Episode 60 – COVID-19 with Fadhel Kaboub

When asked to talk about public health needs during the current coronavirus pandemic, Fadhel Kaboub immediately brings up climate change and expands the concept of public health to a degree that some will find surprising. After giving it a moment’s thought you can’t help but agree.

Even if COVID-19 isn’t related to climate change, the effects of the climate crisis will accelerate in the coming years and we’ll see more pandemics and other disasters. We were caught flat-footed this time, but our inexcusable lack of preparedness cannot happen again. As Fadhel warns, there can be no “return to normal.”

This pandemic illustrates why it’s impossible to think of public health needs in narrow medical terms. This kind of crisis requires massive intervention early on. Clearly we need the infrastructure and medical capabilities to handle screening, testing, treatment, and hospitalization of huge numbers of patients all over the world.

To slow the spread of the virus requires decreasing the intensity of human contact by working and shopping from home. Businesses and their customers, schools or universities and their students, all will need broadband internet access as a public utility. Privatization and deregulation of the telecommunications industry will have to be reversed, which means going up against entrenched interests and their representatives in the government.

Everyone deserves paid sick days and universal medical coverage. We need contingency plans across the system, including efficient means of providing goods and services during the crisis. We have to keep the supply chain moving as much as possible, keep the quality of life maintained — these are enormously complex problems, as Fadhel explains.

An overarching impediment to this level of emergency planning is the fact that the market considers it a waste. To have enough hospital rooms, ventilators, ambulances and test kits during the crisis, they must be constructed beforehand. Capitalism doesn’t produce excess goods out of a sense of civic duty. Only the federal government can afford to do this.

The pandemic demonstrates what MMT has been emphasizing all along: that it’s not about having the money. To transform our system to handle public health emergencies, what matters is the real productive capacity of the economy — the physical and technical resources, human capabilities, and knowhow.

Fadhel says it’s time to reframe our current crisis within the economic policy agenda that we’ve been talking about for years. Understanding the monetary sovereignty of the US government, we need a three-point program:

1 – Universal public services: education, childcare, healthcare, and broadband access. It’s the responsibility of the federal government to guarantee these things as human rights.
2 – Job guarantee for people who want to work. The program should be resilient and flexible enough that you don’t have to be physically present.
3 – Generous income support for people who cannot or should not work.

As always with Fadhel, the discussion covers too much to recount here. He tells us how to address the “cost” of the Green New Deal and what to say to someone who thinks the federal budget should be treated like that of a corporation. He reveals a serious flaw in our understanding of the GDP.

It’s easy to forget that we’re still in the throes of the political primary season, but Steve had to ask him to weigh in on that. Fadhel leaves us with a reason for optimism. Bernie Sanders and his supporters have proven that there’s an alternative to rule by super-PACs and corporate interests. People believe in the transformational nature of the movement and many dozens have been inspired to run for office with a progressive agenda.

Dr. Fadhel Kaboub is an Associate Professor of Economics at Denison and President of the Global Institute for Sustainable Prosperity.

www.global-isp.org/president/

@FadhelKaboub and @GISP_tweets

Macro N Cheese – Episode 60
COVID-19 with Fadhel Kaboub
March 21, 2020

Fadhel Kaboub [intro/music] (00:00:02):

While this was not necessarily a climate change virus. We’ll see more pandemics of this kind that will spread quickly around the world in the future. This crisis is hopefully demonstrating to people that it’s really not about having the money.

You can have all the money in the world, but if you don’t have the test kits, if you don’t have the ventilators, if you don’t have the internet access to do work remotely, then it doesn’t matter how much cash you have in your bank account if you don’t have the physical and technological capabilities to get things done.

Geoff Ginter [intro/music] (00:01:23):

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

Steve Grumbine (00:01:34):

All right. And this is Steve with Macro N Cheese. You know, our old friend Fadhel Kaboub has been with us many times, but it’s very important. Fadhel is going to join me today to talk about the near and present danger of the COVID-19 virus and the impacts it’s had, not just in the United States, but around the world. And we’re going to talk a little bit about what it means to be prepared for an event like this.

What the United States social safety net and framework for disaster recovery might look like in a time like this and why we weren’t prepared for it now. What types of things impeded us from being prepared to handle such a disaster today? So with that Fadhel, thank you so much for joining me, sir. I really appreciate it.

Kaboub (00:02:24):

Thank you for having me on. It’s a pleasure.

Grumbine (00:02:26):

Absolutely. I’m sitting here got cabin fever, shoved in a box with my wife and kids and people are screaming and yelling and they get no idea what they’re doing. And they really, really wish they could go back to school and see their friends. And the schools are shut down. The place where I work they have told us all to work remotely.

Thank goodness they didn’t lay us off. Life as we know it today has changed dramatically as a result of this. And I believe I could be wrong, but I believe that a few of you guys, a few of the MMT community have been at the forefront of talking about this for years and years and years. Not just like in the moment.

Hey, guys. Hey, guys. And now here we are. What do you think about our current readiness for this virus? If you were to give a grade as a teacher, what would be the United States grade for being prepared for this?

Kaboub (00:03:21):

Oh, this is an interesting way of putting it. Definitely a very bad grade. I don’t want to assign a particular thing. And it’s really, degraded to the US government of 535 people in Congress and people who run the white house, not in particular, this administration, but this is, you know, decades in the making. So we’ve known about climate change for a long time.

We’ve known about this since “Silent Spring,” since the seventies, and we haven’t done anything significant to put in place measures that will dramatically reduce the effect of climate change. And notice I’m starting with climate change, not with COVID-19 because one of the things that COVID-19 is teaching us now and kind of reminding us of what the scientists are saying is that these pandemics will accelerate with the effects of climate change in the next several decades.

While this was not necessarily a climate change virus, we’ll see more pandemics of this kind that will spread quickly around the world in the future. Which means we should be ready from a public health, from a national security and economic security standpoint. We should be ready with contingency plans to adjust accordingly.

