Episode 4 – Neoliberalism with Ellis Winningham

Macro N Cheese – Episode 4
Neoliberalism with Ellis Winningham
February 23, 2021

Ellis Winningham [intro/music] (00:00:03):

World War II showed us that we could actually use deficit spending to achieve full employment. Welfare is what we call an automatic stabilizer for the economy. It actually serves a macroeconomic purpose. It creates a floor in the economy so that consumer spending will not fall through it. The truth is, is that it is the US government in the United States, it is the US government that determines the unemployment rate.

Geoff Ginter [intro/music] (00:01:26):

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 (00:01:34):

Welcome everybody to Real Progressives. This is Steve Grumbine. We are going to be tackling possibly the most important subject. We are going to be talking about the origins of neoliberalism, what neoliberalism is and where it’s taken us.

We are going to be discussing unemployment, forced unemployment, and we’re going to be talking about how income inequality has overtaken the United States in force, en masse. So with no further ado, let me bring on my guest, Ellis Winningham. Ellis, sir, welcome.

Winningham (00:02:10):

How are you doing, Steve?

Grumbine (00:02:13):

I’m great. I’m great. So let’s talk about that, man. Let’s define what neoliberalism is before we even get started.

Winningham (00:02:22):

Well, the danger with neoliberalism is – I’ve heard this argument now from several Democrats post-election. And their explanation is that neoliberalism is just an academic definition that professors came up with to describe US Democrats who are not left enough, you know, not far enough to the left. First of all, that doesn’t make any sense whatsoever.

And second of all, neoliberalism is not just something specific to the US. It is a worldwide global phenomenon. Basically what it is, is it’s a philosophical belief, it’s a political belief where we take the economic means out of the control of the public sector, meaning from government. And we privatize it, we transfer it to the private sector.

So basically what neoliberalism is, in a nutshell, is privatization, you know, taking things and killing them, like Social Security, balancing that budget, Steven! You know what I’m talking about? Basically, anything that benefits the market and anything that’s anti-government you understand?

So, um, that’s what neoliberalism is and how we got here is very important, I think, for the millennials, especially, to understand. Because if you were not born in the sixties or early sixties or whatnot, you don’t know what a production-based economy is, you just don’t remember full employment. And you don’t know how we got here.

You know, all you’ve got is the Democratic Party or whatnot, saying, “Oh, the reason why we have income inequality is because, you know, Reagan cut taxes on the rich. So that’s why everybody is in trouble because of all these tax cuts on the rich.”

And that’s just icing on the cake. That’s a very, very simplistic answer. So it’s best that we explain how we get there, how we’ve got to this point and what the actual root problems are. How income inequality really came about in the United States. Why it’s so vast today.

Because I think people would be very surprised to find out it’s not just tax cuts on rich. You know, that’s what I would… I think it’s very, a very important issue that we need to discuss.

Grumbine (00:04:51):

All right. So let’s, let’s talk about that then, Sir Ellis. What was the genesis of neoliberalism? Where did it all begin? What, what are we dealing with here, sir? What, what was the point?

Winningham (00:05:07):

Actually it goes, it goes way back. Kalecki discussed the consequences of full employment in his “Political Aspects of Full Employment,” where he talks about the business leader, why the business leader would not like full employment. And what Kalecki said was “full employment prevents the business leader from disciplining his workforce.” You know, you can’t threaten them with unemployment.

You see it’s very important. Well, World War II showed us that we could actually use deficit spending to achieve full employment. Most governments afterwards, after World War II tried their best to maintain policies of full employment wherever possible, you know?

But there was a group of people, business leaders who were always after that, you know, we don’t like unions, we don’t like all of this full employment going on, you know. It’s very bad for us and we want to change.

And Milton Friedman had written a silly paper back in 1968 – that the Labour Party in the UK just absolutely adored for some reason – but to make the long story short, when OPEC caused the price of oil to spike in the early seventies there, and the great inflation took off, the Chicago School of Economics.

You know, the monetarists – Milton Friedman being one of the more famous personages at that school – use the great inflation as a springboard to warn us off from use of fiscal policy and the dangers of government spending because it results in inflation. ‘

Got to control government spending if you don’t want to have this accelerating inflation.’ So he used that as a way to break the neck of full employment once and for all. And it wasn’t just in the United States, as we can see it’s everywhere, from Canada, the UK, Australia – full employment is like non-existent now.

And I think people would find it very, very shocking why we refuse to have full employment and who’s actually responsible for maintaining unemployment. I think that’s something people need to know.

Grumbine (00:07:38):

So let’s talk about who is, who is ultimately responsible for unemployment? I mean, let’s be fair. Who is it? Who we talking about there Ellis?

Winningham (00:07:49):

Well, it’s not business. Everybody is trying to think the market, that business creates jobs, business adds jobs, business this and business that. The market is solvent. And the truth is that it is the US government. In the United States it is the U S government that determines the unemployment rate.

The US government determines unemployment, the level of unemployment. And it does that through its net spending. In other words, through its deficit spending and taxation it maintains, forcibly maintains a certain small number of people – or a large number of people – in a state of involuntary unemployment, by force, to fight inflation.

Grumbine (00:08:29):

So the misery factor is brought on through something we call NAIRU, correct?

Winningham (00:08:37):

Yeah! Non-accelerating inflation rate of unemployment.

Grumbine (00:08:40):

Can we address what that term is? N A I R U – NAIRU. Go ahead.

Winningham (00:08:46):

It’s the non accelerating inflation rate of unemployment. And what it says is there’s a certain number, okay? Don’t ask me what that number is. Don’t ask anyone, ’cause we don’t know. It’s just a certain number, I assure you. And this certain number, it exists and it’s the natural rate of unemployment, you know, because unemployment is natural to the universe.

I mean, when, Neanderthal man was out there, you know, some Neanderthals were unemployed, you know, back in the stone age, cavemen were unemployed and you know, they were, you know, so it’s very natural. Unemployment’s a very natural course of life in the universe, you know? So anyway, there’s this natural rate of unemployment where it balances inflation.

And when you maintain a certain number of people in a state of involuntary unemployment, you won’t get accelerating inflation and everybody’s happy. But if government comes along and decides through its spending to push unemployment below that natural rate – in other words, to lower the unemployment rate below the natural rate – the universe will respond instantaneously with accelerating inflation and we’ll all die. [laughter]

It has never happened in the last – well I’m 50 and it hasn’t happened since I was 50, but whatever, since I was born, I’ve been alive and it hasn’t happened. But anyway, it’s going to happen every time the government spends accelerating inflation. The moment you get below that natural rate, accelerating inflation, look out, we’re all going to die.

Grumbine (00:10:27):

You know, for me, for the life of me, you know, I was a Republican most of my life. And during that time period, the sun always seemed to shine on my, you know, my visage. I always seem to walk into somewhere and get the promotion. I always seem to find a way to get the job. And then in 2008, 2009, Verizon started doing massive layoffs.

And in 2009, I was one of 10,000 people let go on July 24th, 2009, not to put too fine a point on it. A 17-year career got flushed down the drain. And, so we’re on the same page, I had a master’s degree in technology management and Master of Business Administration. I was a project management certified professional.

I was also a CCNP and the CCDP Cisco-certified design professionals, Cisco-certified networking professional. I had every credential under the sun. I was infinitely employable. However, it took me 18 months during the height of this fiasco, this, this crash, to find work, right? So it was in that moment – and it didn’t happen overnight. I was already in my process to understanding:

Holy crap, if this can happen to me…. I mean, not that I’m perfect or special or anything like that, but if this can happen to me, who has taken care of his education, who has taken care of all these things, if this can happen to me, how much more horrible will it be for those who cannot? And that was the beginning of my move from the right to the left.

As many Republicans that moved to the left, it typically requires a major screw you in the forehead to find out that, Hey, the world isn’t as perfect.,,It’s not just about “bad choices,” not just about “good choices.” And as we find out, our government makes this shit happen on its own and that, my friend, should be terrifying to everyone. So anyway, I just wanted to throw in that personal anecdote.

So everyone understood that this is not just, you know, the, the ne’er-do-goods. This is not just, you know, the, the undesirables, you know, this can also be the people that quote unquote took care of everything, you know, did whatever. So anyway, keep going Ellis. I’m very sorry. I just felt like it was worth sharing.

Winningham (00:12:52):

It is worth it. And the reason why is because it illustrates that the unskilled and the bottom income distribution are not alone in this suffering when the highly skilled, highly educated workers are also victimized by the system. And the reason why that is, is because the government chooses to allow this to happen.

