the federal government. When do we run out of resources? When we run out of people. When we run out of technology or materials or physical resources to build things, and we’re nowhere near that.  

We have millions of people unemployed. We have excess capacity, industrial capacity in so many areas. And then the areas where there’s shortage of capacity, the good news is that this capacity is producible and we have the know how and we have the people to build it. So when we’re told that the government is broke, when we’re told that the government can’t afford this, that, or the other, it’s a myth.  

But when we’re told that the state of New York or the state of Pennsylvania can’t afford this, unless we tax the population, it’s true because states don’t have sovereignty. They can’t issue their own currency. So states, individual households, we operate in a completely different financial framework because we have to earn revenues first, or the state of Pennsylvania has to earn tax revenues first in order to spend.  

They can’t spend money into existence, or it can borrow up to a certain limit. And that limit is to be determined by financial markets based on your credit worthiness. And once you borrow and promise to pay back, that becomes a real financial burden on the state or on individuals on firms to work hard, to earn income, to pay it off.  

So we have to make this clear distinction between what the federal government can afford and what the rest of us users of the currency can afford. So when it comes to the issue of immigration, yes, it can be burdensome on a particular state, on a particular city, to put more pressure on school resources and housing resources and health resources.  

But we’re talking about immigration as a national issue, and it’s the responsibility of the federal government to address these issues. It’s the responsibility of the federal government to welcome refugees with generosity and not scare the rest of the population into thinking that the refugees are coming to take over their homes and take over their schools and take over their health resources and so on.  

That’s really the part where educating the masses in the US to understand the distinction between what the federal government can afford and what local states and municipalities can afford is to put us in a situation where we can’t be fooled. We can’t be tricked by people on the left or on the right or any particular political motivation to scare us, to divide us and to turn people against each other, as opposed to build community and build prosperity for everybody.  

And this is where again the MMT lens becomes useful to empower the Progressives – people who care about the other. And you hear this all the time and say, “Well, you know, I’m all for helping people, refugees, but sorry, we don’t have the resources. This is going to come at the expense of my family, of my community.”  

And this is where MMT flips that argument around and says, “There is no sacrifice that your family has to make, or an additional tax burden that your school district will have to carry because of more refugees coming into the country. And then we turn this onto the federal government, onto Congress and ask them to do what they’re supposed to do, what American values tell them they’re supposed to do.  

What American values have always told everybody how to treat immigrants, how to welcome immigrants; and to end this immigration debate forever.” 

Steve Grumbine (00:26:49): 

Fadhel, I want to say something. You know, I see people reflexively, within our particular community that say things like, you know, they’re very concerned, if you will, about right is right. You know, not in any way, shape or form condoning any illegal activity, you know, so on and so forth. So they use very technical, literal terms about the laws and so forth that, you know, they try with “that’s illegal blah, blah, blah.”  

And they try and use that as a wedge to be able to say, see, it’s not a racist or anything like that. I’m just pointing at this. But the reality is is that if you dig past that initial, you know, they’re racist or whatever it is, that feeling that you have, you go deeper and deeper and deeper doing that is not a solution.  

That may feel good. It may bring a spotlight to an individual that’s behaving badly. But the reality is that that individual is suffering themselves from the effects that neoliberalism brings to each of us in our daily lives – that insecurity, that fear. It’s not just a racist that is afraid of things.  

Non-racists can be afraid of things, too. And if you look, if something you’d said earlier that I want to get back to, and I’m going to try and tie this all together. You had said something to the effect of many of these colonial areas were farming communities, and that colonizers ended up depending on them for food and so forth.  

And you’d looked at the US destabilizing Honduras, destabilizing other places, creating very unstable environments for the government to operate, to exercise its sovereign currency, to exercise its economic will. And what you’ve got is a situation where like in Venezuela, where we’ve been interfered on many levels and they’ve got a single real export in oil, this is the foundation.  

You look at Zimbabwe., You look at the Weimar Republic. It was always about resources not being available. It wasn’t about just money being around, which is the common, you know, come back by the people that don’t know economics. They’ll fire back at you: Well, you just print more money causing the hyperinflation. The reality is, is that it’s always been, I think Randall Wray said it clearly — there’s never been a hyperinflation in a functioning democracy ever.  

