Fadhel Kaboub President of the Global Institute of Sustainable Prosperity talks with Steve about the pressing crises of climate change, poverty, and unemployment.  Problems with multiple root causes need a multi-faceted response.  Fadhel describes the failings of the market approach, and uses the lens of MMT to change the narrative and put forth a comprehensive solution.  Along the way he touches on migration, war, and baby boomers, all from an international perspective.  It’s an hour packed with political economy and clarity.

@FadhelKaboub on Twitter
Global Institute for Sustainable Prosperity – www.global-isp.org/

Special Thanks to Geoffrey Ginter for the excellent intro song! And of course special thanks to our guest Fadhel Kaboub, the donors of Real Progressives and our excellent staff of volunteers

Macro N Cheese – Episode 5
Environmental Justice, Sustainability and Full Employment with Fadhel Kaboub
March 2, 2019

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

That’s when politicians will start to follow. They’re not gonna lead most of the time. They’re gonna really cross to the other side and go onboard with a Green New Deal when they realize that the forces underneath them, the popular voices, are bubbling up in favor of urgent action in this direction. Fix unemployment, fix poverty, fix inequality, and fix the planet.

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

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

Steve Grumbine (00:01:34):

Today is a special program. Uh, we have a friend of mine, Fadhel Kaboub. Fadhel is the President of the Global Institute for Sustainable Prosperity. And he’s an Associate Director (professor) of Economics at Denison University.

The thing that’s special about Fadhel is he brings the political economy of the Middle East and the fiscal and monetary policy dimensions of job creation programs to the table, much of which is extremely important, especially in today’s environment, as we have a Green New Deal being positioned by Alexandria Ocasio-Cortez and the Sunrise Movement. Welcome to the show, Fadhel Kaboub. How are you, sir?

Kaboub  (00:02:13):

I’m doing great. Thanks for having me on the show.

Grumbine (00:02:15):

You have been all over the place. I’m watching you out there talking to different progressive radius, feeling all jealous and whatnot. My God, you’re just making the rounds. You are all over the place.

Kaboub  (00:02:27):

It’s a, it’s a commitment. It’s a, it’s a mission. And when, when you have something to contribute to this movement to address climate change, poverty, inequality, unemployment, why not?

Grumbine (00:02:39):

I couldn’t agree more. So what I want to do real quickly, tell us a little bit about what you do at the Global Institute for Sustainable Prosperity.

Kaboub  (00:02:48):

So the, the Institute is a, is an interdisciplinary public policy think tank. And when, when we had the opportunity to create the Institute, we wanted to make sure that it’s, it doesn’t remain as an sort of purely academic think thank, publishing academic papers, just for academics to read and share and debate with each other.

We wanted this to be solutions oriented. So some of the publications are aimed at the general public, media organizations, grassroots organizations, and policy makers who are interested in alternative solutions. And it’s in the interdiscipline interdisciplinary in the sense that the big problems that we deal with, um, in the real world, such as climate change, they have multiple root causes.

They’re multidimensional. So they require solutions that are also also multifaceted. Uh, so when you think of climate change, it has a political dimension, economic dimension, ethical dimension, scientific dimension.

So it’s, it’s not reasonable to just bring economist to the table and say, how do we fix climate change, or just bring climate scientists and say, how do we fix it? It requires an interdisciplinary, multifaceted type of, uh, research and thinking and policy action. And that’s really the, the spirit of what we’re trying to do.

And when you look at the biggest problems that we’re dealing with, climate change, unemployment, inequality, you have so many interconnections between these problems and their roots, but at the same time, the solutions are also interconnected. So when you think of climate change today and, and unemployment and poverty, we have sort of three things on the table.

Number one, you have millions of people unemployed, and they’re looking for work. They want to work. Number two, you have the planet is pretty much on fire as we speak. And number three, we have technical solutions that are accessible, available, producible, scalable, and they’re getting cheaper by the day. And all we’re saying here is let’s put these three pieces together and fix unemployment, fix poverty, fix inequality, and fix the planet.

Grumbine (00:04:58):

So this philosophy is founded, if, if I’m not mistaken, from an economic perspective, anyway, you come from the Modern Monetary Theory school of economic thought, correct?

Kaboub  (00:05:10):

Yes. And this is, this is really the, the most important, enlightening thing about MMT is that it gives us a lens to look at these things on the table and say, we can do it. Whereas without the MMT lens, you look at these things, they will (say), how are we going to pay for it? Yes, there are people unemployed, there’s technology. Uh, the planet is on fire, but it’s unfortunately — it’s too expensive.

And if we’re going to address it, who are we going to tax? So we’re going to tax the rich? Are we going to tax the polluters? And then we fall into this traditional trap of, you know, well-meaning people falling into this trap that says, well, if we’re going to tax the rich and corporations, they’re going to use that and threaten the rest of society and say, well, it’s going to be a burden on us.

We’re going to, to slow down production, shut down certain things, and that’s going to be your job and your livelihood on the line to save the planet. And a lot of people get, you know, backed into a corner and they get scared. Well, they . . . Well, yeah, I, I want clean air and clean water, but if it means mass unemployment, I’m not going to be able to support that.

And unfortunately, that’s, that’s the narrative that we hear all the time. MMT on the other hand demonstrates that you don’t have to, you know, at the Federal level for the US Federal government, for example, for a Green New Deal, you don’t have to tax anybody to fund this. Taxes at the Federal level don’t fund Federal spending. At the local level, yes. But at the national level, it’s not.