It’s not that the market is doing something and the government stands back and says, “Oh well, you know, we’re not going to do anything,” and suddenly there’s unemployment. The government literally, through its fiscal policy choice, chooses to have high unemployment, chooses to have recessions, chooses to cost Steve Grumbine his job, chooses to cost Joe Ironworker his job – and not give a damn.

No one cares. You know, as long as it’s, as long as the upper echelon are getting their money, that’s all that matters, you know. And that’s the way we operate our economy.

Grumbine (00:13:50):

Let’s just… I have a list of things I’d like to go through with you and I want to make sure that we stay on point, but we’ve got some time here. We’re going to go… Folks, we’re going to go on an extended run tonight.

It may not be forever, but it’s going to be a longer than normal because this is such an important topic, especially on Martin Luther King Day, with so many things going on in the world. When we’re looking for income, inequality will be solved. I mean, this is maybe the most important issue of our generation, aside from possibly climate change.

So with that in mind, Ellis, what is it? When we start talking about, um, neoliberals, we progressives use that term maybe as loosely as Republicans use the word socialist in the wrong way. And I think it’s very important that we have an understanding – when we say Cory Booker is a neoliberal, when we say Hillary Clinton is a neoliberal – it’s not good enough, in my opinion, for us to just say terms that really are out of place.

I mean, they’re correct in this case, but it’s more important to me that they understand why, because when Cory Booker is gone, when Hillary Clinton is six feet under, when all these other folks are no longer in the public space, how can they identify a neoliberal other than waiting for someone else to call somebody a neoliberal? What are the traits of a neoliberal?

Winningham (00:15:20):

Look at Hillary Clinton. That’s a perfect example. Look at Bill Clinton as another perfect example. A person who wants to deregulate, who wants to deregulate banking . . .they like to deregulate, and they like to privatize wherever possible, or find cuts to government programs like Social Security. A neoliberal wants to do what is best for the supply side and for the financial sector.

And they want to reduce government involvement in the economy. And the problem with that is when the government is the issuer of the one product that the market needs to function, you cannot hinder the government from doing its job by issuing that product without serious consequences to the lowest income distribution, the unskilled – and skilled workers like yourself – there’s going to be consequences.

And so a neoliberal basically wants to transfer the control of the economics from the public sector to the private sector. So Ronald Reagan, Ronald Reagan is a neoliberal understand? George Bush, Sr: neoliberal. Bill Clinton: neoliberal. Obama: neoliberal, big time. Hillary Clinton: neoliberal. Bernie Sanders: not neoliberal. Jill Stein: not neoliberal. Donald Trump: not neoliberal. You know? That’s something completely different. So… Yeah, go ahead.

Grumbine (00:17:16):

No, I think the thing I want to touch here, and then I’m going to go… we’re going to go backwards so we can start talking about the origins and so forth and really dive into that. But I put a video out earlier today that was describing sectoral balances – we’ve already talked about this at some length – which you know, is a key metric.

This is something very important for folks to be able to understand you can kind of get a fix on where the economy is at any given time if you know where the flows are. Right? Um, Obama came out some time ago and said, Hey, we’re going to have to cinch up our waistbands. We’re all going to have to accept the cuts. Federal employees are going to have to take the cuts.

They’re going to have to be good little boys and girls and take the cuts. And this is my problem. African Americans have a devotion… I can’t even fathom what it would be like if I had been marginalized for so long and finally have someone that looked and had my experience, you know, to go up there and become leader of the free world.

And so there is a natural inclination to defend Obama, oftentimes. We find it frequently. And so one of the things that has been of interest so that we can make sure that we are both sensitive to all forms of historical achievements and accomplishments and breaking through glass ceilings and stuff. I want to make sure that we make… we push that aside.

Obama is part of a neoliberal system that has generated the folks like Ronald Reagan and, just to your point, Bush, Bush, Clinton, Clinton. The whole gang. They’re all… Even though Reagan, wore an (R) in front of him, he he’s still a neoliberal. Same exact thing.

So when Obama sits there and talks about how you got to eat your peas, and you’ve got to do better, and you’ve got to, you know, blah, blah, blah, eat your mush. Obama is doing the same thing Ronald Reagan did. Obama’s doing the same thing that the Bushes did. And yet somehow or another people have allowed the (D) in front of their name to shield them.

And then they say, “but the GOP blocked…” The GOP did not block them. This is who they are. ACA is an expression of who Obama is. It wasn’t that he was forced to do a neoliberal healthcare bill. He went ahead and did a corporatist bill that was neoliberal in the sense that he privatized that. He pushed it out there instead of bringing it in-house where we could have had single payer.

I just want to make sure we clarify that anybody that defends Obama is by extension defending neoliberalism. They’re not defending just an… the first African American president, which is a wonderful thing. They’re not defending the fact that this guy was an eloquent speaker. That’s a wonderful thing. Obama did awful things to us and the economy, even though they see that he quote unquote saved us.

He did stimulus – and stimulus is a sign of, “oops, we didn’t do anything before now.” You know, when you have to do a stimulus, that to me tells me that you haven’t been paying attention to your sectoral balances. You had cut too close to the bone, you know, anyway, I just wanted to get that out there.

Winningham (00:20:32):

There’s something, there’s a word right there that we need… I’m going to say something now that’s probably going to cause, well, at least Paul Krugman, he’ll flip out, but it’s going to cause some people’s ears to perk up and go, what did he say? Let me explain it to you this way, it’s impossible to stimulate the economy. You know the word stimulus. We’re going to stimulus.

We’re going to do a stimulus here. It’s impossible. There’s nothing to stimulate. You know why, because the US government is in complete charge. If it is not spending enough, the economy will eventually slump into a recession, so the only choice is for it to expand its deficit. It’s not a stimulus, it just means the government’s decided to do its job.

The market is not in charge, if the market were in charge, but it got stuck, as Krugman said, “banking got stuck in the zero lower bound.” If that were the case, then government stepping in and adding some printed dollars, you know, might stimulate something, but there’s nothing to stimulate here.

The economy belongs wholeheartedly to the US government and it hangs totally in its success and failure, and it’s totally in the balance of whether or not government is going to spend. And if it is not going to net spend, eventually there will be a recession. So if the economy is slumping, it’s not needing a desperate stimulus package, it’s just needing the government to do its damn job. Do its job.

Grumbine (00:22:21):

This is so important. I want to hit this really hard because this is one of the things that drives me absolutely insane. And that is, hey, we shouldn’t have bailed out the banks, maybe we shouldn’t, maybe we should. I’m not getting into that. All I’m saying is they divert here, they divert there, and the reality is that our government needs to be spending on us, period, when we’re in these conditions.

And so I don’t care whether we should have bought an $800 hammer, that was never being budgeted to be spent on the 99%. I don’t care if we bought the F-35 fighter or if we bombed some other place. That’s not the point.

The point is that we have allowed the 99% to suffer, and that those other things are important issues, and you can address them in their right space, but conflating, ‘we should have saved money over here and spent it there.’ We shouldn’t save any money, this is not a savings thing. This is about opportunity costs. This is about efficiency today.

This is about making sure we maximize our productive capability… Productive, not being a capitalist productive, but productive in terms of who we are as a people productive. Add to that, please, because I’m so angry when I see people derail the conversation and say, “well we wouldn’t have a deficit, if we didn’t spend so much on the military.” It’s got nothing to do with that. That’s not the point.

Winningham (00:23:49):

You have to have a deficit. You must have a deficit. That is how the US government adds its only product to the non-government sector. If it is not deficit spending, you’re not getting dollars added to the economy. It’s just that simple. So what we have here is a total failure of people to understand how jobs are even added to the economy. Do you understand me?

Grumbine (00:24:18):

I’m so sorry. I hate to say this. I’ve got to say this. I’m not going to mention the name because I can’t put their question up here, but it’s just very important. I care very much about us not bombing at all. Here, I’m going to put it just on Steve Grumbine for a minute, Ellis. I care very much that we don’t bomb anyone at all.

I’m saying economics, if you don’t understand what I’m talking about here, that’s okay, but I am 1000% anti-war, not 1000%. the other way, I am completely and utterly anti-war, unless we are absolutely pushed to the brink and have no alternative. So I care very much about that. What I’m talking about is using your brain and understanding economics versus project A, project B, project C.

The issue here is about sectoral balances. It’s about flows. If we cut spending, I don’t care, if you like where the spending goes, we can shift the spending somewhere else. But the point is, if you cut spending, the bathtub lowers, and we end up in a recession; this is the bottom line.

