Teaching Economics with Benjamin Wilson

We are joined again by Benjamin Wilson to discuss what it is like to teach Economics from a heterodox Modern Monetary Theory perspective in 2023. Wilson is associate professor and recently-minted chair of the department of Economics at SUNY, Cortland. In previous episodes, we have chatted with Wilson about his research, the Uni Currency project, and his innovative work experimenting with classroom currencies. Developing these topics further, our conversation this time explores the potentials and dangers of using neoclassical textbooks in the heterodox classroom; the utility of classroom currencies for Econ classes of all levels; the place of narrative in neoclassical and heterodox theory; and so much more. Our dialog with Wilson is shaped in several respects by our conversation with Larry Johnson in last month’s episode of Money on the Left. If you are passionate about pedagogy, then this episode is for you.

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Music by Nahneen Kula: www.nahneenkula.com


The following was transcribed by Mike Lewis and has been lightly edited for clarity.

Scott Ferguson:  Benjamin Wilson, welcome back to Money on the Left.

Ben Wilson:  So great to be here. Thanks for having me.

Scott Ferguson:  So since you last joined us, I hear you’ve become the chair of the Economics Department at your university. Is that true? Are the rumors true?

Ben Wilson:  The rumors are true. I took that role with a tremendous amount of hesitancy. The rumors are true that it is a significantly greater amount of work. But I’m glad that I’m doing it. I’m halfway through my second year, and it’s looking like I’ll probably take on a third year because at the end of my third, then we’ll have enough people that have been tenured and gone on sabbatical and done things that we can go forward and and elect a new chair and then have rotations of two to three years for each of us moving forward, which I think is a really exciting evolution in our department and really part of us getting a series of new hires after retirements and coalescing as a new team for what will be hopefully the start of my second full decade at SUNY Cortland, which is a little bit mind boggling to me.

Scott Ferguson:  What’s it like teaching economics at SUNY Cortland? As an outsider who knows just a little bit about economics and economics pedagogy in the United States, my impression is that most economics departments really suck, and they teach some pretty horrible things and reproduce a culture of neoclassical economics that doesn’t really encourage critical historical, social, political, or ecological thought at all. I have a sense that something different happens at SUNY Cortland in the economics department.

Ben Wilson:  Yeah, it very much does. In terms of what goes on in other economics departments, I have a hard time saying because my graduate work was at UMKC, which is another super unique opportunity and space. Even as an undergraduate at the University of Kansas, which ended up being a pretty strongly orthodox department, my first professor at that university was very much more of a heterodox inclined political economist. I really didn’t appreciate how great that was until I started doing the PhD work there, and it was all models and maximization and all those things. We’ve talked about that previously. So at Cortland, we have a very pluralistic department. Hopefully this airs before we close our next application process for interviews because we are hiring another two new tenure line faculty this year.

Scott Ferguson:  Congratulations.

Ben Wilson:  Yeah, it’s just amazing. I mean, it’s exhausting work. But it is really exciting to bring new folks on. I’m very much the beneficiary of a legacy of people at the school that really valued political economy. All of our students, whether business economics is their major. So we have a business economics degree that’s housed in a college of arts and sciences. We’re ahead of the curve there in that right now, lots of business schools are looking at their programs and thinking that they’ve kind of missed the boat in their School of Professional Studies in terms of being able to incorporate the benefits of developing and thinking about an education that brings forth good citizens and really focused too heavily on the narrow values of productivity, efficiency, profits, individuality, etc, that are the cores of neoclassical economics, really. All of those students, whether in an economics major or the business economics major start their journey with Political Economy and Social Thought 105. That class is taught by four or five of us and we rotate those sections and all of us approach it in a little bit of a different way. We share different textbooks and procedures. I myself have taught it a host of different ways. It’s a really hard class to teach just because you want to do everything. So, do I start with Adam Smith in 1776 and sort of work through it chronologically to the modern day? Or do I start with a modern day and then work backward deconstructing those things? Or do we construct it based on thinkers? Do we construct it based on ideas? I go back and forth. This semester, I’m teaching it as an honor section. This is one of the things that I’m guilty of, I’ll read a book in the summer, and I get really excited. I think this is going to be a game changer. It’s gonna be an awesome read for this class…

Scott Ferguson:  Then you tell me about it.

Ben Wilson:  That’s right. And then I read it for the second or third time as I’m teaching it, and I’m like, God, why did I do this to myself? This book is Robert Shiller’s Narrative Economics. It’s actually been better than I just said, but Shiller is as big a name in the orthodoxy as you could probably put forward, but he’s really wrestling with this idea that narrative matters. It influences the length, duration, severity, etc, of the financial crisis, but he falls a little bit short of really digging into the structures that are causing the crisis. The Great Depression lasted longer than it needed to, because people kept talking about unemployment in various ways, and it’s not that people were actually unemployed that was the problem. Bubbles and real estate happen because everybody’s talking about how great it is that their house price is going up, and it creates irrational exuberance, and all these things, and no mention whatsoever at all of deregulation and assets, and that the US economy was creating the environment for this and these stories. It’s a good book for thinking about just how shallow a lot of Orthodox analysis can really be, and that we need a little bit more complexity in the way that we’re thinking about these things to really prevent and understand and make these sorts of crises less painful for the people that bear the brunt of it. So far, so good. It’s been a great reintroduction to the classroom post-pandemic in a way that has been so rewarding as these students have really engaged with the reading and are giving me a hard time. They’re predicting that I’m not gonna like this chapter, and the reasons why I didn’t really care for it. It’s just been a really good semester so far. And I think, as department chair, the most rewarding part of that job is classroom visits. As part of the evaluation of the quality of our teaching and maintaining a strong culture of teaching, the department chair has to visit anybody who’s coming up for a particular review. I’m just blown away by how much thought and care and energy our faculty puts into their classes. I’ve stolen a few techniques here and there that have been very useful in my classes. I think my favorite is the use of the software Perusal. Are you guys familiar with that?

Billy Saas:  Just got something in my inbox about. I’ve not used it before.

Ben Wilson:  Yeah, it’s been great. It’s like Brightspace, or any of those other online learning management systems, but it allows you to highlight and comment in the readings and everybody can see it. So the students really appreciate it because they say it feels like we’re reading it together. The other really nice thing about it is it keeps information and collects statistics on how long students are in the document. So they can’t just open it and leave it open. So for example, it’ll say it was open for 24 hours, but they were active in it for seven minutes. So I even give people a little bit of a hard time and be like, alright, let’s see if we can build that stamina from seven minutes to 21 minutes and maybe by the end of the semester, a solid hour. For maybe 45 minutes consistently in the readings, and then we’ll really be cooking with some gas.

Billy Saas:  I want to talk about Shiller a bit more. What was the name of the book again?

Ben Wilson:  It’s called Narrative Economics.

Billy Saas:  Maybe a word for it could be a foil for the class. It’s like you’re teaching through critique of the book. And in our last episode, we talked with Larry Johnson, and that’s how he shared his story of coming into heterodox economic thinking through critique of Samuelson. Would it be fair to say that Shiller is on par with modern Samuelson? Not quite every classroom.

Ben Wilson:  He’s kind of been my victim. But it’s been a fascinating book, because it was published in 2019, just before the pandemic. The subtitle is: How Stories Go Viral and Drive Major Economic Events. The whole metaphor throughout is about contagion and viruses. So the narrative is always this sickness that’s happening. One of the questions we asked is, can we write some positive stories? Or are there some good ways that we can turn this ship around?

Scott Ferguson:  Does he not really allow for that?

Ben Wilson:  My reading is that I don’t even know that it’s crossed his mind.

Billy Saas:  Is this meant for a popular audience, do you think, more or less?

Ben Wilson:  That’s one of the reasons why it’s a good one for the 105. I wish one of the things that I would like to see more heterodox folks do is write sort of this 100 level book. We’re confined either publishing in our journals and writing these really heavy books, or the textbooks, like I said for 105. They’re either sort of this, featuring the great thinkers sort of way or…

Billy Saas:  Accessible, heterodox? Yeah,

Ben Wilson:  Raj Patel, he’s got a book, The Value of Nothing, it was published in 2008. So it’s starting to get a little bit dated. But it aligns so nicely with the critique that I levy against microeconomics in my 300 level economics course. So starting with Homo economics and the individual consumer and then thinking about the corporation and the firm. He has a nice chapter on value theory and then the second half of the book kind of explores alternatives in forms of democracy that allow us to think about the state, firms that aren’t maximizing profits, and nonprofits and co-ops and all those sorts of things. I guess there are a few, I just wish that they came out and got as much acclaim and fancy book jackets.

Billy Saas:  You can’t buy him in the airport. So I want to talk about that 100 level heterodox, economics intro book, and see what we think would need to be in there. But before we do, is there an index? Or are there sources cited in that book? I’m just curious, because it seems to me like what Shiller’s describing is also incredibly derivative, and a story that’s been told a bunch of times. I wonder to what extent there’s any kind of citational practice there.

Ben Wilson:  It’s pretty shallow, and for a second, he talks about MMT, but I can’t remember the exact straw man that he uses. But it’s really bad. So those are good things, right, to be able to point out and say, this is the way people write in these books similar to the textbook and in our economics class. They write things like instead of saying in our model, they say that if the government provides a tax incentive to increase investment, it’s going to increase interest rates. Instead of saying, in our model that has all of these assumptions, if the government provides an incentive, then our model predicts that interest rates will rise. There really should be much more thought to that. There’s just no room for thinking that what the model does is not going to happen in reality. Which is really problematic. Especially when you teach a loanable funds situation, and go through all that, and the interest rate is going all over the place. At the end, we really should say, but none of that really actually happens, because the interest rate is a policy variable. I don’t know, it’s really hard. Having been trained in neoclassical economics and spending all that time, when you think about it from an intellectual project, the idea that we can model the economy using these tools of physics, it’s actually pretty creative and kind of a fun idea. But at some point, the fun idea, and the fact that it just keeps failing us; at what point can we abandon it and just stop teaching this stuff? I don’t know.

Scott Ferguson:  You’ve told me about how you teach Orthodox economics in the past, and I think you’ve referred to metaphors of building blocks, there might have been Legos involved.

Ben Wilson:  Yeah, so I mean, it is model building. And, the micro economics, the 300 level class we teach, I teach the textbook, and we develop the model and all of its calculus glory, and drive the demand curve and the law of demand and find our supply curves. Then we go through, meticulously, all the assumptions of the perfectly competitive market. We do the whole shebang, in all of its glory, straight out, honest, and I even speak about its elegance, and how it is sort of captivating to think that we could somehow harness the power of physics to control and think about unemployment and inflation and all these things. What we derive is partial equilibrium and the way that I present it toward the end is that, what we’ve accomplished, people like Alfred Marshall did, and all the economists, long lines of them have done this work. Since then it’s developed into general equilibrium. From general equilibrium, we get dynamic stochastic general equilibrium. Really, all that’s occurring is that we’ve gone from what we did in this class, which is the Duplo, LEGO model of the economy. All you really are doing when you get to the more sophisticated is you’ve made the pieces smaller, and more complicated, and much more painful when you step on them as a parent. But at the end of the day, the pieces are all the same, right? The rational agent is an efficient firm, you’ve just made it much more rigorous, and the assumptions and the assumptions actually become even more narrow and less like reality, the more complex the math gets. So there’s like an inverse relation between the two.

Scott Ferguson:  For example.

Ben Wilson:  To get to general equilibrium, you’ve got to assume perfect information. And you don’t necessarily need perfect information in the simpler partial equilibrium model. So things just get more and more convoluted.

Scott Ferguson:  So is there a theory of the press that goes along with how perfect information circulates?

Ben Wilson:  Oh, man, that’s a good question. I’m not, I’m not aware of it off the top of my head. That would be an exogenous shock that the press is presenting information in the wrong way or something. What’s the press? Is there a market? Where are they exchanging their words?

Scott Ferguson:  So much narrative, so much viral narrative getting in the way. We need more monetary silencing.

Ben Wilson:  It’s an exogenous shock to the system that will create a short term perturbation and then we’ll return to normal.

Scott Ferguson:  So the rational agents get their information by simply using their five senses and by looking at the market?

Ben Wilson:  Oh, I don’t even know that they have five senses.

Scott Ferguson:  They’re just brains in a vat.

Ben Wilson:  Yeah, they’re agents, right? They’re solving optimal problems. It’s not even so much that they’re agents or things because we’re not even really looking at them, we’re looking at the optimal points that emerged from their decisions. So, the aggregation. Economics, from the free market perspective, it’s just constantly aggregating choices, optimal choices, to form these structures that we call the demand curve, the supply curve, and then there’s one magic optimal point …

Billy Saas:  Subjectivity is a veil over real aggregate relations.

Ben Wilson:  Yeah, I mean, this is where we should invite Mitch Green into this sort of conversation, because he is the master of the neoclassical language. And in jokes, the neoclassical dad jokes, he’s the master. So we go through that, and does this Death Star model of Legos really tell us any more about how we behave and who we are and what’s going on in the economy than the Duplo one? I’m not really sure that it does. I wish they had to go through and say all the assumptions every time they make a proclamation about what’s going to happen in this policy choice. Because it’s really unfair, even in their papers or in a presentation, they would just say: assume the standard assumptions. If they even acknowledged the assumptions at all. It just presents theirs as “this is the way that it is.” Then, when you critique or raise an alternative, you have to deconstruct all that stuff. So it’s almost like you’re reproducing it again, in your own head, and then they’re listening to you reproduce it again. And then by the time you get to the punchline, they’re like, Well, you just said, all the same things. You just talk past each other all the time.

Scott Ferguson:  And you’ve cited the hell out of us in our Orthodox journals. Yeah.

Billy Saas:  Yeah. That’s why I feel like the kind of the by now pretty standard, or standardized approach that Shiller seems to be taking in that book, without having read it, but having your description in hand, there’s fundamentally a defensive posture in it. It’s like “what we’re doing is not narrative, everything else is narrative,” right? And to the extent that we can detect narrative, that’s the extent to which we can detect that we’re straying from our Death Star model. And we’re out in kook land.

Ben Wilson:  Yeah, please stop telling all these stories, because you’re shocking people’s preferences, and they’re not making optimal choices anymore. Whereas maybe, the fact that we let people take out a bunch of mortgages without proving income, that’s why we got a bubble?

Billy Saas:  And the trick there is that you can always locate narrative in those points of breakdown. There’s no narrative at the optimal point, but there is always narrative at the non optimal points. Right, the irrational.

Ben Wilson:  Shiller is clearly very much influenced in thinking about the Great Depression. Lots of the narratives and stories that he tells about consumption and frugality and the way that things move through that period come up throughout the book. One of the things that we’ve brought up in the class as a counter is the interview you did on the myth of the redemptive depression, which really goes into how these stories come about, and why they come about and what it was actually like, and what was going on and the vivid descriptions of what it means to have nowhere to go and to be hungry and to be trying to care for children through this time period. At some points, even having to give up your children. That sort of thing is why narrative and story carries on through generations. Not that it was a shoeshine boy telling Rockefeller that something bad is gonna happen. When you get the redemptive depression narrative, thinking about Grandma’s here because she had local supply chains and worked hard and made it through and came out of this morally stronger. Then you transition to the 60s in the civil rights movement, and Martin Luther King talking about the right for jobs for all and why do we need jobs for all? The New Deal didn’t really actually do anything to allocate resources. What’s the argument here? Then, you can pull back these sorts of silly individualist stories and think more holistically about all the things that are interconnected in our lives. The importance of work and jobs and stability and risk and why we study what we study and all these sort of bigger questions that are much more interesting and fundamental. So you guys, big shout out to podcast and I mean, I love returning to this catalog, and listening to these episodes. There’s just so much in this podcast that is so applicable. The value, like I was saying, is that there are these accessible books. Lots of the books, and the people that you guys talk to, the books aren’t appropriate for the class, but hearing them discuss their books and their work in the podcast is sort of like an introduction to how to critically read and how to think about what an author might be trying to do, and the way that they’re structuring their books and their articles and their research. So in those ways, it’s so useful, especially from a heterodox perspective to be able to think about what are these different methodologies? What are these different tools that we can use to start understanding these economic outcomes from different perspectives? Because one of the challenges of being a heterodox economist is there’s no “this is our method.” Right? This is our toolbox. This is what we do, we’re not going to stray from it.

Scott Ferguson:  It’s automated.

Ben Wilson:  Where’s my beta hat? It’s really much more eclectic. We’re always wrestling and grappling toward what is a social science methodology that can give us meaningful and useful knowledge?

Billy Saas:  That’s the thing: meaning and purpose as objectives versus the internal model consistency.

Ben Wilson:  Yeah.

Billy Saas:  I agree.

Ben Wilson:  Let’s tell a really good story about utopia, and there you have it. Right, and that’s frustrating too, right? Socialism gets painted as this utopian narrative, but free market economics is the most utopian story maybe ever told. That autonomous individuals with no constraints will spontaneously decide that these tokens are money and that all of us transacting and doing things will lead to our harmonious and good society. Like, what? This is crazy talk. Like, we can’t even spontaneously agree what to get for dinner most nights. Like society is supposed to spontaneously believe this is our medium of exchange because it has an intrinsic value.

Scott Ferguson:  So I think our listeners, at least our longtime listeners, know you on this podcast, in part because you are a pioneer of classroom and university currency experiments where you model so-called tax-driven money as an obligation to the institution, as the foundation for monetary production. I think often when we gloss those experiments, we’re doing so in different contexts. Now, we’ve invited you on to talk about economics pedagogy, and in a more kind of holistic way. So what happens with these service learning currency experiments in relation to learning about orthodox economic models, the different models of equilibrium, different heterodox models? How do conversations get started? Or how do students metabolize, make sense of all of these things in conversation with one another?

Ben Wilson:  Yeah, that’s a great question. It’s one that has changed, really, every single time I’ve issued a currency in the classroom. It really depends on what classroom. So it started off that I would only do it in the 105 class, as an introduction, so that they would know what I’m talking about when we get to the upper level classes, or at least have been introduced to it. Now, I’m gravitating toward that I just need to do it in all my classes, so that when they get to the upper level classes, maybe they already have some of the currency already in their possession, and it’s transferring between time periods. I mean, this is what Fadhel has been able to successfully do at Denison is this intergenerational thing. I’ve just not quite ever, I think I was building up toward that pre-pandemic, especially with the debt theme that was going on on campus and bringing people like Stephanie Kelton to talk. We still have to get you up there, Scott, to give your talk that was canceled, like so much else that fateful spring. This semester, the last time I did it, I did it with digital money, and they had wallets and that had its own sort of fun to it. But this semester, I went back to just paper money. And it’s a Comparative Approaches in Political Economy class, where we’re looking at the differences and methodologies and political economy from Orthodox and Heterodox around questions of money and how it works and what it does. The primary text in the class is the classic Ten Men of Money Island that I learned about from Jakob Feinig, which is really pretty fascinating, just because who knew you could write an imaginary story about money that’s grounded in state theories of money.

Scott Ferguson:  Tell us about it.

Ben Wilson:  It’s really fascinating and terrific. The characters in the book are named after what they do. So like Sledgehammer, and Reaper, the agriculturalist. The name for the government person is Do Nothing. The name of the banker is Discount. It really builds the story, right? They’re all kind of doing their own thing, they’re building their community on this Fantasy Island, and they decide that they need a bridge, right? They’ve set up shop in ways that, now they’re spending so much time getting around the island that it would really benefit everybody if we just had a bridge right in the middle. They’ve wrestled with how they’re going to do it, how are we going to mobilize the resources to build this bridge? Basically what they arrive at is: Do Nothing writes notes to prove that you spent time building the bridge, and they set a timeline for when you’re going to have to prove that you contributed equally to the building of the bridge. There’s a central ledger, Do Nothing is issuing this new money and it’s comical. I don’t know if it’s intentionally satirical. These conversations that they’re having and thinking like Sledgehammer spending a lot of time on the bridge, but the guy that does all the textile creation in clothing isn’t spending any. He’s so excited about these new shirts, and he’s got extra shirts and Sledgehammer has extra money and what on earth are they going to do? So at the end, they get a bridge and everybody’s contributed to the building of the bridge or they’ve been able to contribute to those who have built the bridge. All the money gets turned back in and they’re like: Alright, great, what should we do now? Then the idea comes up: well, I’ve seen this shiny stuff in the river. Maybe we should go dig that up, and that will be how we established the money is, this gold. So they spend the next chapter, some of them are digging up this river and bringing all this gold and they’re issuing their monies. At the end of they’re like, Oh, what did that do? All we’ve got now is a ruined river and this big pile of gold. Which is so Bitcoin, right? It’s just like, Oh, what do we have now? We’ve got all this carbon coal that we burned in China and nothing really to show for it. So that book is good. It gets them imagining money and gets them thinking about … it goes all the way through. The finance franchise gets developed with the creation of the bank and their over reliance on debt and not issuing credit through the state anymore. The bank gets really greedy, and then the state colludes with the bank to do its thing. Then at the end, they start over and they’re like, “well, we were not going to fall for that stuff again.” Then we read Jakob [Feinig]’s Moral Economies of Money. The parallels between the development and the experimentation and the wrestling with theories of value and production and money as a democratic medium, and that it mobilizes production and the scarcity of money really seems to be a significant problem. We can solve the scarcity of money problem by creating more money. It’s starting to sink in. Along the way, we’ve listened to Saule [Omarova]’s interview with you guys to think about the finance franchise. Then we show Bob and their diagrams and their paper. Now that we’ve gotten to Bitcoin and thinking about digital currencies, that allows us to think, again, about the importance of the philosophy that’s undergirding the monies. This idea of individual, decentralized exchange, and that is not what’s producing stuff. I think it’s starting to sink in. They’ve given some good presentations and done some nice group work, and now they’ve been assigned. I’ve given them all jobs at the Federal Reserve. Their final project is to use the criteria and the four sort of big questions about where does the money come from? How much should we produce? How do we create demand for that money? How do we do these things and those criteria and thinking about should we just edit the US dollar? Some of the ways that it enters the economy, or how much we should produce or the tax circuit? Or do we need new monies in New York state or here in Cortland, like our classroom currency? It seems to be working: we’re mobilizing resources, we’re solving problems. You guys are getting interesting and meaningful work done for loaves and fishes and the SPCA. We’re gathering data with our partners in the Adirondacks about HVAC providers that are part of New York State’s bigger plan to reduce carbon emissions and move to energy efficiency. So we’re doing all sorts of these little things that are adding up, hopefully to big things and, do we need the federal government to issue the money or change the money? Or can you do it at a local level? All those sorts of questions really challenged the idea of governance and challenged the idea of “inside” and “outside” the state and market. I’m having a lot of fun, and I think some of them are having a lot of fun. We’re having writer’s workshop meetings before the break to go over their project and talk one on one, which I think always helps ground the community and get us off on the right track. I don’t know if that answered the question. Next semester with urban I want to continue sort of the same projects in the Adirondacks, but we’ll think about it from the urban economics perspective, and land and land use and data and GIS and all that sort of stuff. It’s pretty fascinating.

Scott Ferguson:  I love this. I think we’ve come full circle because we’re right back at Narrative Economics, but now it’s not a dirty virus that gets in the way of distorting optimal preferences, but instead is the lifeblood of provisioning as an imaginative process. I guess my next question for you that you started to kind of answer is: you ask them to write these proposals, what are the strategies, what are the genres that they can write in? Are they telling stories? You say that they maybe mobilize data in different ways?

Ben Wilson:  Yeah, so in our individual meetings we’re wrestling with their idea that I’ll be able to suggest various opportunities. They could be doing an interview on a podcast. So that could be an interview that they could write. Or the standard sort of field guide, case study style as one of the ways that I think is pretty straightforward. That translates well for professional writing and thinking about that. The writing assignment that has the most freedom that I’ve given this semester is in that 105 class, the Shiller class, where I asked them to write their own economic narrative, and it’s 2050. I just kind of picked 2050 randomly, but it’s actually just about exactly the difference between my age and their age right now. That kind of helps them think about, well, it could be this huge radical change, or it could be sort of still looking fairly similar. But they have the freedom to write a dystopia or utopia and use the different context and stories and what catches fire. How do we rethink the individual as cooperative and altruistic and always interdependent? Or do we keep beating our brains against the wall and trying to separate ourselves and isolate ourselves and be individuals? Homo Economicus. I’m really hoping that these conversations are as fun as I anticipate them being and that they have the chance to free their minds from all the constraints that exist. What is the problem that is keeping you up at night? Right? Is it just about getting a job? Or are you worried about climate, and let’s work through and think about the work that you might do for the rest of your career to make a meaningful and useful contribution to solving that issue? What sort of institutions and support would you need to do that? Hopefully, we’re getting there, because so much of what we talk about is how dire things are, the crises, and it’s awful. But at the same time, we really have to equip them with the vision and the ability to envision a better world than we currently have. I think that that’s something that most of these generations since World War Two in this country have kind of had. That’s under attack right now. Even as the data suggests that this generation of students has got a less than 50-50 shot of having a better income and life outcome than this current generation. That’s kind of terrifying and sad. We don’t want to shackle them with those sorts of doomsday scenarios. I mean, we need to take it seriously. But we’ve got to give them the tools and the freedom to think about what a good and just and verdant and exciting and healthy world looks like.

Billy Saas:  I love that so much. What does a rubric look like? Is an A paper for its convincing portrayal of a dystopia achieved by Goldbug resurrection, insurrection, or the intensity of your feeling of joy and euphoria the vision of a Green New Deal world that they give you? How do you grade this thing?

Ben Wilson:  There’s specific parameters. One of the most important parameters I think students need to get familiar with is following directions. 12 font, double spaced, and then familiarity about where to turn it in. So I use OneDrive and things like this where they’ve got to navigate folders and submit it to the correct space . This is an iterative project, so they’ll submit an abstract or an outline, and I’ll provide comments. How well do you address the comments that I’ve provided? There’s a number of quotations and references and I’m looking for the intertwine of the readings and the materials in the course. Then, I get a little bit of leeway with something like creativity, to sort of emphasize that they should try to have fun with this. I experienced this as an undergrad. My Growth and Development teacher, her assignment was: you are now the leader of this developing country, implement your economic strategy. And I tried to find this paper, because I know that I wrote a super neoliberal, crazy, terrible …

Billy Saas:  Micro loans for everybody!

Ben Wilson:  I remember thinking that it is so good, and free markets. Like everything, you get so influenced by what it is that you’re reading at the moment, and I remember that I got a good grade because I used all the references, and I followed directions, and it was a pretty good story, I think. I could tell that the teacher was just like, oh my god, how did he just totally miss the point of this class? I’ll have some love for the Gold Bug emergence and Bitcoin decentralization occurs. Softens the blow, right?  You know, because we all go through…You gotta have an intellectual crisis at least once in your life, or you’re not thinking hard enough.

Scott Ferguson:  Provisioning intellectual crisis with Benjamin Wilson.

Billy Saas:  Good one-two punch would be you and Larry because his kind of inductive approach alongside your critical narrative driven approach?

Ben Wilson:  Well it’s so exciting to hear that somebody is teaching future teachers how to wrestle with this stuff. Can you imagine the system of education that is cultivating an understanding that money is a productive promise that we are announcing to each other all the time? The Uni project, and the classroom currencies and thinking through Jakob’s book, and the whole thing is really these folks wrestling with how to organize productive activity. This tool is either being used really well, or really ineffectively all along the way. If we could harness that spirit of experimentation throughout our educational curriculum, the same way that we’ve allowed homo economics to infiltrate every dimension of our educational system. All of our disciplines and all of our laws, going back to Oliver Wendell Holmes, giving his “Bad Man” speech at Harvard Square, right? How do we begin to disentangle and take apart all of these ugly structures that assume the worst in one another, and allow us the freedom to experiment and think about production and money and promises in so much more rewarding and effective ways? This sort of thinking is so much a part of social studies, and even the sciences, right? How many great scientific experiments are submitted to the National Science Foundation, they get turned down just because it’s a random selection or the reviewers don’t necessarily like this particular project, or having an affinity to it. Do 91% of the projects to the NSF not deserve to be funded? I can’t imagine that.

Billy Saas:  Then there’s the old thinking about the context of what gets submitted. There is the stuff that is going to satisfy the expectations of the review committee, and that is to sort of colloquially show that you already know what you’re gonna find, right. So, discovery is not a priority in this otherwise discovery-oriented discipline, as a result of monetary scarcity imposed from the top.

Ben Wilson:  Yeah, the question of the unknown. In our conversations about what it would look like if we implemented this full employment program: you don’t know any more than Jerome Powell knows what’s going to happen if they raise the interest rates again. But there’s like, a certain amount of gravitas or so many people saying: yeah, this is what’s gonna happen. That we’re allowed to experiment in that way, but not others. It’s so constraining and so narrow, and it’s so self defeating. It seems like people are finally, at least in the moment, like Galbraith’s piece the other day was really great calling out Jason Furman. Yeah, well where’s that six and a half percent unemployment? Maybe we don’t need to throw people out of work, except for maybe you. Then maybe we can move forward with the business of finding those meaningful and useful jobs. That’s one of the things, selfishly, why I like the classroom currencies and engaging with the nonprofit sector, and in these groups that are trying to solve some of our problems outside the business world, so to speak. Sometimes it is a little bit hard to imagine what all these jobs are going to be and how many jobs we would actually need. If we solve the problem of hunger, what’s next? What’s the evolution of this new care driven economy? How much less material waste do we produce? I think those sorts of unknowns are a lot less scary than the unknown of when we’re gonna burn the final tree on this planet or the ocean isn’t going to be able to support life anymore. I would much rather pursue these other avenues of when there is too much art? When is a workday just way too short? Is it three hours? I put in my half hour today and AI cranked out the rest.

Scott Ferguson:  I’d like to talk about the future of your department. As chair, you’ve discussed with me a little bit in the past that your department is going through a kind of generational turnover, and that the curriculum has been divided and organized in a particular way. The participants who put that plan into place are phasing out and retiring. It’s raising the question of where to go from here. Like all these other topics that we are describing, there’s no automated map for you to follow. Obviously, you’re not doing it single handedly. Being a chair is not being a dictator, or it shouldn’t be. Unless I’m in charge. Can you tell us a little bit about this history of the department and what kinds of questions, challenges, and aims seem to be bubbling up as you reckon with the question of the future of this institution?

Ben Wilson:  This all happened well before my time, so that my institutional understanding of a lot of it is probably guided by conversations and things of this nature. But the short of it is, that a long time ago, they made the decision to create a business economics degree in a liberal arts setting. That turned out to be a really shrewd and an excellent move because over the course of the last 20 years, the department rather than shrinking in size has steadily grown and now we’re the largest department on campus in the liberal arts and sciences. We are operating from a position of strength and stability and the success of that department and our students in those things are all terrific. So we’re wrestling with this question. Out of these 500 majors that we have, 30 of them are economics majors. Is the goal to have a better balance between economics and business economics? Is there a way to more robustly teach the business economics degree as sort of a pluralistic economics degree? I’m a little bit torn. As a political economist, I’d like to see us just teach all these political economy classes. The work of Sanjukta Paul and [Nathan] Tankus on coordination rights and thinking about the firm has been something that I think fits really nicely in the literature for liberal arts management and thinking not of it as management, but as organizational behavior, is the new name. I think that that’s a great sort of way of introducing a lot of heterodox concepts and ideas into a business curriculum. The sole proprietorship is going to, organizationally behave significantly differently than the corporation or the worker-owned cooperative, or the non-profit. So it begins to introduce all the ways in which the corporation will maximize and fit these really narrow value systems of efficiency, production, shareholder value. Whereas the Mondragon cooperative has managed to be a very successful global enterprise for multiple decades by embracing a much more holistic view and a democratic workplace. I would love it to see us sort of embrace this idea of the structure of the organization really matters, and to be training students to adequately be able to assess whether or not I want to run and manage a corporation, or a Mondragon. I think that that would be infinitely more healthy social enterprise and the budding hipness of social entrepreneurship. I think all guide themselves to this idea that we could really create a robust and interesting liberal arts education that gives students the idea to think through these issues. Even beyond, it would turn right back to money, where how we structure access, and who creates and how it is entering the system, and all those things become that coordination right, as well. There’s no inside-outside, we are always all practicing governance. Whether it’s our department or a business or a family or a nation-state, there’s always the possibility for experimenting and decision making and collective decision making that we should be approaching. With all the resources that we have here locally in the Finger Lakes for experimenting in farming and agriculture, tourism. That is just exacerbated up in the Adirondack Park with our partners in our campus up there. I think the possibilities for this really exciting new degree programs that aren’t abandoning business or management, but framing them from a liberal arts perspective is super exciting. That’s not gonna happen overnight. I think a lot of it has to do with how the hiring process goes and that sort of thing, but I think it opens up the possibility especially for grant writing and community partnerships and things in a really exciting and robust way that lots of people are excited about.

Billy Saas:  So where does podcasting fit into the new curriculum at SUNY Cortland, in the economics department?

Ben Wilson:  Great question. I think that’s no more than trying to get other faculty in my department to issue the currency. I would love the communications department to issue for the creation of new digital medias around the reporting and analysis of these new organizational structures that we’re creating in the economics department to mobilize production. Because we need some good news, and we need some good reporting, and we need de-sensationalized our need for breaking news and Donald Trump. Can we just take a timeout from reporting about this person? He’s just not that interesting.

Billy Saas:  A different kind of social media like in a very literal sense.

Ben Wilson:  Yeah, we had a guest speaker, I think it was last year, she did the movie, Tik Tok Boom. It was a pretty good, interesting film about how TikTok is shaping our children’s brains, and how the algorithm works to keep you on it and engaged and how that works for influencing and all that. The heart of the way that that application is structured is all around the idea of attention and attention translates to profits. So how do we create apps that aren’t about that, right? TikTok, it’s not all bad. I think it helped my golf swing a little bit this season. Occasionally, a nice recipe pops up. Otherwise, it’s just a time sink that is so unuseful. TikTok and Facebook, and all these folks are starting to think: we need programmers, but we need programmers who understand some history and the humanities and can communicate. We can desperately not let them go to those platforms. Or take them over, yeah.