Grumbine (00:06:37):

I love the concept of, you know, people, people don’t really have a full understanding of the role of taxation here. And I think that, you know, going back even before MMT had become, you know, sort of the, the tip of the spear as it approaches these economic issues, I feel like people were advocating the, the whole cap and trade, the different tax strategies and so forth, not fully understanding the role of taxation.

You know, they, they felt like taxation would somehow or another pay for each of these initiatives that, that this was fundamentally required to do this. And they didn’t really understand the nature of a Pigouvian taxes that serve to disincentivize certain behaviors or limit certain behaviors, uh, kind of like a luxury tax and, and sports.

You know, the, the goal is to try to, uh, prevent teams from, you know, building super teams by blowing too much money and pricing out smaller markets and so forth. Talk a little bit about the tax, uh, the, you know, the cap-and-trade style, um, solutions that have typically been in the political speak and, and what the MMT lens is on cap and trade.

Kaboub  (00:07:57):

So some of the proponents of this idea, they say, well, if we, if we tax polluters, it will create sort of a fund that will be used to incentivize green technology and other things. But the idea that they’re putting in place is really a market solution, so to speak, a market mechanism where the companies that, uh, innovate and invest in technologies that allow them to pollute less, they can trade those quote, unquote “savings” and sell them to companies who need to pollute more because they haven’t invested enough.

And it creates a market for, for these tradable assets, so to speak. Um, but it doesn’t change the fact that this is still a minor impact in the global system. And it doesn’t recognize that the Federal government intervention doesn’t need any taxes. It doesn’t require any taxes to address this. So it’s kind of, you know, minor intervention within the realm of possibilities that the free market system provides.

And it doesn’t recognize the bigger push that the Federal government can put on the table with its sovereign monetary power. Um, so it’s, it’s, it’s not a horrible idea, but it’s, it’s really, it gets in the way for bigger policy changes to, to actually take place.

Now, I’m not saying we shouldn’t tax polluters, we should, but it’s for the sake of changing behavior, influencing, you know, better decisions, but it’s not because we need their money to invest in green technology or to fund the Green New Deal or anything of that nature.

And this is, this sounds confusing to a lot of people who don’t necessarily, are not familiar with MMT, because we’re so used to understanding that the Federal government needs to tax somebody in order to spend it. Cause we hear it all the time. Politicians tell you, you know, who are we going to tax? Where are we, where’s the money going to come from? Is it coming from China?

Is it coming from the rich, the wealthy, the polluters, whatever it is? So the best example to understand this is the US intervention during World War II, which was massive military intervention, massive kind of re-organizing of the economic system during the war years. And let’s remember that that intervention came right after the great depression, the most miserable economic time in US history.

And at the time nobody asked where’s the money gonna come from to spend all this money on World War II. The decision was made to go ahead and intervene. So essentially I’m going to use the same metaphor with three things on the table. At the time, the decision was we have millions of people unemployed.

We have this massive crisis happening in the world, World War II, and we have the know how, the technology to build tanks and airplanes and everything. And even if we don’t have enough of those, we know how to produce them. They’re producible. So the idea was we have these three things on the table.

Let’s come up with a solution that makes it work: hire millions of people who are unemployed to produce more tanks and airplanes to address this global crisis at the time, which was World War II. Today we have the same challenge: millions of people unemployed. We have the technology that’s producible, that’s scalable. We have the know how, and we have a global crisis of climate change.

So what did we do during World War II? We didn’t tax anybody. The decision was made to spend money into existence to address the crisis before us. And the spending happened, millions of people were hired to, you know, to do the work and got decent wages. And normally what would happen next is that those millions of people will take their money and spend it in the economy.

But that’s where the intervention came in to postpone the spending, to prevent the inflationary pressure from materializing, and that was freedom bonds. Freedom bonds were not sold to the public before the war. There were not conditional, you know, for the war intervention, the war already happened. The employment already happened. The production already happened.

The spending already happened and then selling the war bonds was a way to convince those who have cash to postpone their consumption until after the war. And that’s why we were able to prevent the inflationary pressure from, from happening.

But we went from almost 25% unemployment at the depth of the great depression to essentially full employment and beyond full employment. We had to bring women into the labor force, elderly people in the labor force, younger people into the labor force just to keep up with the productive effort for, for the war effort.

Grumbine (00:12:46):

What it sounds like to me is that maybe we need to take two minutes here and, and I’m sure you probably have done this a million times. In fact, I know you’ve done at least a million and one. Let’s make it a million and two. Give the two-minute elevator pitch for those people that don’t understand what Modern Monetary Theory is. Give them a quick two-minute primer.

Kaboub  (00:13:12):

So the the basic idea of MMT is that in the United States, the US Federal government is the sovereign issuer of the US dollar, which means nobody else can issue US currency other than the Federal government. If anybody else tries to do it, they’ll end up in jail. It’s illegal. It’s called counterfeiting. And with that comes the following definition of what we call monetary sovereignty that the Federal government enjoys.

Number one, it prints its own currency, issues its own currency into existence. That’s true. Number two, the Federal government only accepts US dollars in payment of taxes. Number three, the Federal government only issues bonds denominated in US dollars.

So in other words, when the treasury sells US treasuries, US government bonds, it promises to pay you back in US dollars and only in US dollars, not in foreign currencies. Number four, the US government as a policy, doesn’t fix the value of the dollar to gold or silver or any other countries, uh, currency. So we don’t follow a fixed exchange rate system.

If you have these four pieces on the table, then you have full monetary sovereignty. And that allows the Federal government to do something like a Green New Deal to have a full employment policy that’s completely manageable in the sense of creating full employment and price stability, and meeting all the basic priorities that the nation sets for itself democratically.