It’s not about not bombing or bombing, the problem is it’s a non-sequitur, it’s not the point, is the point I’m making. So I care very much about that stuff like this, but just accept we’re talking about economics. All right Ellis, bringing you back in brother.

Winningham (00:25:56):

Where were we? Were we on sectoral balances? Deficits?

Grumbine (00:25:59):

Well, yeah, we were, we were trying to talk about how the economy is going into, you know, if the government doesn’t spend, it goes into recession.

Winningham (00:26:09):

Yeah. The reason for that is people need to understand how the economy adds jobs and takes away jobs. These things are done through consumer spending. So let’s just remove the government just for a moment from the equation, and let’s just look at consumers over here, and then we have business over here, okay? Now, consumers take their money – take their dollars – and they spend them, okay?

That spending becomes business income. See how that works? All right, now let’s add the government back in. The government deficit spends and adds dollars to the economy. This takes pressure off of consumer savings, allowing them to spend more. When consumers increase their spending on goods and services, this puts pressure on business to increase its production, to meet that consumer demand.

So what it does is it solicits help from workers. It adds jobs. See how that works? So if the US government is adding the appropriate amount of dollars through deficit spending, pressure is taken off of consumer savings, we meet consumer savings demand, they go and spend, jobs are created, and the unemployment rate folds.

If the government is not deficit spending, but cutting its spending, then what’s going to happen is consumer spending is going to contract. It’s going to fall. And when that happens, business loses income, enters what we call the inventory cycle, where it has more inventory than it can sell.

And it kills the one thing that it can part with: jobs. It begins firing workers, and as they get laid off, the unemployment rate rises and you get a recession. So hence, the government controls the unemployment rate through deficit spending, through its net spending.

If it is not spending enough, look, it’s real simple, Steve, if there’s any involuntary unemployment in existence, if there is a single worker that can be found who is willing and able to work, but cannot find a job, that’s how you know, the federal deficit is too low.

Grumbine (00:28:21):

So, all right, that’s a great segue to our next point, right? We had talked a little bit in terms of planning this out, you know, and we wanted to talk about wage suppression, right?

That’s really where this next part comes in, because once you suck the money out of the economy, (I’m going to bastardize this on purpose so you can save it), basically they suck the public money out of the economy and they put us into a debt economy, a personal private debt economy.

And in that personal private debt economy, now all of a sudden, we’re desperate for those dollars, those paper dollars. So now all of a sudden the businesses, who are now in a spiral, because they can get us on the cheap, et cetera, now they’re able to suppress our wages, now we’re desperate.

So now they can punish the employee and give us a shit wage on top of it. I said that really, really crass. Give us the more official roundabout. Correct my English.

Winningham (00:29:22):

Okay, well, what happened was when, when the monetarists came along and they ended, you know, they successfully convinced us to end full employment and go with the notion of this non accelerating inflation rate of unemployment, you know, the “natural rate” there.

They basically said to the government, we’ve got to keep a certain number of people permanently involuntarily unemployed, longterm, so that we never again have to face the inflation that we saw in the 1970s. When in reality, that inflation had absolutely nothing to do with government spending, I don’t care what anybody says.

But at any rate, the moment that we were able to break the neck of fiscal policy and really start relying solely on monetary policy. And the moment we broke the neck of full employment, that gave the business leaders and the business community the opportunity to start breaking and busting unions, which they did. They began busting unions. And then they went after wages.

And throughout the course of the eighties and into the nineties, right up to Bill Clinton, you see that wages were being suppressed. We saw wages just falling. The cost of living is going up, people were saying, but you know the wages, they kind of suck. They’re not keeping up with, they’re not keeping pace with the cost of living.

And so the thing about wages, it’s very important that people understand before we finish this part off. We are told persistently – and Steven should be able to verify this since he has an MBA [laughter] – we are told persistently that if we raise the minimum wage, it will cause unemployment. So whenever you raise the wage, it’s going to cause unemployment.

And the reason for this is because wages are a cost. And that’s absolutely absurd, but people buy this up. They buy this up like it’s food, I don’t know, during a period of privation. And they actually believe this nonsense: wages are a cost for business, and if you increase the cost of business, they’re just going to increase unemployment, going to fire a bunch of people cause they can’t afford it.

It’s all nonsense. Here’s why: when we say that wages are a cost, there’s also the fact that wages are a demand. There’s a demand element to wages, as much as there is a cost. It’s the same thing, it’s just one thing. Wages are both a cost and a demand. The reason for that is somebody’s spending is always somebody’s income, right?

So to claim that wages are nothing but a cost, and if we increase the minimum wage, it will result in unemployment, is to claim that workers never spend their paychecks. Now is that not absurd to you, Steven? Are we to really believe that workers go off and when they get paid, they just stick their paychecks under the mattress and they never spend them?

Because that’s what it means when we say, if you raise the wage, unemployment will result because wages are just a cost. Well, then that means that workers never spend their paychecks. It has to be that and nothing else. So that’s what these nonsensical neoliberals want you to believe. They want you to believe, literally, that workers never spend their paychecks when they’re paid.

So wages are just a cost, and every time we raise wages, we are costing business. The truth is, if you raise the wage, you increase the worker’s share of something very special, which is the root cause of income inequality and wealth inequality. Not these tax cuts on the rich that the Democratic Party likes to keep going on… “Oh, you know, Reagan cut taxes on the rich in the eighties, and that’s why we have vast income inequality.” No, that’s the icing on the cake for the rich.

Grumbine (00:33:33):

The cherry on top.

Winningham (00:33:33):

The question is: how the hell did they amass such wealth to begin with? How did they go from just being well-to-do, to opulence? Well, they have to be stealing something… ‘Because the tax cuts’. Yes, but you’ve got to earn before you can get a tax cut. You got to have some earnings. Where are they earning?

You see? And that’s where wage suppression comes into play, with involuntary unemployment; you maintain involuntary unemployment, longterm, this allows you to bust unions and then start suppressing wages. Why is that important?

It’s very important because of a little thing called GDP, gross domestic product. And people say, “Well, what is that? I hear it all the time – debt to GDP, blah, blah, blah. What are they talking about?” GDP is another word for the national income.

And the way it works is simple: in the United States, there’s a bunch of individuals, some of them are workers and some of them are business owners and CEOs – we call them capital. So here’s workers and here’s capital, and what we all do is we come together and we produce some goods and services that we end up selling back to ourselves.

What we’ve produced is called GDP, the national income. Workers and capital both share in gross domestic product – in the national income. But you know what, workers share in the national income, through their wages, capital shares in the national income through investment, and then what it gets from its investment.

Like Kalecki said, the business owner, the capitalist, gets what he spent and the worker spends what he gets. So, if you are suppressing wages, and that’s the only way for the worker to share in the national income, then strangely enough, the worker share begins to contract and get smaller and smaller. The workers’ share of all that we produce gets smaller and smaller. So who’s getting the rest of it?

It’s being redistributed to capital. It’s called GDP redistribution. When you suppress wages but increase productivity – I don’t know if you can see my fingers – here is productivity and here’s real wages. When they’re in line like this, everything’s happy and fine. Everybody’s sharing equally in the national wealth, you know, the national income.

But if you’ve got productivity rising faster than real wage growth, this gap that forms here – see that, there’s a gapa there – and that gap tells you that GDP is being redistributed to capital. Now over time, the rich are soaking up more and more the national income by suppressing wages. You suppress wages further by saying “screw 40 hours a week – the new full time is 30 hours.

No, wait, the new full time is 20 hours. No wait, part time jobs only.” Now you’ve got Steve Grumbine, he has to go out and get three part time jobs just to pay his bills. Isn’t that special? Because the majority of the jobs are part time. That’s wage suppression, you’re suppressing it and keeping it down and down and more of the national income flows to the rich.

Now give them a tax cut, they get to keep more of what they stole. The real issue is the rich are stealing our national income – not the tax cuts – they’re stealing what the workers have rightly earned. I hate to mention the Bible, but Christ, James himself said, yeah, hear the cries of the workers have risen to heaven, the workers that you have cheated of their pay.

This is it right here, buddy. And now the day of reckoning has come because people know why. And I’m telling you right now, the reason why the rich are the rich, the reason why the 1%, are the 1%, is because they have been robbing you for the last 40 years of your national income.

Grumbine (00:37:52):

Knowing what you know, how infuriating is it when you see people assume that the panacea for all things is ‘we gotta raise taxes.’ How infuriating, knowing what you know, knowing that the real deal has nothing to do with that, very little anyway…

Winningham (00:38:15):

It has some.