And one of the things that we’ve seen in the US in the last few days is the best way to slow down the spread of the virus is to slow down the level of intensity of human contact essentially. People are talking about self-quarantining and avoiding, you know, large public spaces. We’re shutting down university, we’re shutting down workplaces as much as possible, and trying to encourage people as much as possible to work from home.

The question is do we have the infrastructure capabilities for people to work from home or teach from home or learn from home in terms of students or to deliver goods and services remotely? And the answer is we don’t have that infrastructure.

Do we have the infrastructure to deal with the public health crisis on a public health narrowly defined perspective in terms of having the medical capabilities to handle large amounts of people all over the country and all over the world to test and screen and do triage and do treatment. And we’re already a few days into this crisis, and we’re talking about hospitals being overwhelmed; hospitals not having enough ventilators, not having access to test kits.

And the deployment of gearing up the response was extremely slow. And this is the kind of medical public health emergency that requires massive intervention early on. So you can flatten the curve of the spread of the virus, and we just didn’t have that. So the lesson from us from this crisis moving forward is that this may not be the only time we’ll have to deal with this. We’ll may have to deal with this on a regular basis moving forward.

So the lesson is, you know, number one, we need a game plan. We can’t just do this haphazard in an emergency situation. Number two, if the game plan, when we face crisis, like these from an economic standpoint is to move to remote communication, remote teaching, and learning and work, then we have to have broadband internet access as a public utility.

Otherwise today, I mean my own university and we have pretty good internet access, and most of our students are privileged and have pretty good internet access, but this is going to be a national thing. So we’re on spring break right now. So the day we come back from spring break, everybody’s planning to go online and do Zoom and Skype teleconferencing with their students in their classes.

And it’s going to be pretty much everybody – K through 12 and universities, in addition to people doing work from home remotely and setting up video conferences. Do we have the internet infrastructure to handle that kind of load? And most people are telling me, probably not. There’s going to be probably a lot of people who will be going to a plan B or plan C, which means not the ideal scenario for teaching and learning and doing work remotely.

So point number one, we need the massive infrastructure upgrade the telecommunication infrastructure for the US not as a kind of market driven solution, but this is a national security, this is a public health issue.

Grumbine (00:07:58):

Fadhel. Going back to 2010, if you look, Obama had signed the Telework Enhancement Act of 2010 into law, and it was a key factor in the federal government’s ability to achieve greater flexibility in managing its workforce through the use of telework. And this goes back for disaster recovery for all federal executive agencies, for all federal employees defined under Section 2105 of Title Five USC.

They’ve known about this for a long time. They have had disaster recovery and continuity of operations or COOP. This has been stuff that our government has known about forever, and literally, even with that has done nothing to ready society for this. It’s a huge dereliction of duty.

Kaboub (00:08:46):

Funny you should mention that. So we’re good at thinking ahead and knowing what needs to be done, but then there’s this thing in Washington, D.C. that gets in the way when they say, Oh, it would be great to have all of this infrastructure and all these capabilities to deal with all of these issues, but too bad we don’t have the money to do it.

So this is where MMT comes in. And Obama said it in many occasions, we were out of dollars. We can’t borrow more or the credit card is maxed out. So it’s that major obstacle to improving quality of life that turns out to be, you know, according to the work we’ve been doing the MMT community, it turns out to be a myth.

So it’s like an artificial constraint that we’re imposing on ourselves and yet today, we’re living the consequences of not having that level of readiness. And what this crisis is hopefully showing people, demonstrating to people that it’s really not about having the money.

You can have all the money in the world, but if you don’t have the test kits, if you don’t have the ventilators, if you don’t have the internet access to do work remotely and teaching and learning remotely, then it doesn’t matter how much cash you have in your bank account if you don’t have the physical and technological capabilities to get things done.

Grumbine (00:10:03):

That is really important.

Kaboub (00:10:06):

Yeah, this is what MMT has been emphasizing all along, but it’s about the real productive capacity of the economy, the physical technological resources, the human capabilities, the know how that matters the most. And people in the nonprofit world know this. They know that it’s not about only the cash, so to speak.

It’s about having people who can get things done and we’re facing this right now. Plenty of people have cash in their bank account, but can they get a ventilator on demand? Of course they can’t. That needs to be produced.

And that needs to be, you know, from a public health standpoint, having excess capacity during normal public health times and economic times from a free market perspective, sounds like a waste, but from a public health perspective, having that excess capacity of hospital beds and ventilators and skilled staff is the thing that you need to have in order to meet a crisis like this, where it needs to be addressed.

So this brings me to public health, which is the other contingency plan that, you know, people like us who have been advocating for Medicare For All and universal access without having anybody worry about copays, or why are people going to work in the last few days, even though they may have a cold, or they may have something that may turn out to be a coronavirus infection.

It is because they don’t have health insurance or the copays are too expensive, or they have to decide, should I go check on this thing, which might be just the regular common cold, or should I just go to work because I need to pay the rent. These are questions of life and death for people. And unfortunately, this is what happens when you don’t universal coverage.

 If people had universal coverage as well, if you’re not feeling well today, you take a sick day and you go get checked at the hospital. And this way we prevent you from, you know, losing your home or missing your payment. But also we prevent you from spreading the virus to everybody else around you. So that means moving forward, we have to have paid sick days for everybody, regardless of the level of skills or occupation.

This means we have to have universal coverage for healthcare without any additional burden on families. And we have to have contingency plans across the system for how do we provide the goods and services that we provide during normal economic times and public health times. How do we switch to emergency crisis mode and keep the supply chain moving as much as possible?

Keep the quality of life moving as much as possible. Meaning we minimize the impact on employment. We minimize the impact on the supply chain and living in a globalized universe where the supply chain is literally global in terms of the production of components that feed into the supply chain, a crisis that happens in China, we’ve seen the disruption immediately and affects everybody else, not just in terms of the spread of the virus, but the supply chain disruption.

That includes by the way, pharmaceutical production, because a lot of the active ingredients that go into pharmaceutical medicine and prescription drugs, the active ingredients, a lot of them are produced in China and then shipped to Korea and Japan and other parts of the world to finally find its way in the final product that I buy from my local pharmacy here.