Billy Saas:  Maybe from the inside. We’re wrapping up a course in Media Studies, and we just had a conversation about TikTok and the different platforms through Cory Doctorow’s lens of ‘Enshittification’. Are you familiar with this one? The platforms like TikTok, Facebook are designed to degrade right? Essentially, in terms of quality of the experience. They begin as these big, hospitable places in order to get people in, and then the more people get settled in, the less they feel like they can leave. That’s when they turn the levers and start making life more shitty in Doctorow’s theoretical lens. So we talked about with the students what would it take for this ‘Enshittification’ to be reversed? Not to just keep talking about old Money on the Left episodes, but let’s do it. Kim Stanley Robinson, a critical portion of the utopian, mostly utopian near future, a version of climate catastrophe. Part of the story is the development of a public social media. A publicly-funded and non surveillance driven, non ad driven, open platform for social interaction online. That’s where we should send the historians. Let’s build something new and as utopian and far off as that can seem, it seems pretty important.

Ben Wilson:  Yeah, I wonder when you read about the New Deal, and the amazing archives and interviews about family members of former slaves, and the catalog that was developed in that time period: how are we going to know about this time period in the future? Where’s this data going, and who’s cataloging it? Our department is full of file cabinets with all the documents that have recorded the history of what’s been going on in our institution. Now they’re all on our U-drives. Where do those go in the future? And will we even know what our history was, as this technology gets wiped out? I think that’s a lot of meaningful and useful work that’s not getting done right now. Or at least I’m not aware of how it’s getting done or what it would look like. Our vision of things changes as we change what meaningful and useful product is instead of just like, how do we streamline this to be cost effective all the time.

Scott Ferguson:  Do you get resistance in the classroom? Somebody who’s just team Homo Economicus and insists as much?

Ben Wilson:  I think it’s so hard for them to see where I’m coming from ideologically, I think. I don’t know if they know when to be resistant or not. Even when I teach the 301, I do two thirds of the class on neoclassical in 1/3 of the class heterodox micro, with the critique of the neoclassical throughout. At the end, I’ll have two or three students ask me: so are you an Orthodox or a heterodox economist? The real answer is that you’ve got to be both. You’ve gotta keep up with what’s going on so that you’re not straw manning them the way that they do us. But as far as I can tell, the neoclassical model still remains the driving force of so much of the thinking that’s going on. In the Twitterverse, they’ll say, oh, no, that’s not informing our research, and then they’ll post their textbook diagrams in their threads below. I don’t know. I’ve gotten a little bit away from that, because I feel like there’s a little bit of dishonesty there. So in recent years, I’ve just flat out said, I was a really staunch neoclassical orthodox economist, it was in a Ph. D program, and I became disenchanted with what the school of thought was delivering, and I no longer had the feeling that I was doing something that was going to make the world a better place. I really felt lost, and I didn’t know what to do. I left school for a number of years and worked in the professional environment. Then I found out that there was this other school of thought that I could return to, to be part of the academy and teach and that was all very exciting. And so here I am, and every once in a while I look back, and I’ll wrestle with some of the ideas in these pieces. I’ll be like, Oh, maybe that is a meaningful move forward. So I think, as long as you’re never 100% sure of what you’re doing, students respect that. They have the freedom to be an orthodox economist. I’m not gonna tell them no. If you want to do your Orthodox, maximization problems and you find joy and excitement, and you think that that’s gonna make the world a better place, go for it.

Billy Saas:  Just imagine what that looks like. Yeah.

Ben Wilson:  My master’s thesis at Kansas was a factor model. So what’s the impact of institutions on economic growth and development? And there was this really interesting government data that was all like, categorical variables about whether or not they were a dictatorship or not, and the houses of how their government was divided. It was an interesting, fun exercise. It turns out that institutions with more democracies have better economic outcomes.

Billy Saas:  You get a hell of a grant for that one, I’m sure.

Ben Wilson:  Yeah, I mean, so you can still tell good stories from that perspective, I suppose. But I find much more joy and excitement and thinking about social science methodologies, and how to role in the humanities and institutional structures and human behavior as not an individual thing, but as a collective. So I’m gonna stay there for now. Billy, how did your class end up that I talked to, how are those projects?

Billy Saas:  Yeah, so in that class that you visited over Zoom to talk about classroom currencies, the class was called Money, Culture, and Media, or MCM, if you’re into acronyms. But of course, it’s from the MMT perspective. The course, each student is tasked with designing a complementary currency for use in the New Orleans area here, whether it’s in the city or on campus. We had a lot of fun, they did presentations of them. At the end of the semester, we held a vote and the top ones were going to be passed on to the next class. The next class would inherit the top proposals, and then develop and refine those proposals with the idea of iterative design. I think my intervention from the communication perspective was on the design and the discussion and the deliberation back end. Whereas I think a lot of the existing excellent classroom currency assignments are about design, but then it’s also implementation. I’m intimidated as hell of actually rolling out the classroom currency and managing it.

Ben Wilson:  I get that apprehension. That’s probably the most common thing that I hear from folks when I’m like why don’t you do this?

Billy Saas:  Another hang up. So there’s that, and I think it’s understandable. But we also, in that class, talk about grades and debt, like in the framework of debt, and you earn credits, and we’re in this whole accreditation system, and so on. So it ends up being usually a pretty interesting conversation. We’re talking about the rhetoric of debt in economics, and then we just locate it everywhere, like Lakoff and all that stuff. To what extent using the classroom currency as a stand in for, or as a part of their grade is sort of a redundant thing to do. Right? What are we actually achieving other than introducing complexity to the situation in the form of … Maybe complexity is community, complexity is buy in, and maybe that’s worthwhile. I am asking you, I guess, if a student comes up and says well isn’t this just the same as 10 points that you were already going to assign me based on work that I did? I guess for me, the answer is, yes, but we have now talked about it as opposed to just being the de facto.

Ben Wilson:  I think that having the grade component, whether it’s 10% or 5%, that you get that part of the grade through the redemption of the money that you’ve issued opens up the conversation about coercion. Was it even necessary for me to implement this tax? Would I have gotten the same result and the same amount of productive activity without it? Because 10% of a grade for the semesters is a pretty good chunk. It’s also a chunk that they’re guaranteed to get 100% of if they do the work. I think it gives them the choice, how much of this am I going to do? What am I going to do? How coercive is this actually? Because I also have students that just flat out choose not to show up for a midterm. I think it’s an interesting way of thinking about what we’re actually getting out of this credit process and out of education, and how much we’re buying into the way that we’re chunking up these classes and saying, was what you learned working for Loaves and Fishes really 10% of what the learning outcome of this class was, or maybe the most enriching and fundamentally eye open component of the class versus the 25% that I gave you for the paper, the particular readings and all these sorts of things. I think it is worth the physical issuance and redemption process to really drive home that it comes from a particular place first, and that we’re not recycling tax money. That I can always deliver my promise of 10% of your grade, just as the state can always deliver on whatever it is that we collectively promise, whether it’s whatever $1 trillion of military spending is supposed to deliver for us versus however much money I have to mobilize in this class to get the data that I need. We are capable as we the people of making whatever promise we the people want to make. I think employment, education, health care, and all those things are there if we want to mobilize in this different way and wondering and thinking through what the redemption process is in the circuit and how we create demand for satisfying each other’s collective promises, I think it’s an important exercise and thinking about our theories of value.

Scott Ferguson:  It seems to me that it introduces the question of, but also a legitimately new structure of receiveability in the classroom and beyond and among the students because grades are, and credits that they’re earning without the currency, those are receivable higher up the food chain. Those are receivable in the wider institution, and then in different ways on the job market. Maybe for getting into a graduate program, right? There’s many ways in which those grades that they are earning are receivable, but we call it cheating if they try to do horizontal coordination, which I refuse to call exchange, but that’s just me. If they are horizontally coordinating, that’s an illegitimate liquidity, right? Whereas, at least the way I’ve heard it described by you, Ben and Fadhel and some others, there is the possibility for horizontal liquidity. That’s different from the vertical redemption or the vertical liquidity of the teacher to students relationship.

Ben Wilson:  Yeah. I don’t think it’s ever happened where I didn’t have a number of students to weigh more than they needed to satisfy the tax obligation. That might be because they were already doing this work beforehand, or you’re doing community service by mandate already. There’s all sorts of things going on. But there’s also this situation in which a student was like, this was so awesome that I kept going back. This student that was going to feed people at Loaves and Fishes said this is the most rewarding and eye opening thing about people and life, I just did more of it. That’s part of it too, right? When you find reward in your work, that is so insanely valuable. I think that’s an important thing to be teaching our students as anything else, right? It’s not just about clocking in and clocking out, we want to find meaningful and useful work. I love that terminology for the full employment program. So at the end, as we’re closing in on tax day, there’s those students that have way more than they need, and there aer students that still haven’t done anything. I’ve issued more than enough to collect and satisfy a balanced budget, should I just close the opportunities, and you guys can now turn to Jimmy and Sarah and Samantha, and you guys can go work for them? Because now they’re the private sector. So that you can get the money that you need to pay the taxes? Then we will hold the vote, right? Should we keep the government open at the risk of running a budget deficit and running a full employment program? Or should we allow you guys to reevaluate your life choices and pull yourself up by your bootstraps and go do some volunteering or gather the data that we’re working with our community partners to build on. 17 hands go up to keep the government open and three hands or one hand will go up to close it. So those sorts of things are surprising and unexpected, and you would think that when you describe it, it just sounds like all the students will go and do exactly 10 hours of community service and that’ll be the end of it, but inevitably these students are unpredictable, right? Just like all of us are, we all have things going on in life. The question about whether or not these folks had “already had these volunteer opportunities lined up for them, is that fair? It was so easy for them, I had to go find it.” It opens up all those really good and interesting discussions that don’t happen unless some of them have the money, and some of them don’t.

Scott Ferguson:  I’ve been thinking recently a lot about my 15 year old son, who is part of this pretty great … I mean we’d like to see college being free for all and open enrollment and all these ways, but living in the state of Florida, we have a program called Bright Futures. If you get a certain GPA, and you fulfill a number of requirements, basically your tuition is taken care of at a public university, which the future of the public university system in the state of Florida is another kind of impending question. But one of the key requirements is 100 hours of community service, and my son’s been doing a lot of these hours. He usually tries to get in an hour a week or so. And I keep thinking about what a tremendous mobilization of young people and their labor, and my son will go to a local nonprofit that serves communities in need, and whether it’s about food service, or working in their thrift shop, he does any number of things. That is a lot of money! That is a lot of money, that is a lot of labor, and yet, we put out a proposal for a university currency system at the federal level, and people think we are insane. Right? And how do we live in a world in which…

Ben Wilson:  And our workers are old enough to work!

Scott Ferguson:  Yeah. How do we live in a world in which one of those models is gigantic, tremendous, in a currently super right wing state, and the other one is absolutely nuts. It is unthinkable. In fact, they’re not that different. I think that the pedagogical experiment of the classroom currency, in constant dialogue, and in this reflexive relationship around the institution, and grades, and coercion can be one way of pulling down the kind of conceptual barriers that make one of those sound totally rational and doable, which it is because it’s happening every single day in the state of Florida, versus these other proposals.

Ben Wilson:  I would imagine none of these students that are trying to participate are having any trouble finding work. There’s so much that needs to be done. I applaud the idea there. I think maybe that’s a way of merging and thinking through the transition from high school to college, and higher learning in an interesting way. Talk about having exposure to some really important social and environmental issues and going into college with those ideas already in mind. Then, having that experience to be able to continue to grow on what it is that you’ve done in the past in new places, with new people and organizations, and build capacity in those areas that doesn’t exist when we’re only relying on volunteerism. That’s really the hardest thing that occurs. I’ve built really good partnerships here, but all my partners are dependent on soft money. Lots of people work in these places as long as they can and then the reality of expenses and mortgages and family and the turnover in the space is just non stop. Programs just end on a fiscal date, and then you gotta start over again. If this program could grow and provide them with that sort of monetary labor stability such that we’re always building capacity and growing and achieving these goals and objectives and missions, that would be terrific. But we’re still …

Billy Saas:  The transitory nature of public good inflation. People come in and do good work, and then they gotta go.

Ben Wilson:  The buffer stock is an interesting pedagogical tool and should we choose gold or labor. If it’s really meaningful and useful work, you don’t want people just picking up and going because they got a higher bid from the private sector. That’s not really building capacity and stabilizing communities in the sort of way that I think creates this ongoing social cohesion and environmental awareness and respect for human life. I think it just falls into that trap that we’re automatons making choices and doing our own thing, rather than part of this much bigger collective that is really something that we need to be more aware of.

Billy Saas:  This has been really great. Ben Wilson, thank you so much for joining us on Money on the Left.

Ben Wilson:  Thank you so much for having me. Please, please if you want to issue your own currency and experiment with this, I am always open to talking and chatting. You can reach me on Twitter at @autogestion77 and it’s a similar handle on Blue Sky. I’m just starting there. bcw@cortland.edu is my email and that’s where I’m bombarded every day by all sorts of things. So it’d be nice to get a question about how to issue currency in my classrooms.

Billy Saas:  Where do we go for job ads and when does the job close?

Ben Wilson:  Oh, that’s good. First week in December, it’s available on the JOE (Job Openings for Economists) and our website, our Human Resources website. Thanks for asking.

* Thanks to the Money on the Left production teamWilliam Saas (audio editor), Mike Lewis (transcription), & Robert Rusch (graphic art)

Monetary Foundations of Education with Larry Johnson

This month, we speak with Larry Johnson, associate professor in the Social Foundations of Education Program at the University of South Florida, Saint Petersburg. In his pedagogy, Johnson focuses on the complex relationship between education, culture, and society with the goal of exploring policies and practices from historical and contemporary perspectives that address structural inequality, and transforming educational institutions into sites for social justice. Johnson is notably a long-time proponent of Modern Monetary Theory (MMT) and variously mobilizes MMT’s insights when training our teachers-to-be. In our conversation with Johnson, we discover just how constrained the US system of public education is by wrong economic thinking and what it would mean to think otherwise. Together, we ask: How do federal interest rates shape US education policy? What do standardized tests have to tell us about neoclassical economics and the nature of money? Why is the rhetoric of education in the United States so narrowly focused on preparing students for careers? How do classist and racist myths of taxpayer financing create unequal schooling? And how could we ever reasonably hope for the political economy of education in the United States to ever be otherwise? Pondering such questions, Johnson opens a window onto his longstanding advocacy for radically rethinking US public education through the lens of endogenous public money theory.

Visit our Patreon page here: https://www.patreon.com/MoLsuperstructure

Music by Nahneen Kula: www.nahneenkula.com


The following was transcribed by Mike Lewis and has been lightly edited for clarity.

Scott Ferguson:  Larry Johnson, welcome to Money on the Left.

Larry Johnson:  Thank you. Good to be here.

Billy Saas:  We’re excited to talk to you today about the Social Foundations of Education, which is your area of expertise and something you teach about at University of South Florida. Could you start us off by telling us a little bit about what the Social Foundations of Education are and how one like yourself comes to study them?

Larry Johnson:  Sure, sure. The basic idea is you are trying to look at the relationship between school and society. As an historian, I look at how education is related to political economy and ideology. That really runs throughout the social foundations field. So we’re always trying to think about how, for example, if you’re thinking about kids not doing well in school, we have to look not just at what’s happening in school, we have to look and see, poor communities often–the kids in poor communities often do badly in school because their schools are poor as well. Both the community and the school lack resources, just as an example.

Billy Saas:  And we’re specifically excited to talk to you about the overlap of your research and teaching in the Social Foundations of Education with questions related to what money is and how it works. In fact, I think we have slated this episode, The Monetary Foundations of Education. What do you think of that? Does that work?

Larry Johnson:  Ah, that actually might work. Yeah, yeah. Yeah, maybe even MMT is necessary for education.

Scott Ferguson:  I like it. It’s just too long for our title art, but I do like it.

Larry Johnson:  Okay. I got thinking about issues of the federal budget and how it works fairly early on. When I was in high school, I had a teacher. This is 1965, the year after Goldwater’s run for the presidency. And lots of students in class were Goldwater supporters. They were preoccupied with passing a balanced budget amendment, and they raise those kinds of issues in class all the time. And one day the teacher happened to say, as he was addressing some of these kids, and I can’t remember exactly the context. He told us if we went down to the IRS office in Ogden, Utah, where people in the Rocky Mountain West send their taxes every year. If we paid our taxes, we’ve got a bag full of cash and got down there and paid our taxes with cash, the IRS would shred it. And yeah, so what does that mean? And I just happen to think, well, it means the government doesn’t need our taxes to spend money. And he kind of smiled. That was the end of it. We didn’t go any farther. But I went home and asked my dad about it. And he told me, like he often did: call someone and find out, so call Ogden and find out. So I called. The receptionist was very good. She ended up connecting me with the chief economist at that IRS office. And he got on the phone and said I hear you’ve had an interesting conversation in school. So I told him about it. He said that’s exactly right. If you paid your taxes in cash, we would shred it, because we don’t need that cash. We issue the currency. And that was really interesting. And I must say, the man was very nice. He invited me to come down to Ogden to meet with him. But I was a 17 year old, I never did go. I passed up a real opportunity to learn something. And the next instance where I really got a chance to think about this was the fall quarter of my sophomore year in college, I took a class: general introduction to economics. And the fellow thought it was a guy named George Fuller, a very interesting economist who had read Keynes had read Marx. He used both in the class, and the department had assigned this class to use the Samuelson economics textbook. So what George would do is, we’d go through Samuelson and then he’d give us stuff to read to critique what was in Samuelson. A very interesting way to teach it. During that semester, he gave us a pre-publication copy of something that Hyman Minsky had written critiquing the War on Poverty as a conservative effort to address poverty. So we read that. It was fascinating to me because my dad was a Roosevelt Democrat. Although, he would say he’s a Roosevelt. One time some supercilious businessman tried to correct his pronunciation, and he asked him, How do you say the name of the animal that crows wake up in the morning, rooster or roaster. Rooster. He said Roosevelt. But he was very critical of Kennedy and Johnson, because they simply weren’t doing enough of the kinds of things that Roosevelt did to intervene directly in the economy. And of course, both of them argued that education was the way to solve poverty, which I knew even at the time didn’t make sense, but I wasn’t exactly sure how to make those arguments. So we talked about it a lot, my dad and I. When I got assigned Hyman Minsky’s piece, it really gelled, and he helped me see important ways to criticize the War on Poverty: criticizing it because it did not spend enough money; criticizing it because it wanted to change the people who were poor, instead of changing the economic system. For example, guarantee people jobs or had a full employment policy so people could work. It was always very clear that people who faced long spells of unemployment and frequent spells of unemployment are much poorer than those who are able to work continuously at a decently paying job. So that was clearly the most important thing we can do to address it. Training and stuff was not of any great interest. I wrote a paper about that the next quarter, winter quarter of 1968, in a social psychology class and the teacher was just absolutely enraged, because he was a strong supporter of the War on Poverty and believed it was exactly the way to go and education was the only solution. So we had this confrontation in the class. And, wow, this is really interesting, people really don’t like to be told this stuff. That made me even more interested, so I spent a lot more time trying to find information and then look at it. Then, when I was out of college, I was working for a community action program in Weaver County, Utah where Ogden is. I was put on the Manpower Training Council. John Kennedy passed this law to create these Manpower Training Councils around the country. The whole purpose was you got this federal money, and you could choose programs to train the poor. We were on that for a good couple of years, and it became clear to everyone on the council that this was not the way to end poverty. I mean, you’d have businessmen who really liked the idea of training workers because they want to socialize training as much as they can, the cost of training. But what we needed was more jobs in the county. We needed better paying jobs. So we all began to advocate for that sort of approach. And just reinforced the idea that what we really need is a meaningful full employment policy. I ended up getting my doctorate in education because I wanted to partly address the criticisms of education, which were unfounded, and talk about how education actually fits with our economy and what we ought to be doing, kinds of things. I was always motivated by the history of education, what people have said throughout history the purpose of education was. When I teach my classes, we often start on the first day by looking at what the Manifesto the Plebeians in the French Revolution said: “All knowledge, universities, and schools have to be held in common. If they become the property of a single class, they are oppressive.” And that’s extremely important right? The enclosure movement is driving people off the Commons, and commoners said straight up: you’re not only destroying our livelihood, you are destroying the way in which we teach our children to live. By driving those people off the commons, forcing them into the cities, putting them to work in factories was destroying a way of life. It was also destroying a way of education. They were very tuned into the idea that education has to be for all. Of course, the United States gave Horace Mann who creates the common schools, so rich and poor, Muslim and Christian, would be taught in the same schools. Of course, Catholics criticized his schools for being Protestant. But that’s for another time. So that’s going on. Then, a couple of interesting things happen in the 19th century. African Americans develop very powerful arguments that education should be for liberation. It should help them think about what their freedom means and how to shape it. And of course, you had philanthropists in the North trying to impose what was called industrial education on Blacks. That didn’t have anything to do with industry. It was meant to teach Black teachers how to farm, do all these menial tasks from sunup to sundown, and then get a couple hours of education at the end. Well, let me backup. If you look at the schools that were created to train Blacks by Northern philanthropists, like Hampton Institute, and Tuskegee Institute, one in Virginia and one in Alabama. They promote what was called industrial education, which didn’t prepare Blacks to be in industry at all. These were schools to teach teachers, they were normal schools. But their idea of how to teach teachers to teach Blacks was you’d make them work from sunup to sundown, give them a little bit of training on academic subjects in the evening. But their goal was to work in schools and teach Blacks the value of labor. Odd for people who’ve labored for centuries. But that was their goal. So Blacks clearly understood that that was an education for subordination. What they needed was a much more academic education, what we think of as liberal education, so that they can think about freedom and what it means and how to shape their own freedom. In the late 19th century, you’ve got the Populists, an organization of Blacks and whites, trying to constrain the power, overthrow the power of the planters in the south, and the bankers and railroads in the North. Their conception of education was that education should help us understand the machinery of society, and how to control it to benefit ourselves. How to control it in our own interests as a large working class. Then, one of the statements that my students really gravitate to was from WEB DuBois in a commencement address that he gave at Howard University. He said, “Our task is to out-think, and outsmart the people who own the world.” So they’re very different conceptions of what education ought to be doing. Then we get from presidents of the United States, from John Kennedy, to Joe Biden, that education is about training people for work. And so we need to recognize that people have thought much more deeply about what education is, and why we ought to do it. So that’s how we start and then we move on from there to raise a whole host of issues about education, how it’s related to the economy. I don’t argue with him that there’s no relationship. For example, we know that we in our society use education to compete for things. We compete for jobs, we compete for incomes, we compete for status, and we use education in that competition. So it surely is the case that if you get more education than people in your neighborhood, you have a better chance of getting a job than the people around you. An economist named Barry Bluestone said many years ago: getting an education is like getting a new pair of running shoes to go bear hunting with your friends. On your own, you can’t outrun the bear, but all you have to do is outrun your friends, right? So the bear eats them and you survive. That helps students understand that particular way of thinking about how we use education. Again, that’s thinking just about education in a very narrow way. But it is an important way that we use education. We spend a lot of time talking about why education can’t end poverty. In recent years, we get a chance to see, for example, in 2018, there was a magnificent headline, well two headlines, in the New York Times. One was about how prisoners were being taken out of prison and put to work in factories because the factories couldn’t find enough employees. Okay. And the other one was, employers no longer require drug tests. Okay. Now, for decades, we’ve been told that these people end up in prison, they really can’t get jobs, they’re not job qualified and so forth. And the people who smoke dope, obviously, they’re unemployable. Well, it turns out, they’re not. In a tight labor market, there’s room for all those people to be employed. And that’s important, because it wasn’t that those people got an education in prison that allowed them to go work in an automobile factory. It was that we had a tight labor market, employers were competing for employees, and they wanted to expand the pool of employees. So they wouldn’t have so much pressure to pay them more. So they go into the prisons, they get workers who they would have rejected before, because they would have failed the drug test. But now they can hire them. It really is that these people are functioning as a reserve army of the unemployed, being drawn in when the labor market is tight. All of that helps students to think about education in a much broader way. That all helps students think more deeply about the limitations of the conception of education of our political leaders. They really are misleading us about the role of education. For example, we actually talked about this in class: President Clinton always talked about people who are unemployed and were not job ready, and they needed to get the training, so they would be job ready. Well, the only time you talk about job readiness is when you have unemployment, you’re a political leader, and you don’t want to say, well, I could have different policies, and then people will have jobs. Instead, you put the onus on the unemployed and say: well, they’re just not job ready. But Clinton himself, when he ran for president in 1992, the big conflict between him and George Bush Sr was how low unemployment could go without triggering inflation. Clinton said it could go down to 5.5%. George Bush thought it could only go to 6.1%. So they’re debating this, of course, and they’re saying, oh, unemployment, we have to keep unemployment high in order to forestall inflation. It’s interesting when we talk about that, just as an aside, I tell my students: now if you believe that, how would you distribute unemployment fairly? Would you have a lottery? So it’s not always the same people who get shoved on the unemployment line. But what’s interesting to note is that Bill Clinton, I had this really interesting, short article that for years I had students read. It was titled, “Professors Give the New President High Marks.” Bill Clinton was talking about how low unemployment can go without triggering inflation. Then Clinton says, “we have to have” … It’s interesting, he talks about, these people are unemployed, because we need to have high unemployment, to forestall inflation, but the people are unemployed because they’re not job ready. They don’t have the training and the skills to get the jobs. If we did that, they’d find jobs and it’d be fine. My students read that and just within a couple of paragraphs to get a chance to, okay, here, he’s saying we need high unemployment to forestall inflation. And here he’s saying, we need education so people can get jobs. But if education actually worked and people got jobs, it would undermine his effort to use high unemployment to constrain inflation. Of course, unemployment dropped to 4.0%, and we didn’t see inflation, right? Alan Greenspan, appointed by Ronald Reagan, as chairman of the Fed, continued for many years through the Bush administration through Clinton. He’s saying, well, there is this rate of unemployment that, if we fall below that it will trigger accelerating inflation. But we can’t see what it is. We know it’s there. But we just can’t see what it is. A very odd thing for someone who calls himself an Objectivist to claim, right? I mean, so anyway, you see how Clinton was just simply wrong about 3 million people not having the skills that were needed to get a job. Of course, he’s wrong about the other millions too. Under the right circumstances, of course they would have jobs. They’d be able to do just fine.

Scott Ferguson:  So we’re getting this sense in which your pedagogy around the social foundations of education are not only situating education in a broader social context, but also in a political economic context. And that for you, and for a long time, Modern Monetary Theory, or the ideas surrounding Modern Monetary Theory have been really central. What we’re hearing is that you have a practice of orienting your students to the evidence of the world like. Like a seemingly innocuous article about giving the new president high marks on his economic discourse, how whether it’s explicit or implicit, how the Modern monetary theory perspective makes contradictions in the dominant political, economic and education discourse extremely salient, such that you can’t ignore them. You can’t pass over them. I want to go further into this project of yours. But I want to step back for a second and tell our listeners a little bit about how I’ve gotten to know you in the last year.

Larry Johnson:  Yes.

Scott Ferguson:  You emailed me probably about a year ago. You are a professor at the University of South Florida, as am I. You’re at our St. Petersburg campus, I’m at the Tampa campus. And you invited me to participate on a committee that you were putting together. And that all went very well. There’s no reason for me to talk about the committee work on this podcast. But I remember when you first emailed me, you introduced yourself and said, how about you join this committee? It’ll be good fun. And by the way, I’ve been practicing MMT for something like 40 years. I did like a triple take. I read the email like 10 times and I thought to myself, first of all,: what? I thought I was the only strange Freakazoid at the University of South Florida that cared about Modern Monetary Theory, let alone heterodox economics. Secondly, I was just delighted that somebody else cares. I’m not alone. And thirdly, I was pretty confused because, as far as I know, Modern Monetary Theory is not that old, right? Modern monetary theory came into being in the mid to late 90s, famously on a heterodox economics listserv. And you’re telling me that you’ve been doing this for decades. And I’m just scratching my head. Part of me thought: I’m sure he thinks he’s telling the truth, but is he lying to me? What’s going on? But then it turns out, right, that as you’ve informed our audience, you’ve actually been reading the works of the heterodox precursors to what eventually comes to be known as MMT. Right. 

Larry Johnson:  Okay. Yeah, yeah.

Scott Ferguson:  And then MMT is a much later designation for this body of scholarship. I mean, here’s another aspect to this story that I think is defamiliarizing for me and potentially for our listeners, which is that I think of Money on the Left and our editorial collective as being, along with certain movements in critical legal studies and left law scholarship and activism, I think of us and this generation as being on the vanguard of doing interdisciplinary research with MMT principles and ideas and trying to think about what are the implications for MMT once you start taking them outside of heterodox economics as relatively narrowly defined? And it turns out, I guess you beat us to the punch a long, long time ago. So we genuflect to you.

Larry Johnson:  Well, Thank you.

Scott Ferguson:  But with this background in mind, I’d like to get back into some of this interdisciplinary thinking and pedagogy that you’re doing with your students around education and the political economy of education, and obviously, the sort of political and even radically political importance of education for social justice and environmental justice. But at the same time, the kind of blind spots the normative or hegemonic blind spots that position education as a kind of salve, and as a kind of excuse to perpetuate a society of austerity and all the kinds of sexist and racist and homophobic and ecocidal impulses that are behind it. And I know you’ve talked to us in our kind of preliminary conversations a lot about the way that the rhetoric and politics of testing has informed this kind of dominant impulse of austerity. I was wondering if you could flesh out some of that argument for us?

Larry Johnson:  Sure, sure. Yeah, it’s useful to start with a couple of things that happened in the early 80s, particularly in 1983. Oddly enough, one year. You had the publication of A Nation at Risk; the report from the Reagan administration that claimed that schools were failing, and that’s why we were unable to compete effectively with Japan and Toyota was making better cars than Ford and selling a lot more of them. This report made a number of claims about declines in test scores, what students were and weren’t able to do. I’ll just give you a brief account of that. It has a list of 12 or 13 claims that justify their report. I always have my students go through and look at those claims. One example is that in the report, they say, there’s been an unbroken decline in science test scores for 17 year olds. And this is from the National Assessment for Educational Progress tests, 9, 14, and 17 year olds. So you wonder, well, what about 9 and 14 year olds? Well, I get my students to look up AP scores. And sure enough, those kids do pretty well. There’s no evidence of decline. Then we look at this wonderful graph, and it shows the exact data that the President’s Commission on excellence in education was looking at. You look at the 9 year olds, 14 year olds, and you see no decline in reading, math or science. Same with the 14 year olds. Then you get up to the 17 year olds, and in math and English, they’re doing just fine. But in science, they have a relatively flat line and then a little bit of a downward slope between 1980 and 1979. Before that, there isn’t any data comparable, so they project that data. They assume that well, in the sense scientists assume things I suppose –maybe not scientists, but others — that this brief downward slope they see between a couple of years, that slope continues on into the past. So they retroject or retrodict. Instead of predicting, they retrodict; they predict about the past. And they claim that the scores would have been. That’s how they claim there’s a decline in scores. My students go through and look at every one of those claims in the report, and they find not a single one of them is clearly true. They’re either misleading, they’re false, or you can’t quite be sure what they mean. One of my favorites is that the test scores of students graduating college are also lower. Well, we never had, fortunately, an FCAT testing program to test people as they graduate from college. If you go into graduate school, you take the GRE and stuff, but there’s nothing that we do, like in many states that have tests for kids graduating high school, or maybe their sophomore year in high school. But there’s nothing like that in college across the country, so there really was no way to make that comparison. But if you think about it, test scores are also lower. Well, there’s no clear meaning to it. It’s like the language of advertising. Tied, get your clothes cleaner. Cleaner than rolling around in the dirt? Sure. Yeah. It makes no sense. I have my students look at those kinds of claims. I have them look at a speech that Barack Obama gave his first year in office to the Hispanic Chamber of Commerce. His major Education addresses his first year in office. In this address, I haven’t listened to a clip lately, but he make some claims about Blacks test scores and test scores in general, it’s always objectionable, but he says in the course of this: if we’re looking at our international comparisons of scores in science and math, we have fallen to ninth place. Well I looked at those scores with my students, and it turns out the previous test, the United States, was in 16th Place. So if you go from 16th to ninth, are you falling or rising?

Scott Ferguson: We fell up! 

Larry Johnson:  We fell up. That’s right.

Scott Ferguson:  A tragic ascension.