Grumbine (00:38:15):

It’s on the back end though. We’re letting the bad thing happen first, right? We’re letting the evil occur in spades, and then all of a sudden we want to put a bandaid on cancer. That’s what I see it as. I jokingly say, it’s a band-aid on a frigging gallbladder erupting. We’re talking about the wrong diagnosis and the wrong prognosis and the wrong fix. The wrong surgery for the wrong ailment.

And so people, and I’m going to just say some people that are not the sharpest knives in the drawer, come around saying, you know, that you’re for the rich, when in reality, you just gave a gut punch at the source, which is the income inequality based on stealing GDP before it ever gets taxed. The tax is not the issue. Because taxing them does nothing for the poor in this country.

The way to fix the poor is to give them a share of GDP. These people ignorantly focus on just taxes. They just focus on that, and they think they’ve found something, they think they’re being cool, they think they’re being savvy. They think they’re being “Power to the people yo”.

And the reality is that it starts at GDP, it starts at workers’ rights. It starts at wage suppression being eliminated, it starts at a basic fundamental right to a job with a living wage and basic income, et cetera. I mean, I just want to make sure we hit that nail hard because I’m so beyond frustrated with the ‘bandaids on cancer’ that I get apoplectic.

When I think about the absurdity of the people that have things to say, they just say things. And that irritates me to no end, because people are really suffering because they’re fighting all the wrong battles. Anyway, I had to say that, there you go, you’re back.

Winningham (00:40:25):

The thing that we need to understand, and I want people to understand, I want my brothers and sisters who are watching from the United Kingdom, who’re watching in Canada, who’re watching in Australia, to understand that everything that I’m saying right now applies there equally. This is how GDP is stolen. It’s very important to understand, if there is no GDP, that means that the country itself is not producing a goddamn thing.

Are we understanding that? So when there’s GDP present, that means there’s a national income, that means that workers and capital are working together, producing goods, and then selling them back to Americans. The thing about this is, is that once again, if you suppress the worker’s wages, that is the only way the worker can share in what the nation produces, is through their wage.

So if you go to like Walmart and you see a worker that’s only allowed to work no more than 16 hours a week at $8.50 an hour, you say, well, he’s not getting paid a lot. But the thing is, Walmart is getting paid tremendously. You say, well, what’s going on here?

It’s real simple, Walmart is claiming a much larger share of the national income by keeping the workers’ wage down. It’s not just Walmart though. This is a straight across the board thing. The business leader wants to keep wages low so that he can derive profits.

 It’s much easier than actually having to work for a living you see, you just steal it. And the way you steal it is you tell the worker to come on in and get three part time jobs. And then you get someone like George W. Bush’s ignorant face coming on television, and some woman saying I work three jobs, “Oh you work three jobs, ain’t that American?”

Yeah, it is now. But I’m telling you in 1950, it was not American. The Republican AND the Democratic Party were both pro-union. The Republican Party put up pro-union posters and urged their members to make sure that they attended their union meetings. Do not tell me I do not know what I’m talking about because my grandfather worked for the railroad and he was a union man, and he was a Republican.

And Eisenhower – “I like Ike” – I still got the original “I like Ike” button here in my drawer. My grandfather got union notices from the Republican Party back then, I’ve seen the letters, I’ve seen the propaganda and everything. When a new breed came along in the seventies, it was a new breed that was controlled by these business leaders that wanted to end unions. They wanted to end full employment.

They wanted to end decent wages. And we talked about decent wages, right? Because they contain a demand element. They’re not just a cost. It’s a demand. When workers get ahold of an income, when they get paid, they spend, and that becomes business income again, you understand?

Well, the thing about the wages is that, like we said, again, if you suppress them, you’re going to reduce the share of national income, so you’ll create this vast inequality. Then if you give the rich tax cuts on top of that, they get to keep more of what they’ve stolen. More of what they have not earned. They just stole it by not allowing the worker to participate, just not allowing them to share.

But you see it goes much deeper, much, much deeper than just that. And you notice that you don’t hear the Democratic Party talking about this stuff because it’s too complex, according to them, for people to understand. I’m telling you right now, what I’m saying right now, people listening to me, everyone out there listening to me, right there, right now, can understand every damn word that I am saying.

The Democratic Party could easily stand up tomorrow and say, here is why there is vast income inequality, here’s what GDP is, here’s what wages are, here’s what the problem is, and guess what, they won’t do it. And the reason why is because they want vast income inequality, because that’s what they’re paid for. They’re paid for that. It is deliberate.

Grumbine (00:44:44):

You are gonna hate me for this, but I’m going to do it anyway. Just forgive me, just forgive me in advance. This is just a slight excursion to a small rabbit hole, we’ll get right back on the path. So obviously we have not, most of us, have not enjoyed the decision-making of the Federal Reserve in terms of where it put its efforts. It put its efforts where neoliberals asked it to.

Neoliberals were appointed to the Federal Reserve by electing lesser of two evil neoliberals. So the people that sit there and get all righteous about how the Democrats have to come and save the day and all this other stuff. When they do that, not only does it infuriate me, but it just absolutely makes me want to give them a good throat punch.

So the next part to that is, is that the Federal Reserve in and of itself is just neutral. It just is what it is. What is not neutral is when you elect neoliberals who appoint neoliberals to do neoliberal things. It’s not the Fed, it’s the people appointed to do these things have neoliberal tendencies.

Now, if you want a progressive to do progressive things or a socialist to do socialist things, you need to elect a progressive or a socialist. The ‘vote blue’ sycophants that tell us we must vote for another neoliberal, you are the reason we have no nice things.

Look in the mirror, stare into it hard and accept the fact that you have brought this onto all of us. You didn’t stand firm and fight for progressives, own it, strap it on. You have literally killed the nation. Simple. If that’s too harsh for you, too bad. I’m sorry, I had to say that. Back to you, sir.

Winningham (00:46:41):

So we understand now that income inequality or this wealth inequality has been going on for many, many years, which has everything to do with GDP redistribution to capital, at the expense of the worker. And I just saw, Joe Firestone made a comment there about my memory being long and so is his. Damn right. And I’m not going to forget that easy either.

That’s why I’m talking about this right now. And also noticed another comment go by – Joe mentioned that working three jobs is un-American. Damn right. That is un-American. One job, at a decent wage. One job is all that’s necessary at a living wage, a decent wage. And we can do this because we did it for years. We did it for years and years and years without inflation.

Don’t tell me that it’s going to cause inflation because it won’t. I can knock that down. Look, I’m good at math, and I’ll knock that crap down right into the ground. I don’t want to hear about this inflation stuff. I’m so sick of the word inflation.

But we’ve only talked about the period just up to 1992 before Bill Clinton said, “it’s the economy stupid”, remember that? You remember James Carville “it’s the economy stupid”, remember that? We haven’t even got to this point yet. We haven’t even got to the deficit slashing yet.

Grumbine (00:48:12):

Let’s get there, brother.

Winningham (00:48:12):

So here comes Bill Clinton and he says, “I’m a New Democrat.” Everybody knows what that is, right? It’s not the old tax-and-spend liberal from the seventies; this is a New Democrat. This guy is new, in other words, he’s a neoliberal. We don’t say that among certain circles of ‘vote blue’ people, because they’ll hate you forever.

You know, you can’t sully the reputation of Bill Clinton because he did tremendous things like run a surplus, isn’t that wonderful? And he also expanded income inequality and wealth inequality to the moon, right along with Obama. It’s just sickening that people actually think that the Democrats stand for the working man.

Intermission (00:49:16):

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Grumbine (00:50:04):

Identity politics, identity politics, identity politics. I can say it all day long… Identity politics. It is lethal to making progress for the classes. I mean, while we certainly have specific things, like if you come into a neighborhood and a house is on fire, you know, all houses matter, but the one that’s on fire matters, so you put the water on it.

So in that sense, I’m all for identity politics in that respect, but the reality is that the kinds of macro solutions that we’re talking about here are not based in identity politics. And unfortunately, because of identity politics, what they’ve done is they’ve created bunker mentalities that prevent logic from penetrating a very thick, dense skull that is immune to facts.

And this is what we’re hoping to penetrate here, I hope, is get through these very, very thick, dense skulls of neoliberal apologists who have fallen into identity politics, and therefore don’t hear anything but “la la la identity politics” and reality is, is that we’re talking macroeconomics. It doesn’t give hide nor hair of your gender, your color, or anything else.