And these places it’s always political instability, some political instability that has rocked their nation that creates these hyperinflation type scenarios. That is again, if this wasn’t the common comeback from these individuals that fight with us constantly, I wouldn’t even bring it up, but I see this tie-in.  

You’ve got agricultural areas that are dependent on producing this stuff. You’ve got political instability, they’ve got immature economies. And ultimately once the colonizer or someone like us, who’s exporting our neoliberalism everywhere decides to flex its muscles, we can literally destroy their economy, just like that.  

Can you talk a little bit about hyperinflation and its role in creating these immigrant crisis, these refugee crises? I think that there’s something to be said there. I want to see what your thoughts are. 

Fadhel Kaboub (00:30:01): 

So there’s a couple of things that link us back to the hyperinflation issue. First of all, keep in mind that many developing countries, one of the key deficiencies, economic deficiencies that they suffer from because of the history that we described a little bit ago is food dependence. So their net importers of food and energy imports are a huge burden on most developing countries with the exception of a few big oil exporters.  

And even those, because they depend so much on oil exports, that’s fluctuations in oil prices, you know, create a lot of instability for them because their entire economy is based off of just oil exports. And even when it comes to oil exports, they really don’t have energy independence because they export the crude oil, which is the low value added content, and they end up importing the refined product to run their cars, to run their factories, to run their airplanes and machines and everything else.  

So even then you’re still an energy importer. Even the biggest oil producers in the world are still energy importers because they don’t have the capacity, the productive capacity internally, to refine oil products into the petrochemicals that they actually need for their economy. So they end up exporting low value added content, which is crude oil, and importing high value added content, which is kerosene and gasoline and other petrochemicals.  

So it turns out that all developing countries, including oil exporters, are actually energy dependent when it comes to these things. So how does this translate into inflation? If you run a trade deficit structurally year after year for decades, because you’re constantly importing food, you’re constantly importing energy and you’re importing medicine, you’re importing technology, you’re dependent on so many other things.  

And overall, no matter what you’re exporting, you’re exporting low value added content and you’re importing high value added content. So even in manufacturing, you see developing countries exporting cars and trucks and even airplanes. When you start looking at the details, where are the assembly lines for producing cars, because all the parts are imported from other high-tech countries.  

So they import all the high value added content parts, assemble them together with cheap labor and export the finished product. The net effect is that they’re losing in that game. So you have these three factors — food, energy, and low value added export content. They all translate into larger and larger trade deficits.  

Trade deficits put pressure on the value of their currency. So it devalues their currency. So the next day, or the next year, when they’re trying to import more food or more fuel or more medicine, they would import it at a higher price. So they’re importing inflation because of the devalued currency.  

So instead of doing that, because, you know, if you import high inflation for food and medicine and transportation, you have food riots, you have energy riots, we have all kinds of riots. So it creates social and political instability. So instead of dealing with this structural issue, the band-aid solution is to artificially fix the exchange rate at a higher value, artificially subsidize fossil fuel imports, subsidize food imports, subsidize all basic necessities, and that translates into external debt that those countries have to accumulate over time.  

That’s debt denominated in US dollars, in Euros, in British pounds, in Japanese yen; and that’s how those countries lose their financial sovereignty. And when they lose the capacity to borrow, because this is a continuous process and when financial markets say, “Well, you have too much external debt, we can’t lend you anymore.  

You’re going bankrupt.” And that’s when they lose their capacity to control the exchange rate. And that’s when hyperinflation kicks in. And depending on the political situation, depending on the intensity of the situation, that translates into high levels of inflation or even hyperinflation cases – Venezuela being a case in point.  

Obviously when there’s lots of external animosity, let’s say from the US or England or whatever, then that makes that country even more isolated and more prone to hyperinflation scenarios. Right? You see that in the case of Venezuela, very clearly, in the case of Zimbabwe also very clearly because of what Mugabe did to upset the British after that. 

Intermission (00:34:33): 

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Steve Grumbine (00:35:23): 

I got to ask you, one of the other big things that comes up frequently is the idea of the IMF and the idea of the World Bank and so forth. And the IMF and the World Bank really don’t have anything to do with us per se, in terms of we’re not dependent on them, though we are contributors to the baskets, if you will, or whatever that they use for this.  