Larry Johnson:  A tragic ascension. Yes, yes. So it’s pretty clear that Obama wanted to say something negative about education. It’s been common in politics, for presidents at least, for the last 60 or so years. Going back to the 50s and Eisenhower’s time with Sputnik being launched then people say: oh their education systems are better than ours. Which is another matter. It’s one of those things where just you see political leaders want to say something bad about the school system. And it’s very odd, like Obama, if you may recall, between the time he was elected, and when he took office, he was asked constantly about, should we clawback that money from the banks, the fees that they got. He says: no, the sanctity of the contract has to be respected. Then his first year in office, Providence, Rhode Island fires all the teachers in high school, which violated their contract, right? They hire back all but the leaders of the union there, and Obama says we should have more of this. The teachers’ contracts are like straight jackets, they’re keeping us from reforming the schools. I was asked whenever I ran into a strong supporter of Obama’s. I always ask them, I think it’s a question that he should address too, why are contracts with bankers sacred, and those with teachers profane? It’s just amazing how they maneuver to position schools and teachers as the enemy. And that means that they can deflect criticism of their policies and say, Oh, it’s a failure in education. You think about The Nation at Risk, saying, Oh, our education system explains why Japan’s able to build better cars and sell them better than Ford. Well, Japan’s economy went in the tank a couple of years after that. They didn’t say, Oh, that was their education system. And our car started selling better. They went back and said: our teachers are doing this. Of course not. Now I mean, whether we sell cars, that depends on federal policy. It depends on decisions of people that own car companies, all kinds of things, and has nothing to do with education. Education is just an excuse. Let me come back to what was going on in 1983 because it’s very useful. That year is when you see this testing regime really being put in place in southern states. Mark White, Democratic governor of Texas promises teachers he’ll give them a raise. He goes to a businessman and says we want to give teachers a raise. Well, I know you want to make sure the teachers are competent. So we’ll test the teachers, make sure they’re competent, and we’ll test the students to make sure they’re learning. So they invented this whole big testing rigmarole. Ross Perot heads up his committee that creates his reform plan. Bill Clinton in Arkansas the same year, creates a committee on educational standards headed up by his wife. And they come up with exactly the same plan they did in Texas: massive testing of teachers and students. Richard Riley in South Carolina, he became Bill Clinton’s Secretary of Education and does the same thing there. All Democrats in the south. Then Lamar Alexander, the only Republican that I’m aware of, in Tennessee implements exactly the same plan. These ideas are very prominent in the south. It’s odd because these southern states have among the worst education systems in the country. In Tennessee, they ranked 49th in per pupil spending, and their graduation rates are right at the bottom. Same with all these states. But they end up dominating national education policy. There’s no other word for it than just deplorable. These people, they are the ones who put the straitjacket on education, making it much more limited. Their focus on test scores is: we have to test students to make sure they have the knowledge that their future employers want. That’s a question that we should never ask. We need to ask, what do students need to develop fully? What do they need to interact with the world in useful and interesting ways? I mean, if their employer wants them to know something, they should foot the bill to train them. Of course, they don’t want to do that because if they train them, then they can go to work for someone else. They want to socialize the cost of training by putting more and more of the stuff in the schools. But there’s no evidence that employers even care about these test scores. Bill Gates has put hundreds of millions of dollars into improving test scores, and in the old days his job application used to be available online. It doesn’t ask you to give your high school test score. One of my mother’s great nephews, my grand nephew I guess, went to Microsoft to work. He was from California, I asked him, did they ask you for your California test scores? He said, of course not! The only ones that had to get tested were in the keyboarding pool. The typing pool, we used to call it. So they do their typing tests, but nobody else. His whole thing was to program handheld devices. He didn’t have to report his test scores.

Billy Saas:  So what are those test scores doing then? On your read?

Larry Johnson:  Oh, what do they do? That’s a really good question. One is you can always find a way to use them to undercut education. Think of No Child Left Behind. It divides students up into different groups based on race, whatever. And the more time the more groups you divide any larger group into, the more likely you’re going to have a group that falls below some arbitrary standard. So diverse schools. We’re gonna finally disaggregate the scores so we know how Blacks are doing, how Hispanics are doing, this and that other groups are doing. But the more groups you create, the more likely you’re going to have one group that fails. Now, I’m not just saying that off the top of my head. There were a couple of people who worked in the Bush administration who explained very clearly, when they were interviewed, that the goal of No Child Left Behind was to make schools look like they were failing and make it easier to privatize them. It’s a very simple argument. Testing goes way back. When Horace Mann created the common school system in the 1830s. He and his allies figured they were trying to promote centralizing control of the schools more in the state school board. Mann created the state school board in Massachusetts, and he was its first Secretary of Education. He and his allies created a test to test common school kids. You have to remember, common school takes you up to like the third grade, or what we would call a third grade. They had these test questions, they asked all the kids in Massachusetts, and one of the questions was: you’re in Cincinnati, Ohio, and you’re traveling to Vienna, Austria. Name of the rivers, locks and oceans you would travel through on the way. Now you have to ask yourself, do you think Horace Mann or his friends could have answered that question without looking at a globe? I couldn’t! Could I have even understood what it meant when I was a third grader? I’m not entirely sure. So yeah, and another question they had was, if you’re traveling on the Mississippi, is Cincinnati on your right or your left? That’s the question. Well, it depends whether you’re going upstream or down, right? So you literally can’t answer. So the kids didn’t do well on his test, not surprisingly. Mann could step in and say, Okay, we need greater centralization of the schools, greater standardization. People have always understood how they can use testing to achieve a political goal.

Billy Saas:  Just a little anecdote, I live in New Orleans. We have a four and a half year old who’s looking to get into kindergarten, which means they’re entering into a fully charter system.

Larry Johnson:  Yeah.

Billy Saas:  Very overwhelming org charts. They have CEOs at each of these respective charter schools. And there was this really great pitch that they were giving, these are people representing the school system and trying to help us navigate this just circuitous and helplessly bureaucratic, but also, free market. Yay!

Larry Johnson:  Which, by the way, was supposed to do away with bureaucracy, right?

Billy Saas:  Exactly. Oh, my goodness, just looking at my partner the whole time I’m like, this is not efficient. One of the things is that it used to be the case that in order to get into the schools, you’d have to apply to each one, right? And there’s something like 65. Not all of them service kindergartens. So they made it more efficient by creating the one app, or the common app, where you can apply and then you just list your top 5, 6, 7 or whatever. Then you enter the lottery to find out if you get into that one. Two of the kindergartens have testing. They say that the common app is supposed to be, you fill it out, and then everything’s sorted out. It’s something that makes it easier for parents and schools and everything, and it’s universal. But then they make this qualification. This is what happened throughout the entire presentation, it was like: this is the universal policy, and here’s how it is changed at every individual school. And here’s why you as parents need to start researching last year in order to figure out where you’re going to send your kid to kindergarten. But the testing thing is something that everybody knows in that room. It felt like because charters are so dominant in New Orleans, that they don’t have to give an argument for the system. So I asked about the testing, and is that equitable. I happen to know because we’ve talked to people who’ve had students go there before to take the test that they use iPads, and they complete the tests on iPads. And there are many just sort of transparently prima fascia inequitable practices entailed. So we asked the question, how do you ensure that this is equitable? The question can’t be answered because it’s transparently not equitable. That’s why it exists, right, for separation purposes. That goes back to the testing, in general, as a premise for privatization or creating new markets, right?

Larry Johnson:  Yeah. So we wouldn’t test kids unless we wanted to say they were different and deserve something different, unless we had some other goal.

Billy Saas:  Exactly. Right. So when you are outlining this history, you’re drawing a line between Alan Greenspan’s theory of engagement with NAIRU to funding for education.

Larry Johnson:  Yeah.

Billy Saas:  The fact that the chair of the Federal Reserve is in a roundabout, but maybe not so roundabout way, determining the boundaries of education policy. It seems like you do this very deductively over the semester with students. How do you end up at the end of the class without there being a kind of revolt and tearing down the walls of the classroom itself?

Larry Johnson:  Well, yeah, that’s so funny, worded that way, because one of the things I do is when we’re looking at the criticism of education, I quote from Alan Bloom’s book. He wrote a book criticizing schools and stuff, and he says in there: the American education system has totally collapsed. We’re sitting there and I say, look around, collapsed right? Here you are in college.

Scott Ferguson:  Is this The Closing of the American Mind?

Larry Johnson:  Yes, yes. Thank you.

Billy Saas:  The roof might be collapsing in on you. But the firmament is there.

Scott Ferguson:  Yeah because it’s underfunded.

Larry Johnson:  Yeah, we get a chance to look at another strand of those kinds of arguments.

Billy Saas:  But it seems like it is quite literally, you are inducing a revolution or a full scale change in thought and how we understand or are educated to understand what education is and what it’s for. Maybe you could share anecdotally what the student response is to this kind of cumulative macro picture, political, economic situation in education?

Larry Johnson:  Sure. You know, it’s surprising I taught this way at Utah for a number of years. Then, when I came to St. Pete, when I came to USF, it was really interesting. The very first semester that I taught here, I had some incredible students, one of whom ends up on the faculty with me now. But on their own initiative, they continued to meet after the end of the semester, to continue to talk about what to do with these ideas. I’ve had other students tell me that they have taken what they’ve learned and tried to figure out how to use it in an age appropriate way with their students in elementary in high school. I had one woman, this was actually at Utah, who tried to figure out what she could do with this stuff, what she would do teaching first graders, so they could get a foundation so they could resist propaganda later on. Yeah, surprisingly enough, she actually applied for — there was a national group that was providing money, they just chose one person. It was for somebody who was trying to have a transformative career in education. Here she was, and most of these people are already teaching, and they’re coming back for masters and doctors. She was an undergraduate, and she applied with her ideas, and she ended up being a finalist for this. She didn’t get it, but she went a long way. Much further than I expected. It’s interesting to me, I mean, I have students who come back three, four or five years later and say: when we were in class, I thought it was a bunch of garbage. But now I’m out there teaching, I can see why you had to think about this stuff. They’ll talk about how their curriculum is indoctrinating the students with neoclassical economic ideas beginning very early in grade school. So they’re thinking, okay, now that I have different ideas, how do I respond as a teacher? What can I do? They often come back and ask me and I’m not always much help. I’m usually a listener and ask them questions, try to figure out okay, what do they want to try to do? Okay. You want your students to understand this? Their first graders. Okay, how do you get them to think about this so it doesn’t fall back on the standard “the federal budget is like the family budget.” Okay, how do you help them to do that? And how do you help them understand that the federal government issues currency? Once you understand that it changes everything.

Billy Saas:  The fact that it prints the currency, that it makes the currency, that it circulates the currency is, in this case, maybe not as important as highlighting that, at the same time, it doesn’t do it. Like when it doesn’t want to do it, and to what ends it is not?

Larry Johnson:  Oh, yeah.

Billy Saas:  To those first graders, the reason that we don’t have music class anymore is because the chair of the Federal Reserve thinks that unemployment is too low or whatever, right?

Larry Johnson:  Yeah, so we’re gonna cut everything back. And that means you’re gonna have less in school. Now, they’re not gonna have less in school up on the east hillside where the rich kids go, but we’re gonna have to get by without trumpets and clarinets, for band class.

Billy Saas:  Because our test scores are low.

Larry Johnson:  Because our test scores are low. That’s right.

Scott Ferguson:  I can speak from experience that …

Larry Johnson:  Please do.

Scott Ferguson:  Teaching some of these fundamental principles of public endogenous money gets easier and easier the younger and less indoctrinated your audience is. I can say this about my own children. I mean, my now 15 year old, I think I probably started talking about MMT when he was four, four and a half, and I never stopped. It’s very easy to just begin with money is something that is public and comes from the government and is organized by the government. It is given out and not given out in different ways. Where teaching MMT gets very, very challenging is when you have to cut through all of the neoclassical assumptions and garbage and even cut through some of the more critical approaches to political economy that sometimes come out of the Marxist tradition, and Polanyi, and some of these other traditions. It’s when you have to unwind those worldviews when things get very difficult. The basics of MMT, I mean …

Larry Johnson:  Are pretty easy to understand.

Scott Ferguson:  Pretty easy. I mean, some of the stuff about the interest rate is supporting this and that and the financial system. We don’t have to talk about that with the four and a half year old. But nevertheless, I think it is a lot easier.  I’m actually curious to hear you talk a little bit about pushback, if you get any? When I’m teaching, I don’t get a lot of pushback, but I will get a lot of bewildered faces. Like huh? But I know you’ve told me about, I think I recall, parents have contacted you kinda wagging their fists on some of this stuff?

Larry Johnson:  They’re less resistant!

Scott Ferguson:  Yes, yes. They think I’m indoctrinating their child. But what I found exciting about all those things is that the students were going home and talking to their parents and their spouses and their kids about all this stuff. I mean, that’s great. Yeah, I’m happy to talk to any of them. We don’t have to agree. It’s about, you know, stating the debate.

Larry Johnson:  That’s exactly right. I always hide behind that.

Scott Ferguson:  No, but it is both true.

Larry Johnson:  It is. I’m not trying to change what you believe, I want to change what you understand. I want to help you to understand things that you may not have understood before. You can think about this. And I know my students will think about it for years, and come back and tell me they’ve continued to think about this stuff.

Billy Saas:  Well, I think that you’re talking about the deductive approach, as I’ve called it, where you’re putting the evidence in front of them in sequence over time so that it’s not … If it’s indoctrination, it’s very passive, right?

Larry Johnson:  Very much, yeah.

Billy Saas:  And can’t be considered indoctrination to the extent that you’re just sort of questioning things, right?

Larry Johnson:  Yeah, and it’s funny how students will come to insights. I remember, I was talking about a student we were talking about. Actually, this is kind of funny because I often these days will show undergraduates and graduates the little collection of video clips that one of Stephanie Kelton’s postdocs did where they have people talking about the budget deficit and all that stuff: Obama leads, oh, we’re out of money. We have to get our credit card with the Bank of China, blah, blah, blah. They’ll watch that, and we’ll talk about it. Along the way, we’ll talk about Obama. This is very interesting in, say, 2018 when unemployment had dropped down well below 4%. We talked about Obama, what his beliefs were about the budget, which was always interesting. I’ll mention, you know, his position was that unemployment couldn’t drop below 5.4%. without triggering inflation. 1/10 of a percent better than Clinton, right?

Scott Ferguson:  Progress!

Larry Johnson:  Yeah, progress. Yeah. This kid who had been pretty quiet most of the semester, pipes, and he says, but he was wrong, wasn’t he? I said yes! And for that student, that conversation opened it up, and he’d go back and look at stuff we’d read, that he just hadn’t comprehended. But for some reason, understanding it that day opened up the whole semester for him.

Scott Ferguson:  You never know when it’s gonna happen.

Larry Johnson:  That’s right. It’s kind of the neatest thing. Yeah. Wow, you have a kid back there. He doesn’t say much. He’s kind of you know, morose. He’s just coasting through. And then suddenly, something happens. And you figure a lot of stuff out.

Scott Ferguson:  We’d like to talk to you a little bit about the history and structure of school financing in the United States. And neither of us are experts at this.

Larry Johnson:  Me either, there are people that know a lot more about this than I do.

Scott Ferguson:  Okay, well we still want to pick your brain. As you know, we became interested in this question in higher education, which has an entirely different financing structure, and its own history. We were responding to the calls for downsizing, and austerity, and the elimination of departments, and greater adjunctification, and the exploitation of staff and students and graduate workers, et cetera, et cetera, especially during the pandemic. And the idea was that there was some natural occurrence of this virus and yeah, and state state revenues were going to drop. And so there was really no choice but to not not let the crisis go to waste, so to speak. And to cut, cut, cut are already struggling Universities, especially the big public ones. And we came up with a proposal that understood money as public and as endogenous. And as designed. We called it the uni short for university, a kind of university currency. But we named it the uni to rhyme with Muni, because the Federal Reserve, we’re mounting with all kinds of Windows, so to speak, for various sectors to take advantage of to stabilize their liquidity access. And they have opened up a Muni right. Liquidity facility. And we were first arguing that, well, if it’s good enough for municipalities, why isn’t it good enough for big public university systems? And then over time, we began to experiment and rethink this. And later on, we were thinking, well, maybe we can, we can structure the financing of the public university system across the country, via the Treasury, and maybe we can bake this into the proposed public Banking Act. And this can be public financing as needed for the public purpose through these major centers of research, and these economic anchors and all kinds of regions. And you’re familiar with this proposal. I think a lot of our listeners are familiar with this proposal. And what I would say is, you know, this, this would be interesting to me to contemplate, for K through 12, which I’ll just say what little I know about K through 12 financing, which is that it’s his Historically tied to property taxes, I think at the county level, which is already deeply classed and perpetuates the myth, that taxpayer money finances, things instead of, instead of anchoring the currency, and, you know, we we draw on the work I’m not sure if you’re familiar with her work. Her name is Camille Walsh. She’s a historian who wrote a book called racial taxation that’s all about tracing the kind of rhetorics of taxpayer citizenry, taxpayer citizenship, in the history of American education, policy and politics, and and essentially making the argument that this becomes a highly racialized in addition to a class category, that that of course, justifies, justifies the perpetuation of itself. So I’m wondering, what do you know about the financial structure of K 12 education in our country? And how would you maybe recommend going about transforming it with public, endogenous money in mind?

Larry Johnson:  Yes, very much. Yeah, actually, let me shift gears a little bit, and talk a bit about the effort to restrain the universities. As you may know, in the middle of the 20th century, Republican and Democratic governors had created a higher ed system in California, that was tuition free. You did not pay tuition from community college up through your doctorate if you’re a resident of California. When Ronald Reagan decided to become a right winger, he was the perfect candidate for them to run for governor and he succeeded. He set about attacking universities right away, because universities, of course, he and his allies saw as the origin of the civil rights movement at colleges and universities. The origin of the anti war movement, blah, blah, blah and set the state police out to pull protesters down the marble steps at the administration building there at the University of California, bouncing off the marble steps. Then, even though tuition free colleges and universities were very popular in California, he was determined to impose tuition. A guy who was working in the Nixon administration named Roger Freeman went out to consult with Reagan to help him do this. Freeman was quoted in the San Francisco Chronicle as saying, we have to be careful about who we let into and through our universities, because we are in danger of creating an educated proletariat, and that’s dynamite. Spiro Agnew said, straightforwardly, we’re letting too many Blacks into the universities, we need to stop that. Nixon himself made several comments about making universities more expensive. Now, universities were free in California, but across the country, they were much, much cheaper than they are today. When I was a sophomore in college, it’s actually in the economics class I told you about. I wrote a paper that compared tuition in the state at universities that were designated the liberal arts university in the state, sometimes people call them flagship universities like University of Florida here. Then the state universities like Florida State and Utah State, and then state colleges, like Weaver State College in Utah and well New College here. I looked at all 50 states and I looked at their liberal arts university, the State University often had been called agricultural colleges in the past, agricultural mechanical colleges, and then they were all universities, the University of Utah, Utah State University, Colorado, Florida, Florida State. Then, the college system. In the university system, our tuition, across the country, paid between 11 and 14% of the cost of the college education going through a bachelor’s degree. The rest was paid by the state, some federal money, grants, other things, some foundation money. But, state appropriation was a big chunk. Tuition paid a very small percentage. If you looked at the state colleges, that tuition covered about 7% of the cost of the students’ education. People that allied themselves with the right wing of the Republican Party, not the Lincoln wing, which is rapidly disappearing. Their goal was to make universities more expensive, and restrict and make administration more controlling, so they could make the universities do what they wanted, rather than have them be an independent source of criticism, and so forth. They were really pushing that idea and trying to make it so that universities were not as open or inviting or accessible to nearly as many students. Some people say they didn’t anticipate the students would be willing to go into debt with student loans like they have been to get a college education, which really shows how important they are to students. Maybe they were, and that was okay, because that would then strengthen the banks, you had all this debt to the banks. In any case, their goal was to change the universities so they were not criticizing the church and the state. Going back, I used to joke with people all the time. Universities need to understand why Roger Bacon was willing to go to prison in the 13th century. Universities have a long history and have a long history of challenging sources of power. That’s an essential part of what universities are. That’s not the only thing universities do, but it’s one thing they have done, certainly from time to time. So, if you’re representing an authoritarian wing of politics, you want to restrain that at the very least. You want to focus universities on doing things that will benefit corporations or the capitalist class, generally. You don’t want them to be a source of criticism. One way to do that is by restricting access to universities by the working class.

Scott Ferguson:  So can you speak to the problem of K through 12 financing? And if we were going to harness the powers of public endogenous money, that’s just step one. What happens when we need to implement it and implement it in a democratic and inclusive way?

Larry Johnson:  Right, right. I think the problem there would look very much like the problems with universities. How would you make sure it would be used for things that benefited the students or society, rather than some other interests in the community?

Billy Saas:  Say a CEO.

Larry Johnson:  Yeah, paying a CEO. We know with charter schools, they pay their CEOs far more than school principals get paid. In New York, an organization had two charter schools, and the CEO over this, they called it a network of charter schools, was paid more than the Chancellor of Education in New York.

Scott Ferguson:  I like that you laugh at these atrocities. I think it’s healthy.

Larry Johnson:  The only way you can keep fighting. But Juan Gonzalez has written some really neat stuff back in the days when he worked for the New York Daily. He had some really neat articles about what’s going on with charter schools and how they were paying their CEOs exorbitant sums. And of course, that’s what they cared about. You take the Pay for Success stuff that Barack Obama promoted, and George Bush actually started, but they would pay people to …Like the banks, social impact bonds. You get some money from Goldman Sachs. Actually, in Utah, Goldman Sachs was part of this. They came in and they offered programs for disabled kids. Then, each year that those disabled kids stayed out of special education classes, stayed in regular classes which reduced the costs, Goldman Sachs got paid for it. Which, to my mind, is insane. For Goldman Sachs, it was a way for them to get money out of the public schools. This is a big deal. If you read Barack Obama’s Every Student Succeeds Act, it’s filled with that. Obama takes away states’ right to limit or prevent charter schools. He says, Every state, if they’re going to receive Title One money, has to allow charter schools. And all the states have to engage in what he calls Pay for Success, this whole system where somebody comes into the program, and it works, you pay them. Like with Goldman Sachs in Special Ed, if you continue to see benefits in your schools, then they’re entitled to get some kind of compensation, because they’re continuing to benefit the school system. That’s a very destructive way to treat the education budget. People have to realize, public education has a budget of right around $800 billion. Students don’t often realize that. That’s a lot of money. If you can privatize this and still keep that money stream going, you can make a lot of money. If you can get even a small share of that, the biggest share of that is state funding. Federal funding is a chunk of it, and then you’ve got local millage and so forth, it provides some of that. That’s a lot of money to spend. You divide it up per student, and you see it’s not a whole lot per student. But the problem is, it’s not distributed equitably. Schools that serve wealthy families may, as Jonathan Kozol points out, get 10 times what schools serve poor families get per kid. Certainly, two or three times as much. I mean, I’ve seen those examples myself. If you think about what happened in South St. Pete, when they re-segregated the schools, they actually reduced the funding going to the segregated schools that would serve just Black kids on the south side. It’s just remarkable. That happens partly because we don’t have a strong enough democracy to control it. We’ve limited the vote, we’ve restricted voting in ways where, if you’re in one of those communities, you simply it’s harder to vote, you don’t have the standing to go to the school board and speak. So I often tell students, if we want to improve the schools, we have to make sure we have universal suffrage. Everybody votes, everybody gets counted. You have to have universal employment, job guarantee, everyone has a job. I used to spend a lot of time organizing poor people to go to the school board. They would ask these people, I mean, they would show up certainly in a different quality of clothing than the school board members wore, for the most part. They would ask these people what they did for a living, and they’d say I’m unemployed. Once they said they were unemployed, you could see people stopped listening. They just don’t have the standing to be heard. So you have to organize in other ways to get their voices heard. You have to put pressure on the board in other ways. But if we had a job guarantee, those people would have standing to speak for their own kids to push for the schools to serve their own kids. Then, I think you could have a chance. One, you could prevent the kind of destructive use of funding or use of funding to destroy schools that serve poor kids. You could actually have people getting something better out of that. Say for example, we had a government through whatever mechanism was willing and able to willing, obviously they’re able to issue the currency so that we could have more money for schools. Really, for poor schools, schools serve kids who are disadvantaged in a variety of ways. That would be great. But unless we control the political situation, that money wouldn’t be spent where I would argue it needs to go. We’ve got to address that political issue so that no matter how much money we can create, it goes to the right places. Don’t use it to fund wars. We use it to actually provide a decent education for kids. I’m always amazed at how committed parents are to education. They need to get that support, the money coming into their schools. We people talk about the schools here in St. Pete, how terrible they’ve gotten after resegregation. But still, most of the parents even though they know there’s a lot of violence in the schools, they know the teacher turnover is high, they have the least experienced teachers, and a curriculum that they don’t necessarily find engaging. But nonetheless, they send their kids there because they believe that the kids will get something valuable. That’s true across the country. I remember attending a conference 30 years ago where a woman was talking about the schools in Chicago, and she described them grimaced, the way Jonathan Kozol describes the schools in his book and in poor communities, especially poor Black communities. The window encasements are falling in, there’s sewage coming up through the drains, or even out on the playground. She describes the schools, and then she shifts and she talks about only 57% of the students graduating. I’m sitting there thinking: if I had a school look like that, I wouldn’t go. I would just tell my parents, I’m not going. But 57% of these kids persisted and graduated from high school. That’s remarkable. That’s an extraordinary commitment to schooling. We ought to support that by actually spending the money. It’s hard to imagine how you would organize a movement to get that funding now from state legislatures. But if you could use the issuing of currency to take away their argument that they can’t afford it, then at least we would talk about it in real terms. It’s okay, well, this is what the kids need. We don’t want to give it to them. It forces them to say, we don’t want to give it to them rather than what we can’t afford.

Scott Ferguson:  It forces the class and racial and, and sexual politics to the forefront rather than having those be hidden behind seeming not laws of nature and economics.

Larry Johnson:  Yes. We can never explain why we can’t afford it here, but up there, suddenly, we can afford it. We can afford it last year there, but not this year here. Yeah. That funding is always used to dodge what needs to be done, dodge having to say straight out what they’re actually doing. If we took care of the funding issue, then we can have a much more vigorous debate about what we ought to do, and why we ought to do it. That’s not it’s not a very technical discussion of school finance. It’s what matters. Yeah. That’s an important part of how I see this. It takes one of the most destructive arguments that never leads anywhere off the table. Because now they can’t use it. We understand we can spend the money if we choose to. That’s what we have to address if we choose to. What do we choose to do? Clearly a political problem. Yeah.

Billy Saas:  What a wonderful way to start winding down. Probably a good place to end it but I can’t help myself. I like in my classes where we talk about the job guarantee. I have a similar sort of let’s take steps there and kind of stumble into the revelation and see how encompassing this is. I like to pose the question, visa vie education and money, what would happen to education if there were a robust, strong, universal job guarantee where the jobs paid well, had benefits, did not require in most cases, or if any, credentials in the same way, because you’re learning on the job, right? You’re learning the job while doing it. What do you think would be maybe the most radical changes if we had a robust job guarantee?

Larry Johnson:  I actually asked my students exactly the same question. If we had a job guarantee. What would that mean for education? How would education look differently? How could it look differently? My students, probably because they’re my students, then say: then we could do the things we ought to do in education. We can help students understand the world. We can help them study examples of how people built coalitions to get something they want in the world, that kind of thing. And it would take the straitjacket of job preparation off of us.

Billy Saas:  What’s exciting and makes me a little bit anxious is, it reduces the priority of education in its kind of strongest rhetorical sense, as we’ve been critical of it. Right, it becomes less important.

Larry Johnson:  Yeah, you know, it’s funny, I actually have had a student say, only one, fortunately, in 30 years, that: if we do that, how are we going to motivate students to do well in school, if we can’t tell them they have to do well in school in order to get a job and they need a job in order to survive? Well, then you have to find other ways to make what you’re teaching valuable to the student. I remembered going through school having teachers constantly talk about, when you’re in third grade, or well, my third grade teacher didn’t do this. When you’re in second grade, my second grade teacher actually did this: when you’re in sixth grade, you’ll need to. Everything’s about preparation for the future, and then in junior high it’s: you’ll need this for high school, and you’ll need this when you apply for a job. I had my student read a piece which actually addresses this question. The people who pushed vocational education, really, were able to establish this idea that the purpose of schooling is job preparation. So they get a chance to read some of the people who make these arguments and they read a really nice piece from a different perspective, comes back and says, …Herb Kliebard characterizes this process: All education is just shilly-shallying, waiting for the future. There’s nothing of value in itself at the time. And arguing as Dewey did, that we need to make education valuable to kids at that time. We have a sense that there are many things they need to understand about the world in order to make the world the place that serves them, a good place for them to live. They need to understand those things. They need to have those conversations. They need to be educated and learn things so that they can have those conversations. Like Blacks in the 19th century wanted education, to give them the intellectual tools that they needed to discuss what freedom would mean for them.

Billy Saas:  The return to education as liberation. Yes. Not shilly-shallying your way to a job. Well, increasingly, the carceral apparatus of the state is working to ensure that you are there shilly-shallying, and you have no other option.

Larry Johnson:  That’s right. Yes, for sure. And nothing else can be of any interest to you. I was like my parents’ attitude. When I was growing up, we didn’t have much homework in public schools, not in grade school. The only time you had homework was if you were sick, and you missed a few days, and sent some stuff home to catch up. In high school, not a lot of homework. I tried to do most of my work in and around my classes. So when I got home, my time was my own, I could do other things. My parents really supported that. Don’t just stay locked into school. You don’t want to be someone who comes home and then just goes into your little cubicle and continues doing schoolwork. This is the time for you to do other things you need to develop other things. If you do that, you’ll get more out of school. So that was a really interesting approach. They were very clear about that. My mother was a schoolteacher. They just said, you can’t have everything revolve around school. I was so surprised when I came to Florida. I happened to go to an eye doctor’s office, right when I got here, and a secretary was bemoaning how she had spent four hours the night before helping her second grader with homework. What can you do to a second grader, that would take four hours, it would be in any way useful. Of course, what you find out with all this crazy homework is the parents do it. Because it’s not of any value to the kids. They can understand it. I noticed that my great grandkids get assignments. I remember this a few years ago, they gave my great grandson something to do on the computer. The computer program was so clunky, it was virtually impossible to figure out what he was supposed to do. They gave instructions very briefly at the beginning, then you entered in part you’re supposed to do. There was no way to go back and listen to the instructions without exiting, and going back and starting. I was sitting there watching him and I said: boy, you are patient, you must have gone out and started that five times to get clear on the instructions. He said yeah, it’s what I have to do. I said I would have given up.

Billy Saas:  Near guarantee that that software cost the school quite a bit of money and was sold by a private vendor who contracted someone else out to slap it together and there was no oversight.

Larry Johnson:  Oh, gosh, I’m absolutely sure that’s true.

Scott Ferguson:  And that’s why there’s homework.

Larry Johnson:  Yeah, that’s why there’s homework and homework that can’t be done. What better way to do it, than you ensure?

Billy Saas:  The lesson that you’re supposed to learn is very clearly secondary to the lesson that you’re actually learning about how impossible this whole thing is.

Larry Johnson:  Yes, yes. I could never understand how students, I mean, clearly, well, off family students managed to get through this stuff. Maybe it’s just because school makes a decision that they will get through. It doesn’t matter what they actually do. How do they learn to pass these tests? One of my students said, Well, one thing if you’re lucky enough to go to school in a rich community, you learn you don’t think about anything too much. You learn what you’re supposed to say, and that’s what you do. I had a student who I thought had misread a passage and something we’d read the other day. I criticized her and gave her that feedback. She got back and said, No, no, this is what the piece said, and this is what I said. She copied and pasted from each. And I looked at it and I thought, I think you left a note out of what you said, and she got back to me. She says, Yeah, I did. I left a note out of it. And I said, Well, you were willing to read the feedback, and follow up on it. That’s the whole purpose of this. If you had gone through this in a discussion group, I would have given you full credit. You went through with me, I probably would still give you full credit. She was willing to come back and challenge my feedback, which I thought was excellent. That’s what you hope your students will do. So look at it, think about it, try to understand it, and come back. So I said, You’re doing everything I could ask of the student.

Scott Ferguson:  I think that is a beautiful place to end our conversation. Larry Johnson, thank you so much for joining us on Money on the Left.Larry Johnson:  Thank you. It was great talking to both of you. Take care.

* Thanks to the Money on the Left production teamWilliam Saas (audio editor), Mike Lewis (transcription), & Robert Rusch (graphic art)

Power to the People w/ Sandeep Vaheesan

Sandeep Vaheesan (@sandeepvaheesan) joins Scott Ferguson on the Superstructure podcast to discuss the still-undecided political significance of the Inflation Reduction Act (IRA). Their conversation focuses on Vaheesan’s article, “The IRA is Still Being Formed: An Episode in America’s Past Contains Important Lessons for How We Move Forward in Greening the Economy,” published recently in Democracy: A Journal of Ideas. 

While present left debate about the IRA tends to split over whether the legislation ultimately breaks with or confirms the tenets of neoliberal governance, Vaheesan turns our attention to the ongoing contestation over the bill’s implementation across heterogeneous domains. Vaheesan puts the current struggle into perspective by reflecting on the historical fight surrounding the construction and operation of the Boulder (a.k.a. “Hoover”) Dam. 

In the case of the federal provisioning of the Boulder Dam in the 1920’s, a strong public utility—the Los Angeles Department of Water & Power —was well positioned to control water and power as public goods, despite efforts by the conservative Hoover administration to wholly privatize the process. What is more, the success of this project laid the groundwork for later rural electrification programs under FDR’s New Deal. 

Today, Vaheesan sees similar potential for public control over the IRA’s implementation because the legislation crucially extends investment and production tax credits, which were formerly available only to for-profit entities, to community-controlled public and cooperative electric utilities. For this reason, the meaning and fate of the IRA remains up-for-grabs. Should community-controlled public and cooperative electric utilities seize hold of the IRA’s democratic potentials, Vaheesan suggests, the process stands to build significant capacities for a more expansive Green New Deal. 

Ferguson and Vaheesan close their conversation by considering the social construction of and  disputes about public money in both contemporary and historical contexts. 

Vaheesan is legal director of the Open Markets Institute and author of a forthcoming book titled, Democracy in Power (University of Chicago Press) on the history and future of cooperative and public power in the United States.  

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Photo by Gabriele Holtermann, AMNY

Music: “Yum” from “This Would Be Funny If It Were Happening To Anyone But Me” EP by flirting.