It’s pure, and this must be understood at the macro level. And we can fine tune policies to address the house on fire but don’t screw it up up here because you’ve got some situation that you can’t see past. It’s very, very important to saving our nation from neoliberalism. Go ahead, sir.

Winningham (00:51:41):

Remember Bill Clinton’s “welfare to work.” Remember that one? Yeah, that was a beauty, wasn’t it? No progressive, no progressive would ever cross the aisle with someone like… to meet someone like Newt Gingrich and say, “Hey, I got a great idea, let’s do welfare to work” like Bill Clinton did. Does anyone here know what SNAP is, what welfare really is?

This is not really, you know, you’re sold a sad bill of goods that aren’t real. Let me tell you right now, welfare is not this thing where we give money to the poor – handouts to the poor. So it’s moochers and takers versus hard working people, that’s not what this is. Welfare is what we call an automatic stabilizer for the economy. It’s… It actually serves a macroeconomic purpose.

It creates a floor in the economy so that consumer spending will not fall through it. What happens is, is when the economy starts to head South, you get a downturn, people lose their jobs. They go to the government and they apply for welfare benefits. They apply for food stamps, yeah? Unemployment insurance. Okay? And when they do the deficit automatically increases, okay?

This keeps consumer spending at a certain level. So basically what we’re talking about when we talk about food stamps and SNAP, for instance, it’s not so much about feeding the poor as it is preventing a large scale collapse in consumer spending. Okay?

Now, when Bill Clinton goes and screws with that, what he’s doing is he’s – yeah, he’s giving the poor a really hard time, but what he’s really doing is he’s screwing the economy. He’s, he’s lowering the floor in consumer spending so that as you, as you reduce the people that can get on welfare and stay on welfare, or even be on welfare, you reduce that floor significantly.

So if there’s a downturn, the floor, the consumer spending will fall even further. And when it does, bad things start happening. Like, people that are highly skilled in IT can’t seem to find a frigging job. It doesn’t just affect the poor, this stuff. If you lower that floor far enough, this, this, this, the affects will reverberate through the economy and eventually reach middle class jobs, where they’ll be destroyed.

So it’s not a moochers versus… moochers and takers versus hardworking people. That’s not what this is all about. That’s not what welfare is about. It’s not what unemployment insurance is about. It’s there to create an automatic stabilizer that will automatically adjust the deficit when people apply for it so that it can create a floor in consumer spending – in the economy – so that it can’t fall through that.

There will always be some kind of consumer spending to prevent a large scale collapse. Unless of course, you’d like.. there’s the Great Depression. Did you enjoy that? And none of us, I guess not too many of us were around to remember that one, but we can always do that: let’s just get rid of welfare, we’ll get rid of our unemployment insurance, we’ll get rid of all the automatic stabilizers, okay?

Because we don’t want to give any handouts to these moochers, right Steve? And then when the downturn occurs, watch how far our consumer spending falls.

Grumbine (00:55:16):

Super important point here. And I’ve been waiting for a point to jump in, and this is it. When we talked on the phone yesterday, you told me about the… the actual deal here was a financialization of our economy. In other words, now we have pushed the stimulus away from public deficits to private debt. In other words, we have to borrow to survive the downturns in the economy, going back to Uncle Milty.

So talk about that. That to me was… Folks, hold on, I’m going to go to the Steve screen for just a second. For me, this wake up call that Ellis is about to present was one of those “Aha!” moments. And I just had it yesterday, even though I kind of knew it in a different fashion, the light bulbs that went on for me yesterday were… I mean, it tied everything together.

This was the whole bringing neoliberalism to its, to its bare essence. And for me, I want to make sure you guys hear this because if it has any kind of an effect on you, the way it did on me, you’re gonna see the light bulbs just blind you. So Ellis, let’s talk about that for just a second. What was Milton Friedman’s position in terms of taking – and how we could survive downturns in the economy – instead of these stabilizers, we could, in turn, go into private debt. Talk about that.

Winningham (00:56:43):

It wasn’t so much Friedman. This is just the direction that neoliberalism took. And I’ll explain it in just a second. We’ll go back just a moment and be sure that we understand that this vast income inequality that we have here is because, you know, you have wage suppression, right? Right? And so workers get a smaller share of GDP and GDP redistributes to capital.

So now the rich get even more richer and then you give them tax cuts. So that makes, allows them to keep more of what they stole. But the most important aspect here to understand about wages is something that was understood in the fifties, by business. You know what that was? Wages are the stable way that we can ensure production is sold.

Remember what we talked about here in the beginning, Steven, we talked about everybody comes together, workers and capital, and then they create something. They produce goods and services, right? And then they sell it back to each other. That’s what we do. We sell it back to one another. Well, workers purchase that stuff through their wages, which is how they share in the national income.

What we understood in the fifties, we understood that decent wages and one job, and one job only – you know, the man could go to work and a wife could stay home, right? You only needed one person working because he made decent wages, good job. Those decent wages insured that what we produced as a nation could then be sold back to ourselves.

The stable wages are very stable for consumption. But when you suppress wages, Steven, something terrible happens. Eventually it catches up with neoliberals. Eventually it catches up with the business leader. Guess what happened?

In the face of low wages over a long period of time, suddenly you look at the thing and you’re saying, well, look, we’re asking them to produce twice as much, but we’re keeping wages suppressed. So production is up, but wages are depressed. How the hell are we going to sell what we’re producing back to consumers if they don’t make enough money to buy it?

So it became a dilemma. How do you sell production? When wages are so damn low and been suppressed for so long? Well, the business leaders said, “we can’t have that. I got to keep earning money.” What do we do?

Well, Bill Clinton said, along with Larry Summers and these people in the Democratic Party, you know, cause they’re New Democrats, neoliberals: “let’s just deregulate the financial sector. We’ll deregulate banking. What we’ll do is we’ll slash the deficit, slash the federal deficit. We’re not going to add US dollars – net financial assets – because if we did that there’s a danger that, shit, you could get full employment.

There’s a danger that wages could go up.” You know? Can’t have that. “Well, we can keep wages suppressed and we can keep consumer spending alive so that they can consume production with credit cards and bank loans and various bank products” – financial engineering, as we call it.

So what we do is we suppress the federal deficit, which is exactly what Bill Clinton did – slash that deficit – but to do that, he had to push private debt onto the populace to fill the spending gap because, you know, dollars are missing. So off goes the deregulation of banking, and then they go pushing credit cards and loans onto people. Consumers start spending again, but they’re spending bank credit money.

It’s not an actual US dollar. Remember our last week’s discussion, we talked about bank credit money is just an IOU that’s pegged to the dollar. So every time the bank creates a $30,000 IOU loan, it’s also creating $30,000 worth of debt. Yeah? So when you pay that off it nets to zero, but you can’t do that with a dollar; when the government spends a dollar into the economy, it stays a dollar.

You can’t get rid of it unless you tax it away. So here comes the bank, offering you credit cards and offering you loans and you keep on spending and consuming. And guess what happens? Business continues to – the capitalist continues to absorb profits.

But this time around with your low wages and your credit cards, you’re going into debt, down and down and down, deeper into private debt until something bad happens. You know what that is? It’s called the recession of 2002. Consumer spending collapses because they can’t take on any more private debt. They can’t take on any more credit cards.

What they need are decent wages, but we’re not giving it to them. And we’re not giving them US dollars because Bill Clinton’s running a damn surplus. So what’s happening? You have an indebted populous. Spending collapses because nobody can afford to keep on spending.

Grumbine (01:01:58):

So let’s… Hold on, I gotta stop you there. Bill Clinton had eight years to produce this private debt bubble. George Bush was in office for a minute and the economy collapses with the dot.com bubble bursting and everything else. And yet, somehow or another – and don’t get me wrong, I’m not pushing up Bush. Bush was an idiot.

The concern here is that because of worthless, and I mean utterly devoid of value, worthless tribalism, the “vote blue” sycophant still blames Bush for the crash of the economy. It is extremely important that the “vote blue” sycophant absolutely get a stiff right of truth. Okay. So that they realize that this had come in, he literally walked in the door to this. Talk about that.

Winningham (01:02:53):

It’s just real simple to understand. The United States has been importing more than it has been exporting since the mid-80s. So this means that what we have is a current account deficit. That’s what we call a current account deficit. What this means, simply put, is that whatever actual US dollars that consumers have in the US they’re spending on imports and those dollars are flowing out into foreign hands.

Okay? That means that government has to step in and run deficits to refill the domestic private sector with dollars to meet its savings desires. When you fill that spending gap with bank credit and you slash the deficit like Clinton did – he pushed debt expansion and he slashed the deficit and he ran a surplus.