Now we know that most pharmacies have two to three months worth of inventory for their local customers. And then the pharmaceutical producers also have, you know, stockpiles of two to three months worth of active ingredients and components for production purposes. And within the next three to four months, we’ll be hitting right against that limit. And we’ll see how much additional disruption will materialize.

So we don’t have a game plan for what happens if this thing lasts for more than six months in terms of work, in terms of employment, in terms of access to resources that are vital, for the elderly, for disadvantaged communities, for people across the country and across the world. We just don’t have the infrastructure for it.

And the infrastructure, we don’t have it because a lot of people thought that’s too expensive. Why would we waste so much money building an entire alternative ecosystem for what might be an Armageddon type of scenario? And look what those people are saying today. We should have had better response mechanisms and better infrastructure.

Grumbine (00:14:57):

Absolutely. You know, the phone companies and the other telcos have a huge part to play in this because they, with Ajit Pai and the FCC and so forth, they have a huge role to play in terms of stifling any kind of government rollout, any kind of services that would be deemed universal. In fact, they’re leading the charge against net neutrality and have done everything they could to block our access to having the internet as a public utility.

Right now, I would say that everything from the safety measures that could be brought on through edge computing connected on autonomous vehicles even that would allow us to have automated deliveries and such throughout the roadways, they have purposely blocked advancements in technology, such as DSRC, radio, and other such things that would allow us to deploy widespread everything from, you know, being able to monitor traffic on the roadways, to monitoring if there’s an accident or a wrong way detection.

So many things that they have blocked by trying to own. And this is where privatization, I feel really hurts our efforts to have a safe and just society. And you can see it clearly right here with this COVID outbreak, as we look at what continuity of operations would look like, or just in general, even trying to find a way to keep people at home, as you said.

Let me ask you a question. We’ve watched clearly watched this election cycle and you’ve seen the centrist, the establishment pushback against everything Bernie Sanders has said, and you’ve seen actual hate and dislike and just disrespect that has come from the establishment when we talk about the things that we talk about doing, I believe Hillary Clinton was famous for saying “it’s all pie in the sky” and so forth.

Well, here we are now literally facing a pandemic as you clearly articulated. And also with climate change, the very real shifts, the melting ice caps as new viruses and bacteria long since hidden away for a million years, come back to the surface to say, hello, how you doing? We haven’t even begun to see the shocks and awes as the tsunamis hit and other things.

 I mean, this isn’t just a matter of a virus. I mean, what happens when the oceans rise, the ocean levels rise and the coastal communities are impacted and disaster strikes, or what happens if we have that and a virus at the same time. We are woefully. There’s no plan. There is no contingency. There is no risk management. There’s absolutely nothing.

Kaboub (00:17:48):

Right.

Grumbine (00:17:50):

What do you see that gives you any hope at all? Do you see Bernie being able to capitalize on this? Do you see our movement being able to elevate this? Do you see this winning the day, or do you see us literally having to suffer incredible for the will of the capitalist, if you will, trying to maintain the private ownership of our survival.

Kaboub (00:18:13):

Right. Well, just to clarify something you mentioned there, it’s really not a question of if, it’s a question of when, in terms of all of these climate change impacts, and that’s not me speaking, that’s what the climate scientists have been warning us. So it will happen most likely within our lifetime, within our children’s lifetime.

The question is, are we prepared for response? And then to go to your point about the election and the establishment and the Bernie Sanders movement. And I emphasize as the Bernie Sanders movement, not Bernie Sanders because Bernie Sanders as an individual, we can put him in the white house tomorrow.

And if you have the same composition of those 535 people in the House and the Senate not much will be done. What gives me hope in this movement is that Bernie Sanders played a major role in the last few years in inspiring millions of people to believe that something better is possible, is within reach. And within those millions of people who were inspired by his message and his leadership, a handful of them decided to run for office based on that same vision, that same platform that they truly believe in.

And that includes people like AOC and Ilhan Omar and so on. But as they call them, the Squad is just a handful of people in Congress. They don’t have the leverage to change the system. But my reading of the current composition, especially of the Democratic establishment, I’m going to leave the Republican side for a second.

The Democratic establishment, you have a significant number of elected officials in the house in particular, on the Democratic Party side, who are really not leaders, per se, they’re followers of, you know, the party decision-making machine. And those individuals, many of them, you probably never heard their names because you don’t see them in leadership positions. Many of them are kind of reading what’s happening in the political scene.

They clearly see the movement that Bernie Sanders built rising within their own districts and putting pressure on them as individual representatives. But they’re also looking on the other side and it seemed the establishment is still powerful. And they’re kind of waiting to see where this will end. And if the establishment wins, there going to stick with the establishment.

But if they feel like the establishment is becoming a political liability for them, and that this movement is essentially unstoppable, many of them are ready to join. So that gives me hope, because I know for a fact that, you know, behind closed doors, these are the kinds of conversations that I’m sensing from some of them. But then you have people who are not in Congress yet.

We literally have right now, I personally lost track and everybody who’s been keeping track of who’s running on a Progressive agenda that endorses the Green New Deal, Medicare For All, a job guarantee. We started to keep track of this in the last 12 months or so. And last time I checked on the list, there was maybe 175 people running for Congress on a very progressive Bernie Sanders like agenda. By now it’s probably 200 or more.

 I really don’t know. It’s been overwhelming in a good way to see so many people running for Congress, some challenging establishment Democrats and some challenging Republicans. It doesn’t really matter. What matters is that these individuals have a clear vision for what needs to be done. They’re very passionate about it. And many of them in the last 12 months or so discovered that this is actually within reach, that we can pay for it.

They’ve discovered the MMT way of framing these questions and that, you know, set their campaigns on fire because these individuals are knocking on doors. They’re canvassing, they’re changing the conversation. They’re shifting the paradigm. They’re talking to constituents, they’re talking to local media and they’re debating their opponents and pulling them in their direction to shift the conversation about how we pay for it, to shift the conversation about what’s possible to bring climate change to the center of the debate, to bring Medicare For All to the center of the debate.