Twitter: @actualflirting

Reparations for Black Americans w/ William A. Darity

We’re joined this month by William A.( “Sandy”) Darity to discuss reparations for Black Americans. Sandy Darity is Samuel DuBois Cook Professor of Public Policy, African and African American Studies, and Economics and the director of the Samuel DuBois Cook Center on Social Equity at Duke University. A founding theorist of stratification economics and foremost scholar of the racial wealth gap in the United Stats, Darity is perhaps best known for his committed public advocacy for acknowledging, redressing, and resolving histories of racist violence against enslaved black people and their descendents through a federal program of reparations for black Americans. In April 2020–just weeks into the COVID-19 pandemic and two months before the global uprisings that followed the murder of George Floyd–Darity and co-author Kirsten Mullen published the book From Here to Equality: Reparations for Black Americans in the 21st Century. We speak with Professor Darity about this book–including its conception, reception, and circulation over the last few years. We also ask Darity about related projects like his proposals for “Baby Bonds” and a Federal Job Guarantee. We conclude, finally, by suggesting that the U.S. Treasury mint a $12 trillion-dollar platinum coin featuring prominent figures from the black freedom struggle for the purpose of financing reparations and educating the public about how money works.

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Music by Nahneen Kula: www.nahneenkula.com


The following was transcribed by Mike Lewis and has been lightly edited for clarity.

Billy Saas:  Sandy Darity, welcome to Money on the Left.

Sandy Darity:  Thank you. Thanks for having me.

Billy Saas:  It is such a pleasure to have you. To get us started, you spoke just a few days ago at the reparations symposium at Spelman. It was put on by the Spelman Social Justice Program, and it was meant to be a dinner and a discussion. I’d be interested to know the shape of that conversation in late September 2023; what were some of the key takeaways and points of excitement that might have come from that dinner and discussion?

Sandy Darity:  Well, I did the presentation as a conversation, and the other person who was participating in the conversation with me was my partner, Kirsten Mullen, who is the co-author of our book From Here To Equality: Reparations for Black Americans in the 21st Century. There were two faculty members from Spelman College who posed questions for us to answer. One of them is Cynthia Spence, and the other is Romie Tribble. I think it was a pretty lively exchange because the best part of these discussions always is the question and answer period, and there were some very, very provocative questions that were raised. Most of them concern our perspective about who should be eligible to receive reparations from the United States government under the orbit of what might be referred to as African American reparations. A lot of the discussion hinged on our perspective about states and localities conducting projects that they call reparations, something that we’re extremely skeptical about. Then, there were a number of questions that concern the issue of how you would go about financing a reparations plan. So I think those were maybe the three hot button issues that came up during the course of our conversation.

Scott Ferguson:  To me, one of the thornier questions is: who counts? How did you answer that question?

Sandy Darity:  Well, I think for about 20 years, we have had an answer to that question. I’m not sure it’s an answer that’s acceptable to everyone. But we have proposed for a long time that the eligible community for reparations from the United States government, for African Americans, should be those Black Americans whose ancestors were enslaved in the United States. And so we’ve advanced a two pronged criteria for eligibility for reparations. And the first prong is: an individual would have to meet what we refer to as a lineage standard. That is to say, they would have to demonstrate they have at least one ancestor who was enslaved in the United States. But in addition to that, and this is the second prong of the criteria, they would have to meet an identity standard, which for us, involves self-classifying oneself as Black, Negro, African American, or Afro American for at least 12 years before the adoption of a reparations plan, or the adoption of a study commission for reparations. So our view is that the individuals who may be living as white in the United States, who might happen to have an ancestor who was enslaved in the United States should not be eligible for reparations. And similarly, individuals who are Black, who are immigrants from other parts of the Black diaspora, should not have an expectation of receiving reparations from the United States government. Now, from my perspective, they are fully deserving of reparations, but not necessarily from the United States government. Their countries of origin should be seeking reparations from the nations that colonized and enslaved them. Some people complain about this, but we do accept the existence of the nation state structure as being relevant to the way in which reparations should be executed and administered.

Billy Saas:  Well that nation state structure is certainly very relevant to the question of financing. At risk of asking you to repeat everything that you talked about at Spelman just a few nights ago: how did those conversations go on that end? I know the financing one is something that we are particularly interested in.

Sandy Darity:  I think it’s important to explain that we have been pursuing a very specific set of standards for determining what the amount is that is due. That, in turn, influences the way in which we think about financing reparations. So in the work that we’ve done, we’ve highlighted the racial wealth gap as the central factor that needs to be addressed by a reparations plan. And based upon data from the survey of consumer finances for 2019. For some reason, they have not yet issued the results for the 2022 survey. I expected that to be out by now, but apparently it’s not. So if I just stick with the 2019 survey, I come up with an estimate that the average Black family or Black household has about $841,000 less in net worth than the average white household. And if you were to try to construct a rough estimate of how much that amounted to per person, it would be about $350,000. If, in turn, about 40 million Americans who are Black whose ancestors were enslaved in the United States, if those 40 million persons were multiplied by $350,000 per person, you come up with a number of approximately $14 trillion. That’s the baseline from our perspective for the amount that is due under a reparations plan. And we focus on the racial wealth gap, because we think it’s the best single economic indicator of the cumulative intergenerational effects of white supremacy. So that said, it poses a major difficulty for states and localities to even approximate getting to that number when their total combined budgets are less than $5 trillion. And in addition, if we were to think about generous individuals who felt some sense of obligation to address the nation’s history of racism, putting together a fund where they cast in $1 billion on a monthly basis, so $12 billion a year, it would take a millennium to get to $14 trillion. So it’s really only the federal government that has the capacity to meet a bill of that magnitude, particularly since the federal government, and this is where the MMT dimension comes into the conversation. The federal government is not constrained by tax revenue, in terms of its spending activity. From our perspective, the only constraint is the danger of producing significant inflation from any expenditure that the government makes. We spent a bit of time in the final chapter of our book, trying to talk about ways in which expenditures for a reparations plan could be designed in such a way that they mitigate the inflation effect. And we suggested two very simple steps. The first step is that you could space the payments out over a period of time so that the amount of expenditure in any given moment, or a given year, would not be as large as it might possibly be if the total amount was distributed at once. And then we say, we’d like to constrain that to a 10 year period. We wouldn’t want the reparations payments to be spread out longer than a decade. But then the other way in which you could limit payments is by providing people with direct payments in the form of less liquid assets. So, part of the reparations payments might be direct cash transfers, but they could also be an endowment. It could be a trust account. Could be some form of an annuity. I don’t have the expectation that people would have no savings whatsoever in the absence of these kinds of constraints, but you could, in some way, kind of force a higher rate of savings, and thereby reduce the potential inflationary effects, as well. So that’s our concern. It’s not whether or not you’ve got the tax money to do it. It’s whether or not the distribution of the funds under a reparations plan would trigger a significant depreciation in the value of the currency. That’s something we would not want to have happen.

Billy Saas:  You’re talking about the final chapter of From Here To Equality: Reparations for Black Americans in the 21st Century, which, correct me if I’m wrong, came out in April of 2020?

Sandy Darity: That’s right. Then we have a second edition that came out last fall in paperback. And the only real difference is that the paperback edition has a new preface that we prepare, trying to bring the conversation up to date,

Billy Saas:  Right, which would include everything that happened around that time, and after!

Sandy Darity:  And especially January 6, 2021.

Billy Saas:  So what was it like having that book come out in the thick of the early days of COVID, and just before, some of the most significant social and political action in the United States in some time.

Sandy Darity:  We had hoped that the book would prompt a renewed conversation about reparations. But by the time the book came out, it wasn’t necessary for it to prompt a renewed conversation. In fact, from my perspective, the way in which the trajectory of reparations talk had gone in the United States after the 1960s, in particular, is that there really wasn’t much of it. There was discussion of reparations within certain circles in the Black community, but in terms of it being something that was on the national stage, that wasn’t the case. So in the year 2001, or so, in the beginning of that year, David Horowitz put an advertisement in a series of college newspapers attacking the idea of Black reparations kind of out of the blue because nobody was really talking about it. It actually triggered a greater degree of interest in reparations, at least among college students than had existed in the past. But at that point, in September, we had the assault on the Twin Towers. In the aftermath of the 9/11 attacks, conversation about reparations just evaporated. It was not renewed until Ta-Nehesi Coates put out an article in The Atlantic in 2014. I think the significance of that article was in making or trying to build the Case for Reparations, he talked about atrocities that had taken place after slavery had ended. And I think that that was very, very significant and distinctive, because Kirsten and I are typically repelled by the phrase slavery reparations. We certainly think reparations are due for the long term effects of slavery. But slavery is not the only atrocity that’s relevant, and it’s certainly not the central policy that created the current racial wealth disparity in the United States. Especially if reparations had been provided, like the 40 acre land grants that were promised at the end of the Civil War. We might not have any kind of significant racial wealth differential in the United States today. So that’s one phase of the process that took place. But even after Ta-Nehisi Coates article, I think that there was a real diminution in conversation about reparations, which didn’t alter until 2019, the year before the pandemic, when there were a handful of candidates for the presidency running for the Democratic Party nomination, who actually said they endorsed reparations for Black Americans. This would include Julian Castro, Tom Steyer, and then perhaps most significantly, Marianne Williamson who actually came forward saying that there was an amount of money that she had in mind. Now, at the time, I think she talked about $500 billion dollars as a maximum. And in comparison with $14 trillion, that’s actually somewhat of a paltry amount. But nevertheless, that kind of projected a reparations conversation onto the national stage. Then in 2020, with the combination of the pandemic, the murder of George Floyd that had worldwide repercussions, I think that kind of cemented the presence of the reparations conversation. So this is a long winded way of saying that when our book came out, it came out in a climate in which there was a greater degree of interest in reparations than then had existed at any point in my own lifetime previously. I think we were concerned that the effects of the pandemic would mean that it would grossly limit our opportunities to do book readings and the like. Turns out quite the contrary, because of the virtual process. And we ended up probably doing many more presentations about the book than we would have been able to do in a situation where we would have had person to person contacts. In fact, it got a little bit ridiculous and exhausting. I think there’s a day in which we did five presentations on the book, and we said we’ll never do that again. I think, you know, there was some serendipity, actually a product of some very horrible circumstances that actually led the book to get more attention than it might otherwise have received.

Scott Ferguson:  I have so many follow up questions. I’ve long been a supporter of reparations for Black Americans. I was very compelled by the Ta-Nehisi Coates piece back in 2014. But as a Modern Monetary Theory and heterodox economics fellow traveler, I was always concerned in multiple senses about the rhetorical and emotional appeals and fault lines and dangers of the question of who will pay, which Ta-Nehisi Coates raises in that article, without really giving an answer. Right, but who will pay? Suggesting that someone must pay. And from a certain point of view, from a MMT point of view, as we’ve been saying, the federal government should pay. Absolutely, the federal government should pay. But I think there’s a larger question being asked here, which is, should a group of people be taxed or punished or subtracted from in order to repair, in order to make things whole? And I guess what I would say is, there might be a moral case for maybe not literal taxation, because we know we don’t need that literal taxation. But there might be a moral case for making certain groups “pay” or have there be a lessening of their wealth or something like this. But I think I’ve also been very concerned to not frame reparations as a national reckoning in zero sum terms, and that that’s crucial for the emotional politics of and the emotional political viability of reparations. If a group of people rightly or wrongly feel like they’re losing out so that others can gain, I think that can be politically really toxic. And I’m curious if you’ve thought about these kinds of questions?

Sandy Darity:  Yeah, this is a pretty challenging set of issues. I think the way in which we’ve focused on this notion that the federal government should finance this without raising taxes is from the point of view that we know that an objective of closing the racial wealth gap would alter the relative position of Black and white households in terms of wealth. And it would improve the relative position of Black households significantly. In fact, if the plan that we have in mind was enacted in which $350,000 was distributed to each Black American who was an eligible recipient, we would raise the median level of Black household wealth above the median level of white household wealth, although the mean levels would be equal. So that said, and I think if one’s going to attack the racial wealth gap, or do anything that’s of substance under the aegis of a reparations plan, you’re going to have to improve the relative position of Black Americans. So the best that we can do in terms of trying to insulate white Americans from damage from this process, is to avoid altering their absolute position. And so that’s why we focused on this notion that you could fund this thing without imposing taxes on anyone. And also without, in essence, taking money from white Americans to put into Black Americans pockets. That’s not what we have in mind. And that’s why federal funding becomes a critical engine. If you’re to do this at the state or local level, they are entities that are constrained by their tax base. And so money has to come from somebody and go to somebody else in terms of the state and local initiatives. Even if they borrow the money, well borrowing is deferred taxation. I think that’s why we focus on the federal case. But yes, the bullet will have to be bitten in terms of relative position.

Billy Saas:  You and Kirsten talk about some of the misconceptions about why things are the way they are today, attributing life choices and lack of financial acumen or awareness for the wealth gap. It seems to me like, in addition to all of the wonderful outcomes that would follow from administering the reparations program, as y’all have outlined it, there’ll be a tremendous opportunity to have a conversation and to get some acknowledgement and engagement of a kind of more radical financial literacy: that this is how the money system works and has worked historically to reproduce these conditions of disparity. And what we’re talking about doing now is mobilizing and redirecting the potential and power of money toward redress, toward closure. The very thing that sort of ends up as kind of an avatar for an obstacle to reparations: how are you going to pay for it? Who’s going to pay for it? becomes an opportunity to think about money through the histories of this country and its place relative to regimes of repression and violence, but then also potentially, for liberation and redemption. Is there a place for a conversation about money in this context of advocating for reparations?

Sandy Darity:  Yes, there is also a place for a conversation of the attentiveness that we give to the nation state. There’s also a possible conversation about the question of whether or not an objective that Black Americans might pursue with these additional resources would be an objective that really maintains a general structure of inequality and inequity. I think that those are all questions that are open ended, but I don’t necessarily see us moving off of that path in the absence of reparations. So I would not want to claim that the political decisions that Black Americans might make with additional resources would necessarily be revolutionary. I have no idea. They might not be. Regardless, there is a whole set of issues concerning the question of the denial of full citizenship of Black Americans. For the entire period of time we have existed in the republic that was formed in 1776.

Scott Ferguson:  One of the other criticisms that you have, I think, a really meaningful response specifically when it comes to reparations and cash payments. So the criticism is that: ah well, it’s just money, and money is not a substantial enough moral recompense. And, of course, you have all kinds of other proposals and ideas that are in excess of building wealth, and closing the wealth gulf for Black Americans. You have a really strong response to that. Maybe I’ll let you respond to that criticism.

Sandy Darity:  That kind of question came up the other day. Kirsten and I both said, well, just imagine a world in which the typical Black household in the United States had the equivalent of about $1 million in additional resources, say in 2019 dollars, if you will. Actually, it would probably be 1.2 million in a household before. Think about the range of opportunities, options, and also capacity to exercise political influence that those resources might provide them with. And then we begin to talk about having a very, very different world.

Scott Ferguson:  Yeah, that’s exactly the answer that I was thinking of. I appreciate it on multiple levels. One, as an advocate for public money, I’m very skeptical, I’m very critical of certain, let’s say, mainstream, liberal ambivalences and moralizing around money and imagining that money is something that’s … It’s mere instrumentality, or it’s merely about private wealth acquisition and greed, or it’s somehow empty. And I think your response suggests that money is not empty private greed; money is a substantive, multifaceted, medium and social and political relationship that dearly matters for all of us, including those of us who have been structurally deprived for centuries.

Sandy Darity:  Yeah, I mean, less hierarchical societies. I’m not aware of any society that’s non hierarchical, but less hierarchical societies or societies that have a better social floor for wellbeing. People still use something that we might call money. The more of it they have in those contexts, the more options they have to exercise. I mean, one of the tragedies of actually existing socialism has probably been the disproportionate amount of power that’s been registered with the individuals who run state bureaucracies. And it’s not accidental that they typically have more wealth than the other members of their society. So the question is not money, per se. The question is, what is the system in which money operates?

Billy Saas:  Along those lines, we brought up the nation state as a category or concept that’s up for scrutiny. I think one of the ways that Scott and others in our orbit have tended to rethink or engage that question, as it relates to the financial system to money and to the form of government that exists, is around the question of sovereignty, which tends to be at the center of the story for conventional stories of Modern Monetary Theory and the history of money.

Sandy Darity: Right.

Billy Saas:  And reconceiving of the problematic or the concept of sovereignty in terms of agency. It seems to me like that’s also a word or a concept that works better in the terms that you’re talking about and Scott was excited about with your response. It’s about who has the agency in a society and the distribution of that relative to others, and it happens to be in the money form most often.

Sandy Darity:  Yeah, and the companion issue is always how fair or even do we want to make agency?

Scott Ferguson:  So we’d like to talk to you about some of your other long term projects and proposals, but maybe to set the stage for that we can pause and step back and ask you, to the degree that you feel comfortable speaking about your personal and professional background, a little bit about how you came to these questions and how you came to them with such boldness. These proposals are not run of the mill. They’re really outside or they have been very much outside of a certain mainstream orthodoxy. And yet, you’ve been very committed to thinking outside that orthodoxy. How did Sandy Darity get here?

Sandy Darity:  I think a lot of it has to do with my parents point of view. I was raised in a family where both of my parents earned doctorates at later points in their lives than when I earned mine. But I grew up with two parents who were very engaged in the academic world. But they never took the position that the reason they got to the points that they did was because there was something extraordinarily special about them. They always emphasize the kind of support that they had received from others that had given them the capacity to get to where they were. I remember my father, who came from a small, small town in the mountains of North Carolina called East Flat Rock, and there is no West Flat Rock. East Flat Rock was the Black side of Flat Rock. He tells a story about the point at which he was about to go to college and he really didn’t have any significant amount of clothing. And surprise for him is that the folks in his community left him a suit and a pair of shoes at the house for him to take with him to go to college. They didn’t have a lot of resources, but they contributed. His own parents had never gone beyond sixth grade. In schools, three of their four children, including my father, all completed college. And he said it was because his parents said you were going to go to college from an early age. He’s always said he didn’t know where they got that idea from. But the notion that my parents left me with is that your life outcomes are largely a consequence of the luck of the draw of the situation that you’re born into. So I never started with this view that people who were doing badly were doing badly primarily because of their own behavior and actions. I think that that’s been central, or that’s been at the core of my thinking. Now, of course, there are people out there who make serious mistakes. An individual, in the course of their own lifetime, can do good things and bad things in terms of building their own life success. But the phenomenon of poverty is something that I always thought of as something that was structural, rather than a consequence primarily of individual actions and individual decisions. When I went to college, I decided I was going to study economics, because I assumed that economics was the field in which I could have the best understanding of inequality. I’m trying not to laugh. I take these classes, and I say this doesn’t make any sense to me. This is not how the world works. So that’s how I kind of got launched on this by being an outlier economist. I guess I’m less of an outlier now, but I don’t know. Still feels like I’m not on the inside, and that’s probably a good thing.

Billy Saas:  Your focus from early on, thanks to your parents sharing their perspective with you, is on the consequences of structures, less individuals. And I wonder, going back to reparations now, but it’s there in your other proposals as well. It’s about reparations, but it’s about reckoning with the consequences of structures that have been in place for so long. Not, you know, in addition to and alongside and adjacent to the institution of slavery, of racial inequality, as it was propounded and elaborated by the state over time, on the dispossessed, suppressed, and oppressed. But also, that part of this reparations and the reckoning or the conversation and the redress process has to be reckoning with the effects of those structures. I’m talking about white supremacy, right, the ramifications of white supremacy for everyone.

Sandy Darity:  So we live in a hierarchical society. So conditions are uneven for all people in the society. All white Americans are not in the billionaire category. In fact, a very small number. On the other hand, when you have a racialized hierarchical system, then it’s a system that protects the dominant racial group from having to be in the bottom most positions, or having to bear the burden of the harshest circumstances that are associated with that system of stratification. So I am very, very concerned about the disparities that exist on the basis of race. But I also recognize that the overall system of hierarchy is damaging. So in addition to thinking about policies that should be pursued for the purposes of bridging the disparities that exist on the basis of race, I’ve also tried to think about policies that could at least moderate the worst effects of the overall system of hierarchy. And so in particular, I’ve thought about this idea that it’s not, it’s not new with me, by any means. We could have extraordinarily rich people in a society, but we could ensure that no one was in a position of deprivation. And we might then be less concerned about the fact that we have very rich people in the society. You know, if we could ensure the folks at the bottom actually had a decent existence and had a satisfactory array of opportunities. This is the question of the social floor that I think I referred to a moment ago. I’ve been thinking for many years about how we could create a social floor that would ensure that no one would be in a position where they had to suffer, or where they had to deny their children any significant range of opportunities to participate fully in the society and to fulfill their own creative ambitions. So, while reparations is a policy, specifically African American reparations is a policy that I’ve focused on from the standpoint of eliminating racial disparities, there are other policies that I’ve tried to think about and help develop, that are focused on raising the social floor in the United States, and potentially elsewhere, those policies could be applied in other places as well.

Scott Ferguson:  So for our listeners who are less familiar with your work, or would like a reminder, maybe you can tell us about your proposal for a federal job guarantee. How that might look? How might that work? And what problems would it be addressing?

Sandy Darity:  Yeah, and I definitely do not want to claim that the idea of a job guarantee is uniquely mine, it definitely has not. It has a long tradition and heterodox economics in particular. People like Hyman Minsky were advocates of a job guarantee. There may be some uniqueness to the particular way in which I think about how it should be done, but the idea itself is a fairly old one. I think that when it was introduced, most people were concerned about the question of trying to ensure that people had employment in bad times. I think that I’m at least as interested in the question of creating a floor on compensation. The access to a guaranteed job is something that should be permanent. And it should be a mechanism for compelling the private sector to improve the compensation standards that they provide. So individuals would always be able to opt out of bad private jobs by turning to the public sector for a guaranteed opportunity for employment. So I would couple the business cycle benefits of having a job guarantee with the potential benefits that are associated with ensuring a decent standard of compensation in all employment, both in the public and the private sector. So you know, some people could say, well, what you’ve really done is introduced a minimum wage mechanism. Yeah, you have, but it’s different from the traditional minimum wage, because it is something that would be available to people who are unemployed, we are guaranteeing an employment option for everyone. And it also could be structured in such a way that there is a benefits package that typically is denied to individuals who don’t work a sufficient number of hours under minimum wage law conditions. So in a sense, what we’re doing is sort of resetting the table with respect to what the kinds of conditions are that must be provided to individuals who are at work, including the opportunity to be at work. So that’s what I have in mind, the federal government would ensure that every American adult would have access to a decent job as a public sector employee, and that would be an option that would be permanently available to them.

Scott Ferguson:  What kind of criticisms do you hear in response to that proposal?

Sandy Darity:  One set of criticisms is you destroy smaller businesses that rely upon low wage labor. And my response to that is regardless of the scale of your business, if your business plan is projected on hiring people at very low wages, that’s not a socially acceptable business plan. The other argument that frequently is made is that we don’t have enough types of work for people to do productively. And my answer to that is, we may not have enough work that appears to be profitable to the private sector to hire people to do. But we have an immense amount of socially useful work that is going undone in the present moment. And then, you know, there’s the argument that AI is going to just destroy jobs anyway. And I would argue that, yes, AI is probably going to destroy a wide range of jobs. That’s all the more reason to have a public sector structure where you could identify the types of work that AI cannot replace. The last point that’s related to that is, would we be satisfied with care work that was conducted by robots? And I don’t know, we might be, but my personal reaction is that I still think that there’s an important place for the human touch.

Billy Saas:  I don’t think we’re there yet.

Scott Ferguson:  I don’t want to be there. I don’t want to.

Sandy Darity:  Well, you know, you have human-like androids I guess maybe we wouldn’t be able to tell.

Scott Ferguson:  I suppose. But why wouldn’t we want to care for each other? It just presumes so much, right? Oh, well, if I can quit caring for you, then that’s just an automatic good. So in addition to the federal job guarantee, another proposal you’ve been working on for many years, is something that you will often refer to as the baby bonds proposal. What is that? How does it work? What does it aim to do?

Sandy Darity:  Well, I’m trying to think when Darrick Hamilton and I first started working on this. We may go back to 2008-2009 or so. The late Manning Marable at Columbia, heard me talking about this, and he piped in, and he said: Oh, baby bonds! So it’s been called that ever since. But it’s not really a bond. The idea is to provide every newborn infant with a trust account. And the trust account will be calibrated on the basis of their parents wealth position. So a child is born into the wealthiest of families, maybe we give them a $50 trust account, but for children born into families at the lowest end of the wealth distribution. Let me say, the idea of calibration was based upon your family’s wealth position relative to the median for all households in the United States. And so kids at the lower end would get, say, $50,000 or $60,000 as a trust account for families that might have a negative or zero net worth. The idea was to bring everybody’s wealth position, every child’s wealth position, closer to the national median. This is what distinguishes it to a large degree from the reparations plan, which focuses on the mean difference between household wealth rather than the median. Now, if you designed your baby bonds proposal to focus on targeting the mean level of wealth, then you could replicate the kind of objective that’s built into the Darity-Mullen version of a reparations plan, which is to get rid of the racial wealth gap. But the original formulation of the baby bonds proposal could not do that, because it’s median centered rather than centered on the conventional average.

Scott Ferguson:  And what are the responses, criticisms, affirmations of that proposal?

Sandy Darity:  I’m not aware of any real significant criticisms of that proposal. In fact, it always struck me as ironic that it hasn’t had even wider traction than it has had. There are three state governments or so that have pursued it. And I think Congressman Cory Booker has had some legislation on the books for something like that. It’s not in his proposal, the calibration is based upon the income position of the household rather than the wealth, because of some arguments that it’s harder to measure household wealth accurately. We have an income tax system. So presumably, we do have relatively good data on people’s incomes. But I’m not aware of any real substantive criticisms of it.

Scott Ferguson:  I haven’t heard any.

Sandy Darity:  Yeah, and it’s not that expensive. I mean, it would be, you know, given the typical number of newborn infants in the United States, it wouldn’t cost much more than $100 billion per annum. So yeah, that’s not big, big money in terms of the US budget.

Scott Ferguson:  Right. But we also know that often it’s relatively small, small money that gets politicized and blown out of proportion as it is.

Sandy Darity:  And people invoke this phrase, well, what are you doing with our taxpayer money? Right?

Scott Ferguson:  That’s right.

Sandy Darity:  And people are people on both sides of the aisle, the ideological spectrum, loves that phrase, taxpayer.

Scott Ferguson:  Oh Absolutely!

Scott Ferguson:  Yeah, that’s where they unite. They reach across the aisle to bemoan the loss of taxpayer money. So I’m wondering, what are you working on nowadays? What’s in your immediate or long term future? Anything you’d like to share?

Sandy Darity:  Yeah. We’re doing some work at my research center, the Sammy DuBois Cook Center on Social Equity that’s related to various dimensions of wealth. We’re trying to launch a project that’s focused on international comparisons of intergroup wealth inequality. And then also, we’re hoping to have a major conference, overseas, presumably, in London. We’re in the process of trying to get funding together to be able to do it. But to have a major conference on stratification economics that might accompany the launching of a new journal called the Journal of Stratification Economics. I guess, from the standpoint of my own sense of what contributions I might have made or be making to the field of economics. I think that that’s largely attached with stratification economics.

Scott Ferguson:  Can you tell our listeners a little bit about stratification economics? About where it comes from, and what are some of the basic suppositions? It seems to wear its meaning on its sleeve to a certain extent, but I’m curious if you could explain a little bit.

Sandy Darity:  I think I introduced the term stratification economics in a speech that I gave. No, I’m not going to remember the exact year but it was, it was at a conference that was held by the Academy of Economics and Finance, which is a southern based economics and business scholars professional association. I gave this talk in Savannah, I guess it was 2005 or so. I had been thinking for a long time about how one could go about building a theoretical framework that did not blame individuals for being poor. I mean, that’s basically what it was. I increasingly began to develop a set of ideas that I decided I would put under the label stratification economics, borrowing from the field of sociology which has a fully developed sub-discipline in what they refer to as stratification. I was thinking that maybe there was a way to merge some of the approaches in economics with the approaches and sociology, to come up with a new sub discipline in economics that are called stratification economics that attempted to explain disparities between social groups, and between individuals that was not primarily focused on group based deficiencies or individual deficiencies, but was focused on the nature of the social system in which these people live. And so that’s how it began.

Scott Ferguson:  That’s clarifying. Thank you so much. So are you familiar with the various proposals and legislation to mint a trillion dollar coin?

Sandy Darity:  I am aware of it. I’ve never fully understood it.

Scott Ferguson:  Well, there’s a proviso in the law that allows the Treasury to mint a platinum coin of any denomination. It’s been proposed several times over the last decade, in response to the so called sequestration and the so called debt crises, and the debt ceiling and these kinds of issues. It also ended up in Rashida Tlaib’s ABC Boost for Communities Act, which of course, didn’t pass, but was proposed legislation for emergency financing to individuals in the height of the pandemic era. But I was thinking, it would be great to expand this project, and maybe start dreaming up a $12 trillion coin for reparations, that perhaps on one side of the coin, on the beautiful platinum coin, we might see a picture of George Floyd. And maybe on the other side, there’s a medley of figures like A. Philip Randolph and Martin Luther King, Jr. and Coretta Scott King. I’m wondering how that strikes you?

Sandy Darity:  Well, I guess I’m not sure how that’s different from just putting the money in people’s accounts.

Scott Ferguson:  It’s not. It’s different symbolically. But that’s what it is. Right. It’s about instructing the public on where the financing comes from right?

Sandy Darity:  It’s coming off of this coin.

Scott Ferguson:  Yeah, it’s coming off of this coin that we can make as a matter of law, and that it’s a matter of national imagery. So if we put certain figures instead of a bunch of dead white men, but we put other kinds of figures on the coin, that might have some profound meaning, as well.

Sandy Darity:  The big reparations coin. I kinda like that.

Scott Ferguson: Ok, good. I have your endorsement. I hope to see this go viral very soon. Sandy Darity, thank you so much for joining us on Money on the Left. It’s been such a pleasure to talk to you.

Sandy Darity:  Thank you so much for having me on. It’s great. Cheers.

* Thanks to the Money on the Left production teamWilliam Saas (audio editor), Mike Lewis (transcription), & Emily Reynolds of The Buffalo Institute for Contemporary Art (graphic art)

Medieval ink on a medieval budget

By Sara Charles

Originally published at Teaching Manuscripts, a site that hopes to inform and educate about making medieval manuscripts. Explore the site to learn about the different processes of manuscript production.

As autumn is the season for collecting oak galls, now seems a good time to consider how to make ink without access to the standard ingredients of oak galls, ferrous sulphate and gum arabic. Perhaps you are in an early medieval monastery in a remote part of Britain or Ireland and are desperate to write the word of God on some parchment. Or perhaps you are an itinerant cleric, who has just woken up to find the cat has knocked your jar of ink off the shelf and your yet-to-be-copied documents are due in the next few days.

British Library, Royal MS 13 B VIII, fol. 22r

So – you need some ink quickly, using what sources you have on hand. Of course, carbon ink made from soot is always a cheap and readily available alternative, but you would really prefer the superior oak ink. If you were a resourceful medieval scribe, what alternatives could you use?

First of all, you need a source of tannin. The galls that are found on oak trees are the easiest way to get hold of some – but alas, your stock is depleted. Perhaps the finest Lombardi marble galls sold at the market are out of your price range, or not easily shipped in to your remote island. Perhaps even the locally sourced apple galls were in short supply this year. Fortunately, as long as you have access to an oak tree, you can simply use bark chippings. Just scrape some off an oak log from the stack of chopped firewood, or get some chips from the local tanner.

Now you have a handful of oak bark chips, you need to soak them in rainwater – preferably over a bit of heat. An hour or so should do the trick, to make sure that the tannic acid from the bark leaches into the water. Strain the mixture through some linen cloth.

The liquid will be a rich brown colour, but you want the deep black that lasts permanently – so you need to add some iron. Ferrous sulphate was manufactured from natural deposits of iron pyrite in the medieval period, but again our stocks have run dry and we need to find easily available materials. Chucking a few rusty iron nails in a jar with vinegar poured over them will provide the same effect as ferrous sulphate. Being a medieval, you are not so bothered about the potential danger of this. You might even reclaim the iron nails from the vinegar once their purpose has been served.

Leave the nails to soak for a few days. It will start to look very toxic, so handle with extreme care. The iron and vinegar should give the solution enough oomph to create a chemical reaction when combined with tannic acid, immediately turning the mixture black. Only two drops are needed to visibly change the colour, as you can see in the video below. You can add more, but the downside is the iron solution may be too strong and start to corrode the paper or parchment after a few years. But this is a quick fix and we are deliberately not getting hung up on the perfect recipe or ingredients.

The final ingredient is the gum arabic, which acts as a binder and helps the ink flow from the quill to the parchment and adhere to it. But gum arabic comes from faraway lands, harvested from the sticky sap of the acacia tree. Surely there must be a local, native alternative? Luckily, there is – the sap from a cherry tree. This may not be as highly prized as gum arabic, but it will do the job. Hopefully you will have a few chunks of cherry tree gum laying around, which you can grind up into a fine powder. Once that’s done, you can add the powder to the mixture, creating a silky texture to the dark liquid.

The ink is technically looking like an ink should, so now it’s time to test your product. All right, so it hasn’t been made with the finest of ingredients, and it is definitely not as deep black or easy to write with as iron gall ink – but it still works. If you were in a hurry and needed an oak ink, you have here a choice of three different substitutes for the main ingredients, bark chips for galls, rusty nails soaked in vinegar for ferrous sulphate and cherry tree gum for gum arabic – hopefully you would only need one or two of these substitutes.

There is still a lot of mystery around how exactly British and Irish medieval scribes made their ink – did they use marble galls or local apple galls? Would they have used the green crystals of manufactured ferrous sulphate, or made do with some iron nails? And would gum arabic have been sought after when local plant gums served the same purpose? Surviving medieval ink recipes seldom elaborate on alternatives and besides, we do not know how strictly they were adhered to in the first place. Like many medieval processes, the connection to the natural world was assumed to be too fundamental to have to write down – most artisans and scribes would have absorbed a basic knowledge of how to use their local landscape to suit their needs. And fortunately for iron gall ink, there were cheaper alternatives that could be sourced closer to home, so hopefully there was a recipe to suit all medieval budgets and situations.