What he was doing was, when he ran that surplus, he was literally withdrawing actual US dollars out of the economy. He was just pulling them out, making things so bad that eventually – when consumer spending collapsed in 2002, from his efforts – the economy went into recession because as consumer spending collapses, business income drops, and unemployment then rises in a recession.

What happens with the “vote blue” crowd is that they like to, you know, especially the Occupy Democrats – people that really should shut up, but they don’t – they use a logical fallacy called “post hoc ergo propter hoc,” which basically says, since it happened on George Bush’s watch, George Bush is responsible for the recession.

Here’s the thing: if Bill Clinton could have run a third term, the recession would have happened on his watch because Bill Clinton is entirely responsible for that recession. He pushed an expanded private debt – filling that spending gap with private debt – consumer spending contracted because of the surplus.

The economy went into the shitter and guess what happened to the surplus? It became a deficit again automatically. And it had to. Because the US government is the only issuer of the US dollar. Where else is the market going to get it’s supply of US dollars? Okay?

Grumbine (01:05:06):

Aren’t you going to borrow it from China?

Winningham (01:05:07):

How are you going to do that? China doesn’t issue US dollars. They have to earn them just like you or Walmart.

Grumbine (01:05:18):

Alright, so keep going here, sir.

Winningham (01:05:21):

Alright, so, so what happens is, we keep on allowing the financial sector to engineer new, amazing products and guess what happens? You end up with a global financial crisis and then this recession, kaboom, which is actually a depression – I don’t care what the experts say.

You know, I don’t care what orthodoxy says: “Well, you should know the Great Recession of 2008…” and that’s the Great frigging Depression 2.0, and it’s still going on, by the way, it hasn’t stopped. No recovery in sight. But anyway, the question becomes, why did we bail out these banks?

Well, if we remember Obama in 2009, he stood up and said, “the American people ask ‘where’s my bailout?’ They think that government money should be going to us, to the people, not banks. ‘So where’s our bailout?’ Well, I’m here to tell you that a dollar of capital in a bank is worth $8 to $10 in loans, which will make the economy grow faster.”

What Obama was basically saying is “I’m not giving you guys any more US dollars than I have to. I’m going to continue slashing the deficit. I’m going to continue being a neoliberal, and I’m going to expand private debt, even though you’ve already had way too much as it is. I’m just going to keep on doing it. So I want you guys to go out and buy things with your credit cards. You don’t need good wages.”

And you’ll notice for the last eight years – it’s taken eight years for this economy to recover and it never has – private debt has expanded. You’ll notice that the Democrats have slashed the deficit, have they not, Steven? And they keep celebrating Obama’s deficit reduction. But look at private debt as it expands one more time to fill the spending gap. Okay?

This has been the slowest recovery in US history for the precise reason that they’d been slashing the deficit and replacing consumer spending with bank credit. Okay? It’s going to grind to a halt again, and there’s going to be another recession. So the question is, why are they doing this?

Why would you want to slash the deficit? Why would the Democrats, why would Obama want to slash the deficit and stick in all this bank credit, knowing this is going to cause a recession? When the global financial crisis hit, all the jobs for the unskilled and modern distribution that had been created since that recession 8 years ago, have all been low wage under-employment jobs.

Wage suppression is still quite alive. What they’re doing, Steven, is what they figured out a long time ago. They’re selling production with bank credit instead of wages, hence income inequality is now vaster than it ever has been because everybody is drowning in private debt, except the rich; they’re soaking up more GDP than ever before. And with the tax cuts on top of that, icing on the cake.

Hell, now you have opulence. Where before you just had wealth, now you have opulence. You know, we’re talking about King Midas here. [laughter] You’ve got the small handful of people that own more wealth than billions of people combined. And so basically that’s what they did.

When you slash the federal deficit – pay attention to me, people – when you slash the federal deficit, what’s really happening is you’re not adding US dollars – needed US dollars – to the economy. So if you allow private debt, bank loans, to expand, what you’re doing is you’re filling the spending gap where US dollars would have been, you’re filling that with bank credit.

What’s happening is you’re allowing Wall Street and the banks to profit off of the spending gap. You’re allowing them to earn interest where they shouldn’t be, where wages should be paid high enough to where people can afford to consume production. Wall Street is telling government to get its US dollar out of the way. “

Don’t spend it, now, let us supplement consumer spending. Let us take care of the consumers. We’ll give them credit cards and loans and we’ll make tons of interest.” And then George Bush and Bill Clinton did that. And then George Bush comes in . . . and you think that George Bush is not guilty? Isn’t he the one that made it harder to bankrupt credit cards? Yes, he did. So how are you going to get out from under this private debt? You’re not.

Grumbine (01:10:00):

Ever.

Winningham (01:10:03):

Ever. So now the interest is flowing, the wages are suppressed, you have vast income inequality, and you’ve got the Democratic Party saying “all it really is, is when Reagan started these damn tax cuts on the rich. So what we’ve got to do is we’ve got to tax the rich to fix the problem.” No! You have got to end this surplus fetish, especially the one in Australia, dammit.

That government down there is insane. It should be put in prison. Every single, nearly every single person in the government of Australia should be put in prison for life. They are insane. Okay? But this goes without saying. The surplus fetish needs to stop. Deficits must expand immediately.

Banks need to be regulated hard to where they can only operate the payment system and make loans to credit-worthy customers that are verified. That’s it. They should not be allowed to do anything else. And we need to be spending for full employment and the public purpose.

That’s what needs to be happening here. So in other words, what I’m telling you is we need to shift national income – GDP – back to workers’ share and away from capital. And only then, Steven – listen to me carefully, it’s very important that everybody understand what I’m saying – it is only after you have been able to shift GDP back to workers’ share that making huge tax cuts on the rich is going to make a difference.

Because it is the only way that you can guarantee prosperity for everyone else is to allow them a greater share in what we produce as a nation. Once you’ve done that you’ve automatically begun reducing the income of the rich. Then you tax on top of that and you dramatically bring it down for equity. What we need to do is we need to get full employment first. We need to enact full employment.

We need to do universal health care. We need to do infrastructure modernization. We need college tuition, free college education. We need to do the right thing now. And once we have got a situation of prosperity, then you go after the rich and tax them, what’s left of them.

You can do it at the same time, but what I’m trying to say to you, and I think what everybody is trying to say here: do not mistake taxing the rich as the end-all be-all solution, because it’s not going to work. You’re only going to reduce the wealth of the rich in terms of US dollars, but you’re not going to do anything for everybody else. You need to raise everybody else’s income.

And the only way that you can do that is guarantee a situation of permanent – permanent – full employment. Full employment. And when I say full employment, let me define: less than 2% unemployment, no hidden unemployment, no involuntary under-employment. You understand what I am saying?

Grumbine (01:13:00):

Oh, yes.

Winningham (01:13:00):

I am saying: where every single man and woman who is willing and able to work, can find a job. Rapidly. That is full employment.

Grumbine (01:13:13):

Let’s talk about that for two seconds. Cause obviously tomorrow night’s guest, Pavlina Tcherneva, will be attacking, head on, the job guarantee and the basic income guarantee, et cetera. But you know, I saw some comments earlier – and you know, people have things to say, and then they’re not terribly wrong or anything like that, they’re just missing the point. They were talking about drones taking away American jobs.

They’re talking about robots taking away American jobs and, you know, let’s just lay it out there for a minute. You know, you talked to me about building out infrastructure. That’s American jobs that are not currently in existence today. We talked about expanding medical care to all which is talking about vastly expanding the medical community way more than it is today.

We talked about expanding green energy that will absorb many of the energy workers that are in these dirty plants and put them into green plants. But it will also expand because it’s a new disruptive technology that will expand jobs as well. But then, when we go into the non-skilled labor area, instead of twisting ties on the Hershey kisses, we’ve talked at length about the federal job guarantee, which is Pavlina.

But we’re talking about self-actualization as well. We’re talking about what are you good at? What do you enjoy? We can find a way for you to serve the public purpose. They confuse this with the old capitalism – “working for the man” – but what we’re talking about is something altogether different. Can you just touch on that a little bit, Ellis?

Winningham (01:14:45):

Yeah. When we talk about the job guarantee, what we’re talking about is offering, uh, the federal government will pay for it, will fully fund it, but communities will administer it. What we’re talking about is a program where anyone who wants a job and is willing to work can just walk into their local job guarantee office and sign up and we will tailor a job around the person.