So not all of them will win this year, but a handful will probably win, but the other ones will continue building the movement way beyond Bernie Sanders era, either as president or as a Senator, because this is not going to be a two year or three year or 10 year process. This is a generational shift. And we clearly see it in terms of a generational gap in terms of who are the people who truly are passionate about a Green New Deal.

It’s the younger people because this is their future. This is their life. Who are the people who are standing in the way and kind of hoping to, you know, go back to “normal,” quote, unquote, going back to normal. Going back to normal is not good enough. Going back to normal when somebody like Joe Biden says it means like would go back to the Obama and Clinton era, which for younger people, that’s not good enough.

The Obama era, the Clinton era didn’t do anything about climate change. Didn’t do anything about public health to allow their generation to thrive and to survive. And it’s really the older generation, the baby boomers, so to speak who are standing in the way. And I have a lot of conversations obviously about this with friends who are baby boomers and younger people.

And the best way to kind of communicate this to baby boomers in particular, especially if they’re parents or grandparents, I tell them this, when you’re thinking about the future of the political system, don’t think about yourself, think about your children and grandchildren and the planet and the environment and the quality of life that they will inherit and ask them, have a conversation with them, ask them whose political platform would you support for a world that you want to live in.

And if you do that, we clearly see it from the polling numbers, from all the data we have. The younger generation is very passionate about this movement, about climate change, about Green New Deal and Medicare For All. And if today’s older generation takes this statement seriously and engages in a conversation with the younger generation within their own family, then I think we’ll have a better outcome.

Grumbine (00:24:46):

The numbers are damning. The numbers are so skewed. It’s like a hourglass. When you see the millennial groups in the younger crowd and the elder crowd, it’s so unbelievably inverse – the proportions. You have to wonder what is it that they’re protecting that’s causing them to vote against their kids and their grandkids having the benefit of a better life. Is this the Calvinist approach, the whole idea of hard work and bootstraps, or is this simply that they don’t believe it’s possible?

Kaboub (00:25:22):

It’s a combination of factors. So some lived through the Red Scare and have PTSD damage from that generation that says, you know, anything that involves some kind of large government involvement that displaces the market in some way might be a slippery slope to communism, which the younger generation is just laughing at that.

You must be kidding, are you serious? But you have to take their position seriously, because this is a lifetime worth of cultural formation that that generation lived through and completely believes in through education, through the media, through the political process.

So that’s one element. That’s not the only one, some older folks obviously reject that vision, but for a lot of them, it is part of the reality. And even those who don’t believe in it, they still believe that many of their cohorts in that age group still believe in it.

So they say, nothing’s going to change; anything that sounds like a slippery slope to Socialism or Communism older folks will not vote for so why should I vote against that and end up with Trump for another four years. So even those who understand it, they still fear their cohorts will not understand it and will continue on that path.

Grumbine (00:26:41):

Biden came out not too long ago, saying that the young people think that this is hard. Give me a break. I’ve got no empathy for them, and literally said that. And I had to play like five times to really believe that a presidential candidate actually said that. And had Randy Wray on a couple of weeks back, and Randy talked about, Hey, I’m a boomer and we didn’t have student debt.

And we were able to get a university for free in California. And we were able to not carry it. Now many of the people from that era and now CEOs that benefited from free education at the college level that are now scolding the youth that are carrying a hundred thousand dollars of student debt. It’s just unfathomable.

Kaboub (00:27:23):

Sure. Yeah. And it’s really interesting that a lot of the issues that somebody like Joe Biden, it’s not really Joe Biden in particular, anybody from the establishment Democrat, when you think very carefully about what their political career is based on, it’s based on serving the interest of people who put them in office. And that means campaign contributions are extremely important and lobbying is extremely important and influencing the agenda.

And it starts from day one before you’re even an office. When you decide as a candidate, I’m going to run for office, I’m going to put forward a platform, an economic and public policy platform. That’s where it comes in immediately. Then you ask yourself if I put in place this set of policy proposals in my platform, will I be able to raise money to win this election?

 And the establishment tells you NO. If you have a Green New Deal, oil companies will not give you money and pharmaceuticals will not give you money. So what do you do? You either join the Progressive Movement that says we’re not going to take corporate PAC money. We’re not going to take money from big pharma or any of the establishment corporate media system and so on.

And we’re going to raise money from individuals to form a government of the people, by the people, for the people. And if you join the establishment direction, then you get all the Super PAC money. You get all the funding, but then you’re compromised. Then you’re not forming a government of the people, by the people, for the people.

You’re forming a government of the Super PACs, by the Super PACs, for the super PACs, which means you’re already compromised on day one when you’re elected, because you have to serve the interest of the elite that put you in place. And what the movement that Bernie Sanders has sparked is doing is saying, we’re not going to go that route.

We need a Brand New Congress, hence the name of one of the organizations that’s pushing for this movement, but we need a brand new Congress with elected officials who are unbought and unbossed. Nominated by you, the people and held responsible to their constituents, not to lobbying groups or establishment groups.

And it’s not easy, obviously because you know how much it takes in terms of organizing, in terms of canvassing. And in terms of being essentially embargoed by the mainstream media, you don’t get any coverage and any coverage you get is negative coverage. And you get all the establishment naysayers saying this can’t be done, or are they saying, this is a slippery slope to Socialism or all of that stuff. And what this movement has shown in the last few years, I mean, look at Bernie Sanders’ fundraising machine.

You know, he’s unstoppable because people believe in the transformative nature of this movement. And people are donating a few dollars a month because that’s what they believe in — no Super PAC money. As Bernie said, several times, we don’t need Super PACs. We don’t want Super PACs. We don’t have Super PACs.

But what did the establishment Democrats say a few years ago when Bernie said, let’s move away from Super PACs? They called it the nuclear option. Why would we disarm, you know, unilaterally when the others are not. And he said, I’m going to disarm. And he beat the fundraising records of all the establishment Democrats and this campaign as we speak.

So the naysayers on the money front is that we can’t run a campaign like this. Well, look at the AOC fundraising efforts. Look at Morgan Harper here in Ohio in the Third Congressional District. Within the first quarter of her campaign broke every single record, not taking any money from fossil fuel companies or corporations or anybody else.