Money’s Place: Science Fiction, Realism & MMT in The Ministry for the Future

Money on the Left: History, Theory, Practice
Vol. 1, No. 1 (2023)

ISSN 2833-051X

Money’s Place: Science Fiction, Realism & Modern Monetary Theory in Kim Stanley Robinson’s The Ministry for the Future By Maxximilian Seijo


Kim Stanley Robinson’s speculative near-future novel Ministry for the Future (2020) centers the heterodox political economy of Modern Monetary Theory (MMT) to forge a new path for ecosocialist politics. This money-positive path diverges radically from critical traditions in political and literary thought that reject money as the ultimate source of environmental exploitation and climate catastrophe. In this essay, I argue that Ministry’s centering of money challenges and displaces the generic conventions of science fiction and realism, each of which has historically related to money in opposing ways. Whereas science fiction prioritizes escape to an enclave “outside” of money’s mediation of social relations, and realism laments the immanent dynamics of money’s mediating force, Ministry estranges both genres from their relationship to money by redefining money as an inextricable expression of social relation and interdependence. As opposed to dominant Marxian modes, Robinson’s redefinition draws attention to money’s radical place within the speculative imagination, disclosing new political economic and ecological capacity to remake global reproduction. 

The People’s Ledger with Saule Omarova

This month, we discuss democratic possibilities for public finance with Saule Omarova, the Beth and Marc Goldberg Professor of Law at Cornell University and President Biden’s original nominee for Comptroller of the Currency. Omarova’s work on financial regulation and banking law has long informed how we at Money on the Left understand the modern monetary system. Her and Robert Hockett’s “finance franchise” metaphor for modern banking-–according to which the federal government is the franchisor and chartered banks are all franchisees–renders an often-times opaque system intuitive and readily politicizable. Throughout our conversation, we learn from Omarova about how she arrived at this work, what other metaphors she and Hockett considered as alternatives, and exciting democratic possibilities for social policy development, including proposals for a National Investment Authority and a public banking system called “the people’s ledger.”

Visit our Patreon page here: https://www.patreon.com/MoLsuperstructure

Music by Nahneen Kula: www.nahneenkula.com


The following was transcribed by Mike Lewis and has been lightly edited for clarity.

Scott Ferguson:  Saule Omarova welcome to Money On The Left.

Saule Omarova:  Thank you so much. Thanks for having me.

Scott Ferguson:  We’re so glad that you could join us today. Maybe to kick off our discussion, you can tell our listeners a little bit about your professional and academic background, how you got into thinking about law and finance from the point of view that you pursue?

Saule Omarova: Sure. So I am currently teaching at Cornell Law School. I write and teach on a variety of subjects that have to do with financial markets, financial institutions, and various regulatory issues in finance, understood broadly. I came into academia from private practice, I was a bank regulatory lawyer primarily, but also have done a lot of transactional work with various regulated financial institutions, broker dealers, insurance companies, and so on, so forth. And I did it in New York City, as part of the specialized financial institutions group. I really, really enjoyed the work, it was really difficult and quite demanding, particularly of a young lawyer with no prior experience. 

I came into the legal practice actually not thinking about banking law, even as a potential area in which I would pursue my career because prior to law school, I did a PhD program, and I’ve completed my doctoral studies at the University of Wisconsin at Madison, in political science. I studied comparative political economy, and was interested in economic development and all of this wonderful, interesting historical stuff. So as a lawyer, I was thinking I was going to be just a business corporate lawyer. And then I ended up being in the financial institutions group. 

What I’ve learned in that practice was quite invaluable, and it spurred my interest in returning to academia, to share the knowledge, but also to contribute to the discussion of public policy matters that as a practicing lawyer, I simply didn’t have the luxury of thinking about or addressing in any significant way. I did spend one year in the Treasury Department between my leaving the law firm and becoming a law professor, which was also focused on potential regulatory reform and financial stability, oversight, and so on. That was actually right before the bottom fell out of the subprime mortgage market. I left the Treasury in early July of 2007, and quite literally a couple of weeks later, things began unfolding.

So my academic career began in the midst of an unfolding global financial crisis. And of course, given the fact that financial regulation and financial markets was something I was interested in to begin with, this was a very, I suppose, fortunate set of circumstances in terms of directing my research interest into law and finance. And as I continued to learn about finance and financial regulation from an academic perspective, rather than from a purely practical perspective, gradually, I came to appreciate and realize that my long forgotten, perhaps, academic training in comparative political economy and institutional, developmental, political science, whatever you call it, actually had a lot to contribute in terms of shaping the perspective with which I approached various legal and policy issues in financial regulation, and kind of presumptively focusing my attention on structural issues, because that was really what I’ve been interested in all along.

I gradually started expanding my research, beyond writing about specific dysfunctions and specific regulatory and policy problems in the regulation of banking institutions, including banking conglomerates, so called bank holding companies or financial holding companies. Expanding that focus to encompass broader, perhaps deeper issues in what it means to have this type of a dysfunctional banking system or malfunctioning banking system at the center of the financial market that is itself supposed to serve the interests of the real economy, and real people. That’s how I started researching and writing about issues of power and structure in finance, and I suppose that’s why I’m here right now talking about it.

Billy Saas:  So I first became aware of your work in a paper that you co-wrote with Robert Hockett on the “Finance Franchise”. And of course, you’ve done subsequent work on The People’s Ledger. I’m curious, in the context of this bio that you’ve just given us. I think a lot of academics when they come into contact initially with heterodox economic, financial or monetary theory, it seems like a surprise. Or things need to be relearned. But I wonder about your history as a regulator, and that sort of journey that you took… Could you kind of narrate that experience for us when it came time to kind of think about finance as a franchise? Was it novel or did it just sort of make sense in the structural thinking that you were prone to do at the time?

Saule Omarova:  I suppose it was both a surprising development and something that did not surprise me at all, more of a natural trajectory, I guess, of my thinking and learning and experience, both as a practitioner and academic. But the surprising part was, perhaps the excitement of a discovery, and the excitement in that moment when, suddenly, a lot of the pieces that you’ve been thinking about or writing about, or talking about, fall into place, more or less, to cohere into a whole of which you were not aware of previously. That was something that I don’t think anybody can kind of predict, or that’s definitely going to happen. Certainly not for my work. 

Every time I start writing a paper, It’s always a process of a lot of doubt, and worry, and thinking about, is it really new enough? Is it interesting enough? Is it valuable to share with people? So the “Finance Franchise” was kinda like that, but it was also a different experience, because it was a co-authored work. When you are collaborating with somebody else, the dynamics change. Bob Hockett and I, we started talking and discussing various issues in finance a few years before the “Finance Franchise” was actually published. And it was not our first quarter piece, we’ve written a couple of shorter ones, and a really longer one about the developmental finance state previously, so this was a process. 

What I am really grateful for in that process was that chance to find a comrade-in-arms in a way academically, someone who shared certain fundamental premises and understandings, but brought to the partnership a complementary set of ideas and knowledge. For example, I am not, and I do not consider myself an expert on monetary economics per se. I have never been formally trained, I don’t have a degree in economics, and whatnot. So it was really fascinating for me, to start from my usual, typical, let’s start from the ground, from the understanding of the mechanics in the market, certain financial instruments or certain market dynamics and relationships, that financial institutions and regulators and various other actors in the economy enter in starting from that understanding, building up toward the whole. Whereas Bob came into this experience, perhaps from a slightly different perspective, which was absolutely complementary. He has tremendous knowledge of economic literature and philosophy and history, so we worked really well together and it was truly a great partnership. 

That was the “Finance Franchise” and I remember we’ve gone through many, many iterations of the draft. We developed and discarded multiple metaphors for the arrangement that we were trying to describe. I remember talking about the solar system and how the federal reserve, the central bank, the sovereign public is the sun, and emits that full faith and credit as the energy into the universe, and the first layer of planets would be commercial banks, and then the outer layer capital markets, and so on, so forth. We were writing and rewriting this draft. And at some point, we have decided to discard that particular metaphor for the sake of coherence and certain writing editorial choices. 

That was the process. And I, perhaps I don’t know if Bob has a different recollection of that process. Perhaps what he valued is not exactly the same as what I value, but I really did value that chance to really build something from scratch. Because for both of us, I don’t think I will be speaking out of turn here on behalf of my colleague. But I think for both of us, that concept of the “Finance Franchise” — that particular public private partnership type arrangement in the creation and distribution of sovereign money and credit throughout the modern economy — that concept continues to be the foundation of whatever work we’re doing separately now.

Billy Saas:  I know that when I came to that work, I had been fairly deeply immersed in Modern Monetary Theory and heterodox economic discourse, generally. There was something special about that, that seemed to sort of click things into place in a new way. And the metaphor, just want to say, is very effective, very useful. And I think, as a metaphor, it’s not too far out of bounds from what it’s attempting to describe or carry over. It fits, it’s fitting. And I’ve found it very useful to share with students in courses.

Saule Omarova:  Thank you so much. Thank you so much. I do notice that with students as well, that I always start talking in my classes about what the financial system really is, what is it for, who are the main players and so on, so forth. And I start with the Orthodox description of financial intermediation, because to be perfectly fair, it’s not that that description is entirely and completely wrong. It does have its place. It is just not the correct description for what happens with money, as we know. 

So you start with this kind of traditional description, and then suddenly, you problematize it. And you ask them the question, well, then what do you think JPMorgan does when you come and ask for a loan, let’s say for a million dollar loan? Do you think JPMorgan needs to go into its books right away and make sure that it actually has the extra million dollars in deposits sitting there ready for it to extend to you as a loan? Because if that were the case, do you think JPMorgan would ever find that moment at which is: “yeah, yeah! Right now we have it! Oops right now we don’t have it,” right? Because people withdraw money and put money in and things happen. 

That kind of simple, and silly as it may be example, makes students wonder, wait a second, if that’s not the case, then what is happening here? Then I introduce them to this concept of “Finance Franchise” and how complex but yet incredibly simple it appears, and how it sheds light on so many problems that we seem to be walking around in practice, with respect to policy and regulation. And suddenly, understanding of that fundamental dynamics just changes the way you approach solutions. 

Scott Ferguson:  We’re starting to wade into it, but I’m wondering if we can do a little teaching for those listeners who are not familiar with this very important paper that’s so foundational to your work. How would you describe your criticism of what we might call the conventional, micro economically-oriented approach to money, to law? You use the word intermediation, maybe we could spell out how is it that the dominant ways of understanding comprehend money and banking and finance? And what are the problems with that? And maybe a little bit about how that dominant model has shaped financial regulation and reform, especially after the Great Financial Crisis and Dodd Frank. The kind of sensibility that’s built into Dodd Frank that you criticize.

Saule Omarova:  Yeah, well, that’s quite a lot, so let’s see if I can actually do that. So if you pick up any textbook on economics, or finance, or corporate law, or financial regulation, for example, usually it starts with some introduction into what a financial system is, what it does, and its functions. Very respectable scholars, and practitioners have written those books and contributed to those books. Their view of what the financial system is, it sounds familiar, it sounds plausible. 

They basically talk about how the financial system helps to transfer wealth across time and across space, and it helps to generate capital and do XYZ. But when they talk about banks and securities firms and insurance companies, and mutual funds and fund managers and other financial institutions, usually, the description is quite simple. They’re just introduced as this sort of middleman entities, intermediaries, whose job is to bring together two groups of actors in the financial system. 

Those people or entities, those persons who have surplus funds, extra money, that they do not need for consumption immediately, but they’re willing to put into the game of investment one way or the other. And on the other side, there are those persons and those entities that have the need of money, of capital, of investment, so that they can actually build factories, hire people and produce goods and services that basically keep our economy going and, in fact, constitute our economy. 

The banks come in, for example, in a particular way, banks are typically considered in the traditional standard explanation the quintessential archetype of financial intermediaries because what they do is that they step right between those two sets of players, the suppliers of funds, investors, lenders, and so forth, and the users of funds, the various companies that raise capital or individual borrowers and so forth. And the banks solve various problems in that relationship by absorbing the risks that the suppliers of finance fundamentally face because they are supposed to give their money up today, in exchange for some promise to be repaid at some point in the future, because nobody knows what the future holds. 

Because these lenders or investors, they really often have no way of accessing or evaluating the information about their borrowers, or the issuers of securities, those companies’ future prospects and the ability to repay. Because of all these risks, frequently, that relationship simply fails to take place, which is not good for anybody. We need money to get inside the economic activity somehow so that the production happens. So banks come in, and they essentially become the borrowers to all those people who have extra money. They don’t have the use for it right now, but they also don’t really have the information or the expertise or the time to research any potential lending opportunities to see: Oh, to whom can I give this money temporarily for a fee? So those people can come to a bank, open a deposit account, and put the extra money into that account. The bank collects all these deposits, because those are what we understand by deposits from a myriad of individuals, each one of whom may put in a very small amount, but then the bank ends up sitting on this huge bag of money. 

The bank then turns around and looks to the other side of the river, where all those other entities and people are standing there with hungry eyes and stretching out their hand, asking for capital because they want to build factories and they want to construct houses or buy those houses, whatever. And then the bank being the professional, now sitting on that huge amount of money, can actually conduct the necessary investigation into these people’s ability to repay or make good on their claims. And once they determine that a particular borrower is a worthy borrower, then the bank can essentially dip into its bag of money. Well, perhaps it’s not a bag of money, but their vault, because that’s where they were supposed to keep the value, right? Dip in the vault, take out a bunch of money and then extend that loan. 

And that’s what this intermediation process in the banking sector is supposed to do: alleviate all these fears, all these risks of everybody who actually has that spare money that they don’t need to use, and then bundle it together and then extend loans to various borrowers. Of course, even within that traditional view of the banking relationship, there is already an element of surprise that students usually encounter. Because once you tell them, well, guess what if you go to the Tompkins Trust or to Citibank and open an account, putting your money in, open a checking account, right? Guess what, you become the lender to Citibank or the lender to whatever bank you open an account with. So you are basically an investor, and they are your borrower, and they owe you money. Is that how you think of this relationship? 

And of course, the students just go: no, that’s not how I think of that relationship. I think of them selling me a service. The bank gives me some kind of a benefit by allowing me to keep my money safe. That is the fundamental, first step in the learning process in which you start pushing students toward rethinking what actually happens. This is when you tell them well, guess what? It’s not your money. If I asked you how much money you have? You would probably not give me the amount of cash in your pocket, but you would give me the balance in your bank account. And guess what, that’s not your money. You don’t have that many dollars. 

What you have is a claim on a bank, a private corporation, that is your borrower to return that money to you should you have the need for it. And so that’s where it starts, but then you start explaining the fact that, well, if you think about the bank in this kind of terms, it’s just a middleman or middle person or middle entity. The player in the middle who essentially collects existing money that people have out there, combines it all and then out of that pile makes loans to other people, then what is the difference between the bank and the mutual fund? Well, then functionally, there shouldn’t be any difference, right? We could just all put our money together in one big bag, and some person in charge of that bag might actually then, extend loans out of that bag. Would that be the same as a bank? 

Clearly, it’s not the same. It’s not the same because there is another very standard textbook explanation of what banks do. And that is typically known as fractional reserve banking, where people came to understand that banks don’t necessarily simply just disperse the money that all these little ladies like me brought to the bank and open deposit accounts. But what the bank does is whatever money it’s collecting in deposits from various depositors, it puts in the vault only a fraction of that amount. But then it can write pieces of paper, essentially, granting loans making promises to various borrowers out there in the real economy, to make payments on their behalf to their suppliers, or to their clients, or to their employees and whatnot. 

What they do is they open these accounts and put that money in there. They create these loans, but the number or rather the amount of the lending activity is not directly limited to the amount of deposits that were brought into the bank because there is this magical understanding that all depositors are not going to knock on your door at once and withdraw all the money. As long as that’s the case, you don’t need to keep 100% of deposits in your vault. You could put in, typically, 10%. So you put in 10%, that’s your reserves. Your reserves, that’s your most liquid cash in the vault or whatever it is. But then 90% of that money that somebody brought in, you can actually extend in loans, and then those loans get deposited elsewhere, or maybe even at your own bank. And somehow, the balance sheet, the books of the banks–individual banks but also the banking system in general–grows. 

This is what usually is meant by this phrase, that banks create money out of thin air because they’re able to use that fraction of the deposits brought in as some kind of reserve base, and then multiply that base by 9 or 10, or 25. That’s a very popular description of what banks do. But it’s so fascinating if you think about it. So which is it? What is it that banks actually do? Do they simply collect deposits and then use that amount of money to extend loans? Or do they have some kind of magical formula and where does that formula come from? Where if you have 10% in the vault, somehow, you can multiply that 10% so many times and everything will be hunky dory. 

Those two descriptions do not really, necessarily cohere. They’re not consistent, but nobody really cares, because in the standard sort of economic textbooks, to the extent that I’m familiar with them, I don’t mean any disrespect for the economists, or corporate law textbooks or whatever textbooks, right? These questions do not get asked because money is frequently taken for granted as something that naturally in any kind of capitalist, or exchange based, private property based, market based economy is something that is almost a natural phenomenon. You need that universal measure of value, so money just happens. So yeah, we know that banks make money, but also, it’s not that somehow they have some magical power to make money. They make it out of thin air, but there is that reserve base. And where does it all come from? It comes from depositors. 

The problem with that is that well, if that were the case, then how would we account for the fact that some countries, for example, don’t even have the mandatory reserve ratios for their banks. In other words, there is no 10% of all of your assets, or whatever deposits that you have, you have to keep in the vault. In some countries, it’s not even necessary. And yet their banks operate pretty much the same way as all banks operate. And banks create money. And there is this concept of the elastic money supply. 

Sometimes banks create more money. Sometimes they create less money. And there’s monetary policy with a central bank in the middle, the whole point of which is to manage the supply. If it was all some kind of preset formula of what the little old lady brought in, and then how much it can grow because Citibank decided that’s okay, then why do we even need the whole complex edifice of monetary policy and whatnot? If we start thinking about it, then you start thinking, but what happens on the ground? How do banks create money? What happens when somebody comes to the bank and wants to borrow from that bank? Does the bank really have to look into his vaults? Does it even have any vault? Where does it look? And how does that decision get made? 

In reality, of course, what happens here is that imagine Billy or Scott, when you went to the bank to borrow money to buy a house, the bank didn’t tell you: “You just wait here. Let me go check how much money I have in the vault or whatever my deposit base is.” No, they don’t do that. What they do, however, is they make you jump through millions of hoops to prove that you have income, you have a steady job, you have assets, to get an appraisal of your home so that you can give them security interest in your house. 

In other words, they assess that loan, that prospective loan as an investment opportunity. And once the bank decides that this actually is a good investment opportunity, we can price the risk of this loan not being repaid and establish that interest rate, but we think this is a good loan to make, because over the next 10, 15, 30 years, we will actually make profit on that loan. And this person is actually going to use that money for some socially beneficial purpose: we want houses to be sold, we want the construction companies to actually build those houses. 

Once the bank makes that decision, then the bank simply credits a deposit account that is in the borrower’s name with the amount of the loan. And that process is the moment of creating that purchasing capacity, that money that didn’t exist in the system before it was created. And at that moment was that bank actually credited that account, from that moment immediately, almost immediately, you can start spending that money. You can start writing a check out of that deposit account to cover your debts to cover your purchases, write a check to the seller of the house or to the construction company or whatever. 

In the current modern system that we have in this country, nobody will start asking: well, which bank opened that deposit account for you? And essentially how liquid is this check? What is that? Maybe we should just discount it? Nobody does that. Why is that the case? There is no reserve requirement that presumptively limits the bank’s ability to create this new purchasing power. Right? And yet, nobody questions the fact that this is good money, because it’s drawn on a particular bank. 

That’s because certain things, certain relationships involving money creation, in particular, and the banking system cannot be understood within this sort of narrowly, micro-level transactional framing that this financial intermediation concept conveys. And that framing being, you can only understand the relationships by looking at the private market interactions between specified private market participants. Like, here’s a lender, and here’s a borrower. Here’s a depositor, and here’s a bank. Here’s a bank, and here’s a borrower. 

You can only understand that when you expand your view, and you look at what happens in these types of transactions as part and parcel of the broader system in which the government and government supported entities, the public, the sovereign, in effect, the sovereign public, various actors, that are typically just treated as being outsiders to private market exchange, in fact, are fundamentally important in terms of enabling those private market exchanges to take place in the form that we know. 

The reason why the bank can actually credit the borrower’s account with the amount of the loan without being constrained in that moment of money creation, by the amount of deposits sitting “in its vault” is because each bank in the United States or in most modern economies, modern banks, is a participant in the system which we call the “Finance Franchise” arrangement, which is basically the principle of how the banking system works. It is tied into and directly plugged into the balance sheet of the Central Bank, which is a public actor, which is basically the embodiment of the sovereign public in the sphere of banking and money creation.

The central bank, on the surface of it, is essentially just a bank for those private commercial banks that extend loans and take deposits. Those banks open their own deposit accounts, effectively, with the central bank. When they have to make good on their promises, on the checks that are written by the depositors on them, these banks essentially have to make those payments out of the accounts that they hold at the central bank. In the US, those are called reserve accounts. 

What happens is that once the bank created new money by extending a loan, at the end of the day, those checks that the borrower wrote to suppliers and employees and various other people that were accepted as good money, no questions asked, those checks at the end of the day have to come back to the original lender, the bank. And the bank would have to make a payment on those checks, make good on those promises. So that system is operated on the books of the central bank, a public agency, a public entity, a sovereign entity, which basically means that all of those new monies that were being created, because they were good investment opportunities for those banks– in other words, good creditworthy projects in the real economy that needed money, and they got the money from the banks–all those projects are able to take off and happen. 

Now the banks have to actually make good on those promises because if they don’t, then those relationships will break down tomorrow. And the reason they are able to make good on those promises is because they do have those accounts on the books of the central bank. So for example, if on any particular day, suddenly, there are too many withdrawals from ATMs from the deposit accounts of a particular bank, and too many checks came in for payment on that same day. And suddenly, you don’t have enough in your account at the central bank in your reserve account. You can actually borrow either from other banks who also have reserve accounts in the same system, or worse comes towards, you can borrow from the central bank itself. And this is the most underappreciated, and the most fundamentally important institutional underpinning of our entire banking system and the system of money creation: an elastic currency that is meant to meet the needs of the growing, modern economy. 

Because in the traditional, the standard, mainstream picture of things, when we just focus on private market participants, banks and companies and broker-dealers and borrowers, whatever, in this micro-transactional sense, and we think of the government as some kind of an outsider, usually, this function, the payments and clearing function, and the provision of this reserve accounts by the central bank to private banks, is considered something mundane, and kind of back office support function that is really, at most convenience, but generally speaking is just like, I don’t know, it’s just the way things are. Sometimes I joke with my students, it’s kind of teenage kids, just think that it’s, of course, how things are that there is a house and the parents provide the house.

Scott Ferguson:  Somebody will do the dishes.

Saule Omarova:  Yeah, somebody does the dishes. Do teenagers ever talk on their social media about how mom does the dishes and dad drives them everywhere? No, because that’s sort of considered part of the duty. So in that same sense, the central bank’s ability to provide that incredibly important support that maintains the ability of private institutions with limited financial resources to engage in money creation in this elastic manner, that we really need as a society. That function has consistently been underrated and misunderstood. And in the “Finance Franchise” framework, we are supplementing these two mainstream concepts, financial intermediation and fractional reserve banking, with this more comprehensive and coherent system-based approach, in which we say that the banking system is not just a collection of individualized direct micro level transactional exchanges between banks and depositors, of banks and borrowers, for example. 

It is actually an institutional arrangement in which the sovereign public represented by the central bank injects its own credibility, its own credit, the full faith and credit of the nation, into that system by enabling certain licensed and regulated private corporations, banks, to have direct access to that public, sovereign credibility. And use that as a backup so that the private liabilities, those deposits liabilities that private banks issue, that we can use in everyday life as a form of money and think of it as sovereign money. 

If I have $100 in the bank, I’m actually quite confident that I have $100, even though it’s actually a private liability. That ability is a result of this particular arrangement. And in that arrangement, effectively, private banks are not some independent creators of monetary value. They are essentially the agents of the sovereign public, to whom the sovereign public outsources this function of finding the good investment opportunities out there in the real economy, finding those potential borrowers, those companies, those individuals, households, that have good productive use for the money, and they need that money. 

That’s why when private banks are doing their due diligence on any kind of prospective loan, that’s what they do on behalf of the public. And once they extend that loan and create new money, those banks can be confident that, as long as they of course comply with all the requirements of that relationship that are imposed on them by virtue of them being the agents of the sovereign public, as long as everything else goes right, that their private liabilities actually are treated in the entire economy as de facto sovereign money, even though it’s not.

It’s kind of like, again, going to my favorite, very basic example of teenage kids and the parents: it’s kinda like the parents giving those teenage kids their credit card, on which the parents pay the bill at the end of the day. And the kids now can use that credit card, to buy things, to do things to pay for services, whatever, because everybody in that exchange knows that ultimately, the parents stand behind the kids. And this is the relationship and that relationship is fundamentally hierarchical. 

I think that hierarchy, that the public sovereign is the ultimate source of all the money credit, the safest money, that is, at the bottom of that entire pyramid of financial claims in our modern economy. The ultimate source of it is the sovereign public, we all of us. That fact gets completely brushed aside in mainstream economic thought. I think by bringing it out through showing the institutional dynamics in the very simple transactional context of the banking sector, that is what allows us to see how all these other relationships and the financial system are fundamentally about the balance of public and private power.

Billy Saas:  That was an amazing tour de force. So a couple of thoughts. One is it seems like a job one is in the classroom, in your classroom, but then also, more broadly, generating and disseminating and educating people about what actual financial literacy is, right? There’s a kind of baseline financial literacy, but also baked into the kind of popular understanding of how the banking system works is a fundamental disinterest, or even say ignorance. The full picture that you’re providing here includes the “Finance Franchise” and highlights and focuses on the support role, but it’s actually foundational and enabling from the very start. So you can’t have those two other models without having the foundation of this unaccounted for thing. And so what follows from that for you? There’s a full picture here. Now what? 

Saule Omarova:  Right, so that’s an excellent question, because being a lawyer by training, and also a legal scholar, for me, the “so what?” is the ultimate question? It’s not just about getting the description right. But the reason why we need to get the description right is that the wrong description gives life to so many misguided policies and decisions that affect everybody’s daily lives. So if we understand the fundamentally central role of the sovereign public as the source of sovereign money and credit in this incredibly complicated financial system that we have, the smart person or critical thinker can actually address whatever burning policy or regulatory issue that they are looking at from the perspective of the public-private balance of roles, functions, responsibilities, and bring out normative implications. 

One example is, in all this current, perhaps not so current, but the recurring and unfortunate political debates about the debt ceiling and federal budget, and those really unseemly political maneuvers in Congress that jeopardize, effectively, the United States credit standing as the global power and whatnot. A lot of these debates become, quite obviously, silly when you start thinking about the public debt that we issue as a form of that solar energy that needs to be emitted, and that is being emitted into the universe, that it’s not the same as a household borrowing money to pay credit card bills, right? It’s not that kind of a dynamic.

For me, I’m not really an active participant in those types of political debates. It’s just something that, quite obviously, everybody’s aware of right. But in terms of financial regulation of financial markets, the recent emergence of new digital technologies and digital currencies, and whatever we mean by this beautiful term, crypto, these are the issues that are very much front and center on many people’s professional and policy and academic agendas. 

This is where the understanding of the fundamental dynamics of the financial system as we have it now can seriously inform our view of potential pitfalls, potential huge policy mistakes that we may make, as we’re trying to adjust ourselves or somehow respond to all of these developments and the crypto markets growing and so on, so forth. But also, and perhaps more importantly, it can inform our understanding of how we can harness the power of digital technology to make our financial system, this hybrid “Finance Franchise” system in which there is inherently that tension between the public and private, between private banks, franchisees trying to increase their private profits by abusing the public subsidy and by abusing this full faith and credit that they can disperse for money. And the interests of the public in keeping the system stable and safe and actually geared towards the needs of the real economy. 

This inherent tension can become much much worse, if we switch to cryptocurrencies and various digital monies that are generated outside of this banking system that continues to be the core of our financial system. But of course, once they’re created outside of that system, they definitely need to be connected to the traditional financial system, particularly the banking system, because those cryptocurrencies need a way of being exchanged into US dollars, or euros or whatever, the real sovereign money that we have in circulation. Whatever happens in that realm really is something that can fundamentally disrupt the system we have today. So rather than sitting there and waiting passively for the disruption to occur, and then encounter the traditional arguments that: Oh, the genies out of the bottle, you cannot change anything. Now all you have to do is extend more public support to this newly created private type of digital money, or maybe financial transactions and financial markets that are built on top of that new private digital money. 

Instead of saying, Well, you know, all parents just dish out more money. We can proactively say: how about we seize on the fact that there are these new technologies, and that we actually as a public together collectively, we are the source of all credit and finance in the system, ultimately. So to the extent that we know the tension in our hybrid finance franchise system, to the extent that we see that this system operates, yeah, more or less, it’s alright. But it does tend to miss allocate credit to over-generate risks to over-generate leverage that is unproductive. In other words, that energy that the sun emits into the system somehow gets trapped in the layers of the solar system, and never reaches the intended recipients, the real economy, the real people. 

Why can’t we use this new technology? Why can’t we re conceive the relationship at the core of this financial system, the relationship between the public, the sovereign public, and the private financial institutions, the franchisees of the sovereign public, in a way that rebalances the currently sort of skewed control over how much money is out there and where it goes — that currently is residing mostly with the private institutions– rebalances it so that the public, the sovereign, the source of the credit, has a greater say, in how much credit money is generated, and where it goes for what purpose. If we can actually solve that puzzle, and I believe we can, it’s not easy, but it is conceivable, to think about various ways of approaching that problem. 

If we can solve that problem, then we will actually be able to resolve for the first time a really, incredibly complex knot of not only financial, but also broader economic, political, and social problems that we have been dealing with for decades, if not centuries in our society. A lot of the problems that currently seem to be far removed from the idea of digital money, or digital currency, or the banking system, per se, and so on so forth, a lot of those problems actually will be able to be tackled, or we will be able to tackle those problems with these new tools. Because guess what, money, credit, finance is the universal input into every economic activity. And it is the most potent tool that we can use as a collectivity to resolve some of the tensions that we will not be able to resolve by looking at each individual tension individual problem in isolation, and trying to fix it with existing, very technical tools. 

I know it’s a little bit abstract, but this is basically the “so what.” The “so what” is, here we have potentially, I don’t know, the Samurai sword that we can take and go to battle, to actually defend, protect our future, from a lot of the challenges. So let’s appreciate the sword, and let’s appreciate the hand that can wield that sword. And that is our hand. It is not the hand of an individual bank or an individual hedge fund or anybody else, not even Elon Musk. So there we are.

Scott Ferguson:  So you have laid out in your work a number of what you sometimes describe as radical proposals for remaking the financial system, the banking system, how deposits for everyday people work, all the way to really rethinking a macro structure and strategy of investment. Could you, and I know there are other proposals out there, and I think you put yourself more on the side of let’s go big or go home, whereas others want to kind of take baby steps with some of this knowledge. Can you maybe spell out one or two of these major proposals for pretty radical overhauls and how they might have effects on democracy, or social life and taking care of people and our environments? 

Saule Omarova:  You’re absolutely right, Scott. There are, luckily, many proposals and many attempts, at least, to deal with these big social challenges we’re facing. That of course includes climate change and the great economic socio economic inequality we have in this country, in many societies. The fact that our economy has been gradually starved of productive capital and investment, and yet there is a lot of speculative investment that’s going on. So the reason I think that it is important to supplement a lot of the existing efforts, maybe to solve particular aspects of these particular types of problems with a more systemic or systematic structural approach to redefining the fundamental functions and dynamics of the financial system, is that sometimes the most practical way of achieving the desired result is not go to the smallest possible denominator and tackle each individual issue separately. 

Sometimes it is the best, most pragmatic way of solving the problems. But sometimes all it does is disperse and diffuse the energy the efforts, and also pushes the pressure elsewhere in the same system. So you push on one lever, and suddenly, the problem comes out in another pocket, right? So I, for the longest time, have been thinking about the, again, the financial technologies, FinTech and digital money and digital financial products and crypto, because that’s basically in my wheelhouse as a former, currently recovering, financial regulation lawyer. 

The more I thought about those specific issues, how do we deal with the emergence of all these private tokens that circulate supposedly, as a form of payment as money? How do we accommodate this kind of new financial markets into the existing framework, the more I realize that this is precisely one of those moments in history where we really need to go all the way to the very bottom, to the very root of how the system operates as a whole. 

So when I use the word radical, I know that in common parlance, it is often considered a bad word, because radical means extreme. And it means almost violent. It means something that is unrealistic, or not something that we want if we’re pragmatic adults. We don’t want to destroy, but we want to construct, right? But radical, actually, it’s the root of that. The root of the word is root, right? So actually it means fundamental. And so when I call my proposals radical, I am hoping that more people will recognize the fundamental nature of the overhaul I’m proposing. So one of these proposals again, very little under the sun is brand new. But particularly during the pandemic, it became very clear that we need to make sure that everybody in the economy, everybody in our society, has equal, direct and easy access to sovereign money because that determines the ability of an individual person to buy goods and services, to pay for the housing, to pay for education, to feed themselves and to provide very essential basic needs. 

For example, not being able to have a bank account in our current society means not being able to make those types of economic decisions and to take that action on a daily basis without having to pay an exorbitant, in many cases, unacceptable price. Those of us who are lucky enough to be part of the existing banking system, to us that may be a natural thing to use. But too many people were sort of in a position during the pandemic, in particular, where even the checks from the federal government that were supposed to help them continue paying their bills and feeding their families during the lockdown those checks had to be cashed by the recipients in some non bank institutions to which they simply didn’t have access during lockdown. They couldn’t even often get to the mailbox in which that check maybe was sitting. So that was an extreme situation. But it brought to the fore of public attention the fact about which many scholars and policy activists have been talking for many years before the pandemic hit; the fact that we actually do not have the kind of banking service, the basic provision of basic payments and banking services that we need to have in order to basically provide effectively economic citizenship rights to everybody. 