And those priorities can be, uh, you know, universal healthcare, um, investment in education and infrastructure and all kinds of things. Whatever the priorities are, the Federal government can afford to finance them. The only limit to how much spending the Federal government can do are the inflationary limits. And the inflationary limits are determined by the productive capacity of the economy.

So as long as we’re creating jobs that are adding value to the economy, improving quality of life and using resources that are abundant, human resources, physical resources, technological resources, then any inflationary pressure can be managed within the economy. But if we’re spending beyond the physical productive capacity of the economy, then you start to put inflationary pressure.

And that’s where MMTers tell you that’s, that’s the limit of how much the government should spend. So we’re not saying it’s an endless amount of spending, that’s obviously foolish, but the . . . we’re, what we’re saying is that in the US we’re not even close to the limits and we’re just sort of sitting in our hands and saying, we can’t do it because we’re scared of the inflationary pressure.

And you know, most mainstream economists and central bankers have no idea how inflation materializes. As a matter of fact, the best way to kind of convince you of this if you look at the last 10 years, most central banks around the world, including the Fed, they’ve been trying to meet the 2% inflation target. And for the vast majority of the last 10 years, we’ve been way below the inflation target.

Then they’ve tried everything they thought would cause inflation. And it didn’t because they don’t know what causes inflation. They think that, you know, spending money or lowering interest rates or whatever the Fed does with its quantitative easing will cause inflation, but it didn’t because the spending and the real economy and the productive capacity of the economy are not conducive to inflationary pressure.

Grumbine (00:16:45):

We have a movement, obviously over the last number of years since the Bernie Sanders campaign kicked in, obviously MMT has been around for a long time. I believe Mosler was messing with this when it was Mosler Economics back in the early nineties. Um, you know, and, and the history of MMT is easy enough to pull up and we’ll go through that at different times throughout our different podcasts.

But for the sake of argument here, for many people, they have not even heard of MMT, Modern Monetary Theory, or as Randy Wray likes to call it, modern money theory. You know, we have all these policies that we claim we want. And I, I hearkened back to the IPCC Report that said we have 12 years before we end up with real serious damage done from climate related disasters.

And, you know, it’s not 12 years to come up with a plan, it’s 12 years to have actually executed a plan, mitigated the carbon in the environment and, and reduce emissions and brought that, those key levels down. Anything that we do that exceeds that 12 year window, we’re really playing with other people’s lives at this point.

And I say to myself, how do we make, you know, we’ve been hearing climate change is a problem, you know, for the last 30 plus years. And, you know, and you know, there’s a lot of missed calls or miss explained calls that have given some folks, maybe, maybe a pause to believe that this 12-year window is legit.

How do we take Jane and Joe public who maybe are leading relatively comfortable lives, that are immune to some of the shocks of the economy. Maybe they’re living in areas that have not been harmed by the climate change that we’ve experienced thus far. How do we get them to understand not only the impacts of this, but say, Hey, you know what, if this isn’t your top concern, that’s fine.

Just rest assured we won’t raise your taxes so that you can pay for this thing you don’t even believe in. But how do we penetrate that very large block of people? And it seems to be this large block of people is immovable when it comes to Medicare For All. They’re immovable when it comes to a job program.

They’re immovable when it comes to anything, uh, you know, other than, you know, the, the 401k plan that they have that they’re waiting on, or some other investments seems like that middle of the road group that is umm, unimpacted by the ebbs and flows of the economy is immune to some of this. Is, is there a way of getting through to them that perhaps we haven’t thought of yet?

Kaboub  (00:19:36):

It’s really about changing the narrative because it’s actually not true that we’re not being affected already. And it’s, there’s nobody on this planet who is immune. Some people are more privileged than others obviously, and have more resources to mitigate the impact of climate change, but it’s, it’s affecting everybody.

When you think of the refugees crisis that, you know, a lot of people think of it as, you know, political conflict and terrorism and whatever the issues are, but have nothing to do with climate change. It’s it’s nonsense. I mean, it’s climate change is already creating climate refugees.

And these are things that I’m not saying create conflict and wars and civil wars and conflicts like that, but they do exacerbate the social and political tensions that lead to armed confrontations and lead to mass movement of people afterwards, because of that.

And the most recent example that a lot of people are not really paying a lot of attention to is the, is the Syrian conflict and the refugee crisis from Syria and parts of the Middle East into Europe and other parts of the world, didn’t really start with the Arab Spring in 2011. The refugee movement started at least three years before that, before any bullet was fired during that conflict.

And it started with major droughts that drove 1.5 million people in Syria alone, out of rural areas because their livelihood was destroyed. And they moved into larger cities. During that drought, 85% of livestock was destroyed. 30% of GDP was destroyed because of agricultural collapse in a country that had self-sufficiency in food production.

So when you have 1.5 million people in a, in a country like Syria, moving to larger cities, you have more pressure on schools, on housing, on resources, on, on food. And that puts social tension and political tension. And then when the conflict itself started, the was like a boiling volcano ready to explode. And this is, this is just one example.

You can go from one conflict to the next, all over the world and find bits and pieces of climate refugees and climate effects exacerbating other tensions within, within those economies within those societies. So then when, when we’re sitting here in a country like the United States or somewhere in Western Europe and saying, we don’t want those refugees to come in here.

But they’re coming anyway, people are, are being pushed to take that kind of risk to drag themselves an their kids and just walk, walk for hundreds of miles to find a better place to settle. And you can’t stop this with borders. You can’t stop this with, and it’s just going to accelerate. And if, if we don’t intervene and then next we’ll be joining them to try to move somewhere else.