We’re not going to create jobs. I mean, you know, we’re not gonna just go out and create jobs and then try and find people to fit that. That’s the trickle-down approach. And I think this is what we need to talk about today and let Pavlina tear into it, you know? What we propose to do is go from the bottom up, okay?

The way we do jobs these days and the way we’ve done them for years is we create a job for the skilled workers and highly educated workers. We create jobs, and then we go out and try and find workers to fit those positions. And then we hope that demand for the unskilled workers will trickle down.

And so what ends up happening in this situation and this system that we operate in, the bottom income distribution, the unskilled, are the last to be hired in an economic expansion, and they’re the first to be fired in a downturn. See, what we’re going to do is we’re going to take a bottom-up approach, which is really the only way this can be done correctly and stably.

What we will do is we will guarantee the jobs of the unskilled and bottom income distribution and by doing so this will create a demand for highly skilled, highly educated workers. The demand will travel upwards. So as long as you’ve got unskilled workers guaranteed working, they don’t ever have to worry about losing their job. They have job security.

Well, they’re always going to demand a doctor aren’t they? They’re always going to demand a mechanic, aren’t they? Yes. So we don’t have to worry about the skilled jobs, if the unskilled are guaranteed. If they have security, then the demand will travel upwards as it should be. The job guarantee is the method that we use to accomplish that.

It becomes the superior automatic stabilizer for the economy, beyond welfare, beyond unemployment insurance. This is superior because it manages the deficit. It ends, totally eliminates, involuntary unemployment forever, gone forever.

And the deficit is managed, so that full employment is always achieved, the right amount of money, the right amount of US dollars being injected to deficit spending, always results in full employment. So if there’s an economic expansion, the job guarantee pool will be really small.

So the federal deficit will be really small because there’s just a handful of workers that the federal government will be paying. But in a downturn, the job guarantee pool will expand, so the government has more people that it has to pay. So the deficit automatically expands and contracts, and as it does full employment is always maintained.

It expands and contracts at just the right level to maintain full employment in perpetuity, not just for a little bit, not just for the next few years, but into perpetuity all the way into the future. In the foreseeable future, there will always be full employment, and when there is always full employment, the worker can tell the business leader to go screw themselves.

The worker can walk into Walmart, and have an abusive boss, and he can say, “I don’t appreciate your abuse. I demand that you stop.” And if that manager says “to hell with you” and continues his abuse, the worker can walk out of Walmart, full confidence, get in his car or her car, drive two blocks down to the job guarantee office, get a job that day and be paid starting that day, even if work has not yet been organized for that person.

And it forces the business leader to change his tune. You either do the right thing, or you face exiting the economy. You’re going to have to get out. If you don’t want to do the right thing, get out. And we achieve that by setting the fixed JG minimum wage.

If we set it high enough, to a living wage, that becomes the national minimum. It forces low wage employers to either meet that standard of living or get the hell out of our country, because we’re not supporting your bullshit no more.

Grumbine (01:19:46):

So talk about why that, I mean, I know why that, but talk to them about why, at just a high level, we’ll leave Pavlina to handle it the rest of the way, but why is the job guarantee vastly superior to the UBI? And they serve totally different purposes, I mean, but explain this because I see people acting like we’re supporting Calvinism and all of this other nonsense, it’s a sign of not getting it.

And that’s a shame, but talk about this because it’s extremely prevalent in green society and other lefties that don’t understand they’re just drifting. Talk about it.

Winningham (01:20:27):

Okay. I want people to clear their minds. I know you all out there who are hearing my voice, have this idea of what having a job is. It’s the 19th century industrial revolution sense of the word “job,” where labor sells his labor to the capitalist. Ok, that’s great. I want you to clear that from your head, and I want you to realize something. Human beings were working before capitalism.

Even Neanderthals worked, they got up in the morning and then they labored. Primitive humans wandered out into the field, looking for food, they were working. Work is not something that’s typical to Calvinism or capitalism. How humans labor is the question here and what they are doing it for is the question.

We have a currency issuer in Australia, the Australian government cannot run out of money. US government cannot run out of money. UK government cannot run out of money, because they are currency issuing governments. They can afford to buy up all labor that is unwanted by the market and pay it a living minimum wage.

So what’s it going to do with this labor? Well, clearly the labor is not going to be working in the 19th century style mode of production. We redirect this type of labor, it’s output becomes a social benefit, its output becomes sustainable. We begin redirecting away from this 19th century paradigm into the 21st century. Sustainability and green energy.

And as far as the job guarantee is concerned, building nature trails, protecting wild habitats, clearing up urban blight, restoration of communities, caring for the elderly, caring for sick relatives. And yes, follow me when I say this, there is a man whose wife works a full time job, but he stays at home with the children. He does laundry and he cooks dinner. He’s a stay at home dad.

And we propose to pay him and turn it into a job, because that’s the type of production you need to start wrapping your heads around – social production, a new paradigm. Let go of the capitalist idea and start getting in with this new type of production that we’re talking about.

Redefining what work is. When we look at the UBI, especially a living wage UBI, which is absolute nonsense, what you’re talking about is status quo. It keeps us locked into the Calvinist mindset. It keeps us locked into capitalism and says, “here’s some money, continue to consume.”

You’re turning people into consumption units and the business leader still maintains low wage on underemployment and wage suppression. And now you’re letting him suck up even more GDP. Why do you want to do that? Turn the tables on him, go full employment. Prevent him from using that as a threat and then prevent him from suppressing wages and move GDP back to workers.

Then tax the shit out of him. Take away that and bring about equity. But understand me, we begin redirecting output, including private sector output, towards the sustainable. And as we do that, new jobs appear out of nowhere, new jobs that we never could imagine. Green jobs. Just look at what Obama did down there in the coal country, look what he did.

The Democrats came along, and this is a perfect example, and they destroyed the coal industry. They said, “no more coal, we’re not having it.” Didn’t they? So they got rid of it. What did they plan on replacing it with though? Nothing. They just left those poor workers unemployed, “but at least we’re saving the environment.” You might be saving the environment, but you got to help the people, too.

What could they have done? Obama could have sauntered right in there. He could’ve walked right in there, and said “we’re going to build massive green infrastructure. We’ll put up windmills. We’re going to put up solar. We’re going to put up collection stuff. We’re going to build this new green infrastructure here, and it will replace all those coal jobs.

Everybody who wants a job who used to work in the coal industry, come on down.” Did they do that? No. But had he done that, it would have transformed that place from poverty to prosperity. But no, he just let them suffer. I thought Democrats cared about climate change. I thought they cared about green energy. Oh, no, they only care about paying lip service.

They only care about doing something to get your vote. They only care about the Sierra Club donating a little bit more. That’s all they give a damn about. They’re bought and paid for by Wall Street. And until you realize that you’re going to think #DemEnter is a really good idea. You’re really just entering the Party of Wall Street.

When you figure out that neoliberalism owns both the Republican and Democratic Party, there’s no difference. Both the Republicans and the Democrats, they both tell you “federal taxes fund federal spending.” They tell you that the US government’s going broke. They tell you that it borrows from China to fund its deficits, and the national debt is real.

Where’s the difference between Republicans and Democrats? Oh, just a policy choice? Screw that. There’s no hope either way. So there’s no such thing as #DemEnter, not for a Progressive, because a Progressive understands immediately that if you’re going to remove coal jobs, you’ve got to replace them with green jobs.

Yes? If you’re going to remove something, you’ve got to replace it. If you are going to kill the deficit, you’re going to destroy the economy. So you don’t want to do that, do you? You want to do the right thing.

Grumbine (01:26:55):

So Joe Firestone brings up the point, don’t forget Dems and saving banks.

Winningham (01:27:00):

Yes. You got to save the banks. Bail them out. You got to bail them out because they’re so necessary (sarcasm). What we should have done, the moment the banks started to fail – a handful of big banks started to fail – what we should’ve done was say, well, let’s make sure that the customers are okay, and then stepped in and the US government should have seized those banks and operated them as public institutions from that point on.

Public banks right there. No, never bail them out, no. A Progressive would never think to bail out a bank. Okay? We would think to make sure that the people are all right, customers are fine, great, seize that damn bank. Operate it as a public institution. The Dems, they love banks, Dems just love banks, don’t they Steven?

Grumbine (01:27:49):

They sure do. Can we talk a little bit about public banking and its role in income inequality, and actually helping out the chasm between what I see in the boring world of public banking versus the exciting world of destroying lives through commercial banking. It’s Epic. I mean, this is, this is the vehicle by which we become slaves, is it not?