During the pandemic, there was this sort of fermenting sentiment that perhaps we should think about a public option for deposit services, and that public option would alleviate the need to basically wait for banks to judge whether or not you’re a prospectively profitable client, before they open a deposit account for you. Of course, again, the idea, for example of using either a post office, or postal banking, or maybe even the central bank itself, the Federal Reserve, as an actual provider of services directly to individuals and households and businesses, in terms of opening deposit accounts directly with a central bank, or maybe a US Post Office in the postal bank. That idea has been around forever. 

But one of the knock down arguments against that was the administrative difficulty of basically having a central bank, let’s say the Federal Reserve, actually manage these deposit accounts. Is the Fed going to open bank branches in every village out there? That’s ridiculous, right? So now we have digital money. We have the possibility of a central bank, for example, issuing digital currency, or I don’t know, any kind of let’s say public authority. It doesn’t have to be necessarily a central bank. It could be monetary, it could be the treasurer. It depends on the choices and the design and whatever. 

Now, there is technology that allows the public money being issued digitally, and therefore managed those deposits accounts or wallets in which that money sits, and out of which it goes and into which it comes, with greater ease than was ever possible when all the ledgers had to be the manual or individually maintained on some proprietary computer systems, for example. So, I hesitate to say, “Oh, I am the smartest person in the universe, I was the first one to …”, of course not. But there were several of us thinking and writing about these things and discussing these things with one another. And, for example, Morgan Ricks, Lev Menand, and other people, in various ways, have been thinking and talking about the idea of the central bank actually offering deposit services directly to economic actors, individuals, households, and companies. 

Of course, there was this great economic debate among central bank economists and particularly central bankers about issuing central bank digital currencies, CBDCs. But during the pandemic, I felt that look, right now is exactly the time when we need to bring those two debates together. First of all, those two ideas, the Central Bank Digital Currency and Fed Accounts, let’s call them, the central bank opening directly deposit accounts. But not only bring them together and think about how it could be done in greater institutional detail than was done before. But also address one big elephant in the room that, in my view, hampered all of these discussions and proposals with respect to CBDC are Fed Wallets and Fed Accounts before them, and that big elephant in the room was: Okay, let’s imagine that you can now have the central bank, the Fed, open deposit accounts for everybody potentially, in the economy. Issue these liabilities directly to everybody, so now, there are sovereign liabilities functioning in the economy as truly sovereign money. Which is how we think of it anyway, right? 

Currently, it’s not happening outside of the cash. In the electronic world, there is no sovereign money. So why not create that sovereign money in the electronic form? But what that means is that the liability side of the Fed’s balance sheet will increase tremendously, immediately. Something has to be done on the asset side, on the other side of the balance sheet, to balance it out. Even if, as we understand, maybe not everybody, but let’s just postulate. Of course, it doesn’t mean that the Fed actually has to look in its own vaults and take out the money that some little ladies deposited in there and then bundle it up and lend it to somebody else. 

That’s not what that balancing act is about. But the balancing act is, nevertheless, an important factor that if there is an increase in liabilities, you actually get greater capacity to invest. As the Federal Reserve, you have the greater capacity to use your own balance sheet to channel capital into the economy. And the question becomes, how will you channel it? Where will you invest? 

So right now, the Fed doesn’t invest in many things. What does the Fed typically invest in? It extends loans, for example, to banks that need loans in emergency liquidity, whatever. So there are some of those discount loans to banks that the Fed has. It invests mainly in government debt, right? There are some treasury bonds, there are a lot of Fannie Mae, Freddie Mac, housing related bonds, because a policy decision was made many, many decades ago that we’re going to use the Fed’s balance sheet to support housing finance because we want homeownership in America. That’s basically it, maybe there are some precious metals, there are these claims on other central banks, but there are no commercial loans, no household loans on that balance sheet right now, and not much is happening. 

So the question that both central bank economists, the CBDC guys, encountered, and that proposes to basically provide the public option for deposits, public option in banking for the people encountered was that well, what should the Fed do on the asset side? So most people pretty much either were just quiet about it, like, we don’t need to talk about that. Let’s just focus on the deposit side. But you cannot do that because there is always that question. But most people just sort of very … and it’s really funny, because very much in passing would admit to, well, the Fed or whatever, the central bank will just do more of what it does currently. So maybe invest more in whatever treasury bonds or agency bonds. And if you run out of those bonds, because you might run out of those bonds. 

What does that mean? Does that mean that the Treasury now is going to be forced to issue more debt? So then, the Fed could invest in high quality corporate bonds. And what happens if the liabilities are growing and growing? Well, then maybe the Fed could even invest in corporate equity: stocks of some companies. And that is an incredible thing to even contemplate, because what that would mean is that private corporations would effectively have the captive buyer, the captive supplier of capital for them, which is the Federal Reserve. Do we really need that? Do we want that? What will the private corporations do with all that money flowing their way? Will they actually go into poor neighborhoods and build fancy facilities for the kids there or something like that. Or maybe… 

Billy Saas:  Stock buybacks

Saule Omarova:  Yeah, exactly. Stock buybacks and dividends, all this wonderful stuff. Bonuses, whatnot. So clearly, that question created a problem, a conundrum, but also opened a possibility for rethinking the direction and the nature of the credit flows in the economy overall. Because now we can have one platform, the central bank’s balance sheet, that has a tremendous capacity to channel that investment, that capital, into the economy, into the economic activities that are going to generate greater employment, stronger supply chains, better life, greater infrastructure, better infrastructure for more communities because that balance sheet belongs to the public, effectively. 

So I wrote up a paper that basically, it’s called The People’s Ledger, because it was kind of playing on the whole “distributed ledger” concept. Distributed ledger, well, you don’t just distribute it in that sort of technical sense. You give it to the people that write to basically use this central bank balance sheet as the platform for providing safe, sovereign money that is digital that is convenient, and universally accessible, and not predatory. But at the same time, with the other hand, channel the resources that are generated on the asset side of that platform, of that balance sheet. Channel those resources into productive activities. 

And so once you start thinking about it, then you can imagine what kind of new assets the central bank, the Fed, can invest in. If it’s not corporate bonds, if it’s not treasuries, what else can it do? So I was thinking, first of all, the Fed could actually start supporting lending for productive enterprise rather than lending that goes into margin loans; the loans that support speculation in financial markets. How can you do that? You can basically build on the existing practice of those discount loans that the Fed already extends to banks, who need some liquidity support on a short term basis, and secure those loans with good loans of their own. 

So to the extent that banks, for example, private banks will lose their access to deposits because deposits will be provided directly by the Central Bank. The central bank can actually open this kind of a discount window to a wider range of public and private lenders. They don’t have to be called banks; it can be called banks, call them whatever you want, right? And establish certain eligibility criteria for the kinds of loans that those lenders can extend and then bring a “discount” effectively sell to the central bank. Those criteria don’t have to be anything weird or radical in any way. But loans cannot support financial speculation, for example. It’s not the kind of loans that private equity firms will take in order to buy out some company and run it to the ground. But loans to productive companies, industrial corporations, loans to cooperatives, loans to universities, public entities of various kinds, like a State Transportation Authority wants to build something and needs to borrow money, they could get a loan now from a bank, a private lender, because the private lender knows that if they extend that loan, they can actually finance that loan at the Fed’s discount window, and essentially, not take too much risk and get a little bit of a profit on it and why not for instance. So that would be one asset. 

The other asset to me is even more important, and that is the fact that rather than basically directing increased investment capacity toward blue chip corporate debt or something like that. The Fed could buy bonds and other securities instruments issued by various public and public-private entities, institutions that are financing large scale public infrastructure, for example, at the state level, but also at the federal level. For example, at the state level, we have various green banks, and there is a movement to create more green banks or some other public institutions like that. 

To a great extent, access to financing becomes a real serious constraint on the potential of state level green banks or similar institutions to really spearhead sustainable economic development and maybe target other problems are on the local and state level like inequality or certain geographic imbalances and decay in certain communities, because those green banks have to finance itself either out of the budget, which at the state level is limited, or by issuing bonds in capital markets, which basically subjects them to the desires and profit seeking motives of private bondholders. 

So now, what if the Fed can become the potential buyer for those bonds issued by state level public banks and state level green banks, for example. That would enable those institutions to really fulfill their missions. Rather than just promise some improvement, they will actually have access to patient capital that is not out for profit there. But in addition to those kinds of existing forms of public infrastructure investment institutions, one can now imagine the creation of a new, more capacious and more ambitious kind of federal level, national level investment institution that is public. For me, that is the National Investment Authority, NIA. Again, it was a big part of the “Finance Franchise”, “so what” answer to the “so what?”

 The question is that, look, we’ve been talking for decades about the need to create some US infrastructure bank at the federal level, or investment bank. But of course, the devil is always in the details, right. All of the existing proposals to date have specifically envisioned those entities along the lines of what can be done in the financial markets and economic markets that are presumptively dominated by private financiers and private profit making motives and are subject pure to existing private market logic, and can only come into plug certain holes that are identified by a reference to market failures. So even where the private market “fails”, and does not provide credit for something that would be beneficial to the public in the long run for the economy, for example. Only then can a public investor come in, and take the risk and whatnot. And there are all kinds of problems with that limited approach to public investment. 

What we can think of, instead, is a standalone federal institution that would actually be just as important in the overall federal structure of public institutions, financial institutions, as currently the Fed and the Treasury are, but it would perform this role that neither the Fed nor the Treasury department currently can perform. And that is the role of directing and managing the flow of public and public-private mixed capital into certain types of critically important public infrastructures. And it’s effectively an industrial policy entity. 

The NIA, the National Investment Authority is not envisioned as a traditional public investment bank or the traditional sovereign wealth fund or whatever, but as a system that would have the political body, the federal agency, the governing board, that would be explicitly charged with a very political task of identifying the gaps in the public infrastructure, and in the structure of the US economy and developing some kind of a strategy for the types of investments and the places in which those investments need to be made and define the goals of that investment. 

Those goals are not going to be commercial viability, per se, but the goals are bigger. Sustainability, resiliency, equality, creating jobs, increasing the well being of various communities and so on. And then in the second level, there will be the operating arms. And here we can actually have a variety of subsidiaries that will tackle various problems in various ways. The National Infrastructure Bank would actually be a much more traditional credit institution that would create a secondary market for various bonds issued by various institutions and enterprises that are building those critical public infrastructure projects. 

As a public lender, the NIB, of course, would not have to squeeze the life out of those entities on those loans, but actually would be very patient and would be ready to absorb some of the losses because some projects will, let’s face it, never be commercially viable. And that’s okay. But in addition to that kind of traditional credit provision, we can actually now think about something alongside the public venture capital fund type of an entity or public asset manager, a slightly different function for a public institution that would essentially perform the same role, as currently private asset managers perform for really wealthy investors and institutions. But this particular institution can perform that function for a certain kind of publicly important type of institutional investor, like pension funds, for example, particularly public pension funds. 

Right now, public pension funds are part of this financial market that lives according to the private financial logic. And when pension fund managers are looking at the menu of financial options that they have, should we put it in the treasuries? Should we put it in corporate bonds? Or maybe should we go into private equity because private equity funds offer higher returns? Well, how about this new asset manager that is a public asset manager can offer new type of a collective investment fund, a new type of investment opportunity for pension funds, where pension funds can put their money into those new vehicles that are managed by the National Investment Authority in the long term interests of the US economy, in US public, and channel that money into long term public infrastructure of the kind that cannot be built by private actors or via private funds. There has to be some financial engineering involved, of course. 

This is where things get controversial, to some extent, but not to me, because all we’re doing here is essentially taking existing financial instruments that currently are being used for pure private profit maximization. But the instruments themselves, you know, a shovel is a shovel, right? A good person can use a shovel for good purposes. And a bad person can use a shovel for bad purposes. In the same spirit, we can use some of these financial techniques to replicate some of the returns, for example, as a reasonable reward to pension funds and other institutional investors for participating in the financing of certain long term public infrastructure projects. In effect, subsidizing the building of those critical public infrastructures. But doing it in a way that helps to avoid a lot of the political problems around budget and debt ceiling, and what have you that currently are plaguing our system. 

So if we have that kind of National Investment Authority, it would be much easier to build it up and to enable its function as intended. If the Fed, as the issuer of the digital dollar, the CBDC and the provider of deposit accounts to the entire economy, is able to provide liquidity support to the NIA using its capacity on the asset side. These are the kinds of systemic, structural reforms that we can and should debate. Not everybody will agree on my particular proposal for example, and they don’t have to. 

There are other proposals, other ways to skin that cat or you know, whatever animal one skins. I hope nobody skins anybody. In any event, there are many ways to approach this problem. The key here is to overcome certain premises, certain presumptions and assumptions, that limit the scope of the debate. We can never talk about, basically, the central bank channeling credit directly into the economy, because that is a political problem. Well, it may or may not be. It’s not like a central bank is apolitical. It’s not meant to be apolitical. But what we can talk about is, which specific instruments are better suited to the public purposes? What public purposes really should we pursue? These kinds of deliberations, they need to happen today, and they need to happen because if they don’t happen, then we will never be able to solve the problems we have in front of us.

Billy Saas:  When you’re talking about investment, and asked the question about what the Fed and the Central Bank currently invests in, one of the things that came to mind in response to that a little bit later, as you’re unfolding The People’s Ledger and the National Investment Authority proposals, is that to the extent that the central bank is not taking these actions, is not actively having these conversations, or in fact, that there’s not a huge constituency to have these conversations at the policy level, could we say that the central bank is actively investing in the status quo where the status quo means mass inequality across all sectors, health, climate, wealth, and all that sort of thing? So the thinking of investment in a kind of negative way, right? Investing in the bad today, and pushing away any discussion of a better future. 

I’d be interested, by way of kind of closing out our conversation, Saule, which has been wonderful, in anticipating that I’ll play this or share this conversation with students in the future, I’ve had, through discussions, and I’m sure you’ve had a similar experience, and Scott probably has as well, you’re talking to students, and you’re doing the thick description of the financial picture: here’s how money works. And you see a light go on, or something snaps or clicks or ticks or whatever. And then you talk about what that permits, that fuller picture, as you have done so eloquently and thoroughly. And then the savvy student, or the savvy person you’re talking to says: “Yeah, but that’ll never work.” 

So there’s a cynicism or a pragmatism, maybe both, that kicks in at that point where it’s like, well, if this is the case, why haven’t we been doing this the entire time. And it reintroduces that question of power and investment in the status quo. So what would you or could you sort of share with us? And maybe provide me with a good way to answer that question? I don’t think I’ve come up with one. How do you reckon with the apparent, cultivated ignorance or resistance to acknowledging how things really are and then there by refusing to have conversations about what a better world we could have, if only we recognized it that way?

Saule Omarova:  Right. Well, that is, to me, a much harder question than a question about designing a potential mechanism, for example, for achieving this or that goal. And it’s a hard question for a number of reasons. And some of it is maybe personal to me, because I’m not that good with blame assignments. It’s my temperament. At the moment when I’m asked, Can we affirmatively say it is your fault for affirmatively basically reproducing the bad thing? It’s not that I don’t think there are situations when such a statement is warranted. 

There are situations like that. It’s just I don’t know how far it gets us in a way because by highlighting the specific political choices of certain entities or certain individuals, where on the other hand, doing a very important job of pinpointing the fact that this is a choice. So by not making a particular choice, the good choice, you are effectively de facto making a bad choice. 

But then I think about sort of it from my personal experience, about the fact that I grew up in the former Soviet Union, at the very end of the Soviet Empire’s lifespan. Sometimes it is difficult to imagine the possibility of change or resistance that is not futile. Because the existing system is so entrenched and so powerful, and so oppressive in many ways, that when you look at it, and even if you are in a position, for example, to take a stance on a particular issue, or at a particular level, sometimes it just seems that there is no way things could possibly change. 

Right now, when I think about the political obstacles to even having a serious conversation about these issues, let alone actually enacting the reform of any kind along those lines, I do feel that kind of despair. And it makes me feel powerless, let’s just admit to it. And in that moment, it’s very easy just on a personal level, for every individual who is part of an institution of whatever kind, even if you want that change to happen, it’s very easy to sort of feel like all it will do is kill me. It will not save it. So that’s sort of like a personal kind of thing.

 When people are in certain positions of power, and their voice actually matters, definitely the responsibility on them to act in the interest of the public is immeasurably higher than the responsibility of any other individual in any other position. Right? Maybe there is that stronger case for basically saying to the central bankers that because you’re pretending this conversation isn’t happening, you are effectively enabling really bad things to continue. So 20-50 years from now, don’t you dare hide behind some kind of excuses, like, Who would have thunk that this would happen, right? And write your memoirs about how you were thinking about all of these things, but nobody could ever really imagine? Because here we are, we are imagining. So it is your job to give us the time that we deserve in terms of listening to our arguments and engaging with us, rather than pretending we don’t exist. 

So yes. But ultimately, you know, what, Billy? Look, the Soviet Union fell apart. And nobody, nobody could have predicted it would happen this particular way, in this particular timeframe. And people were taken aback, even though everybody, everybody in that country knew that this was not a system that was going to last. But at the same time, nobody could imagine the specific mechanism and moment in which the Colossus will fall. So I’m thinking that politics is fickle. Right now, it seems to us the way central bankers are, the way the politics is, the way people think about these things, is so entrenched that there is no way that we can shift anybody’s view in the immediate term. People are just sort of so selfishly stuck in that mode of thinking, and because of the political economy and the lobbying and the corruption and whatnot, because of these various reasons. Those who could make change will never make that change. That may seem to us as the only possible reality. And 10 years from now, we could find ourselves in an entirely different situation. 

This is why I try to focus not on pushing this narrative of, “if you’re not with us, you’re against us,” but rather conserving my limited mental capacity for trying to really engage with a ton of actual substantive design issues, because there are so many open questions. Even in that People’s Ledger scheme that I briefly described, there is a ton of problems that need to be addressed: privacy of CBDC, and how to actually insulate this particular institution from the corrupting influence of new kinds of political economy forces that will inhibit new types of vested interests that might emerge, and so on, so forth. These are the issues I want to engage with. So I’m sorry if it’s really a convoluted and unsatisfactory answer. But there it is.

Billy Saas:  There it is. You’re not alone and keep fighting and stay positive. Sounds like a one way to distill that.

Scott Ferguson:  One of the ways that doing critical work and doing and contributing is not necessarily always in the most direct way, but it is contributing to the conditions of legibility, right, and helping to make the debate and what is legible shift around the powerful actors, rather than necessarily…Sometimes it’s important to go after the powerful actors and to put their feet to the fire. And, of course, this podcast is called Money On The Left, and we’re all for that. But I also think that we’re committed, like you, to a long game, that is about a politics of pedagogy, a politics of shifting how we even approach problems in the first place, and what the conditions of possibility for doing so really are.

Saule Omarova:  That’s absolutely right. And I completely agree. You put it so much better than I could. It is very, very true. And I don’t mean to dismiss the progress that we all collectively have already made. Just a few years ago, some of these notions and ideas were absolutely nowhere to be found in the discourse outside of a very, very small circle of nerdy people. And now, the mainstream press, even, here and there talks about certain things and mentions certain things. For me personally, I consider a huge achievement already for me, the fact that the NIA, the National Investment Authority, even that term now is in circulation! In 2020, when the pandemic hit, nobody but a few academics in the FinReg world even heard of that term. So you know, we’ll take it one step at a time. At some point we might actually get to the change we all need.

Billy Saas:  Saule Omarova, thank you so much for joining us on Money On The Left, it’s been a pleasure.

Saule Omarova:  Thank you so much.

Scott Ferguson:  All right. Yeah. Thanks. You did great. I didn’t hear your allergies but yeah, now you need to get a coffee and decompress.

* Thanks to the Money on the Left production teamWilliam Saas (audio editor), Mike Lewis (transcription), & Emily Reynolds of The Buffalo Institute for Contemporary Art (graphic art)

Adventures in Quantumland w/ Ruth E. Kastner

Scott Ferguson is joined on the Superstructure podcast by Ruth E. Kastner, philosopher of physics and research associate at the University of Maryland. In their conversation, Ferguson and Kastner explore metaphysical resonances between Modern Monetary Theory’s approach to money and Kastner’s “Transactional Interpretation” of quantum physics.

Setting the stage for their dialog, Ferguson and Kastner critique orthodox commitments in both economics and physics to a pre-relational individuality: what medieval theologian John Duns Scotus famously called thisness or, “haecceity.” When being is contracted to mere haecceity, they argue, causality is reduced to local and unidirectional events in a manner that overlooks global conditions of possibility. In contrast, Ferguson and Kastner affirm an irreducibly relational ontology for monetary and quantum theory alike. This relational ontology comprises broader patterns of potential, which orthodox methods have rendered imperceptible. It also takes seriously non-local notions of causality, especially that unfamiliar all-at-onceness that Albert Einstein once derided as “spooky action at a distance.” 

Along the way, Ferguson and Kastner consider a host of interdisciplinary analogies–for example, between monetary receivability in heterodox economics and so-called “absorber waves” in the Interaction Interpretation of quantum mechanics. At the same time, however, they remain careful not to collapse distinctions between political economy and quantum theory. Far from impractical navel gazing, such speculations harbor very real worldly consequences for interdisciplinary theory and practice.  

For more information, check out Kastner’s website as well as her recent paper on “Quantum Haecceity” mentioned during the podcast. 

Visit our Patreon page here: https://www.patreon.com/MoLsuperstructure

Music: “Yum” from “This Would Be Funny If It Were Happening To Anyone But Me” EP by flirting.

Twitter: @actualflirting

Job Guarantee as Historical Struggle with David Stein (NEW TRANSCRIPT!)

We are excited to rerelease our inaugural episode of Money on the Left alongside a brand new transcript.

Conversation originally published on May 27, 2018

Money on the Left is the official podcast of Modern Money Network: Humanities Division (@moneyontheleft).

In our inaugural episode, we consider the recent resurgence of full employment politics in the United States from both a political and historical perspective with historian David Stein (@davidpstein). Stein is currently a fellow at UCLA’s Luskin Center for History and Policy and a lecturer in the departments of History and African American Studies. Check out his recent article in Jacobin: David Stein, “Full Employment and Freedom.”

Intro music by Hillbilly Motobike.


The following was transcribed by Mike Lewis and has been lightly edited for clarity.

Billy Saas:  Hello, you’re listening to Money on the Left, the official podcast of the Modern Money Network Humanities Division. I’m Billy Saas. 

Scott Ferguson:  I’m Scott Ferguson.

Billy Saas:  And we are co-directors of the Modern Money Network Humanities Division or MMNHD.

Scott Ferguson:  MMNHD is a big tent organization for scholars, social critics, and political activists dedicated to recovering and redeeming the cultural and political aspects of modern money, past and present. We do this primarily from a humanities perspective. But we welcome participation from anyone interested in engaging with the School of political economy, known variously as Neochartalism, or Modern Money Theory. MMT for short.

Billy Saas:  So from our perspective, what’s so transformative about MMT is that it turns conventional political economy on its head. Rather than figure money as a politically neutral commodity invented a long time ago by some particularly clever traders in some remote marketplace, MMT shows that money is always in everywhere a boundless public utility, as well as a deliberate political, cultural, and ecological project.

Scott Ferguson:  In doing so, MMT makes so much more thinkable and possible than liberal modernity’s austerity-driven imagination has historically permitted. It not only expands how money can contribute to collective flourishing, it also reorients how we conceive of cause and effect, as well as how we research and write history. In this podcast, we want to develop and complicate the Neochartalist imagination, on and for the left.

Billy Saas:  A key way that Neochartalism reframes money’s history concerns the question and politics of employment. While the hegemonic liberal paradigm treats employment as a function of private hiring and firing. Neochartalism understands employment as a thoroughly political decision. The liberal variation permits modest government assistance and makes unemployment inevitable. But MMT insists that employment is first and foremost a policy choice. And that full, inclusive, and ecologically responsible employment is always affordable.

Scott Ferguson:  In terms of format, the Money on the Left Podcast plans to feature conversations scholarly and political, close readings of texts, interviews, and occasionally some fresh hot takes on current events. In this, our first episode, we invited historian David Stein to help us make sense of the recent resurgence of full employment legislation and debate in the United States. David is currently a fellow at UCLA Luskin Center for History and Policy, and a lecturer in the Department of History and African American Studies. His first book will be published in 2019 by University of North Carolina Press. Its title, Fearing Inflation, Inflating Fears: The Civil Rights Struggle for Full Employment and the Rise of the Carceral State 1929 to 1986. With Betsy Beasley, he co-hosts Who Makes Cents, a history of capitalism podcast, which we chat with him about at the end of the interview.

Billy Saas:  We asked David for some historical perspective on the proposals for a jobs guarantee put forward recently by Senators Bernie Sanders, Kirsten Gillibrand, and Cory Booker, who each seem ready to make the JG a critical plank of their 2020 presidential campaigns. Lots of us in the MMT world are thrilled to see the JG taken up by the front runners for the Democratic nomination. But some others on the left, many of whom have never challenged the liberal money story, worry that the jobs guarantee is alternately pie in the sky progressivism, or just another route to Workfare. As you’ll hear, David puts both the historical fight for full employment and these left critiques in a broader historical context. We were joined in our conversation with David by Max Seijo, a graduate student in Film and Media Studies at University of South Florida. Without further ado, here’s our conversation with David:  You’ve done fantastic work documenting the history of full employment movements in the United States. How exciting have these last couple of weeks been for you? What has excited you most? 

David Stein:  Thank you for having me. It’s been thrilling to see the reemergence of full employment and guaranteed jobs to its place of prominence within the dominant agenda of the Democratic Party. It is a demand that has a long history within the Democratic Party from the 1940s through through the 1980s but really fell out of the Democratic Party’s platform in the 1980s and grew weaker in the platform in 1984 and 1988. I know a number of activists who really fought to get it back into the party’s platform in 2016, so that in and of itself was really exciting. I think to see Senators Gillibrand, and Senator Sanders and Senator Booker all come out in support of various versions of guaranteed jobs has really pushed it to the front of our political agenda. And I think it really can reopen our imaginations about what’s possible. I think that’s really exciting and the idea that this is going to be a durable kind of conversation over the next few years, to me is completely a reorientation of where we were just a few years ago. I started writing this project, this book that I’m in the process of finishing, back in the years after the 2008 recession. I was puzzled as to why guaranteed jobs weren’t emerging as a key solution to the unemployment crisis that so many people were facing. So to see it now, a decade later, after years of inadequate recovery, in terms of how the recovery has been experienced in everyday people’s lives, to me is a real exciting moment and testament to a lot of activism that a lot of people have been doing over this past decade.

Billy Saas:  Yeah, it’s interesting that this conversation is starting back up 10 years after the worst of the financial crisis. What do you think it is? What had to go away or what had to happen in order for this conversation to be happening now, do you think?

David Stein:  I think there’s a combination of a number of factors. One, I think the completely inadequate recovery of government jobs at the state and municipal level, which we’ve now seen over recent weeks, also with all the teacher strikes happening, I think that’s part of that inadequate recovery over the past decade. I haven’t seen the recent stats, but I know a little while ago, it was something like a million jobs were lost in state and municipalities that have just never returned. Those of us who are in academia, we really have seen this very clearly. That’s one element. I think another element is the 2016 election. Just like after the 1972 election, the Democratic Party believed that they had moved too far left in that election and began reorienting towards the right, and especially after the 1980 election. I think the 2016 election, alongside the immense energy that was posed that met the Sanders campaign. I think that’s propelled some of these conversations. I also think just the tremendous amount of grassroots activism has really propelled this conversation. And then I think, at the Federal Reserve level, or at the level, policy wonk conversations around inflation, the inadequate wage gains that have been made by workers, even amidst relatively low unemployment rates over the past few years, has really posed questions about the extent to which the Phillips Curve and ideas like that continue to hold purchase. I believe it was Daniel Tarullo, a key powerful actor within the Federal Reserve System now retired, who gave a talk at Brookings a few months ago saying “the Federal Reserve has no coherent theory of inflation.” Whereas inflationary fears really stifled the efforts to legislatively win guaranteed jobs over decades. So I think all of those factors have contributed.

Scott Ferguson:  So on this podcast, we’re really interested in the humanities and what the humanities can bring to the study of Political Economy and specifically through a new charter list lens. Much of this story in the way it’s playing out now and the big actors are politicians, economists, as you said, policy wonks, certainly organizers and activists of various stripes. But clearly there’s a place and a role for us humanists, right? You in particular, you’re not just studying what’s going on, you’re participating in your own way. Whether it’s with Fed Up, or, or just on Twitter. And I’m curious if you can speak to your own role in how this is playing out, and how the study of history and maybe the humanities approach, more generally, is important for this fight?

David Stein:  I think there’s a few different answers to that question. One of them is, I’m glad you asked this early on, because I think if anyone tunes out or later, I think I have two key lessons that I would say are really important going forward. The first one is that: if we think about how this was a key goal of the civil rights movement–one of the most powerful social movements I know of ever to exist, that broke the US apartheid system–that that movement was not strong enough to fully achieve a governmental jobs guarantee. I think if history provides a guide for us, it’s that our movements may, or will, need to be stronger than that, which I think is a really, really daunting task and a humbling task. But I also think from having studied social movements, that an appropriate power analysis is a key starting point for any struggle. So I think that’s one lesson and think the other key lesson is that in the post 1948 era or so, I can think of about a four year span, when winning these sorts of proposals could have been possible had the movements been strong enough. That’s the years 1964 to 1966, and 1976, to 1978. You can make an argument that had the movements appeared in 2008 to 2010, that they might have been legislatively possible. The movements were not anywhere there during 2008 to 2010. What that lesson shows us is that these openings can appear quickly, and they can disappear just as quickly, and we don’t know when they’re going to return again. So I think it’s really vital, back to the first question about one of the things I’ve been most excited about right now, is that I think and I hope we’re preparing for that opening that might occur between 2020 and 2022. I think that we need to be ready when that opening appears because we don’t know when it’s going to appear again. Those to me are the two key lessons that history teaches us. The third and sort of subsidiary to those two, and this more goes against some of the articles and essays that I’ve been reading that are a bit ignorant of the history of this demand that portray it as a demand so far out of left field or so incompatible with US history and US policy history is to assert that in the key reason that we don’t have this already, or at least it wasn’t achieved in 1945. We don’t know what would have happened after that. We can’t jump too far back into the counterfactuals. But the key reason this wasn’t achieved in 1945 was because of Jim Crow. And because of the role of Jim Crow power in Congress and to a certain extent it’s a similar story in the 1960s. One key reason why demands for full employment and job guarantees weren’t included in the war on poverty was because Johnson knew they could never get through Wilbur Mills’s House Ways and Means Committee. Wilbur Mills was considered at the time to be one of the most powerful members of Congress if not the most powerful member of Congress. Well, where did Wilbur Mills come from? He was the longtime congressman from Arkansas, from a Jim Crow district. So his power was very much linked with the kind of daily life of a Jim Crow society, and of course, when we look at all these key Dixiecrat congressmen, most of them don’t leave Congress by way of democracy. They leave Congress, in Mills’s case, via scandal and disgrace. In many other people’s cases, via death. They didn’t leave Congress until the 2000s, some in the 90s, some of the 80s. It’s not like the Voting Rights Act passes, and these congressmen and I say men specifically. And these congressmen didn’t just pack up their briefcases to go home in 1965. They continue to win election after election. Knowing that history can also show that although job guarantee movements were never ever to achieve those goals legislatively. It wasn’t because they weren’t a dominant moral value, I think guaranteed jobs, full employment was a dominant moral value from the 1940s through the 1970s. But they were never able to push those Dixiecrat congressmen out of their positions of power in order to win legislatively.  

Scott Ferguson:  So a follow up to that. Let’s say skeptics will often point to Michal Kalecki’s now famous article, “The Political Aspects of Full Employment”. They presume that his argument is that sure this is monetarily, economically possible, but it may not be and probably isn’t politically possible. My response to this is always, well, let’s be historical about this, right? I mean, Kalecki was engaging and wrestling with this question at a very particular juncture, when we were in a post war context, the question of full employment was haunting everybody. Very different groups were weighing in, had different visions for what this might look like, how possible it was going to be or not be. I guess my question to you, David, is, if the political aspects and or obstacles to full employment are historical, what do you see today? What are the historical conditions which may facilitate this movement and may block it?

David Stein:  It’s a really good question. Well, I think to me, one of the biggest lessons of history is that one is forced to confront with immense humility what is possible in a given moment, and how few people have any sense of what is both optimistically and pessimistically. One of the lessons that I really try to teach my students is a lesson that the scholar George Lipsitz writes about, and that his writing has taught to me. He says: very few people in 1859, very few abolitionists could have known that their decades of effort, the self activity of enslaved people, the resistance of running away, of breaking one’s hoes, all sorts of things like that. That those would see their expression in the self activity of enslaved people amidst the Civil War, and that enslavement would be abolished, never to return in the United States. Very few people could have envisioned that in 1859. To me, one of the things I’ve been inspired by in my writing about full employment movements is that I tried to write as if these movements could and would reemerge. And the second they achieved their goals, suddenly, the entire history of struggling for these goals would look different. That right this second, you can look at the history of struggles for full employment and say: it’s been 80 years of failure. The second that that changes, that history appears differently. The second guaranteed jobs appear, it’s like, wow, it took eighty years of robust activism to achieve this goal. And I’ve tried to write with that day in mind. I’ve thought about it alongside other activists. In the weeks after the March on Washington, Bayard Rustin, the lead organizer of the March on Washington is giving a speech, and he says things like, “we’re losing the fight my friends,” he says, “we’re losing quickly, where are we winning?” He’s very frustrated at that moment. After three decades of activism, he doesn’t know what historians know, which is that the Civil Rights Act of 1964 is right on the horizon, then the Voting Rights Act is right on the horizon. And so in the weeks after the March on Washington, he doesn’t feel this tremendous swelling of success, because he doesn’t know what’s on the horizon. We don’t know what’s possible, so for those who are writing, “full employment is so difficult because of x, y, z problem or x, y, z thing.” I tell one person writing, “what about the Fed?” It’s like, okay, yeah, that’s a key issue that Coretta Scott King really, really cared about. To me, it’s really important to ask that question, but not in a way that’s about saying it’s impossible and throwing up hands, but to say, yeah, the Fed, which is an institution that is created by Congress, it’s relative autonomy, its independence is institutionalized in congressional legislation. So that would need to be addressed in any legislation, how the Fed would need to adhere itself to an employment mandate, to a federal employment mandate for all, at least so far as the US continues to have a capitalist democracy. I think those are elements to struggle over and to work out and to be aware of in the writing of the policy, but they’re not reasons to not struggle for it.