So it’s it’s, as I say that, I mean 12 years, it’s nothing – that’s like the day after tomorrow. The clock is ticking. And that’s why I, I, I liken the situation that we have to deal with today to the scale and magnitude of intervention during World War II. During World War II, nobody said, let’s wait 12 years and figure out a plan and execute it.

It was — that’s it — we’re going in tomorrow. And we’re going to marshall resources of millions of people and industrial capacity and everything we have to address this immediate crisis. And nobody said no. Nobody said no, maybe we should wait. Maybe we should wait until we have enough money. Maybe we should tax somebody.

Maybe we should wait if we can actually sell those freedom bonds. No, you just intervene when you believe that this is the right thing to do, and you marshal all the resources and know-how and put it into action. The silly thing that we’re dealing with today is that we have, we’re in much better position than during World War II. And we’re not dealing with the war to begin with, right?

Nobody’s going to die in the Green New Deal program, so to speak, unless we’re thinking of industrial accidents and things like that, but we’re not invading other countries. We’re not fighting an army. We’re building a better quality of life for ourselves and every community. So the quality of life will increase. Employment will increase, inequality will be addressed.

And also if we do this the right way, all kinds of other social tensions can be mitigated, uh, including, uh, racial inequality and, and things of that nature. We have the solutions. They’re on the table. What we need is for us collectively to change the narrative so that we stop, uh, sort of the, the natural reflex that a lot of people develop these days for say, Oh, we can’t do it. We can’t afford it.

There’s no solution or people who completely believe that, you know, this kind of intervention will cost us more. So how do you change the narrative? For example, in terms of financial costs, forget about MMT for a second.

In terms of the financial cost of running a Green New Deal, one way to convince your neighbors and say, we’re already paying the cost many times over, but we’re doing it in the wrong way because we’re spending money on the opioid crisis.

We’re spending money on people getting sick and, you know, have breathing conditions and all kinds of medical conditions that they have to spend money on their healthcare treatment and medications and so on. That money would be saved in the future if we have better quality of air and water and soil and better, healthier nutrition.

And this is, this is how you can convince the average person who’s not aware of the MMT principles or how we pay for this. So we’re already paying for this many times over. A Green New Deal will actually save us money. It will not cost us more.

Grumbine (00:25:24):

Interesting. So as, as bringing up the Green New Deal, once again, you know, we’ve got Trump making me feel a lot like 19, uh, 40, uh, you know, in Nazi Germany, the way he’s marshaling troops down in the way that he is. And, you know, it’s all posturing perhaps, but it represents something greater.

You know, the, the idea that the US is afraid of refugees coming into America, which from my vantage point, I see the angle that this is the Make America Great Again crew fearful of losing the little bit that they have to these inbound people who they feel like they’re directly competing with, and that they will ultimately take what’s theirs in this world of scarcity.

They will lose what little they have to these immigrants. And, and I think that this is key with a Green New Deal. If I’m not mistaken, part of this is a Federal Job Guarantee. Part of this is a guaranteed job, which by its own way it would be structured, hopefully, it would follow an MMT principled approach.

Regardless, it would mitigate involuntary unemployment right from jump and provide people with a standard of living that is, I would hope a living wage. Can you address the relationship between a job guarantee and the nation’s current poor, working poor, et cetera, and the immigration populations of other more disadvantaged countries that have been destabilized both by climate issues and political instability.

Kaboub  (00:27:16):

Before I get into this, I’d like to say a couple of words about the narrative and why it’s important to change the narrative because, and this is true of all politicians and all kinds of different contexts, but it’s, it’s really a dangerous thing if we, the public are not aware of how the public opinion can be manipulated regarding these, these topics such as immigration or a new deal and, and things like that.

So it was, uh, you know, Hitler’s a minister of propaganda, I believe who said, give me ignorance and fear, and I can rule the world. And ignorance doesn’t mean stupidity. I mean, lots of highly educated people can be ignorant. So ignorance of the facts, ignorance of the root causes that drive a particular issue. And fear, it’s fear of the other, fear of immigrants, fear of people of different skin colors and religions and nationalities.

And that’s a very dangerous thing to do because politicians will manipulate public opinion in a way that favors their ideological beliefs and their agenda. And that talks about immigration and immigrants being rapists and criminals coming to take your jobs, uh, and destroy your communities is it’s there already, it’s in the public narrative and people are just consuming.

So that’s, that’s one thing. Refugees who are leaving their, their home countries and walking, literally walking or swimming across oceans and risking their lives is because there is, there’s nothing left for them, partly because of climate change and the effects that it has had on, on agriculture and food production.

And partly because of the economic system that we’ve developed globally over the last four decades that the neoliberal economic system that extracted all the resources and all the wealth and left countries with mass unemployment.

And every time you have mass unemployment, and this is true in any country and tons of social science studies have reported this: every time you have high levels of unemployment, you have increase in crime, increase in domestic violence, child abuse, increase in substance abuse, increase in crime, economic crime.

And all of these things essentially drain so many resources and are so painful economically, financially, but also painful emotionally on a country on, on the people. And the poorer the country, the more limited, uh, resources and institutional structures that the country has, the more painful it is.

And this you see in all kinds of developing countries where lots of migrant people are essentially left with with no hope and no chance of improving their livelihood, other than picking up, essentially with nothing other than the clothes on their backs and their kids and just walking away, walking to, you know, taking that risk to cross borders and oceans and, and hope for a better opportunity.