And there’s others, obviously across the country who are running on a Progressive platform who signed the Sunrise Pledge, who signed a commitment not to take any corporate money. And they’re showing that it’s doable. So this is inspiring yet another generation of people who will be running in two years and in four years, and many of them will win. And eventually we’ll have a government of the people, by the people, for the people.

Intermission (00:31:46):

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Grumbine (00:32:35):

With this tragedy going on right now, this disaster, I get a lot of questions about why isn’t Bernie Sanders boldly coming out and speaking about Modern Monetary Theory of all times, if ever there was a time when you have to unleash the full faith and credit of the entire arsenal of the United States federal government, why wouldn’t now be the time to let the genie out of the bottle?

Why would now be the time to pull back the veil and say, we can do this? And there’s some concern that it’s like, wow, if he’s not gonna do it now, when will he ever do it? Of all the times, this is an emergency. Why wouldn’t we expose the full power of our government so that we can do these things.

I’m curious. I know all of us have had conversations about various things and why he hasn’t and what he should do, what he shouldn’t do. And we’re all armchair quarterbacks. But in this particular case, this is an emergency, right? And I’m just curious what your take on that is.

Kaboub (00:33:35):

So very good question. So, first of all, I have no direct contact with Bernie Sanders or his campaign. So I can’t answer that question for him. So everything I say is me from the outside world reading the situation. He’s clearly been exposed to MMT ideas. Stephanie Kelton is his senior economic policy advisor, but it’s also clear that he hasn’t made the full leap forward into the MMT language and universe.

I mean, you can see his language in 2020 is much closer to an MMT informed policy platform then in 2016. So there’s progress. But also you have to recognize that, you know, he’s been at this game for a long time and started his political career as a mayor. So he thinks like a mayor probably in terms of budgets and balancing books.

And it was very clear in all of his political career. He’s fiscally conservative, just like a responsible mayor should be, but he doesn’t use that language anymore. Clearly. I mean, when you look at Bernie Sanders 10 years ago, versus Bernie Sanders now that language of deficit and debt and balancing budget is gone. So that’s progress.

He’s also in a political position where he’s probably concerned about the potential counter attacks of going full MMT from the establishment to begin with because they believe in the PayGo system let alone from the Republican side.

So for example, in this campaign, when he was pushed really, really hard to say, how are you going to pay for it? He didn’t answer the question directly, but he framed it in a sort of MMTish way. And tried to reframe the question, move away from how do you pay for it to how do you mobilize the resources for it? Or how do you convince people that this is a human right?

That it’s not about how do you pay for it. And in there had some tax this to pay for that part of the story. And that wasn’t good enough for the establishment, because they were concerned about the bill for how much this will cost over the next 10 years or so on. So I’m not holding my breath for Bernie Sanders to be the MMT presidential candidate anytime soon.

If he does, that’ll be great, but I’ll leave that to him and his team, especially political strategy team to make that decision. What I’m excited about is the dozens and dozens of candidates who are running for Congress and Senate today, and will be running for Congress and Senate in the next few years, who don’t have any political baggage or political history to worry about. And they’re starting on day one from the get go with an MMT informed platform that says, we know how to pay for it.

Grumbine (00:36:26):

That’s amazing.

Kaboub (00:36:27):

So in a way you can think of Bernie Sanders as the tip of the iceberg and the rest of this movement is going to bring the full force of this — what he called the political revolution.

Grumbine (00:36:40):

I want to ask you a question in line with this. It doesn’t take a rocket scientist to figure this out, but I want to lay a few bombs out there and let’s kind of peel them back to the current climate crisis and COVID-19 crisis. You know, we’ve talked about the $750 billion that just came out of nowhere for the military without raising taxes. In fact, simultaneously cutting taxes.

Then we also look at the fact that the programs that Bernie is proposing right here right now. I mean, let’s just rattle it off. Universal childcare, universal health care through Medicare For All. We’re talking about infrastructure, we’re talking about a federal job guarantee program. We’re talking about eliminating student debt.

We’re talking about making colleges free. We’re talking about so many things — the Green New Deal framework, you name it. And over 10 years, if you’re trying to be a budget person, there’s trillions, not billions, trillions of dollars of deficit spending.

He’s not paying for hardly any of it in a relative speak, the quote, unquote “taxes” that are being earmarked for quote, unquote, “paying for,” don’t even come within a planetary zip code, if you will of paying for it. And I see folks pointing to his website, this is how Bernie’s paying for this. This is how Bernie’s paying for it. I want people to be smarter.

I want people to see Bernie may not be using the language we want him to use, but it’s quite clear and evident. And I’m seeing this mainly for those candidates that are running so that they’re not trapped in the same box that Bernie’s had to run from. That they can clearly see there’s trillions of deficit spending there to spend on the people. And the idea of paying for it is right wing thinking.

It’s Thatcher, it’s Reagan, it’s not a Progressive stance — the stance of quote, unquote “paying for it.” How would you frame that for public as they look at candidates? Is that as big a deal as it feels to me, trillions of dollars of new spending without, you know, being counteracted by taxes even now?

Kaboub (00:38:53):

Right? So there’s two ways of doing this. My preferred way of doing it is to say, we’re already paying for it. It’s just not accounted for in the actual numbers that you look at. So for example, the Union of Concerned Scientists, which is a national organization that does very serious work, they did a study a couple years ago, estimating the impact of sea level rising in the United States, not globally, just the United States for coastal cities in the US and just the impact on real estate properties.

And they estimated at a trillion dollars. This is just loss of property damage from flooding and so on. We’re not talking about resorts and casinos and restaurants and businesses completely shutting down and having to relocate and so on. So we’re talking about trillions already, just for real estate. We’re not talking about other effects.

We’re not talking about the immediate impact that we have right now from fracking, from fossil fuel extraction on water pollution, on air pollution. We’re already paying for it. So every time we have a community impacted by water quality and air quality pollution from fracking and the current fossil fuel system, that community is paying for it in terms of their kids getting sick.

And every time we go and buy prescription for breathing treatment, that shows up as economic growth, GDP goes up every time we buy something and all the cancer treatment that members of the community will have to pay for it for the next 30, 40 years as a community that doesn’t show up as a negative amount, that shows up as economic growth.