They are there really, I hate to say it like, they are predatory lenders, if you will, to these developing nations and people just don’t understand the role of the IMF or the role of the World Bank in creating these horrible, horrible situations – I mean, Greece being one of them. How do we explain to people why the US is not impacted, so to speak, by the IMF and the World Bank?  

Why we are our own creator of our own currency and how those predatory lending practices – they’re supposed to be there to help these countries – but in reality, they’re there to extract real resources from them. 

Fadhel Kaboub (00:36:22): 

I mean, a lot of people think of them as economic financial institutions, but they’re also political institutions. We have to remember, do you have any idea what the nationality of the director of the IMF is since its creation 1945? It’s always somebody from Europe. And the director of the World Bank is always somebody from the United States.  

So we run the show, economically speaking. How does the voting go in these institutions? By charter. Essentially, no decision can be approved in these institutions without 85% majority vote; it wouldn’t be majority vote, 85% approval. And the votes are based on the shares and the participation in these institutions.  

And any idea how much the US controls – 17.5. So essentially it’s a veto power. So, no matter what they say about the economics and the theory and the policy behind it, it’s a wing of US foreign policy. Let’s be honest about this. And it fits perfectly into the neoliberal model that the US has enforced to the rest of the world. 

Steve Grumbine (00:37:34): 

So bring this back. How does that play into our refugee crisis? You know, I want to give credit where credit is due. The people that are worried about the banksters and all the other good stuff – there is some legitimacy to that – but in my opinion, they’re pointing at the wrong place in the United States.  

They should be pointing at Congress to do its job. But in this World Bank IMF world, these folks are contributing to these refugee crisises as well. Would you agree with that? 

Fadhel Kaboub (00:38:04): 

Yeah. If you agree with me that the economic pain that’s been imposed on developing countries has been enforced through the World Bank and the IMF for most countries, and that’s done with the approval of US foreign policy to be consistent with US foreign policy. I mean, you can’t imagine US foreign policy going in one direction and the World Bank and IMF pursuing a completely different economic development model that will actually give developing countries more economic sovereignty, financial sovereignty, and the UN system and the international system, the only organizations within the UN that you see really trying to do their best to get developing countries out of these traps are agencies like the ILO, the International Labor Organization, to some extent.  

Even better, UNCTAD the UN Conference on Trade and Development, which for many years was co-lead by Juan Predo, who’s one of the most accomplished post-Keynesian economists alive today. And the thing about those organizations, they have no financial power. They can talk to developing countries. They can try to get them to act differently, think differently, but without financial firepower to push for a particular set of policy prescriptions, and to push consistently, because we’re so far behind that you can’t just implement policies for three to five years and expect results.  

This is what people in the UN called the Big Push, the Big Push we’re talking about an entire generation worth of doing economic policy, different things, doing economic development differently. It’s just most developing countries don’t have the financial power or the economic fiscal policy space to do things differently because they’re constantly trying to pay the debt, pay to the lenders.  

And this is a constant hassle. I mean, look at what Argentina did several times. Every time they have a leftist government, they try to default on the debt to the IMF and then a right wing government comes 10 years later and saying, “You know what, we’re going to pay that debt. We’re going to be responsible citizens of the world.”  

Even the case of Argentina, they continuously fall back into the trap, right? So it’s really difficult to see how any of this can change without a couple of possible scenarios. One is the realization in the US that this is not in the interest of the US to begin with: this is the interest of the elites of the US and the rest of the world.  

So that’s why I see Real Progressives and learning MMT as a very powerful tool within the US system to get people to realize that we can do things better for the people of the US and for the people of the world. It’s not better for the people of the US instead of the rest of the world, or do better for the people of the world instead of the people of the US.  

We’re all in this together. And MMT allows us to see this. Without the MMT lens, we’re constantly being competing and fighting for resources domestically within the US and internationally, because it’s us against them. And if their situation improves, our situation goes down. So I have some hope in building a new kind of public policy conversation in the US that gets us internally to realize that we’re not sacrificing things when we improve the situation internally in the US and then think globally that US foreign policy and US economic policy through the World Bank and the IMF doesn’t have to be at the expense of other nations.  