And when it comes to the Green New Deal, and, uh, when I, when I think of a Green New Deal, the reference is usually to the US but it’s really what we need is a Global New Deal. And the best place to start is in the places where climate change has already caused so much damage, right? So this has to be done across the board. It’s not just, you know, building new green infrastructure for the US and you know, solar farms.

We . . . yes. We need to do that. And with that, we need all hands on deck. It’s not like reducing unemployment to zero will fix climate change. We really need to go beyond this. So we will need more people in the US. We will need people across the world to be plugged into this Green New Deal philosophy. Maybe we’ll make it within 12 years. So those who worry about losing jobs, it’s, it’s really this, this ignorance and fear philosophy that I describe.

Intermission (00:31:19):

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Grumbine (00:32:11):

So, let, let me, let me take it one step further here. I think there is some confusion out there about what a Federal Job Guarantee is, what it is not. And one thing I want to state for the record, we can have government jobs that are not part of the job guarantee that are really incredible jobs, that are career level jobs. They’re not transitional jobs. They’re not, um, you know, employer of last resort jobs.

They are really, really high-end STEM, uh, whatever it is that, you know, we want to compensate, quite frankly. I think we’ve gotten some conflation here between what a job guarantee is and what a program for infrastructure is. We, we, we might create an infrastructure program and within that have high level engineers and, you know, others that are architecting, you know, scientists, you name it.

Those are government jobs. I would like to think they’re government, even though the neoliberalism, they might be farmed out anyway. But the point I’m making is that there is a difference between a job guarantee job and programs that provide jobs. Can you talk about that for just a minute?

Kaboub  (00:33:28):

If you understand the MMT framework and you understand what the potential is for the federal government in terms of its using its financial sovereignty, then you realize looking back at the last, you know, four decades or so with all the downsizing of, of government programs and, uh, at the federal level, at the state level, also, you realize that there were so many main line government responsibilities that have been downsized so much for no good reason.

Why? For no good financial reason from a federal government perspective. So the first thing to do with a job guarantee or a Green New Deal is to recognize that there’s all of these occupations that we’ve eliminated over the years can be brought back in line. And this includes, you know, funding for schools to have, you know, afterschool programs and coaches and music lessons and teaching assistants.

And that’s a lot of staffing and lab technicians and all kinds of jobs with all kinds of backgrounds and skills, just in the school system. And then you look at the university system and you realize, well, all of this downsizing for research and development and all the lab assistants and staffing has been done because we’ve continually cut funding for, uh, public universities for no good reason.

You can bring those as main line jobs again. They’re not working directly for the federal government. They’re working for universities and doing research and development, which we will need if we were to address this climate crisis within, within a reasonable time, because we do have technologies available today, but we’re going to need a lot more research and development and innovation, the kind of innovation that, that the private sector will not do.

Venture capitalists will not, you know, start research and development from scratch and do trial and error for years and lose so much money. Venture capitalists, they pick up the cream of the crop, essentially from research and development that’s that has been done from scratch mostly by public universities and research labs within university, with federal grants most of the time.

And then they take it and, and commercialize it and move it up to scale for production to, to, to capitalize on that particular innovation. Uh, so we have to, we have to be aware of how and where real technological innovations come from and how, how it’s funded. It’s, it’s a myth that it comes from venture capitalists and things, and people, you know, working in their garage and coming up with innovations.

Some of it does, but it’s the vast majority of it is, is done structurally, institutionally with, uh, funding from the federal government. So we need to scale that up and go back to that kind of commitment to higher education. So once, once you bring everything up to speed, in terms of infrastructure spending, education, healthcare, public health, this is not a transition type of job or transition type of commitment.

That’s a major resource for absorbing so many people into the workforce on a permanent basis, not a, not a transitional basis. And that includes doctors and nurses, but all kinds of staffing from lab technicians and people working with offices and all kinds of things.

When you look at any major hospital in major cities in the United States, you would think my goodness, how are, how do they keep up with, with, with the system when, when they’re so overstretching and an underpaid. So there’s lots of potential for bringing that system up to speed with 21st century standards in terms of staffing and resources.

And once you do all of these major things that should be mainline government responsibilities in terms of employment, or at least funding, then you’re actually left with not much unemployment. And that’s, that’s a transitional job guarantee program where you’re looking at, you know, at the micro level, at the local level and every small community and every small community will have different needs.

And what you find there, you find that we already have the basic infrastructure for addressing some of the social issues that we deal with. And that infrastructure is most of the time local nonprofits that have emerged as grassroots organizations over the decades to pick up the pieces after all of that austerity and budget cuts.

Because when you have all that budget cuts and all that reduction in public spending, you see the consequences with unemployment, poverty, hunger, domestic violence, all kinds of substance abuse, all of these things that happen at the local level, the opioid crisis, there’s grassroots organizations that have tried to do their best to address these issues for the last three or four decades.

But they’re always underfunded and understaffed, but they know the communities, they know what the issues are. They know the local population really well, and they’re just thirsty for funding to be able to hire people, to do more of the good work that they’re already doing.

And that’s an opportunity for the job guarantee, for the federal government to offer federal grants to small organizations at the local level to do the things that they, that they do best. It’s not going to be somebody in Washington D.C. deciding what’s going to happen in a small town in Pennsylvania or a small town in Nevada, because they don’t know what the needs are.

They don’t know the local community. So that it’s not going to be their decision to say, well, you need a bridge, or you need a sort of an addiction remediation center or something of that sort. It’s going to be the local community that prioritizes what the needs are. And then the responsibility would be you have a federal grant with all the checks and balances that go with it in terms of financial auditing and so on.