Maxx Seijo:  You brought up Coretta Scott King already. I was wondering if you could talk about the relationship between her lifelong activism and this current movement and maybe dig in a little bit into the details as to the things you were linking to your last comment about the Fed and things like that.

David Stein:  Yeah. So you mentioned in an earlier question about the Fed Up campaign. A few months ago or maybe almost a year ago, I co-wrote a report with the economist Dean Baker on behalf of an in collaboration with the Center for Popular Democracy is Fed Up campaign which has worked really hard to get the Federal Reserve to be more accountable to everyday people whose lives are impacted every day by the interest rates they pay on their credit card bills or student loans, or car payments, as well as the general level of the economy. Coretta Scott King was the founder, she co-founded and led this group called the Full Employment Action Council and the National Committee for Full Employment and they were kind of parallel organizations that were slightly separated for tax purposes. She co lead that organization, that coalition, starting in 1974, and the goal was to achieve guaranteed jobs legislation. She was well aware, as anyone was in the 1970s, that the high interest rate policies of the Fed and how the Fed needed to adhere to its employment mandate. There’s debate from scholars about where the employment mandate comes from. I found recent evidence that it does indeed go back to the 1946 Employment Act. But the Fed didn’t abide by that employment mandate as strongly as they might have to say the least. It was for that reason that many scholars traced the employment mandate to the 1977 Federal Reserve Reform Act and the 1978 Humphrey Hawkins Act, of which Coretta Scott King was the key activist and her organization were the key activists promoting the 1978 Humphrey Hawkins Act, which had been around and been drafted throughout the mid 1970s. They knew that in order to achieve guaranteed jobs and full employment, they needed the Fed to accede to those goals. Dean Baker and I wrote this report in a sense trying to remember this history of the Fed’s employment mandate, and promote the goal of the Fed keeping interest rates low, continuing to facilitate economic recovery, and continuing to adhere to the law. If people know of the 1978 full employment Humphrey Hawkins Act at all, it’s because when the Fed comes to Congress twice a year, it’s called the Humphrey Hawkins testimony. This was one of the acts that Coretta Scott King and legislators Augustus Hawkins and Hubert Humphrey tried to create in order to ensure that the Fed would be accountable to those who are democratically elected to Congress. The reason that’s really important is because prior to that, in the 1970s, you had a leading economist with the Joint Economic Committee saying they couldn’t even get basic data from the Fed at the time. The Fed was acting as if it was completely autonomous, that their independence was completely autonomous from Congress. This legislation was the attempt to get the Fed to be more accountable to Congress, and thus, more accountable to the people of the United States, who are impacted by their policies. In order to fight for that legislation, there’s all sorts of exciting stories that I can tell you about. I think the 1977 Full Employment Action Week is really inspiring, where 1.5 million people took all sorts of actions in order to protest and propel the legislation. There were parades in Erie, Pennsylvania, with 40,000 people attending, things of that sort that I think are really on a scale of activism that is quite significant. Augustus Hawkins said it was the most amazing activism he’d seen since the March on Washington of 1963. That can give our audience a sense of just how powerful this effort was.

Maxx Seijo:  Coretta Scott King argues that we’ve never really dealt honestly with the question of a peacetime economy. And this is something that I’ve spent a little bit of time thinking about in relation to the kind of full employment debates of today. And I was wondering what you thought about the relationship between World War Two and the mobilization and the job guarantee debates and her activism and kind of how those all go together in this history, especially as you say, if we’re to really succeed now and really actualize this history for our present moment. We need to understand the way these certain strains of contestation interact with full employment and the war itself. So I was wondering if you had any thoughts about that?

David Stein:  Yeah. So I think this is also really important for thinking about some of the contemporary critiques of full employment and guaranteed jobs. The people who say: “Oh, it’s too hard! Administratively, how would it work? It’s just way too complicated.” When we think back to the generation that Coretta Scott King was a part of: she was born in 1927, she lived through the Great Depression, she saw World War Two. They saw just a complete reorientation of the scale and scope of what the federal government could do, and that enliven their imaginations about what was possible, and gave them confidence to call for these sorts of bold demands. I was thinking, while you were asking your question, of a quote from William Lucey, who was the leader, and co founder of the Coalition of Black Trade Unionists in the early 1970s. This was a group, the Coalition of Black Trade Unionists, which, as far as I’m aware, no group has continually promote full employment guaranteed jobs as long as this group has. So to the extent that people remember full employment, I stumbled on an article, that was a fairly good article, but that was like, Why Full Employment Is Back From The Dead, something along those headlines. I was like, well, it never died, and the reason it never died was because of people like Bill Lucy and people in the Coalition of Black Trade Unionists, as well as you all are well aware of the Post Keynesian economic tradition. Bill Lucy has this quote in the early 1970s, amidst these full employment movements, this is in 1975. He says, “In the wartime, when they gear up the war machine, everybody fits into a slot. They make welders out of laborers and pipefitters out of farmers.” So for him, he’d seen that experience, and so he then said, “This is why the federal government should now employ people in transportation, construction, and health services, and environmental work.” So they were thinking dialectically, if you will, to say the military industrial complex and the World War Two efforts showed them what was politically and economically possible. But as dedicated peace activists, like Coretta Scott King was, like her husband was and like many others, they said: well, why don’t we reorient this spending and this energy towards social needs that really fulfill human human lives. I think that’s a key element. They had also just seen, we need to remember, this is amidst the Vietnam War and the years after the Vietnam War, depending. Scott King’s activism continued after the Vietnam War. For her, she saw, okay, we have this economy that’s so tied into militarism, that has helped propel this war effort. And so as an anti war activist, she was like, okay, well, we need an economy that’s geared towards peace and an economy that’s geared towards social needs. As she puts it, she says, “We’re going to have to create meaningful jobs, jobs that serve human needs. As long as there are people, you are going to have certain health care needs, education needs, things that will make for a better quality of living.” So this is what she believed in. She also believed that, she says, “jobs that go beyond the profit making motive.” Thinking a lot about what the job guarantee could do to decarbonize our environment, to clean up the environment, of course, to end the water poisoning of an entire city. We’ve just accepted that the Flint water crisis is going to continue indefinitely and I’m struggling for words to describe how we wake up every day, and we just allow that to continue. 

Scott Ferguson:  There’s such a disconnect between this pervasive feeling and discourse around crisis and around needs, right? We know the many, many things that we need to address. Then, when we get to some of the job guarantee rhetoric in the job guarantee debate, especially this last week, and suddenly those needs go away. Suddenly, everything is good enough. Suddenly, well, oh the private sector will take care of it. I wanted to bring up something that David, you and I have talked about in the past. I know you’re not principally an aesthetic theorist or a student of visual culture, principally. But I’m curious to have you speak to the aesthetics and visual culture around various moments of full employment, struggles, campaigns, fights. And it seems to me that questions of certainly race, if not also gender, and sexuality and of course class play a part in this. One of the things that I’ve been extremely frustrated by in contemporary discourse around just employment, especially around national elections, like pre job guarantee debates that have been happening very recently, where we can only imagine jobs, or employment politics through the image of a kind of Nixon hard hat. Like, a white guy who’s gonna do some tough infrastructure jobs. Sure, we want plenty of those. But there’s a whole diverse world out there. And I’m curious, if just in your research, maybe even anecdotally, could you reflect on just the aesthetics of full employment politics in the past?

David Stein:  Yeah. Well, I think there’s a few things that I’d say to that. I think one, like you’ve suggested, we need to reorient our conception of work. There’s all these conversations about the future of work, but there’s a group of people at the Bureau of Labor Statistics who, at least among a lot of the kind of big headline conversations about the future of work, the Bureau of Labor Statistics folks don’t seem to be really consulted on. I just pulled it up on my computer, which the Bureau of Labor Statistics puts out the fastest growing occupations outlook every few years. If you look at it, I think it’s quite indicative and quite important, and can reorient our ideas around what this looks like. So the number one fastest growing occupation, says BLS, is solar panel installers, then wind turbine service technicians, then home health care aides, then personal care aides, then physician’s assistants, then nurse practitioners, right. So that’s what the future of work, at least according to BLS, looks like. If we think about especially the care work of home health care aides, personal care aides, physician’s assistants, nurse practitioners, these are jobs that historically have been done by women of color, by Black women. To the extent that things like home health care aides, to the extent that those jobs are low paid right now, according to BLS, the median pay for home health care aides and personal care aides is $27,000 per year. Anyone who knows anything about those jobs knows that those are incredibly difficult jobs, incredibly skilled jobs, and jobs that require tremendous amounts of compassion, of energy, of physical hard work of lifting, making beds, doing so many different tasks. So if we asked, why aren’t these jobs paid $100,000 a year? Why aren’t they compensated commensurate to the skill that one sees in those jobs? Well, a big part of that goes back to the history of racism and the history of patriarchy in this country. When I think about what the future of work could look like, or does look like, I think about home health care aides, and how they can be compensated in ways commensurate with how difficult those jobs are, and also with how important those jobs are to dignified life for elderly people and all other people who those home health aides and personal care aides are helping with their daily lives to lead fulfilling, dignified life. And then I think there’s all sorts of other questions. If we think back to aesthetics, and the WPA, and art, I was just speaking with a friend of mine, who I think is a really brilliant, inspiring artist, Evan Bissell, who’s out of the Bay Area, who did a really extraordinary project a few years ago around around the 50th anniversary of the March on Washington, as well as a number of other real community engaged art projects. Evan also is an urban planner, so he’s done a lot of work around community art to talk about the housing crisis and things of that nature. I just think about how many other artists are out there doing work like Evans, that is not necessarily going to be compensated by the market? There’s not a strong market for creating beautiful murals that educate a community about their rent control rights, which is the kind of work that Evan does. He did a project with the Morris Justice Project out of the City University in New York, to organize against broken windows policing in New York. He painted these beautiful pictures in collaboration with members of the local community that say “we are not broken windows” that showed what the community actually looked like. I think there’s not a strong market for that type of work. I always ask what images of beauty and safety can be proliferated with a job guarantee. Of course, as I mentioned a minute ago, if we go back to the WPA, you had people writing plays, the Federal Theater Project. You also had murals, you also had art workers, you had people writing guidebooks to their cities, people like Zora Neale Hurston and Richard Wright. There’s so much that people could be doing, work that the market has not necessarily chosen to compensate.

Billy Saas:  What’s been exciting about this week, like watching how people are talking about the job guarantee, is to sort of notice the kind of arguments that have fallen off, that were active for the last 30 years, specifically around the pay for question and the idea of fiscal responsibility and the fiscal constraints, and that’s too ambitious, you’re going to take our taxpayer money, and all those sorts of things. That seems to have taken a backseat if not disappeared. But we have, at the same time, these other kinds of rhetorical currents or obstacles that are rising up as we talk about full employment in a real sense and a federal jobs guarantee. So the rhetoric of Workfare is circulating now, and as this is happening, and thinking about these new rhetorical obstacles that might take the place or take precedent over the fiscal responsibility talk. I wonder if you might say a little bit about the sort of rhetorical currents and arguments that were used between 64 and 66, and 76 and 78 when you say that these movements were most possible. What were the arguments then? What were the big rhetorical obstacles put in front of Coretta Scott King and others like Bayard Rustin and Leon Keyserling, the freedom budget. What were people saying then?

David Stein:  Firstly, I’ve been, frankly, a bit mystified, by the claim that this would be Workfare in the sense that every single person who I know who has fought for guaranteed jobs over the past 80 years, it was always about expanding the social welfare state, through social movement organizing. Like most activists, they thought dialectically. So they thought, okay, we win something, and then we continue working on it. It’s not like we win a goal, and then we go home and retire. It’s always about winning something usually. For these activists, they demanded 10 things, and they won three of them. And then they took that list of seven things, they didn’t win and continued working on it. So for them, the job guarantee was never was never the end of the road. It was always okay, well, now, how does that reorient the political landscape? And now how do we keep working towards greater degrees of justice and equality for all people. The other thing is that, for these activists, a job guarantee wasn’t the only thing they were fighting for, it was one of many. For them, a job guarantee wasn’t about reducing the social welfare state that currently existed in any way. It was about expanding it, as I said a minute ago. In the 1960s, there were various ways in which the full employment campaigns did and did not work in synchronicity with the Welfare Rights Movement. Some of which had to do with assumptions about male breadwinner ideas and male work, some of which had to do with a number of other things that are a bit more idiosyncratic. But then there’s also elements to where, and this won’t surprise anyone who’s involved in contemporary activism, or who has ever been in contemporary activism was that, at least in Seattle, and I haven’t been able to explore this more thoroughly in other locales, but at least in Seattle, the people who are meeting around guaranteed jobs and full employment on say, Wednesday night, were then meeting and organizing around welfare rights on say, Thursday night and or Friday night. They were like, these organizations are going to be formally separate. They weren’t collapsing them. And, of course, no political formation fought against the nascent system of Workfare more than the National Welfare Rights Organization in the mid to late 1960s. And Coretta Scott King was a strong supporter of the national rights organization and their support of a guaranteed annual income for all which, of course, is different from a universal basic income. They’ve kind of collapsed historically in recent years but I’ve seen some collapse but that’s very different from what Martin Luther King or Coretta Scott King or what the National Welfare Rights Organization was fighting for. They were promoting a guaranteed annual income for everyone who was unable to work for whatever reason due to care work responsibilities, and they were fighting for dignity for all people. Whether through a job or through or through guaranteed annual income, it wasn’t a universal basic income that would apply to everyone. All that’s to say that the claim that adding a federal jobs guarantee to our otherwise existing welfare state that that would somehow be Workfare has, I find it, as I said, a bit mystifying. It doesn’t. There’s not one significant supporter of guaranteed jobs that I can think of in the past 80 years who would have endorsed that type of proposal, and I can’t imagine very many people, if any, would endorse that kind of proposal today. I mentioned Wilbur Mills earlier, the congressman from Arkansas, he was one of the chief proponents of the Work Incentive Program and the types of early Workfare that was created in the 1960s that the National Welfare Rights Organization and the Poor People’s Campaign and Coretta Scott King were fighting against during that era. So not only is the charge that job guarantee advocates would create Workfare inaccurate. In point of fact, job guarantee advocates and guaranteed annual income activists fought against the nascent system of Workfare in the 1960s. Back to your question about what some of the arguments against full employment were in the 1960s and 1970s. In the 1960s, a lot of the arguments were about upsetting the balance of payments problems that were going on during that period. And by the 1970s, the key arguments against it were that it would be inflationary. 

Billy Saas:  Would it be inflationary?

David Stein:  To be honest, I’m probably not the best person to answer that. As a historian, I think there’s reasons to think it might. I think, to paraphrase Coretta Scott King, the unemployed are not pawns to be sacrificed in some economic chess game. So the cost of a bit of inflation is, the human cost is the immense unemployment that hits transgender workers, formerly imprisoned people, Black people, Latino people, the worst. If that’s the acceptable cost of stabilizing the economy, then I think we really need to pose critical questions about that, and who those policies serve and who they don’t. As Daniel Tarullo said, as I mentioned, the Fed and most economists don’t have a coherent theory of inflation. That’s where I’m like: well, I trust Daniel Tarullo. He knows more about it than I do. And so if he says that the Fed doesn’t have a coherent theory of inflation, I don’t see how and why you can continue to go along sacrificing such human capacities in human beings lives to this idea that it would be inflationary when people like him are not even sure that this idea has any purchase any longer.

Billy Saas:  That definition of full employment was one of the things that Coretta Scott King pushed back on, and you’ve written about this, defining it as 5% unemployment doesn’t quite make sense. So zero involuntary unemployment being the preferred definition of full employment for Coretta Scott King. Have you seen people bringing up that discussion of the rhetorical aspects of full employment recently around these jobs guarantee proposals?

David Stein:  I’ve seen a bit of it. I haven’t seen a ton. My colleague, the economist Mark Paul and I have been talking about maybe writing something–Now that I’ve said that out loud to you all, maybe we actually have to write it–that traces that. And that was a consistent ideological struggle during this period was the definition of full employment. As the idea of the non accelerating inflation rate of unemployment takes hold, the idea of the NAIRU takes hold, people keep saying, full employment equals, like you said, 4% 5% 6%, and so forth, which really contrasted to what full employment meant, say in the 1940s when it came a popular concept as William Beveridge, who really helped popularize the concept says in his book. He says, full employment means jobs at decent wages where people are located, that there should always be more vacant jobs than, he says, unemployed men. I think we would think that concept be excised of the “man” in that sentence today, but I think that definition is really important. To see how that was what it meant in the 1940s, and what is being struggled over in the 1970s, is the definition of it. The definition we’ve inherited is one that was antagonistic to what Beveridge and many others proposed. And we can even see that if you read the congressional debates over the 1945 Full Employment Bill, you can see that definition being struggled over and you have leaders of the National Association of Manufacturers arguing for the definition that many people currently have of it today that it’s whatever percentage economic policymakers deem appropriate in order to stabilize the inflation, right? That’s obviously not the Civil Rights tradition of what full employment means.

Billy Saas:  It strikes me as one of those phrases or terms that has gotten the historical privilege of not having to be defined. And when I talk to students about, or I ask them about, what is full employment? The first thing that comes to mind is not 5% unemployment, it is everybody has a job. What might be salutary about this current resurgence of jobs guarantee talk is a real politicization of that idea of what counts as full employment. Sorry, please write that essay.

Maxx Seijo:  I wanted to shift gears a little bit to the more contemporary and think about the relationship to the history that you’ve discussed, and the fight for full employment, and also kind of a step beyond that to the contemporary Black struggle, specifically in the rise of Black Lives Matter over the last decade, and how your history and what the questions that you’re thinking about in your book can inform the movement today, and the fight for racial justice today, and how that coincides with the job guarantee?

David Stein: I mentioned the Coalition of Black Trade Unionists, they’ve continued to promote a job guarantee for decades. In other new formations alongside the rise of the Black Lives Matter movement groups, like the Black Youth Project 100, have also called for a job guarantee. The way I see it is that the broad Black freedom movements have had the longest tradition fighting for guaranteed jobs for all, and a lot of it comes through the moral values of people over profit, that human beings lives are more important than the profit motive, and more important than profit, which is a durable, moral value across Black freedom movements. The other way I think about it is I think there’s multiple streams of welfare state traditions. I’ve been thinking about this as I develop my dissertation, in collaboration with one of my advisors and mentors, and now friends, the historian Robin DG Kelley. One thing that he and I talked about, and that I really learned from him, is that while many people trace the welfare state tradition to Germany and Otto von Bismarck, there was also as I’ve written a contemporaneous Black radical tradition of welfare state struggle during Reconstruction. W.E.B. Du Bois called this tradition “abolition democracy”, which was the focus on creating new democratic institutions in order to provide safety and social provision for all people, while also seeking to eradicate institutions of racial violence and any vestige of enslavement. There needed to be both a negative abolition of enslavement and a positive abolition, the creation of these new institutions. I see the kind of moral values of abolition democracy that in the 1870s might have expressed themselves as calls for things like land access for the formerly enslaved. In the 1940s and after, I think we really see those expressing themselves or articulating themselves as calls for a job guarantee, within Black freedom movements. I think we see that tradition continue through today. It’s also part of the radical humanism of Black freedom movements, that’s a consistent force throughout their history. I’ve been teaching a course on women in the Black Freedom Movement for the past few weeks and this quarter, we just finished reading Ella Baker’s biography, by Professor Barbara Ransby. One thing Professor Ransby notes is that, for Baker, she secularized her childhood social values in the black Baptist tradition, and expressed them throughout her life in the form of radical humanism, calls for job guarantees and economic justice for all. We can see the expression of those types of social and moral values throughout the Black Freedom Movement in different forms from reconstruction, through today.

Scott Ferguson:  Well, I was thinking, perhaps to conclude what has been a really rich dialogue, we could get you to talk a little bit about plugging your podcast.

David Stein:  So I host a monthly podcast called Who Makes Cents, a history of capitalism podcast. Cents is spelled C-E-N-T-S. And you can find us on whomakescentspodcast.com I produce and co-hosted with my colleague, Betsy Beasley. We talk about some of these issues. I do a lot less talking on that show. Folks who are listening to this show might be interested in a number of our episodes. We have an episode with Sandy Brian Hager on public debt and inequality that harmonizes with Modern Monetary Theory post Keynesian tradition. We also have great episodes with LaShawn Harris on the history of Black women in the informal economy. We have, you know, an episode with Geoff Mann on what he describes as a Keynesian sensibility. Also an important episode with Kim Phillips-Fein on the fiscal crisis in New York in the 1970s and the rise of austerity politics. One more episode folks might be interested in is an episode with the scholar Mehrsa Baradaran on banking for lower income Americans and she talks a bit about some of her ideas about postal banking, and things like that. And then lastly, I’d just say one more thing. I know I’ve given you a lot, but folks might be interested in our episode with Sarah Jaffe on social movements since the 2008 recession. Sarah Jaffe is a really important journalist who did a really important interview with activist Ady Barkan about the jobs guarantee and how it’s coming in this moment of resurgence. So Sarah’s episode on her own show with Ady, might be inspiring for folks listening as well as Sarah’s work generally, and our interview with her about social movements since the 2008 Recession.

Billy Saas:  Do you want to say anything about your book project? And yeah, I mean, we’ve spoken about it generally, and I think maybe very specifically at points.  

David Stein:  Yeah, I think I’d just say that I’m finishing a book on civil rights struggles for guaranteed jobs, and how and why those were stifled and how the kind of stifling of those struggles helped facilitate the rise of mass incarceration. The temporal scope is from 1929, the Great Depression to 1986 with the passage of the Omnibus Crime Control and with the Anti Drug Abuse Act of 1986 and the Tax Reform Act of 1986. And I’m finishing that up as we speak, and it should be out in the next 18 months or so from the University of North Carolina Press.

Billy Saas:  To keep up with David and his many projects, follow him on Twitter at @davidpstein. For more Money on the Left related content, follow us on Twitter at @moneyontheleft, and subscribe to our YouTube and Vimeo channels, which are each called Modern Money Network Humanities Division. Special thanks to Alex Williams for producing this podcast and for being one half of Hillbilly Motobike, the excellent Montreal based drums and electronics duo that hooked us up with our theme song.  

* Thanks to the Money on the Left production teamWilliam Saas (audio editor), Mike Lewis (transcription), & Meghan Saas (graphic art)

The Ends of Freedom w/ Mark Paul

Mark Paul joins Money on the Left to discuss his new book, The Ends of Freedom: Reclaiming America’s Lost Promise of Economic Rights (University of Chicago Press, 2023). Paul is assistant professor in the Bloustein school of Planning and Public Policy at Rutgers University. In his book, Paul scours U.S. political and economic history to recover, reclaim, and adapt the rhetoric of economic rights for our current political moment. For too long, Paul demonstrates, progressives and leftists have let conservative and sometimes charismatic economists define the boundaries of our economic thinking. This even as the left has underappreciated its own rich reserves of heterodox political thinking and radical rhetorical action. Hence Paul’s outspoken advocacy–within and beyond the book–for durable and democratic policy interventions like Medicare for All, a federal jobs guarantee, and a Green New Deal. 

Visit our Patreon page here: https://www.patreon.com/MoLsuperstructure

Music by Nahneen Kula: www.nahneenkula.com


The following was transcribed by Mike Lewis and has been lightly edited for clarity.

Scott Ferguson:  Mark Paul, welcome to Money On The Left.

Mark Paul:  It’s great to be here today. Thank you so much.

Scott Ferguson:  So we’ve invited you to talk to us today about your very important new book, The Ends of Freedom, Reclaiming America’s Lost Promise of Economic Rights, which is out from University of Chicago Press this year, 2023. And we want to get into a discussion about the book. But before we do, maybe you can tell our listeners a little bit about who you are, your background, your training, you’ve certainly studied and worked with all kinds of interesting folks along the way. So maybe just give us a little bit of a flavor of where you’re coming from?

Mark Paul:  You know, when I was born, I wanted to be a PhD economist, and here I am now. No no. When I was younger, I wanted to be a chef. I love food. I grew up on DiGiorno pizza, and Dino nuggets, and it was terrible. And I thought there had to be something else to life. And thanks to public programming, good old PBS, Julia Child taught me how to cook. And so I watched Julia Child and just fell in love with food and worked in kitchens throughout high school. I ended up going to culinary school and working in kitchens more. And it was my time working in kitchens and thinking about our food system that actually got me interested in economics. I spent just years working on the line and hot, semi miserable conditions, but in fairly high end restaurants. And I’m working on the line next to often immigrants who show up for work every single day, year in and year out. And they are making marginally above minimum wage, it’s 15-20 years ago, but still, they’re making under $10 an hour in most instances. And it dawned on me that they, nor I, could ever afford to eat in the restaurants we’re sitting here cooking in, and that is just messed up, what’s going on here? And further, my love for food got me interested in gardening and farming a little bit. And so I started down that path. Next thing I know, I’m reading about climate change and the climate crisis. And I’m sitting here in my early 20s thinking, how screwed up is this world we’ve built? From there, I guess made for some people a rather large leap, but to economics. 2008 struck. All of a sudden, the economy comes crashing down, I start reading about the economy. And I realized the food system is the way it is; people are paid shitty wages and good food is expensive where Captain Crunch is essentially free because of poor economic policy. And in fact, I realized we can choose different economic policies and that set me on my path to becoming a PhD economist. It’s not what I ever thought I would do. But here we are, and it was really my passion for food and my observations in the real world that set me on this rather strange path to pursuing a degree in economics. But I came to economics not because I love studying economics, I came to economics because I wanted a decent world where everybody could afford to eat good food and people who worked on the line of kitchens didn’t have crappy jobs, dangerous jobs and low paying jobs.

Scott Ferguson:  Can I ask how did you find heterodox economics? I mean, one can have a desire for a more just, abundantly provisioned world and then think, well, this is probably a problem of economics. And then when you go to research, “well, how do I learn about economics?” The main pathways are the orthodoxy. So how did you find an alternative? I mean, what was that process like?

Billy Saas:  How did you end up not self blaming for not having access to those restaurants and being able to pay for the swordfish plate?

Mark Paul:  It’s such a good question, right? I mean, if only I had worked harder. If only I’d worked 80 hours a week instead of 60 hours a week I’d be able to afford a decent meal. No, but in all seriousness, it in part was luck, and it was in part just the books I happened to pick up. Milton Friedman’s Free to Choose first economics book I ever read, and when I finished it I thought this guy is absolutely insane. This is not the world I think we want to build here. I mean, what’s funny is I and I think most people agree with Milton Friedman: we truly want to be free to choose, but the type of policies he talked about is not like getting us to a world where we actually have meaningful and real choices in front of us. And so reading Milton Friedman left me scratching my head thinking this is crazy, what else is there? Next thing I did was I picked up a book by Keynes and read that and was like, Oh, this is pretty interesting. But the real luck happened was that I’m from Massachusetts, and the University of Massachusetts Amherst is a premier heterodox alternative Economics program in the country. And when I applied to colleges, I had gone to culinary school, and I was taking some part time classes in community college. But I didn’t have money to pay for college, I was on my own financially. And I applied for a number of schools and UMass Amherst gave me free education. I said, you can’t beat free plus, hey, they have some interesting people in their economics department that are a little wonky. And so I went to UMass Amherst to finish my undergraduate degree. And from there, I just never looked back. I was really lucky to be mentored by a host of amazing progressive economist from Nancy Folbre to Sam Bowles and Jim Boyce and others who really opened my eyes to the fact that we can build an economy that works for the people rather than just working for the 1/10 or 100th of one percenters that get rich at all the rest’s expenses. It really was a once in a lifetime opportunity to go to a place like that and study economics.

Scott Ferguson:  You’ve also done some work with Sandy Darity. Is that something that you can talk about a bit with us?

Mark Paul:  Yeah. In 2015, I was finishing my PhD, and I started doing some writing with with Sandy Darity and Darrick Hamilton, two absolutely luminaries in the field that have just done phenomenal work in advancing economics as a profession, and also bringing economics into the policy space to demonstrate how it is that we can build a more just an inclusive economy. I had the wonderful privilege to go spend two years at Duke University working with Sandy Darity as a Postdoc. And I do want to say here, I’m a K through PhD public school kid. I deeply believe in the public school system. My two years at Duke let me see how the, it’s tempting to say how the other half lives, but it’s really it’s how the 1/10 of one percenters live. It was really an amazing change in so many ways. But my time working with with Sandy just really helped further my intellectual development: my belief in stratification economics, my study of economic history, in particular, which I really bring into the book, where I look at the fact that the neoliberal order that we like to talk about so much isn’t the only way to organize the economy. More importantly, it was an incredibly radical vision that came about, and we can talk about this later, in the 40s and 50s. But my time with Sandy helped me really develop into the scholar I am today as I had the chance and freedom to just read far more wide ranging texts. Folks like Du Bois, who I had never read before, and others that helped me broaden my horizons as a political economist. I don’t just study economics, I study history, I study philosophy, I study political theory. And if we want to have a true holistic vision of the economy, we need to go beyond reading the American Economic Review, which has many important articles, don’t get me wrong, but it’s not going to help us actually shape a proper vision for where we want to go and why.

Billy Saas:  K through PhD. I like that a lot. K through PhD public school similar here.

Scott Ferguson:  Me too. Yeah.

Billy Saas:  You end up at UMass Amherst, which is just a wonderful accident, coincidence, providence heterodox school, and then you work with Sandy Darity. I guess one question is, what was your sort of interest in your dissertation? Because I imagine that anticipated your collaboration with Sandy Darity and Darrick Hamilton, as you were going into your postdoc, they must have liked what they saw or knew of your work at that point. So talk to us a little bit about that experience at Amherst and the shaping of your intellectual foundation and platform from which you sprung into this wonderful collaboration.

Mark Paul:  Yeah, it’s a great question. So The Ends of Freedom actually isn’t really that related to my dissertation. In fact, The Ends of Freedom is really new work. A lot of that work that came out of my time working with Sandy, as a matter of fact, where actually Sandy, Darrick and I co-wrote a piece for The American Prospect magazine calling for an economic bill of rights back in 2018. And that was kind of the predecessor to the book. So my relationship with Sandy really came out of actually my involvement in the 2016 Bernie Sanders campaign at the time my dissertation was essentially done. It’s three essays on sustainability where I was really focused on the climate crisis. I should say here that half of my work is really focused on causes, consequences, and potential solutions to inequality. And the other half of my work is really focused on addressing the climate crisis. Now of course, the two are inextricably linked, but they are two slightly separate buckets. And so the dissertation focused much more heavily on the climate crisis, and what to do about it. And really, through this work, I came to understand that first of all policy is climate policy. And second of all, when we address the climate crisis it’s going to be a substantial reorganization of economic activity. And we have a choice here. And that choice is that we can allow policy to continue along the current fault lines of inequality. In which case, we would most likely be deepening existing inequalities. Or we can be quite intentional about taking redistribution seriously, in which case, the climate crisis actually presents an opportunity for us to fundamentally change the structures that exist within the economy, and to address both our emissions and our inequality challenges simultaneously. So the work with Sandy and Derek, though, really came out of my involvement in the Sanders campaign where I had finished my dissertation, but I still had some time on my hands as a graduate student. And everybody’s coming out swinging against Sanders for putting out radical proposals like Medicare For All, which was going to clearly bankrupt the country and make sure everybody quit their jobs and $15 minimum wage, which would eradicate half of low income jobs in America overnight, they just disappear and all these terrible things. And people were starting to ask, are these policies truly crazy, or is there some economic rationale for them? And at the time, that bench of progressive economists was incredibly thin, of course, Stephanie Kelton was advising Senator Sanders. But there were very few economists that were out there defending, I think, these very modest proposals that Senator Sanders was putting out. And so I decided to do a little bit of work with the campaign, and to start writing both policy pieces and opinion pieces to show the economic rationale for why $15 minimum wage, or programs to invest in higher education through making college free for everybody, or programs to actually make healthcare a human right were actually economically smart. Now, it was this opportunity that really changed my work to focus on policy issues first and foremost, where I kind of became a policy economist. I still do academic work quite extensively, but what drives my academic work is the real world. It’s thinking about policy issues, and how is it that we can improve the economy and the functioning of it? Therefore, my academic work heavily ties into my policy work. It’s kind of a two way street, so to say. And it was through that work that I got to know Sandy and Darrick quite well, and Sandy was able to offer me a postdoc to come do some additional research with him for two years.

Billy Saas:  Was the dissertation then sort of incidental or coincidental to or with the Sanders campaign? Or did it inform your advocacy directly in any kind of way?