And I’m not inventing this. Obviously, a lot of people have thought about this before going back to John Maynard Keynes when the IMF and the World Bank and the new economic world order was being designed, Keynes was part of the Bretton Woods negotiations. His proposal was to create a world order where it’s not one country leading at the expense of others, but the Keynes Plan didn’t go through instead of the US Plan or the White Plan went through, which was the create only the World Bank and the IMF, and not to create the third institution that Keynes wanted to create, which would have rebalanced global trade in favor of global full employment.  

So again, that’s a mechanism that requires political courage and recognition that we’re all in this together. It doesn’t have to be us against them, and our prosperity can only happen if their prosperity diminishes. And that’s really what we’re hoping to accomplish with these MMT conversations to empower people in the US and to empower people in other parts of the world to start shifting the conversation and move away from this sick, competitive, antagonistic mindset that as you know, translates ultimately into hatred and into racism and into all kinds of ugly things that humanity doesn’t deserve. 

Steve Grumbine (00:42:56): 

Like death. 

Fadhel Kaboub (00:42:57): 

Yeah. 

Steve Grumbine (00:42:58): 

I want to peel it back just for a second, and understanding you made a great case for understanding monetary sovereignty, who the currency issuers are versus who the currency users are in particular, the states of the United States and state countries like in the European Union, et cetera, but in particular, the border states that border Mexico, they have an influx.  

They’re the first ones to see immigration happen down there, illegal, legal, undocumented, document, whatever. They’re the first to see that happen. And because of the fact that our federal government is not using its monetary sovereignty, because Congress is still playing as if Milton Friedman were God, Lord, emperor, and pretending that we don’t have the ability to do great things, these states are in a race to the bottom.  

They’re cutting taxes because they’re trying to lure businesses into their States. They are literally having to shear off state-based programs, state-based initiatives that would improve infrastructure, improve schools, improve any part of it. The jobs are gone. They’re going — the jobs that could be there are going.  

And because the federal finance is not there to make the economy work, these people are staring down the barrel of austerity of their own. They’re looking at a competitive environment where new people that are willing to work for less wages are walking in the door to take away their jobs. If the federal government doesn’t step in and do its job with a federal job guarantee, or with any number of new deal type policies that would enhance and change the way we view states in this country right now, as it stands right now, we’ve got people that don’t understand this play of currency issuer versus currency user, and they want to do state-based Medicare for all kinds of stuff.  

And they don’t realize that there’s a point where there’s old tropes, where they say the problem with socialism is eventually you run out of other people’s money, in those environments it’s true. You will run out of money eventually if you’re not infused with sovereign spending. How can we help those individuals down there fight for their own rights, because they are being impacted by the austerity.  

They are being impacted by a influx of people working for cheap labor, because obviously the businesses that are willing to pay money for cheap labor, and they end up cutting out these people. How do we help them understand that the fight is not against the immigrants? The fight is against our Congress. What’s a good way to frame that? How do we put that into motion, Fadhel? 

Fadhel Kaboub (00:45:44): 

If you don’t mind, I’m going to bring the big elephant in the room also – for a job guarantee – MMT community cause this is something that MMT supporters, job guarantee supporters have been sort of uncomfortable about when asked about it – and there is no consensus. So I’m not going to claim that I’m speaking on behalf of the entire MMT community or job guarantee.  

This is just me thinking out loud about something that’s extremely serious, because we’re talking about immigration issues, and because we’re talking about public policy dividing people, and this presumed threat of cheap labor an immigrants taking their jobs. So let’s say we’re in the world where the federal government puts in place a job guarantee in the US and the government is going to offer to hire anybody who’s ready, willing, and able to work at a living wage with health benefits, with all the things that we said we want in a job guarantee, and it’s going to be administered locally by local nonprofits, NGOs, municipalities, community organizations, and the logistics is working in a very decentralized way.  

The funding comes from the federal government. So this is not going to put a tax burden on local states or municipalities. So the funding is not an issue. The organization has done logistically at the local level. The question is, do immigrants qualify for job guarantee? Because, you know, we have to realize that there are millions of undocumented immigrants in this country working in slave like conditions.  