And then the priority, the job of the organization is to look at the needs of the community and look at the existing labor skills that you have in the community and the unemployed community, and try to match the skills with the needs of the community.

And if the skills don’t match, then there’s room for education and training and on the job learning that helps you bring up to speed everyone who’s ready, willing, and able to work in order to serve the community in which they actually live, but they’re not serving it as a volunteer. They’re serving as an employee with decent wages and benefits. And that’s really how you start a transformative movement.

And, and honestly, a democratic movement, because what we’re describing here is participatory democracy. Participatory democracy is not just a voting every four years or every two years, it’s participating in the budgeting and the auditing and the decision making of what are the needs of the community, the priorities of the community, and being an active participant and the improvement of quality of life.

And if the community decides, you know, the priority is water quality, then that’s a priority. I mean, water is a question of life and death. If the priority is air quality, soil quality, if the, if the priority is fresh food grown in nearby communities to serve the local community, then that’s the priority.

And somebody is sitting in Washington D.C. that says, well, the priority is to build an airport, and the local community will say, well, the airport is nice for people who want to travel, but you know, how is that gonna give me fresh water or clean air or, or fresh vegetables to eat? So we have to go with the participatory democracy principles and just capitalize on what we already have.

The basic infrastructure is there. And the MMT lens tells us that it’s possible to scale that up on a larger scale because of the capacity of the federal government to fund these programs. Cause remember state and local municipalities, they don’t have the capacity to issue money into existence, spend money into existence because they’re users of the currency just like you and I.

They have to earn it first in order to spend it. Whereas the federal government spends money into existence and doesn’t need tax revenues to fund the program. We do need a tax system at the federal level, but it’s not for the sake of funding programs. The tax system is for the sake of giving the currency value.

Otherwise nobody would care to use the US dollar if it’s not required for payment of taxes and it’s to incentivize and motivate our behavior in terms of less pollution and less gambling and less all the negative things that we want to minimize in society.

You can tax those activities, but it’s not because we need the money to fund a, a Green New Deal or to fund healthcare. So it’s, it’s very important to change the narrative and educate the public, the media, policy makers of the different roles that the federal government plays in terms of, um, public finance versus state and local municipalities.

And that’s really the, the part where a lot of people get confused because they say, well, just like we balanced the budget at the local level, the federal government needs to balance the budget. And that’s how we, that’s how we got here because of all the balancing the budget rhetoric.

Grumbine (00:42:43):

That’s right. I want to jump in real quick, cause I have a exchange between, what’s not ironically, it’s in two separate places, but I pieced it together. Cause that’s just how I roll. And we’ve got Stephanie Kelton who came out with a great line. She retweeted John Iadarola’s tweet. He said, the climate is warming. Humans have caused it. We can fix it.

She came back and she said, this will require massive spending on a Green, New Deal. Budget deficits will result. That’s okay. Then she follows it up. And I just loved this line. So, so beautiful that I had to repeat it in the podcast. She said, if you lack the courage to be unapologetic about this, please get the hell out of the way.

Thanks. And, um, so I, you know, that’s uncharacteristic, but I just loved it because it’s, it’s that serious that it deserved that kind of a response. Well, we posted that in our Real Progressive Modern Monetary Theory for Real Progressive’s group where Warren Mosler came in and made an appearance and he said, and I want to get your take on this.

He said, before the kind of Green New Deal we need to move the needle, we are going to need to redirect a lot of labor hours as the project is very large in real terms. And I doubt there’s enough slack labor available that is when something like green energy costs more and requires a spending increase that most often means it employs more labor than what it’s replacing.

So I see the Green New Deal to be implemented along with a downsizing of the financial sector, which is pretty much entirely parasitic in any case. So it’s a win, win. Paying for this will likely require efficiency gains from cuts in the FIRE sector and legal compliance fees of all sorts to free up the real resources. So that is the theoretical limits of spending real resources.

Kaboub  (00:44:50):

What Warren is saying is absolutely correct. And you know, I hate to keep going back to the World War II reference, but remember what happened during World War II? We had to shut down Detroit. I mean, in terms of auto manufacturing. It had to be completely eliminated for three years. There, there were no new cars produced during that time period.

In terms of real estate market, in terms of housing construction, there was pretty much nothing new built during those three years because the national priority was to dedicate land, labor and capital, so to speak, to producing airplanes and tanks for the national global priority at the time, which was World War II. This is the kind of intervention we need today.

And, and the, the FIRE sector that Warren is talking about finance and insurance and real estate is massive in terms of its employment. And it is, as Warren described, it’s parasitic. Um, so we, we need to have that kind of massive structural readjustment, realignment of the way we do things.

 We have to change the way we consume, because if, if the rest of the world consumes the same way US consumers consume, we’re in big trouble and there’s . . . 12 years, it’s not gonna, it’s not gonna happen. So there are so many pieces of the puzzle that need to be adjusted and a Green New Deal . . .we will not have, I mean, talking about the migrants, we will need all the migrants of the world to implement the Green New Deal on a scale that is necessary.

Grumbine (00:46:24):

That’s exactly where . . . I thank you. You segwayed to this better than I could have even done it. Right? I was, I was hoping we could go there because what I’m hearing him say is, Hey, we’re going to need more workers to do this then we have currently have slack to provide today.

Otherwise this could become inflationary because we have that real resource constraint. Now we’re busy trying to wall off a potential bonus of all this new labor coming in to assist us in saving the planet or not saving the planet. The planet will be here long after we’re gone, but to keep it where it’s, you know, habitable for us.