Mark Paul:  In economics dissertation, yeah, “Three Essays On Sustainability” was the title of the dissertation. Look, in economics, a dissertation is three essays that you slap together, you write a quick introduction and conclusion, you call it a day. I mean, a dissertation is really about learning how to research. And that’s what my dissertation taught me. I mean, it grounded me in economic theory, it taught me a great deal about economic and climate policy. I did a number of studies looking at kind of sustainable agricultural policy, in particular, as well as sustainable responsiveness to climate disasters. But the dissertation didn’t dig into the more pressing inequality policy issues that I ended up pivoting towards. The dissertation really taught me how to go about doing economic research? How do I develop my tools as an econometrician and as a policy researcher? I published it all in academic journals, but it didn’t necessarily go on to have a substantial policy influence the way that some of my later work luckily has, and the way that I hope that this book will moving forward.

Scott Ferguson:  So I have a question that I think you’ve probably begun to answer, but I had this written down so I am going to ask it anyway which is: why a book? When you and I, Mark, have had encounters in the past we’ve hung out at conferences, you graciously invited me down to New College where you used to be to give a talk. I remember you pondering aloud in earshot, “should I write a book? Should I write a book?” And ultimately you decided to write a book. But as I understand it, that’s not actually typical of what an economist does, right? That it’s a kind of rarity. So I’m curious to hear, as we move to talk about this book, and what it’s really about, why did you decide not to write four journal articles? Why did you go for a book? And I guess, a related question, or an integrated question would be, who’s your audience? Who do you imagine would read this? And of course I’m sure there’s not just one answer to this, like, X type of person, but I’m curious who you’re thinking about your audience and why you’re deciding to take up the genre of the book?

Mark Paul:  I’m going to take those in reverse order, because the audience question is what drove me to write the book. So look, I’ve been privileged, and I’ve written numerous journal articles, and each time I read a journal article, I think this is going to change the world in some important way. And then, you know, maybe 100 people read it, it goes out in some academic journal, where subscriptions are 1000s of dollars a year, and it kind of dies in the PDF white paper ethos of the interwebs. And you hope that these journal articles change some academic minds, and in turn, maybe 50 years down the road, when those people are advising PhD students, those students will read it, and it will change the future generation, but I’m a little bit of an impatient person. I see the economy as it operates today, and it is screwed up. And I’d like to do something about that. As Marx said, that philosophers have only henceforth interpreted the world, the point is to change it. And that is, indeed, what brought me to the discipline. I want to change the world. I want to make the economy a better place. And so my audience is policymakers as well as the American public. So the book is aimed for the New York Times to Wall Street Journal readership, ranging from hill staffers to just interested voters. And I’m trying to lay out an affirmative vision for a post neoliberal world. We’ve all read dozens of books about neoliberalism’s rise and fall, how it’s either dead or on death’s door. But what always drove me nuts about all those books was that they’d have 10 chapters about neoliberalism, and then one chapter at the end is: here’s what comes next. And they just really quickly sketch out a few ideas. But if we actually want to move past the neoliberal order, we need to start envisioning what that would look like. We need to start envisioning what is the North Star that we are working towards? And so I set out to write an affirmative book that discussed what the economy can and should look like post neoliberalism. What is it that we want? Why do we care about the economy? And what is it that we’re collectively working towards achieving? Now, why a book? With my audience in mind of changing the hearts and minds of the American public, and also in trying to change policymakers and Hill staffers, because I know we talk a lot about policymakers, but really, it’s the hill staffers that have a lot of sway, in hill offices. I decided to write a popular book in order to reach just a far broader range of people than I could with an academic article. I had already written at this point enough articles for tenure, so I was feeling rather secure. It’s a shame but in economics, they don’t really count books towards tenure. At most research universities a book might count as one article, but your chair would tell you absolutely don’t do it. Versus if you’re in kind of more open minded disciplines like sociology, political science books are completely welcome. What’s crazy about this is that when you go down the list of Nobel Prize winning economists, they all write books. Now why? Because they want to reach broader audiences with their ideas. They know that very few people are going to open up an esoteric economics journal and actually read their ideas. So household economists’ names from Paul Krugman to Joe Stiglitz, and the likes, they all primarily write books to reach broad audiences. And I thought, I want to reach broad audiences like Paul Krugman and Joe Stiglitz are now Stephanie Kelton. So I’m going to write a book. And I have to say it was an absolutely wonderful experience. Challenging, but truly wonderful to dedicate a year and a half of my time to just sit down and focus on one project, and one project only, and really to have the space to deeply articulate my thoughts and ideas to what I hope to be a very wide readership was an absolute joy. While I was writing the book, my partner was pregnant, and I thankfully finished the book prior to having our child. But I really felt like I had two babies; I had the book, and then I had my human kiddo that arrived at fairly similar times. So it was a true joy in both respects.

Billy Saas:  It’s fascinating to know, I didn’t realize that economists were disincentivized from writing books and publishing books. And that’s interesting to know, and makes it I think, even more remarkable that you’re going this direction. As you did so, did you have any models or figures in mind that you looked to as examples of effective public communicators of affirmative economic messages?

Mark Paul:  That’s a great question. So I kind of had two different sets of people that influenced me in mind when I set out to write this book. And one was just leaning on some of my favorite writers, largely out of the civil rights movement, both favorite writers and orators, people like A. Philip Randolph, Bayard Rustin, Martin Luther King, James Baldwin is just one of my all time favorite writers. So I really spend a lot of time with his texts thinking about how they are relaying ideas? Because look, we have to be storytellers to get ideas to stick. And ideas truly are one of the most powerful weapons that exist. But we need to think about how to effectively relay those ideas and embed them in people’s minds, or at least get people to contend with them, which is really what I’m aiming to do is just getting people to think about these ideas. In the economic space, I absolutely spent quite a bit of time with a host of economist books, and thinking about how it is that they laid out their arguments? And how is it that they relayed their messages to a diverse set of readers? And I have to say, folks like Milton Friedman and Frederick Hayek were great writers. I truly do admire their ability to communicate complex and radical ideas to the voting public. And so I absolutely spend a lot of time reading their works and others and thinking about how to write an effective book. But here, I have to say, I’m also deeply in debt to one of my dear friends and editors, Jed Cohen, he is an editor for Duke University Press, was one of my best friends during my two years at Duke and remains one of my closest friends and he helped me through the writing process a good bit. Behind every good book is a good editor, and I think we need to acknowledge that quite openly because books are always a collaborative process, even when they just have one author, they have a whole host of people that helped them make it to press and into your lap, hopefully, on a nice, beautiful, sunny day while sitting outside and kicking the feet up. It was really through my collaborative work with him that I was able to find my voice as a writer. Because learning how to write journal articles, earlier we were talking about the dissertation is just very different from learning how to write a book for mass consumption.

Scott Ferguson:  Here, here. So the title of the book to say it again, is The Ends of Freedom, Reclaiming America’s Lost Promise of Economic Rights. So to get us into this argument, maybe you can unpack the title, and talk a little bit about how you’ve structured the book in three parts.

Mark Paul:  Yeah. So let’s talk about freedom a little bit. I think freedom is our most powerful and salient word in our political discourse here in the United States. Everybody declares for freedom. But in declaring for freedom, unfortunately, we often all mean different things. And that’s what allows President Biden to launch his election campaign in the name of freedom. And it’s what allows Ron DeSantis to launch his also declaring he’s seeking to make America more free, although he has to do some serious twists and turns to come up with any real definition of freedom given his set of policy priorities. So The Ends of Freedom really comes from the idea that the right has very effectively weaponized the idea of freedom to simply mean negative freedom, which is freedom from government, famously articulated in the Bill of Rights, coupled with access to markets. If only we have limited government plus access to markets, which to be clear, requires government in the first place, then people will be free. But this really differs with more holistic understandings of freedom, which also incorporate what the philosopher Isaiah Berlin deemed positive freedoms. Now, by positive freedoms, I mean freedom to certain things, importantly, the freedom to the good life, Jefferson’s promised life, liberty and pursuit of happiness which is enshrined in the very ideals of this nation. And in order to actually be meaningfully free, people don’t only need negative rights, they don’t only need civil and political rights and reproductive rights, which are increasingly coming under attack, especially across conservative states. But they also need economic rights, these positive rights like things to you know, the right to an education, the right to health care, the right to a home and the like. And what I try to do in the book is lay out an argument in the first third about first how it is that we got here, but I do that quite briefly, really kind of flipping the traditional book about neoliberalism on its head, as we talked about earlier. So I can briefly talk about how we got here and where here is with 40 million Americans still in dire poverty, the same number of Americans that were in poverty when Johnson launched the war on poverty or when President Roosevelt, at the height of the Great Depression, declared 1/3 of Americans are ill clad, ill housed, and ill fed. But it’s also about the 100 million Americans that are just one emergency room visit, one layoff, one missed bill away from really severe economic hardship. And in that first third of the book, I lay up these two contending visions for freedom. On the one hand, we have the classic neoliberal vision of freedom, which is, as I mentioned earlier, limited government plus access to markets, which was championed by people like Frederick Hayek and Milton Friedman, and then brought into the political sphere by folks like Barry Goldwater and Ronald Reagan. But also adopted essentially hook line and sinker by the New Democrats, starting really effectively with Jimmy Carter, who I would argue as the first neoliberal president before Reagan, but culminating in Bill Clinton’s presidency and certainly heavily influencing Barack Obama’s. Then, I talked about what I call “America’s other freedom”, which is the fact that we’ve had this long march towards a more meaningful, robust notion of freedom, starting with the founders, folks like Thomas Paine and Alexander Hamilton, who advocated for a robust state that legislated in the public’s interest and ensured that all people had a share of the economic pie not as a matter of charity, not as a matter of welfare, but as a matter of their citizenship right. And what’s really fascinating and this is fairly well connected to Jefferson’s ideas of a landholding citizen, right now of course we need to acknowledge that in the case of Jefferson and many others of the founders, they really envisioned a white male kind of ownership class. To be a citizen was largely to be white and male and educated. But, as we increasingly expand the notion of citizenry to be far more all encompassing, we start to see that these economic rights championed by the founders and then later by people like President Abraham Lincoln, who tried to enshrine this into law with the Homestead Act, where he’s redistributing land to people as a matter of right, really becomes a centerpiece of the vision for freedom in America. Yet, it’s language we’ve just lost here today. And I think that this language really came to its most powerful height during the Civil Rights era, where you have leaders like Martin Luther King, and others fighting not only for civil rights, but also for economic rights. When we learn about King today, we forget the radical side of King. That King not only championed the Voting Rights Act and Civil Rights Act, but after the passage of those two bills, he turned his attention full time to enshrining an economic bill of rights into law. In fact, his final piece of writing, which was published after his untimely assassination, was entitled, “We Need An Economic Bill of Rights” and was centered in the Poor People’s Campaign, around the demands that I essentially outlined here in the book: the right to a job, the right to housing, the right to education, and more. So in the book of the book is when I actually dive into these various economic rights, and in each chapter, for instance, the first chapter on the right to work, I tried to do three things. First, briefly talk about the history and struggle for this, right. A lot of the time we think about the right to a job or the right to healthcare, and we say, you know, oh, this Scandinavian country does it fairly well, and that’s true and we can learn a lot from them. But I think that there’s also a lot lost in kind of pushing American history to the side. So I tried to rediscover and retell the economic history in the US where these rights, in many instances, had been fought for for well over a century. The second thing I tried to do is debunk the common economic or neoliberal wisdom around why, say, providing people universal education is a terrible idea. Because I think if we want to convince people of this idea we need to talk about the criticism and explain point by point on why it’s just deeply misguided. And then third, I make the positive case for the economic right in each given chapter. The final section of the book, which we can maybe talk about a little bit later, takes on what I like to call the trillion dollar question. And we might say a right to a job and the right to housing is wonderful. And in fact, most Americans want it. We did popular polling with Data For Progress, and we found that two thirds of Americans want an economic bill of rights, including a majority of independents and Republicans. But when the rubber hits the road, when it’s time to pay for these things, that’s when we might hit some serious speed bumps. And so I lay out a comprehensive argument of how it is that we finance an economic Bill of Rights?

Billy Saas:  Yeah, so okay, this is probably going to happen, if it hasn’t happened already for you, you are going to find yourself in a situation where you’re in a conference hotel, and there are some hill staffers over there. And this table is full of like Republican Hill staffers, and this table is full of like Democrat Hill staffers, I wonder how your pitch goes? Is it the same for each of those tables? Do you even bother with one or the other? What do you say this story is? And I wonder if this came up in your conversation and your collaboration with your editor? What is this book offering us? What is its main contribution? And I think, how would you pitch that to those two different audiences, which I think are probably both very interested for different reasons and in different directions in what this book is doing, what’s about what it’s about?

Mark Paul:  Yeah, it’s a great question. I mean, at its core, the book is trying to offer us an agenda to attain freedom. It’s trying to lay out a vision and a policy prescription that details, how is it that we restructure the economy to ensure that people have choices to be and do what they have reason to value rather than to be stuck in this current economy that we’ve built that really hamstrings human flourishing left and right, and really places people at the service of the economy rather than placing the economy at the service of us. When we think about what the point of the economy is, the point of the economy is to ensure that we all get to lead meaningful and dignified lives, that we all have homes and food and can go to school and get health care. Yet we’ve structured an economy that’s essentially based on the bastardized version of the game of Monopoly, which was, of course, originally a parody on capitalism, yet really, it’s all about who can grab the most property, and who can fill up their bank accounts the most. I mean, that’s kind of the game that we’ve set up for ourselves. But instead, I want to change the conversation. Instead of playing the game of Monopoly, I want us to play the game of Life; think about how we structure that economy that dictates so much of our lives, right? I mean, Americans work 47 hours a week, often 50 ish weeks a year, thanks to our limited to no vacation. And, we’re often working to 65, or well past that in order to make ends meet. How is it that we structure that economy to actually prioritize a decent life? It’s funny, we always talk about living in a democracy and how important democratic values are, but why is it that democratic values stop when it comes to the door to the economy opening? It’s like, there’s this massive gate we put up. And what I’m interested in doing is tearing down that gate between the democratic realm of politics and the private realm of the economy, where money is the only currency that matters rather than votes. And so when I talk with Hill staffers, first of all, unfortunately, I haven’t had any excited or interested calls yet from Republican staffers, although I eagerly await them. What I make the conversation about is about freedom and about realizing the American promise; the promise to life, liberty and pursuit of happiness and the promise to be a truly free nation, where people have meaningful choices as Milton Friedman put it, people are actually free to choose. If you graduate from college with $200,000 in debt, you’re not free to choose much. You’re free to choose the highest paying job to make sure you are able to meet your bills. If you have a kid and you have to send them to daycare to keep working, you’re not free to choose much. You have to stick to your current job because that daycare bill is going to come due every month, no matter what. If you’re living in an apartment and you want to downsize because your apartment is eating up half of your take home pay, unfortunately, you’re not free to choose a better paying job or a cheaper apartment, because let me tell you, they just don’t exist in most cities across the United States. So I think this notion that we’re free to choose is a farce. And the question is, how do we build an economy that actually provides people some meaningful sense of freedom? And here, you know, when I talk about freedom, it’s frustrating because I think the word that always comes into my mind is enduring freedom. I don’t know if that brings up any bells for listeners here. But that’s actually the codename for the war in Afghanistan.

Scott Ferguson:  Oh, no.

Mark Paul:  Oh, no, is right. The right is just far better at marketing, be it “freedom”, “right to work”, you name it, they have co-opted every powerful word in our political dialogue and turned it into something evil. So part of my mission here is also to not give up on freedom but to reclaim it.

Billy Saas:  I think that project of reclaiming, it’s a common rhetorical move for heterodox economists arguing along the lines that you are for embracing, reclaiming, reanimating, rediscovering the kind of progressive roots of these ideas and the progressive elements of them. And I wonder along those lines, and one of the things I like about your book and talking with you now, you do; you lean into and sort of try to pull back the idea of free to choose, we want to be free to choose. Yes, let’s do that. And by that you’re maybe offering a hand to those Republican staffers or opening up space for conversation. And then in the book, you highlight how Hayek, Friedrich Hayek, was not opposed to social welfare programs, like health care programs, and how that sort of gets left out. On that note, I wonder if you’ve thought about entitlement as maybe a rhetorical obstacle here. So I imagine that those Republican staffers might hear you say, the right to, or the freedom for and say, okay, you’re talking about entitlements, which has become a sort of a demon term over the last 40 years over the neoliberal period. Do you have any clever way to get us into recovering entitlement as a kind of affirmative positive progressive trope or direction?

Mark Paul:  Look, I’m gonna be honest, I think that most of the Republican members of Congress and staff on the Hill are largely a lost cause. I do not think that we’re going to change many hearts and minds there. Now, that is very different from Republican voters. I do think that there is a tremendous opening to convince Independent and Republican voters, as well as Democratic voters for that matter, this is the type of vision that we need to be working towards. And those are the folks that I’m trying to capture more of. I don’t focus much on entitlements. I agree that it is a challenging word. But what I like to talk about instead is what I call the “well being state”. How do we move away from this notion of entitlements, this notion of welfare, to embrace a well being state? And this is precisely why the policy prescriptions that I outlined in the book are what I call targeted Universalist policies. So they’re universal policies, things like college for all that benefits everybody. Hillary Clinton famously quipped that she wasn’t for sending Donald Trump’s kids to free college in the presidential primary back in 2016. And I explain why that’s exactly wrong. Yeah, I’m fine with paying for Donald Trump’s kids to go to college as I am with paying for low income students to go to college across the board. We have a great way to capture the income and wealth of high income earners, I’m not so sure Donald Trump is one, through something called the progressive income tax and we need to couple that, of course, with a progressive wealth tax. But rather than having these means tested gates through every program that are essentially just meant to make programs more complicated and, in return, create political divides over them. What we need to do is have simple straightforward universal programs, things like Medicare For All, things like universal free college, and then you know, tax the rich via income and wealth taxation and let the programs do their jobs. “Programs for the poor make poor programs” was this great quip by Wilbur Cohen, one of the key architects of the New Deal and Great Society, and I think he was absolutely right. If we want broad based buy into these types of programs, we need to ensure that they serve a broad swath of America, economically, racially and geographically. And that’s precisely what I aim to do in building this wellbeing state, where the state is there to ensure that we are all lifted up, that we all have a floor under our feet at all times. The vision is essentially to constrain the market, both using floors and ceilings, to ensure that everybody is taken care of at a fairly high quality of life, but also that nobody is allowed to have undue economic power. And this is one of the things I talk about a lot. When we think about taxing the rich, it’s not only to create the economic space to ensure that we can fully afford everything we need to lead to a high quality of life for all people. But it’s also because we need to effectively put an end to the oligarchy that we find ourselves in today. By actually placing ceilings in the economy, saying that, whether it be a maximum income or maximum wealth level, we’re actually able to reclaim our economy in better entrenched democratic processes into the economic realm, rather than just allowing the billionaires of the world to essentially be mini dictators.

Scott Ferguson:  So I’d like to invite you to speak to some of your particular proposals. You can speak to any of them, but I guess maybe to get us going, I’d like to hear about the chapter titled the route that excuses me. I’d like to hear about the chapter titled “The Right to Housing” and what you’re proposing policy wise for this, to secure this right to housing.

Mark Paul:  So it’s a great question, slogans matter. And in fact, slogans often are best at changing hearts and minds. It was a particular slogan that actually set the initial seed for this book in my mind, and it was when I was spending time at Occupy Wall Street as a first year PhD student where the rallying cry was an economy for the 99%. And it’s a fine slogan, but they didn’t have a 10 point plan. People love criticizing them for that. And, I don’t think that’s a fair criticism, I think it’s fine for a social movement to have a vision, but not necessarily articulate policies. I kept thinking about an economy for the 99% what does that look like? And that’s largely what I tried to articulate here in the book. A right to housing, I think, is a good example of this, because it’s a nice slogan, but what does it really mean? And I had the wonderful privilege of working with a group called the Homes Guarantee Campaign and actually fleshing this out. So it’s a group associated with the grassroots organization, People’s Action, where they brought together a whole host of housing advocates, people that were section eight voucher recipients, people who are either currently or previously unhoused, elderly people struggling to make their bills. They wanted to re envision what a right to housing looked like, and the grass tops leaders were selling them on extending section eight vouchers or this or that. And they said, no, no, no, we want a radical vision that would actually put an end to the homelessness and housing insecurity crisis here in America. And so they brought me in as the economist on that team and a number of other academic policy experts that helped through a bottom-up policy development approach to flesh out what an actual right to housing looks like. And that’s what this chapter is largely based on. What I focus on in the chapter is two key elements to this policy prescription. The first is rent control. Look, we have rent control for the vast majority of Americans already. It’s called a 30 year mortgage, where we essentially freeze rent payments for 30 years thanks to government policy which created the 30 year mortgage out of whole cloth. Almost no other country has it. The United States did not have it before the New Deal which essentially legislated it into existence. And that has led to the creation of the wealth that exists today for the middle class. It’s a beautiful, brilliant policy, but in creating that we left out rent controls for the other half of Americans who rent. And in turn, what we’ve done is we’ve created a housing market that leaves renters at the whim of landlords. And I think this was on full display during the COVID 19 crisis, where in many cities, landlords were jacking up rent prices by 15-18%, in some cases, 23-24% a year thanks to the market power that they have. And it’s not because they were investing in those apartments and making them better, it was because they simply could. What rent control does is take the fact that both landlords and tenants both have rights to the housing, and it redistributes the bundle of rights that landlords disproportionately currently enjoy, and it says that tenants have a right to stay in their house. And it limits how much landlords can increase the rent on an annual basis. And I argue for an increase in the order of magnitude of three to five percent per year as the absolute cap. Now, that will help many existing tenants stay in their homes today, but what it won’t do is help ensure that we have additional housing options given our lack of affordable housing that exists on the market in the first place. To do that, we need much more comprehensive reform. And I think one of the most crucial areas that we should be investing in today is by building millions of units of social housing. Vienna, Austria is, I think, the key example here where the majority of residents live in publicly owned social housing that serves a diverse set of stakeholders. It’s mixed income housing, high quality housing. Many of these housing units have daycares on the bottom floor, have public swimming pools on their rooftops, and have gorgeous community gardens. I mean, this is not the public housing that we think of here in America. This is truly high quality, beautiful luxuries. Beautiful temples of public luxury. And we can have that here too, if only we will it to be the case. And through building such public housing, what we would do is actually set a real floor in the marketplace for rentals, because if a private landlord wasn’t offering decent housing options, people could simply go to the public housing option and get a nice apartment at affordable rent. And so it would fundamentally rebalance the housing market away from a nexus of profit towards a nexus of home and community.

Billy Saas:  Are there any other of the proposals that you feel like are especially, I mean they’re all important, but do any standout to you as maybe… Is there a sequence that you have in mind here for these sorts of rights being afforded? These freedoms being embraced and distributed? Is there an order of operations? Or do we have a sense that we’ll take what we can get when we can get it and figure it out accordingly?

Mark Paul:  That’s a great question. I think, later this summer, we will hopefully be having a resolution calling for an Economic Bill of Rights introduced in the US Congress highlighting the fact that you can’t take any one of these things in isolation, that if you actually want to deliver on economic rights, just like if you actually want to deliver on political rights, you can’t just give one piece of the puzzle to voters and say good luck. We really, ideally, want to adopt a package together. That said, sometimes in politics, you do need to prioritize. For me the two rights that really come to the fore are the right to a job, and the right to a clean and healthy environment. And let me briefly explain why. The right to a job would fundamentally restructure the labor market, which is where the vast majority of us earn our paychecks that pay our rent and put food on our table on it on a week to week basis. And by implementing a right to a job, which I argue has three pillars: running the economy hot, permanently expanding the public workforce, and finally the almighty job guarantee to actually eradicate unemployment and poverty level wages once and for all. By implementing such a program, you would fundamentally restructure the power relations of the economy because workers would have a viable exit option. They would actually be able to tell their bosses F-U if they have a shitty boss, an abusive boss, an exploitative boss as, unfortunately, so many people do. And it would provide them with a reasonable fallback position where they can get a well paying job working for the government and contributing to improving society, to making us all better off. That fundamental restructuring of the power relationship between employees and employers will have massive ripple effects throughout the economy. It will just fundamentally shift the dynamics of capitalism in crucial ways that I think are frequently under-appreciated when we’re talking about the Job Guarantee program. The second area is addressing the climate crisis. Unfortunately, we’re dealing with this crisis in the here and now. It simply cannot wait. Look, nobody has economic security on a burning planet. And if we don’t start investing in ensuring a clean and healthy environment for current and future generations, then most of the conversation we’re having here is rather moot. So given the absolute necessity of the moment, I think that we need to do everything we can to pivot our economic activities away from extraction and fossil fuel consumption and towards a truly sustainable future that all of the evidence shows is both eminently reasonable, affordable, and is completely achievable. It’s simply political hurdles that stand in the way, it’s really how we can neutralize the power of fossil capital in order to reorganize economic activity away from the current, dirty polluted state that we live in, and towards one of green abundance.

Scott Ferguson:  Education is often thought of as being a kind of magical lever for class mobility, and we sort of reify it and extract it from the rest of our policy horizon and our policy imagination, but importantly, for you, you’re putting a right to education, right in the heart of your economic bill of positive rights. And I’d like to hear you talk about the way you conceive of education within this, let’s say, menu of policies?

Mark Paul:  Yeah, that’s a great question. The reason I prioritize the right to an education is kind of multifaceted. So in the economic realm, we often talk about how education provides people with more opportunities, and also how education has a high return on investment, and both pays off for the individual through higher future earnings. But it also pays off collectively: a more educated population means that we have a higher GDP across the board and higher living standards for the entire country. So in econ speak, there’s positive externalities from a person obtaining a higher education degree, so to say. And we frequently thought of education as a silver bullet, and really sold education to people as the key way for them to advance themselves. Well, there is one thing that education will guarantee you in America, and that is debt. That’s not because it needs to be the case, it’s because we’ve made it the case. But before I get into the debt question, let me just say, there’s a second argument for education. And sometimes I’m slightly uncomfortable with the first, though I do make it myself. And it’s because the point of an education isn’t just for economic advancement. It’s not just for money. The point of an education is also to be a fuller human, to lead a more enlightened, informed, and interested life. I mean, often that pursuit of knowledge does not come from the pursuit of money, but it comes from the pursuit of passion and interest. We are a deeply inquisitive species. And I think recognizing that there are huge benefits to us, as individuals and society from promoting education from a social standpoint is really sometimes undervalued and thought of second to the economic benefits. And I think that’s a mistake. I really do, and particularly when it comes to democracy. Why is our democracy under threat? In part, it’s because we do have a bit of an education problem, and a kind of political literacy problem. Will education solve all of these issues? Of course not. But do I think that reinvesting in our education system can help improve the very functioning of our democracy? Absolutely. And I think that that’s something that we need to think much more deeply about. So, given these multiple benefits to education, I prioritize the right to an education in the book and talk about how we can and must expand it. And right now it’s the right in the books that actually people are most familiar with. We have a right to K to 12 education enshrined in most state constitutions. But what’s fascinating here is that we didn’t always have the right say to high school. Indeed, in the early 20th century, the high school movement, a grassroots movement that pushed to expand the Right to Education passed primary school, was able to successfully get the right to high school for the American people that we so enjoy here today. And what’s funny about it is that the arguments made against free college were essentially the exact same arguments made hook line and sinker against free high school, 100-110 years ago: it’s too expensive, it’ll disproportionately benefit the rich, because the rich are the ones who are getting high school degrees in the first place. Why were the rich getting high school degrees then? And why are the rich getting college degrees now? It’s because they have access to them. Once you open it up to the masses, you see that low income people go for these degrees just as frequently as high income people do. It’s the fact that education is serving as a barrier in the first place. And by making it a right, we tear down that barrier. And so I think if we want people to be truly free, if we want them to have the opportunities truly available to them, I think that we need to provide them with a high quality education for them to think about what does it mean to be free in the first place? And for them to think about what is the life that they want to lead? What do they want to do with their life, with their time? I mean, time: we talked about valuable resources, we’re often talking about money, but really time is the most valuable resource we have. And I think an education allows people to think about how to spend their time and to what ends. Now one thing I do want to add here, is I don’t necessarily think college is the right path for everybody. I think it should be available to everybody. But by no means do I think that a college degree, a four year degree should be a prerequisite for a high quality life. And one other thing that I don’t discuss enough in the book is the role of things like trade schools and other avenues that we also need to invest much more in today. And it’s not only about investing in those avenues, things like trade schools, but it’s also changing the ethos around them. Today, we have, I think, a stigma to a degree around the trades and really prioritizing four year bachelor’s degrees. And I think that’s a little bit of a mistake. I think that, yes, college can and should be open to all, but I also think that we should recognize that not everybody needs to go to college, and that college should not be a prerequisite for leading a high quality life.

Billy Saas:  And there are a lot of problems with colleges that would surely be solved or could be solved as we’re dealing with this question of education and a freer, more democratic democracy here in the United States. You talked about education as a path to greater political literacy, which we definitely need. And I think one of the interesting things about being in the heterodox wing of political economy is the kind of stark realization that financial literacy is actually at the same time as important, I believe, right. And this relates to chapter 10. “How do we pay for it?” I’m not talking about financial literacy in terms of balancing your checkbook. I’m talking about financial literacy in terms of what is money, how does it work? Where does it come from, and that sort of thing? So let’s go back to that dimly lit DC bar where we’re at a table with five, Democrat Hill staffers have ordered, like a fifth round. They’re really into what you’re saying. And they say this all sounds really great, Dr. Paul, but how are we going to pay for it? First of all, do you expect that that will be the question? There’s been a lot of gains, I think, in kind of making that question itself questionable. Certainly, still prevails, I think, in policy circles, or in policy discussions, at least on the macro level. But in this scene, in this ideal scenario, where you’re talking to your ideal audience, A.) do you anticipate bumping into that question and B.) to kind of close out our conversation of your book, as you do close out the book. What’s the answer?

Mark Paul:  So, yes, I do anticipate the question. I think that we have made huge advances, often thanks to the work of Modern Monetary Theorists in really advancing the conversation around debt and deficits and the like. But I think as the recent debt ceiling fight that played out in Washington demonstrates, people still care a tremendous amount about debt, they still misunderstand debt to a huge degree. They still are going to bring this up at every single turn. And so we need to talk about the trillion dollar question. But when we do it, we need to break it up into two questions. When we ask how are you going to pay for it? You’re really asking two questions. The first question is where will the money come from, the dollars and cents. And the second question, and I contend the more complicated question that deserves far more attention, is where will the real resources come from? In the case of Medicare For All, where are the MRI machines, and the anesthesiologist and then nurses and the hospital staff going to actually come from? And that is the question that I think we need to be paying far more attention to today. The dollars and cents is the easy part. Let me briefly explain why. First of all, there is a tremendous amount of space for us to increase our national debt. As John Maynard Keynes famously said, anything we can actually do we can afford. Now, the first half of that question, anything we can actually do gets to my second question, that where will the real resources come from. If we can do it, we can indeed afford it. So, part one, let’s increase the national debt, and let’s do so substantially. There’s plenty of economic headroom to do so. Particularly when we’re investing in the American people themselves. Things like education, housing, health care, these all are investments that pay enduring benefits. That’s very different from, say, straight, upward redistribution that, for example, the Tax Cuts and Jobs Act (TCJA) undertook, which is a very different type of growing the national debt that doesn’t necessarily pay enduring benefits for years to come. In fact, I would argue that it makes us all worse off. The second thing is, I do think that we’re going to need broad based taxation, and I use the example of Medicare For All as one example. So I have a good job, I am a tenure track professor at a major public university. Yet here, I pay $830 a month for my health insurance. And it doesn’t even count my co-pays or deductibles. Now, under a Medicare For All type program, if I were to have to pay $500 a month more in taxes, and then have access to Medicare for All, I would normally have better insurance and one insurance for the rest of my life, I’ll add. I actually counted it up the other day, I’ve changed insurances 13 times since I’ve been an adult. But I would actually be saving money, I wouldn’t have to pay $830 a month to my insurance company any longer. Yes, my tax bill would go up a little bit. But in fact, I’d have more money in my pocket at the end of the day, and superior health insurance. So I think we need to move away from thinking of taxes exclusively as toxic and to embrace a different language that really demonstrates to the American people that there are two sides of the equation. There’s public taxation, and then there’s also public benefits that exist. And I think that’s really undervalued. The third area that we could ensure that this is fully financed is particularly high taxes on the wealthy. Now, I want to talk about this in two different ways. First of all, taxes on the rich would create additional economic space if we needed it, if the economy was running at full capacity and needed more space. But also I think that taxes on the rich have the additional very important benefit of being what economists call, and I’m going to get a little wonky here, Pigovian taxes. Pigovian taxes are taxes on social harms; often that’s thought of as taxes on pollution, taxes on cigarettes or alcohol. Well, guess what? The rich are a social harm, too. And so when we talk about taxing the rich, it’s not only to create more economic space, but it’s also about controlling the undue economic and political power that they have thanks to the wealth that they’ve accumulated through the rigged rules of the game. And so I think that is a fundamental aspect. Now, the real resources, that truly is the challenge. In many instances, this is going to take a lot more government planning than exists here today. I think that this is one of the primary challenges that we face that we have, essentially neutered the government for decades, we’ve been defunding the government we’ve been, you know, outsourcing government work to places like McKinsey. And government capacity today doesn’t exist to stand up an incredibly robust state on a dime. And so we need to reinvest in government capacity in order to ensure that, you know, our transition towards a sustainable economy that’s relying on 100% clean and renewable energy or a College For All type program runs smoothly. And I do think that that’s going to take some serious time and attention to accomplish.

Scott Ferguson:  Well, Mark Paul, thanks so much for joining us. Everybody should run out and buy your new book, The Ends of Freedom, Reclaiming America’s Lost Promise of Economic Rights. And thanks so much for joining us.

Mark Paul:  It’s been a pleasure. Thanks for taking the time.

* Thanks to the Money on the Left production teamWilliam Saas (audio editor), Mike Lewis (transcription), & Emily Reynolds of The Buffalo Institute for Contemporary Art (graphic art)