Winningham (01:28:16):

No. You see what we got to do… what we need to understand, what we need to understand is there is nothing really wrong with bank credit money. There’s nothing wrong with it. It’s how we use it. I’m all for public banking. But let me tell you right now, if you properly regulate these commercial banks and we use credit appropriately, everything would just be hunky dory.

There won’t be a problem. You see, you don’t get to deregulate banks and the financial sector, and then claim regulation doesn’t work. We should have imprisoned these banksters. They really should have been sent to prison for very, very long time. But we didn’t, but we can redeem ourselves by properly regulating these banks.

Then once we have done so, once these banks have been properly regulated, I still see no reason why these people cannot be prosecuted. Firestone makes the perfect point right there. It just went by: Iceland did it, why can’t we? We can. And so can the United Kingdom.

And so can Australia, you can put these people in prison because that’s where they belong. In prison. Okay? And their wealth needs to be confiscated. It needs to be confiscated. The wealth in terms of dollars, pounds, needs to be confiscated.

Grumbine (01:29:40):

There was a great comment that just went through and I just wanted to catch it before it went too far away since I can’t put it up on the screen tonight. And it was like, “Hey, seize, the banks. They had no problem seizing our homes.”

Winningham (01:29:52):

Do not pretend that the federal government or the government of the United Kingdom or the Canadian government or the Australian government does not have the authority to seize a bank. Because it does. It is – they are – those national governments are the regulatory authority. They are the currency issuing authority and they can seize these assets.

They can seize these banks and operate them as public entities anytime that they so choose. That’s it. End of story. There’s nothing immoral about it. There’s no moral question here. The immorality has been done by banks and it has been left without any retribution, without any justice done for the people. And so therefore these banks should have been seized.

But, definitely, the banksters should be jailed. I do not care how much time intervened. If I were president in 2020, I would propose to put them in prison. That is the… I would order the Department of Justice to begin preparing a case because it’s just that damn important. And I would seize their net financial assets. I would not let them pass them on to their family. Okay?

Grumbine (01:31:13):

Take a second real quick while you’re on the subject. Okay. It’s all fine and well to have our fist in the air, outraged at whatever, and we are righteously angry. However, what does the solution look like? What does banking reform in an MMT world, in a rational world, look like? What does regulation look like?

Winningham (01:31:33):

Listen to me very carefully. It’s very, very, very simple. You simply tell the banks that they can only operate the payment system and make loans to credit-worthy customers, right? That’s all they’re allowed to do. And then we simply allow bank credit money to be used for production. In other words, let’s say, Apple wants to expand its operations in the United States.

Okay. Well it can go out and have banks finance that, you see what I’m saying? Let the banks finance that production. That’s fine. But when it comes to consuming what we produce as a nation, we should be relying much, much, much more on federal spending. And the same applies in the United Kingdom, Canada and Australia. Credit for production, government spending for consumption of production.

If the banks are hamstrung to where they can only operate the payment system and make loans to credit-worthy customers, and the government is spending for the public purpose and for consumption subsidizing, which means meeting the savings desires of the domestic private sector, everything will be wonderful.

Seriously. It’s really that simple. Now you got to have a job guarantee. You got to have universal healthcare. You got to start doing the right thing. You’ve got to get out there and benefit the public in the proper way. Everyone, every single citizen. Look, if you have a Social Security card, it’s undeniable that you’re a US citizen. Is that right? Right. Okay. I do not care if you’re poor.

I do not care if you’re rich. I do not care if you’re Asian. I do not care if you’re white, black, or whatever, what have you, Native American, as long as you have a Social Security card, you’re a valid US citizen. Each citizen comprises together, comprises a nation, makes up a nation.

A nation operates an economy. Unless every single citizen is deriving good benefit from their economy, you don’t have a nation. You just don’t. You have a country club economy where the rich benefit and everybody else works for the country club. And I will not have that. I go forward to make sure it comes to an end.

The end of the speculation economy, a return to a production-based economy, sustainable green energy production-based economy, where all will derive good benefit from their economy, not a single person will be left behind by this economy, and the government will stand ready to ensure that because that’s its job as a currency issuer.

Grumbine (01:34:22):

That’s great. Now I’ll tell you that Joe Firestone made another comment. I don’t know if you got to see it or not. He made the point that we need to take away their profits because their profits are what allows them to buy influence with our government.

Winningham (01:34:36):

Yes! We need to, we need to remove their profits. And this is, this is what makes all this, “MMT says don’t tax the rich” – this is what makes these claims silly? We’re not saying don’t tax the rich. There are plenty of reasons to tax corporations and to tax the rich. What we’re saying is funding spending is not one of them. That’s all.

So yes, the profits have to be reduced in many ways through taxation and other reform measures. These profits have to go because they’re using them against us. They’re using them against the 99%. They’re buying these damn politicians, just like big pharma, just bought Cory Booker’s lying ass.

They’re buying up the politicians, so they’re not representing the people they’re supposed to be representing – that’s us. They got to go and the profits need to go. End of story. Joe’s absolutely correct, 100%.

Grumbine (01:35:34):

I’m glad you said that because I wanted to make the point, obviously, you know, I hate, I’m not going to even give any publicity to the trolls of the world, I’m not going to specify them by name because they don’t deserve any publicity. Nor do the people that give the heart comments for them, go to their page and like their comments, stuff like that.

And if you know who you are, you know who you are, right? You know who you are, you’re a “frenemy”, you’re an enemy, whatever, you are hurting our nation. You’re literally killing our nation by doing the likes and the hearts and going to their page and liking it and hearting it. You are literally, literally, killing someone each day you do that, just so you know.

Don’t don’t think I don’t see it, and don’t think I don’t know it, and don’t think I’m not calling you out as a murderer. I’m sorry, I’m just calling it out the way it is. So let’s go ahead, we’re at the hour and 40 minute mark here, sir. I want to take us down the final runway of where we’re heading with this.

And you know, at the end of the day, you had kind of talked about how, when we look at what tomorrow brings and how we can affect change, as activists. You know, a lot of people are struggling. They want to be able to present this information in a concise fashion. They want to be able to go out there beyond us, they’ve heard us, they’ve watched this, they watch you, they want you to run for president, okay?

So beyond that, how do these people that are just getting their feet wet, what are the three or four or five points that they need to really, really wrap their head around, other than going to EllisWinningham.net and reading all your articles and stuff. Going to New Economic Perspectives, reading Joe’s articles, reading Joe’s books, et cetera.

Reading Mosler’s “Seven Deadly Innocent Frauds,” Kelton’s work, et cetera. What is it that they can do, in very, very short layman’s terms, what can they do to affect change?

Winningham (01:37:31):

Number one… Don’t teach. Do not try and teach this stuff until you know what you are talking about. Please don’t. Two… If we’re going . . . Don’t debate people. Spend this time, if you are brand new to this and you want to understand macroeconomic reality, and you want to come full circle with MMT, please spend the time learning. Educate yourself now. Invest in your time, now.

What you can do to help the activism is to get with people who are activists, who already know, and ask them how you can help them advance what they’re up to. Like Steve’s doing something, Steve’s up to doing something. He’s doing this, and he’s doing that.

See what Steve could need some help with, or this person might need some help. But beyond all things, the best way that you can help change the economic narrative, is to actually educate yourself. Seriously, that is the number one thing that you can do as an activist, is to know what the hell you’re talking about. I’m deadly serious, Steve.

So it’s not what I’m saying is come to my website, or not to come to my website, and not to go to New Economic Perspectives, because it’s very important that you read Joe Firestone’s work, and read Wray’s work, and Kelton’s work, and Tcherneva’s work, and Mitchell’s work, and Hail’s work.

But it’s also important that you understand that this debating and this getting out there and fighting, right now when you don’t know a whole lot, it’s not going to be very useful. I understand it’s exciting. It can be very, very exciting. Wow. But you really, really need to devote yourself to understanding, to actually learning.

And this leads me in to something that’s very important, that’s going to be coming soon… MMT University. Bill Mitchell is starting it. It’s getting off the ground. It’s going to teach a comprehensive course, comprehensive educational course, in Modern Monetary Theory by one of the best proponents, one of the greatest, Bill Mitchell. Professor Bill Mitchell. So that should be available here, soon.

Grumbine (01:39:59):

We posted the link to that. It’s I think it’s still in its infancy. I’ll go ahead and close this out here real quickly. Ellis, thank you sir, for everything… And folks, thank you all. Have a great night, everybody. And thanks for coming to Real Progressives.

Ending Credits (01:40:18):

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