Kaboub  (00:47:02):

The other piece of the puzzle here is the retirement, the baby boomers retirement, in the US because the baby boomers are not going to help us fix the climate. People retired and retiring, but we’ve improved quality of life substantially over the decades that baby boomers will live longer than the generation before them in terms of life expectancy.

So this brings us to the so called social security crisis and people who want to privatize social security and cut social security benefits and make essentially the baby boomer suffer during their retirement years, a lower quality of life than the generation before them supposedly because the government is broke because the social security trust fund is not going to have enough dollars in it to support your retirees.

Well, it turns out what we have in reality for retirees, you know, what are they going to consume? They’re going to need goods and services. They don’t need the dollars, the cash, that we’re going to send them. They need goods and services. So we can, we can give them all the cash in the world to have a decent retirement and benefits and everything.

But if we don’t produce enough doctors and nurses and hospital beds and services for them to enjoy that quality of life, it doesn’t matter how much cash you have. It’s going to end up sort of bidding up prices for scarce, medical resources and scarce goods and services that we don’t have.

So what we need is a larger, younger population that’s productive enough to deliver the goods and services and the medical services that the retired and the elderly will be needing more and more in the future. We need to be building more hospitals, more infrastructure to meet the demand of the baby boomers as they, as they age.

We need to be investing in education to produce more doctors and nurses to meet that demand. We need to be investing in research and development to develop better quality equipment and resources, medical resources for the elderly, because that’s what we’re supposed to be doing. Instead, all the talk you hear about is that we need to cut spending on the things that will actually save us in the future.

Cut spending on education and, and training and in cut, spending on investment in hospitals and research and development that will actually help us address the retirement crisis. Retirement crisis, by the way, that’s not only a US crisis. Europe has the same crisis cause baby boomers are all over the world.

This is post World War II baby boom. So it’s, it’s a crisis. And in Europe and Japan and China, and that’s going to be, it is already a global crisis. And it’s going to be the countries that invest the most in preparing their infrastructure, their productive capacity to deliver the real resources that the elderly need. And we’re going to need, as I said earlier, all hands on deck. We’re going to need more people, not less people.

Grumbine (00:50:00):

You know, the, these, these fires, you know, are not going to be satisfied by a bunch of people going in the woods and raking, um, eh, you know, as, as the president suggested, although I certainly don’t disagree that we should tend to our forests, uh, there, that that’s a potential job right there in a, in a community.

Um, you know, the, the, you know, we hear a lot of things about a UBI, which, which are the flavor of the day, which don’t really provide any help in this, in this strategy here. Can you talk about California momentarily?

You know, I see, I see California and the irrigation issues and the dryness and the, the desert qualities and so forth as similar to some of the concerns that you might have, maybe not to a far lesser extent to the Middle East.

And, you know, it’s obviously it’s developed skills, developed economy, et cetera. So it, they’re not the same in that regard, but perhaps some of the environmental concerns might be similar. Can you talk a little bit about California as, as it pertains to the more macro version of environmental issues?

Kaboub  (00:51:08):

With global climate change, these heat waves and droughts are getting more and more intense. And as a result, forest fires will happen. What the issue is in a place like California is over the decades, humans have invaded the forest, essentially with building major cities in the middle of a forest.

But historically the ecosystem itself does not fear forest fires that actually, you know, forest fires were sort of part of nature as a way of re-fertilizing and re-fertilizing the land and kind of reducing the density of trees within the forest. But a couple of things that have happened is as soon as the fire starts, because there are homes nearby, we fight it and stop it.

So that, over the years, increased the density of forests. And at the same time, we’re building more and more homes, closer and closer, deeper and deeper into, into forests. So that that’s not good planning. The other thing about the way we build, not just in California, but across the country and across the world, the types of materials we use, the housing density that we use, is not going to be permissible moving in the future.

So we’re going to have to rethink architecture and design and use of materials to begin with, but it’s sort of too late now. It is what it is. We have the California that we have and the houses that we have. So how do we, how do we deal with it? Raking the forest is not going to fix it, you know, uh, and that’s not the Green New Deal that we have, we have in mind, but addressing water scarcity is an important issue.

And that’s an infrastructure issue addressing the type of, uh, energy we use electricity, the source of electricity we use. That’s an urgent thing that we have solutions for, and it needs to be a priority for a state like California and other similar parts of the world. So there are certain things that we can address right away. We’re not going to go back in time and undo major cities and start from scratch.

We, we work with the system we have with the knowledge that we have with the resources that we have, and we do have the resources, we have the knowledge, and we have the people who are capable to do it. And the US Federal government has the financial capabilities to make it happen. The burden should not fall on the state of California or, or on our individual communities to, to fix this.

Grumbine (00:53:38):

Are you familiar with deep water filtration, desalinization plants that serve as hydro electric power as well? Are you familiar with that technology?

Kaboub  (00:53:48):

So especially for parts of the world that have severe water scarcity or water stress, it is one of the solutions is to essentially desalinization of seawater produces fresh water for irrigation, and you use solar panels, essentially solar energy to fuel the desalinization plant and the pumping of the water and the filtration, everything, because it’s a very energy intensive process to push seawater, essentially through filters and, you know, an a on a large scale.

And it’s, I mean, that’s the water that most countries in the Gulf and the Middle East seawater desalinization, desalinization of seawater. The problem with that technology though, is that it’s a massive consumer of energy, which is why you need solar and wind energy to, to run the process, to begin with. But number two, it produces a massive amount of sea salt essentially, of, of brine, uh, from the filtration process.