And some of these conditions have been exposed recently with some of the ICE raids and in some communities right here in Ohio, actually just a couple hours north of where I live. People living in slave like conditions and working in slave like conditions and their entire life as a slave like condition because the way they left their country, you know, trafficked across borders, by criminals who hold the deeds to their homes, or even worse threatened the lives of their families if they don’t pay them 15 to $20,000 for bringing them into this country.  

And when somebody is working below minimum wage and miserable conditions, it takes them a lifetime to save 15 to $20,000 to pay their debt to the traffickers. So not only they live the misery of their life here in the workplace, but they have to worry about the safety of their family back home, because they have to work an entire decade or two to pay off that debt.  

So a job guarantee is in place today. Why would an undocumented immigrant not quit their slave like conditioned job and move into a job guarantee system? And this is where the big elephant in the room is. What do we have to say about that? And some people have publicly said, “It should be just for US citizens and legal residents.”  

And to me, that’s just unacceptable for us Progressives to say that people who live and work in slave like conditions in our communities should be excluded from this new prosperous economy that we’re going to create with a job guarantee system. So now let’s take the argument further down one step. And if we do open up employment and community development organizations, to anybody who is ready, willing, and able to do the work documented or undocumented with benefits, with all the generous things that we want in a prosperous society, in a generous society, then the question is what’s going to happen to those companies who rely on thousands of undocumented workers to do the dirty work in miserable conditions.  

Aren’t they going to go out of business? My argument is that they should! They should go out of business. If your business model is reliant on the slave like conditions, if your business model is slavery, you should be out of business. And if that means, you know, paying higher wages, restructuring, redistributing profits away from shareholders into workers, so be it.  

And if it means within a decade, those companies will automate away those miserable workplace conditions, then that’s something to be celebrated, that no human being will ever have to work in those conditions. And there should be robots doing the dirty job, and then human beings doing dignified work in communities, caring for people, caring for children, caring for the environment, caring for community.  

Why should we stop at a job guaranteed just for citizens or legal documented immigrants? I think it’s unacceptable for me personally, to endorse anything like that. I think because we have the MMT lens allowing us to see the big picture, to see the full potential, we shouldn’t shoot ourselves in the foot for the convenience of having our message be accepted in the mainstream.  

We’ve never been part of the mainstream to begin with so why should we aspire to be admired by the mainstream at this point. We should aim for truly progressive policies that are affordable, where we’re not doing anything that will damage the economy; that are generous and that will truly bring prosperity for all.  

And then a lot of people say, “Well, if that happens, then all the other people around the world would want to come to the US. That will open the floodgates of immigrants and refugees from the rest of the world.” And to that my response is “why not?” Should we make life more miserable for people in this country to deter other people from coming here and tell them, look, if you come here, you’re going to be a slave.  

We should aim for the highest level of prosperity that we can afford. And then maybe through that, empower other countries and other people to follow suit. So if the UK realizes that the US can do this, then the UK will do it. Then Denmark will do it. Then France will do it. Then Australia will do it.  

Then there’ll be lots of other great destinations to go to. And then slowly we’ll move into developing countries and restructure economic policy in a way that actually improves people’s quality of life. And when people’s quality of life is improved at home, most people don’t want to leave their family.  

Most people don’t want to leave their neighborhood, their culture, their food, their music, their everything. I mean, it’s painful for people to leave their countries, their families. And it’s done as a last resort when people don’t have any choices. And people are willing to cross the oceans and die, many people die in the journey.  

And when they leave, they know that it’s likely that they will die. And yet they make the decision that this is the only hope I have for my family, for my kids is to cross the border and look for a better opportunity. And the fact that the US is the greatest opportunity, that Australia is the greatest opportunity, that the UK, or Italy, or Germany is the greatest opportunity is not something that we should work against and say, “Well, let’s make this not such a great opportunity.  

Let’s make life miserable for everybody here so that nobody wants to come here.” It’s just nonsense. So that’s my personal take. I’m not speaking on behalf of any other MMTers. 