So we’re miscounting already the actual cost of doing nothing. The cost of the status quo is extremely painful financially, emotionally, in terms of our public health, in terms of, you know, when you have younger kids affected by pollution, by air quality and water quality, their school performance goes down, which means their chances of graduation are diminished, which means their potential income and earning in the future is diminished, which means their productivity over time is diminished.

Are we taking into account this? We’re already paying for it, right, in this sense? So would we rather, you know, clean up the water source and spend a little bit of money upfront or not do that, and then pay for the consequences as a society over the next 30 years. The costs are just many times over what this Green New Deal program would actually cost.

The cheaper version actually is a Green New Deal. The status quo is the unaffordable, expensive thing from a monetary, from an economic impact standpoint, from a public health standpoint, from a quality of life standpoint, from a personal and community and emotional pain that people suffer through for going through cancer treatment and loss of family members and dislocation of these communities.

Cause all of this fracking that happens, it’s just a few years worth of pumping oil and gas, and then they leave and the school district is gone and then the restaurants are gone and then you’re facing your traditional rustbelt, de-industrialized small towns with the impact in terms of opioid crisis and safety crisis and so on.

So it’s a nonstarter to say that the Green New Deal is expensive for me, this is one way to frame it. Another way to frame this whole deficit government national debt thing is because most people think of the government as a household or as a corporation. So it needs to be held accountable, just like responsible families balance their books and don’t go into excessive debt, just like corporations balance their books and don’t go into excessive debt.

They say the government needs to be the same. So here, I’m going to leave the MMT world for a little bit and just dive into very basic accounting just for the sake of consistency. So if you’re a corporation, if people want to use corporations as the model for what’s responsible financial behavior, then how do we assess corporations?

We do this all the time. Accountants do this all the time. You look at their books, they have assets and liabilities. And if a corporation buys a building or a truck or machinery for their factory, let’s say it costs $10 million the first year. So you put it on your books as an asset that the company owns and it’s worth $10 million. The next year, the value of that machine will depreciate. So you write it on the books with 10% depreciation or whatever it is, but it’s still an asset.

So if the company closes down the next day, you can liquidate your assets. You liquidate the trucks and the computers and everything, and that’s real cash value. So the trucks and, you know, equipment and building that you bought five years ago are still on your books this year. So they’re part of your assets.

So you take your assets minus liability and you figure out if you have a profit and you say, Oh, this is a responsible company, they’re profitable, but we did just count the value of the things they bought five years ago and 10 years ago. Now, do we do that for the government?

When we talk about irresponsible government spending, we take government spending of 2019, and we compare it to tax revenues of 2019. And we say, Oh, the government is not responsible, too much spending relative to tax revenues. But the infrastructure that the government built five years ago is not taken into account.

When we look at the deficit of 2019. So all the military equipment that the government owns, all the physical buildings and computers and vehicles that the entire federal government administration owns that were purchased two years ago, three years ago, five years ago, those things it’s as if those assets don’t exist. So some people say, and this is kind of the deficit doves type of people like Krugman would say, well, that deficit is actually not the right measure.

If we were to treat the US federal government as an actual corporation, and we use the same accounting standard that we use in the corporate world to see if a company is profitable or not. So then we should take into account the value of all the assets the government owns versus all the liabilities.

And we figure out if the government is a profitable corporation or not. And if you even attempt to do that, knowing how much the federal government owns in terms of real estate, infrastructure and so on, the federal government will be the most profitable corporation on the planet. And we would never have this conversation ever again.

Grumbine (00:45:32):

Wow. That’s great framing, too.

Kaboub (00:45:35):

Yeah. So depending on which way you want to go, it’s a nonstarter. This is not how you assess, you know, a government financial position. And then you can also go the MMT way and talk about the government deficit as a surplus for the non-government sector and whichever way you take it. The current framework is just misleading, destructive, counterproductive, and it should be thrown out as soon as possible because this is really the major obstacle to progress.

We have ideas, we have creative people. We have the physical resources. We have the technological resources. All of this is within reach and it’s available and affordable to us. And we’re just sitting on our hands and saying, we can’t afford, it too bad. Let’s keep the status quo.

Grumbine (00:46:22):

With that in mind, you know, you’ve got Tulsi Gabbard and Andrew Yang. Their response to a crisis today is to throw a UBI at people. Once again, it’s the idea of cash at the problem. And I’ve waded into the waters myself personally, trying to talk to people about this. And it’s met with all kinds of really unfortunate responses. We’ve seen the shelves at the stores empty, and you can have a million dollars.

This is a clear, in my opinion anyway, it’s a clear case study of the priming of the pump for Weimar and Zimbabwe. If you really want to talk about a Weimar Zimbabwe thing, the idea of production, not meeting demand and people having pent up demand and cash and trying to compete for scarce resources as production is come to a crawl with people not being able to produce these goods and services, being quarantined and kept from work and so forth.

I wonder what your take on this mad dash for throwing cash at the problem. I understand people make the, Hey, I can pay my bills with this, but in reality, I think we’ve seen other places where we can just stop those bills from being collected period. We can do an emergency order to stop loan and so, talk about that for a moment.

Kaboub (00:47:43):

I’m glad you asked this question because this is very important, especially for us in the MMT job guarantee community to reframe the current crisis within the economic policy agenda that we’ve been talking about for years. So for me, if you understand MMT, if you understand the monetary sovereignty of the US federal government, then there are three things that need to be done.

Number one, universal public services that includes education, childcare, healthcare, broadband access. These are the responsibilities of the federal government to guarantee as a human right in this country. Number two, a job guarantee for people who want to work and who are able to work, an here, I’m modifying the able part, given the current circumstances, meaning if you’re able to work remotely and you want to work remotely, then there should be a job guarantee.

If you can’t find work in the private sector, we in the job guarantee sector, we should be able also to have a job guarantee program that’s resilient and flexible enough to adapt to crisis situation like this, where you don’t have to be physically present at the workplace as much as possible, obviously. And then number three, for people who cannot work or should not work either for personal health reason, or because the responsible thing to do for them is not to work, not to spread the virus.