The question is, what do you do with that massive amount of salt? Historically, what most countries have done is they dump it back into the ocean, which has tremendous impact on the ecosystem. And it makes the desalinization process even more difficult the next day, because you’re, you’re making, you’re increasing the quantity of salt and, and the, and the water that you’re trying to purify.

Uh, if you dump it, you know, in the middle of the desert or dump it and, you know, anywhere on land, the salt will make its way eventually to the aquifer and whatever little water you have in your country will turn into salty water. And that’s not, that’s not a good solution.

There is a little bit of, uh, hope in terms of ongoing research and development, trying to figure out a way to use the salt, the brine from that process to produce electricity. And there are some early exciting opportunities there, but it’s not ready yet to be scaled and used, uh, commercially. Uh, and when that happens, then we’ll have a real solution.

But until then, this is just a temporary Band-Aid that does some good, especially when it uses solar and wind energy to run the plant. But in a lot of countries in the Middle East, in particular, they’re running on fossil fuels. So you’re burning fossil fuels to produce water to drink, not a sustainable solution.

Grumbine (00:56:25):

No. So we’re, we’re coming up on the hour here, and I want to just give you an opportunity to close out with this. Is the technology there? We know the money is there. The question is, is the technology there and is the political will there. And with that, I want to let you close out with that answer.

Kaboub  (00:56:42):

With the climate crisis that we’re talking about, we have millions of people unemployed, lots of exciting, renewable energy technologies on the table with, you know, getting cheaper by the day. And we have a climate crisis. As I say, the clock is ticking, 12 years. And beyond that, it’s a, it’s an unknown territory in terms of the massive economic and social consequences that we’ll suffer for not addressing climate change.

What is, what is missing is the political will and commitment and the political will and commitment doesn’t happen from the top. I think it’s important for the push to happen organically from the population. And that’s where it’s really important to change the narrative about what is possible.

The realm of possibilities has been essentially shut down with the so-called TINA narrative, that is Margaret Thatcher’s TINA, there is no alternative, spells Tina, that the government is broke, it doesn’t have resources. The only way for the government to spend is to tax or borrow from somebody or borrow from a foreign country.

That narrative is misleading and it’s dangerous, and we need to counter it. We need to counter it with a narrative that makes sense to the average person, because those are going to be the drivers of change. It’s not going to be political leaders because some political leaders do understand, but they’re also interested in remaining in their leadership positions.

So they’re not going to go against the public narrative that’s already been reinforced. So the general public, the media, grassroots organizations need to address climate change with a new narrative. And the new narrative cannot happen without the MMT principle, without the narrative that demonstrates that large scale Green New Deal intervention doesn’t need to be funded with taxing the rich or taxing polluters or taxing anything.

The intervention needs to happen because it’s a national priority. It’s a global priority that needs to happen on a massive scale. And we do have the resources to manage any inflationary pressure, to manage any logistical challenges, because we’ve done it before in a wartime environment. Good thing. We don’t have to do this as a war wartime intervention.

This is an investment in quality of life. Everybody will benefit from it, and it can be designed in a way that addresses inequality, addresses, poverty, addresses some of the root causes of the major problems that we suffer from in this society and around the world. And guess what? The side effect of this is that it will address the fears and anxieties of millions of people who oppose any kind of large scale intervention on climate change.

People who fear that they might lose their jobs. People who fear that, you know, some immigrants from across the oceans will come in and take over their neighborhood and invade their towns and take their jobs away. All of those issues will be addressed with a full employment policy that’s targeted at sustainability, is targeted at shared prosperity at the global level, but we have to start somewhere.

The US has been, you know, a leading force in so many dimensions over the last few decades. And there’s no reason for it not to be the leading force in a green, a Global Green New Deal that addresses some of the most urgent issues in our lifetime.

This is where the, some of the work that Real Progressives and so many people in the MMT community across the board have been, uh, doing over over the last few years is so important in changing the narrative. And I feel like it’s beginning to click.

We see so many new voices outside of the MMT circles, outside of the Real Progressive circles, picking up a new narrative, uh, and, and forging ahead with aggressive proposals, bold proposals that people on the right and on the left on the political spec of the political spectrum are beginning to say, yeah, why not?

If this is the kind of scale of intervention, and if it’s not gonna threaten my jobs, if it’s not going to threaten my community, as a matter of fact, it’s going to improve my quality of life overall, then why not? I’m going to go for it. And that’s when politicians will start to follow, they’re not gonna lead most of the time.

Uh, they’re they’re gonna really cross to the other side and go onboard with a Green New Deal when they realize that the forces underneath them, the popular voices are bubbling up in favor of urgent action in this direction. That’s when they’re gonna take the lead. So I’m really optimistic about the possibilities. Um, but I’m also realistic about the kind of work that needs to be done.

Grumbine (01:01:51):

Fadhel, this was an amazing interview. Thank you so much for your time. I look forward to talking in the future, of course. Fadhel is at the Global Institute for Sustainable Prosperity and Denison University. And Fadhel, you’re part of us, man. You’re always part of Real Progressives. Thank you so much for joining us here. This is another episode of Macro N Cheese. We’ll talk to you all next time. Thank you. Bye bye.

Ending Credits (01:02:17):

Macro N Cheese is produced by Andy Kennedy, descriptive writing by Virginia Cotts and promotional artwork by Mindy Donham. Macro N Cheese is publicly funded by our Real Progressives Patreon account. If you would like to donate to Macro N Cheese, please visit patreon.com/real progressives.

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