Steve Grumbine (00:53:02): 

No, I love it. But I want to talk about something that is purely macro, purely economic, has no morality behind it whatsoever – and that is the idea of automatic stabilizers. So automatic stabilizers have been in place throughout our history, in all aspects of our economy. Things people take for granted.  

People don’t even realize they’re there. They’re not there because people are good or bad. They’re there to ensure the economy doesn’t tank. And they’re like, just shifted into places when bad things happen, other things kick in. When things improve, they drop down, stuff like that. The job guarantee was created as a buffer stock to take instead of having unemployed people sitting there just collecting tiny fragment of money from unemployment, why not have a bench of employed people that could easily slip back into private sector work or whatever it is that they want to do with themselves.  

In this case, if I’m just talking purely economics, purely macro, it doesn’t really make a bit of difference whether it’s immigrants, whether it’s only people who have blonde hair, or whether it’s people that are only of the age 65 and above, or everyone from cradle to grave. It really makes no difference.  

The buffer stock works because ultimately, this is so huge to me. This is the light bulb moment for me is that these things came via keystrokes. This is not a situation where they had to take from somebody else to give to somebody else. And it doesn’t really matter one bit where these people come from, they’re just numbers in the grand scheme of things.  

They’re just unemployed workers. And the job guarantee kicks in as that stabilizer and pegs the economy, so to speak, to labor. It doesn’t matter whether it’s immigrants, undocumented immigrants. It doesn’t matter second generation immigrant. It doesn’t matter. I mean, this is the point I hope people grasp from this is that in the end, there’s no economic reason why we would not want to bring them in if we did a job guarantee correctly, not the neoliberal- Corey Booker-style version, MMT version.  

And I’m not talking about, like you were saying, there’s disagreements about who should qualify, whatever. That is purely political. That’s morality talking. That has nothing to do with the ability of the resources to be able to be issued out, so to speak. Correct? 

Speaker 3 (00:55:32): 

Right. So ultimately the implementation of the job guarantee and the criteria and the wage and the benefits, it’s all, it’s going to be political decisions, but that’s where the public discourse is important because in a democracy, you want this to be a participatory way of legislating a new economic order.  

And the hope with going with the boldest proposal, with the most generous proposal, is to open up the conversation about so many other things, because the job guarantee is not a silver bullet to fix everything, but it’s gonna get us to rethink, “Well, how about immigration? How about the minimum wage?  

How about health benefits?” And it will begin a conversation that’s broader than the buffer stock for labor itself, because we’ll get other people in the labor force to reconsider their labor power and their bargaining position and what they can demand from their country. And it will get the working class to think about re- negotiating their position with the capitalists, right?  

It’s about distribution of wealth an this country has dropped so far behind when it comes to income distribution, including after the so called recovery the last 10 years, that it’s time for a reset. It’s time for a new conversation. And that’s why we shouldn’t go with the most conservative proposals because you don’t get anything if you start the whole thing by compromising on everything, you don’t get anything.  

You have to go with the boldest proposal. And if you have to negotiate, you start negotiating at that high end. You don’t start negotiating — well, we have no bargaining position, we’re not going to demand anything. Then you’re not going to get anything. And that’s why the Cory Booker proposal is really very dangerous for Progressives to say this is something we’re going to .  

. . because it starts with the whole thing is a compromise to begin with. It’s a subsidy for the private sector. 

Steve Grumbine (00:57:23): 

He negotiated us right out of the winner’s circle. 

Fadhel Kaboub (00:57:26): 

It’s not threatening to anybody’s position, and it’s not helpful to anybody’s position in the working class and the unemployed groups. So I’m very skeptical of his proposal to be very generous. 

Steve Grumbine (00:57:39): 

Same with Ro Khanna’s. I mean, I saw his, and it was like, Oh my God, this is like the ACA of job guarantees. Totally not cool. 

Fadhel Kaboub (00:57:47): 

And to be honest, I mean, that’s, it’s something that’s expected. I mean, Ro Khanna, you know, we thought, you know, he’s a great guy, progressive and everything, but you have to realize that he rose through the ranks via the DNC machine. So was Cory Booker. So if you go through the ranks, that’s it.  