We need to have a generous income support that supports people who cannot and should not work during normal economic times or during a crisis situation like the one we’re dealing with today. So these are the three layers for public policy for me: universal public services, a job guarantee for people who want to work, and a generous income support for people who cannot or should not work.

Now the question in the current crisis to go back to your UBI question or this generous income support, as you’re clearly aware of, it doesn’t matter how much that paycheck is going to be for a basic income, if the shelves are empty in the stores. So it’s really the productive capacity that matters — not having cash. Now in a crisis mode, like the one we’re facing and we don’t have to go very far.

Italy’s already implementing these. You just put a moratorium on mortgage payments, on credit card payments, on student loan payments, on car loan payments. So people don’t have to panic about losing their home and damaging their credit scores and so on. You just freeze payments across the board. And who’s going to be able to do this?

It’s not going to be the local municipality. It’s not going to be the state. That has to be the federal government. So this is extremely important for crisis like this. The question is how do we provide enough of a resilience in the system to be able to keep the supply chain going?

And as I alluded to earlier, broadband access infrastructure is extremely important, but in every layer of the productive system, every unit has to have a contingency plan for how do we keep the supply chain going as much as possible? How do we continue producing goods and services as much as possible in a way that’s sustainable, in a way that’s healthy, in a way that allows us to contain the spread of this virus.

And so that’s what we’re trying to figure out haphazard in this situation. Instead of having this as a buffer for the system that kicks in automatically, these are the automatic stabilizers that we need to put in place, not just a job guarantee and Medicare For All, but all kinds of automatic stabilizers to minimize the disruption to the supply chain.

Grumbine (00:51:28):

Andrew Yang said that this is a demand problem. He literally came out and said, this is a demand problem, and that we need to give money to this problem. And literally 30, 40, 50,000 people liked his tweet. And that’s the level at which the false narrative, the wrong narrative resonates.

And within the Tulsi Gabbard community, they are rabidly protective of the concept of this basic income guarantee in these times. What would your message to them be to help them understand why these sound good on one hand, they are not effective.

Kaboub (00:52:12):

So, first of all, most supporters of Andrew Yang and Tulsi Gabbard, who truly believe in this UBI thing, we have to acknowledge that they’re people, who for the vast majority, live the economic pain that we’re aware of. And they see this as the one thing that can make their life a little better, which is a few hundred dollars extra a month to pay rent, to buy food, to have access to healthcare.

So I have to acknowledge that and honor their situation. But then you can think of the other UBI supporters, the Silicon Valley types who have a very different agenda for UBI that has very little to do with people who are struggling to pay rent. And their agenda is to Uber-ize the economy, to have the government provide a basic check, a hundred . . . a thousand dollars a month or whatever.

 So you can pay your rent and have a little bit of money for food, but not enough money. So you have to work in the gig economy and hustle for jobs left and right with Uber and so on to supplement your income. So if that’s the world we want to live in to eliminate public services and give everybody a check and then force everybody to hustle for the Uber-ized the economy, that’s not the world we want to live in.

We want to live in the world where people have the right to universal public services, have a right to a job, if they choose to have a job, and then a generous income guarantee for people who cannot and should not work for a variety of reasons. So back to this demand side issue that Andrew Yang and others believe in take the situation today.

You give everybody a thousand dollars check and say, well, you’ve lost income because you’re a restaurant employee and the restaurant shut down. So now you have no income to feed your family. So we’re going to give you a thousand dollars.

So sure if you go to the supermarket and you find enough food, you’ll buy food, but for the items that don’t literally exist on the shelves, having a thousand dollars or $10,000 will not do anything to make those goods appear all of a sudden. If anything, what it does, this is where the market mechanism kicks in, the market mechanism says there’s a lot of people with cash who want hand sanitizers and hand sanitizer prices are going to go up.

So it’s like you’re bidding in an auction. And that’s what drives inflation is when you have a shortage of productive capacity and you have too much purchasing power but not enough supply. So it’s really the supply chain that needs to be pumped up in this moment, not just the demand side. So we have to think about the people who were actually losing their jobs in this crisis, not having income in this universe means you can’t even go to the supermarket to buy anything.

So we have to consider both, but this is not the time to say, Oh, had we had a universal, basic income, all of these problems would have gone away. Having universal basic income will not produce the test kits for the coronavirus. Having universal basic income will not deliver more hand sanitizers or toilet paper or whatever is missing on the shelves these days.

So it’s very important to acknowledge people’s situations at the bottom of the income ladder and people who were literally losing their jobs and may not be back on the job for many weeks, possibly months, depending on how bad this crisis goes. So we have to have those contingency plans, but UBI is not the solution.

Grumbine (00:55:49):

I want to talk to you about this. Just looking at rent and looking at mortgages, the real estate agent that works with my wife, they’ve waived rent payments for the next however long. And the idea here is that that’s a real benefit to people. Giving me a thousand dollars and telling me to forage in the free market is not a viable option, but taking away those debts, that’s a meaningful thing.

It doesn’t matter what the cost is. The federal government can absorb any of those costs. There is none of those costs, no matter whether there’s inflation or whether there’s going to cost increase on travel or gas increases or whatever, there’s no cost there the federal government cannot absorb, but we as individuals, we cannot absorb that.

So if they give us a thousand dollars and that thousand dollars only pays for some bread because prices have spiked through, right, we’re still left in a really tragic situation. That’s not relief. In fact, that’s a false promise.

Kaboub (00:56:46):

Right.

Grumbine (00:56:46):

To me when you have people on the lower rung, because I’ve been there and I know this world, I know it too well, unfortunately, which I didn’t. When I think about having the burden lifted of the crushing debt and having basic needs met in the community, making sure that I don’t have to worry about eating, making sure that I don’t have to worry about clothing and shelter, making sure I don’t have to worry about healthcare.

These are very real things that literally make it so that even if you don’t have a penny to your name, your survival is well taken care of. And your dignity is intact. To me, that is a just society, not one that throws cash and says “figure it out, Mr. Man.” I don’t like that at all.

As a person that’s been in that environment and lived it, to me, that’s a false promise to people that are desperate. And to me, it really breaks my heart as somebody who lived it to see it championed as the answer, when it clearly is not.

Kaboub (00:57:44):

Right. And to go back to the response from Congress, just to illustrate how silly some of these artificial constraints are. Last week when Congress approved $8 billion, the first $8 billion for response to the coronavirus crisis, nobody asked where did the $8 billion come from. They didn’t say who we taxed or who we borrowed from to spend those $8 billion.

And they didn’t say we have to cut this other program in order to do this. There was no PayGo discussion about this. Congress met, and they said, okay, there is a crisis. We’re going to spend $8 billion. We can debate whether it was enough or not enough, but the point is that $8 billion just appeared when they voted to approve it.

And for all I care, they could have said, well, 10, well, how about 50? How about a hundred? The same process. They agreed there is a crisis, there’s a national priority. And it triggered a vote. And the vote says, yes, and the spending is created into existence, right? So those triggers that lead us to this kind of response. I’d like to invite us to think about other triggers.

I mean, even in the stock market, when the stock market was crashing last week, there’s these automatic circuit breakers that kicked in to stop the crash, right? At least for 15 minutes, the trading and so on. Well, let’s think of automatic triggers, and automatic circuit breakers when we emit a certain number of CO2 emission to destroy the planet and say, well, that’s it, we’ve emitted too much circuit breakers shut down.

You know, timeout. Let’s figure out circuit breakers when the unemployment rate hits 5%. Let’s figure out circuit breakers when homelessness increases by 5% or above a certain level. Where are those automatic triggers that actually address quality of life? Automatic circuit breakers when food prices rise by a certain level or real estate prices rise by a certain level or cost of healthcare rises by a certain level.

Why don’t we jump in and say, timeout, circuit breakers. We can’t do that. So we have this selective decision making process that says certain privilege institutions and individuals and markets have access to these safety nets and the rest of us, the voiceless people, you’re on your own, the market or charity will take care of you.

Grumbine (01:00:09):

Can you talk to me a little bit about it was what, $1.5 trillion that was used as an intervention? I believe these were leveraged loans, low-interest but leveraged loans, nonetheless. It’s not the same thing as Congress spending on the people. It’s a different thing, but it is access to credit that regular people don’t have in times of crisis.

And so can you kind of carve that up because while I’m sympathetic to the people that don’t understand, I’m sympathetic to seeing them say, Hey, where’d that 1.5 they’re bailing out Wall Street again. I hear them say that. And I say, yeah, that’s not exactly what happened, but there is something important to be learned here. Can you take us through that for a moment because this is happening right in the midst of all this.

Kaboub (01:00:54):

Right. So when the Fed announced that it will intervene with $1.5 trillion to prop up financial markets, it wasn’t a decision done by Congress, there was no vote and it’s not taxpayers’ money obviously. The Fed has the capacity essentially to intervene as a buyer of last resort in financial markets to buy mortgage backed securities, to buy other assets.

And it’s essentially an asset swap and it’s done on a short term basis. So it’s not really a bailout because none of the banks were failing per se to require a bailout. At least not yet. We’re still in the beginning of this crisis. So it’s not really fair to describe it as a bailout, but it is an intervention to prop up a particular segment of the economy, which is the financial industry.

And if you understand MMT, you understand that the fiscal side of the government and the monetary side of the government as Warren Mosler sometimes says, it’s like your right hand pocket and your left hand pocket. It doesn’t really matter. It’s all within the consolidated government.

So Congress has the power of the purse to address areas of the economy other than the financial industry, and can intervene by creating additional purchasing power in the economy, regulating industry, freezing mortgage payments, freezing credit card payments, canceling student loan debt. All of these things have a real impact in terms of helping people through this crisis or through any other crisis.

It’s just the fiscal side of the government has been obsessed with fiscal conservatisism and balancing budgets and worrying about the national debt. So it’s important for us to recognize that what the Fed did on the Wall Street side of the economy can be done in other areas of the economy. And it’s not in this case, literally is not a bailout, at least not yet, we’re not at the state where banks are failing and need a bail out. This is just to prop up asset prices.

Grumbine (01:03:05):

Very good. So Fadhel tell me, what is your message to the people regarding the current crisis? What’s your final parting words?

Kaboub (01:03:14):

Well, the most important thing is to follow the advice of public health experts, as much as possible to contain the spread of the virus, not just in the US but in other parts of the world that we are in this situation for a good reason. This is not an overreaction. This is extremely important. It’s important for us to reflect on what this means for us moving forward.

Once we pass this crisis mode, hopefully soon in terms of how we need to be prepared for similar events in the future, and engage directly as engaged citizens in the political process and demand that we have the infrastructure that allows us to be resilient in the future and think carefully about what is being done right now in terms of fiscal and monetary policy.

Because this is the time for system redesign or system rethinking and engage in the political process to redesign the system in a way that improves our quality of life moving forward, not just during crisis times, but during normal economic times. It’s been done before. We’ve done this during major wars and crises, and there is no reason for us to go back to normal.

When people say, let’s go back to normal, going back to normal is not good enough in terms of climate change, in terms of employment, poverty, inequality, public health, going back to normal is not acceptable. We need to think big and think in a transformative way and engage with people who can clearly guide us through how we redesign the system and how we can afford it without bankrupting the country, without causing inflation.

And that transformation is not just about creating new programs. It involves taxing and regulating certain things out of existence. It’s about reclaiming the Democratic process. It’s about creating a government of the people, by the people, for the people. If we want the priorities of the people to be honored, then we have to have a truly Democratic, transparent process.

But if we want a process that’s controlled by big donors, corporations, and establishment interest groups, then of course we shouldn’t complain that they serve their interest instead of the public’s interests. So that’s my main message.

Grumbine (01:05:47):

And a powerful one it is. Fadhel, thank you so much. Folks, this is Steve and Fadhel, and my parting words to you all are stay safe. Keep your loved ones close and make sure you don’t spread the disease. With that, I’m out of here. Thank you.

Ending Credits (01:06:06):

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