You’re compromised. And to some extent, the only person who didn’t really have to go through the ranks is Bernie Sanders and see what happened to him, right? And that’s why he’s able to keep some of his independence, which is helpful, but we need more than Bernie Sanders – a movement, a political movement requires more than a couple of senators. 

Steve Grumbine (00:58:27): 

I have a final thing that’s slightly off topic, but I think you’ll see that how it ties back to the topic, and this will be what I want to close us out with. So during the great financial crisis, with the mortgages going under, with everyone losing their homes, losing, I mean, it was crazy. We were losing like a million jobs a month.  

It was unreal. I mean, it was just like, wow. You know, people were just destitute. And I was part of that, you know, destruction, if you will. When you talk to individuals, the simplistic answer always comes back to the banksters, always about the banksters. It’s always pointing back to the banksters and so much of the hatred and outrage within the progressive community as well with Occupy Wall Street and others who had some pretty good ideas, just didn’t quite go to the end where it would have solved the problem.  

They’re still trapped in this focus. What I’d like to know is what part the global financial crisis played in creating refugees and creating the neoliberal hell that we’re in right now and what we can do as citizens to smarten up, activate better and be able to present that scenario, which is still plaguing us today, in my opinion?  

How do people understand? I mean, it seems like, you know, we elevate, we elevate and then all of a sudden, the bottom falls out and then they get us on the cheap and then they, they didn’t lose anything. They just kept growing. But we are back down here fighting for scraps. What is your thought in terms of the relationship between the way that banks were bailed out, industries were bailed out, everyone was bailed out but the regular homeowner was left to fend for themselves, and they still are licking their wounds and they’re looking around and they hate people that are gonna take their .  

. . still got PTSD from losing everything. 

Fadhel Kaboub (01:00:23): 

Right. I think the best example of the example that most people are familiar with would be Greece. I mean, you look at what happened to the financial institutions in Greece during the crisis, and they’ve held the entire country hostage for their bailout and look at what happened to the average person in Greece, homeowners, working class people, retirees, pensioners, students, young people who just finished their education and remained unemployed for years and years.  

What a waste of human potential. Right? So the sacrifice that the Greek society has made is wasting an entire generation of young people and including people who literally died, you know, some committed suicide and some died because of the ill treatment by their government or the economy. Why? Because we wanted to prioritize saving the banks.  

And that’s done not just, you know, obviously by the Greek government, but the Greek government was powerless in this game because it was under the supervision or, you know, control, I should say, of the ECB, the IMF, the European Commission, the Troika. And so that’s really one of the most recent best examples of how this neoliberal political agenda and economic agenda is literally wasting a generation worth of young people into unemployment and all the negative things that go with it and literally killing the elderly with ill treatment – the people of Greece, for example.  

And the same is true in other parts of the world. So, what happened to Greece is something that developing countries overall have experienced since the 1980s imposing austerity on developing countries after the debt crisis of the eighties was something that, you know, many of the countries in the Middle East and Latin American experience and continue to experience to this day.  

So when you see the intensification of misery in a place like Honduras, it’s not a recent crisis. It’s been an ongoing crisis for decades. And it’s just a gets to a point where it becomes unbearable for people to live in a country like that, to the point where they’re, they’re willing to take the riskiest routes and the most dangerous thing, with the hope that maybe their kids will survive the trip, and maybe they’ll be welcomed into safety in the United States.  

And then what we do when we receive those kids and how we treat them, that’s really important for people who think of themselves as real progressives to see the full picture and not to think, “Oh, those kids are going to take my kid’s spot in college, or it’s going to be a burden and taxes on my family.” If you want to get to real progressive policies, you really need to think holistically, not just within your own community or country. You have to think globally when it comes to this, and you have to think that refugees and immigrants and working class people in the United States are on the same side.  

They’re on the receiving end of neoliberalism and dividing us can only serve the interests of the elite who want neoliberalism to be imposed on us. And that’s the worst thing that can happen to Progressives is to fall into that trap. 

Steve Grumbine (01:03:36): 

All right. Fadhel, thank you so much for this. Bye bye. 

Fadhel Kaboub (01:03:39): 

Thank you. Bye. 

Ending Credits (01:03:46): 

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