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oh all right thank you very much as i said for coming out and for being brave enough to choose uh a panel with more economics in it for other choices surprised to see you all here frankly um let me let me just start with a phrase that i think will be familiar to everyone in the room um people are sick and tired of establishments i want to talk a little bit about establishment economics with you today and i want what i hope to do is to tell you something that can empower organizations and groups that are promoting a progressive economic agenda that there is a progressive economic framework out there that will complement a bold progressive economic policy agenda and there is an army of economists out there ready willing and able to support you in your push in your quest for a more just a more fair more equitable economy or equitable social justice and so forth programs policies that are big and bold ambitious well beyond what the conventional mainstream views as feasible right these pie in the sky sort of things may not be so high in the sky after all if you ask the right economists to look at your proposals but who are those economists and what does it mean to say that we don't want to do establishment economics anymore so i spent the last year working in washington dc as the chief economist on the us senate budget company i was hired by senator sanders uh near the end of 2014 when uh he called and we had a conversation and a couple of conversations actually and both conversations were designed i guess to see if he and i were a good fit for one another and um obviously we were because i ended up going to washington dc and working for him but it might surprise you how many headline so-called progressive economists aren't there for you when you need them when you need them to help you push out big bold economic policy programs and they'll be the first ones to line up do it it's not feasible the math doesn't work it doesn't add up right and so i want to talk a little bit about why that's the case why the economics progression is so fractured how to think about the economics profession different schools of thought where to reach when you're trying to reach in for some friendly to your agenda and my own experiences i guess a little bit so i teach i teach at the university of missouri in kansas city i took a leave of absence i was chairing the department there and went to washington dc and did this thing for senator sanders for here and then left the budget committee and ended up advising the campaign and when i was there i did things like help find economists who thought maybe raising the minimum wage to 15 an hour was a pretty good idea you know there are a handful of places in this country where the economics department doesn't look like the economics department in just about every other major universe in this country and those departments have a history a tradition of doing more progressive so i called up a friend in one of those departments he's here i won't name him in case he doesn't want me to but he's here at this event and i said i need some help we would like to demonstrate that there is broad support for a 15 an hour minimum wage from our profession can you help can you help get a letter drafted we'll gather some signatures and then we'll show people that the profession actually has a number of prudential phds who will say 15 an hour isn't going to kill off jobs and destroy the economy and he said yeah i can help with that how long do you have and i said no not right i need it like yesterday and he said well it may be if i have a few weeks we could get 50 or so signatures i said no we've graduated enough of our own phd students and placed them in departments all over the country i can get 50 by tomorrow let's go for a couple hundred percent when senator sanders and the co-sponsors of that legislation went out and said we are advocating for introducing bill today to get to 15 an hour for a federal federal minimum wage people immediately said what you can't do it's too big it's too bold it's too much it won't work and they immediately started talking that number down and you had a letter you said don't tell me we can't do it don't tell me we can't think big i've got at least 210 professional economists right here who have endorsed the proposal this is okay we can do this right and time and time again we were able to muster on financial regulation did exactly the same thing with his wall street legislation on health care reform but there is pushback and the title of this panel features the name of one prominent economist who was part of that pushback by part of creating a narrative that said no you can't no you can't no you dare not you dare not because the serious people the very serious people have looked at the numbers and the map doesn't work okay so there are these ideologies there are screws of thought within the economic discipline but broadly speaking we call it neoclassical economics there's neoclassical dynamics and then there's the stuff that's not neo-classical economics and that can be institutionalist it could be marxist it could be keynesian it could be a lot of other things but it's all outside that main street within the mainstream there is a very comfortable brotherhood right if our colleague jamie gallery who's here also one of the advisors to the senator sanders campaign this group you know they're they fight like hell but at the end of the day he says they're like tweedledum and they agree on all the big stuff there are neoclassics i can actually have a fundamental faith in markets as a as a force that will self-correct things their big fight is over how long it will take to self-correct how long it will take the system to fix itself one side says it will happen very quickly and you could leave a total hands-off approach laissez-faire and the other side says hey it takes too long there's a role for government in that intervening period to do small stuff to try to boost along the process back toward an equilibrium and then there's everybody outside of that mainstream who says we can't just simply sit back and rely on the market forces or small ball interventions designed to take the edge off the cruelty that is the market economy that we need bigger more structural changes so i'm going to just stop by that introduction and introduce to you my colleague and friend of kate thank you also known as bill we were asked to make two announcements so josh fox's film how to let go of the world and love all the things climate can't change will be shown in this room from 7 to 8 pm we'll have extensive time for q a and then you're asked to line up along that wall um and then come up to this mic uh individually to ask your questions when you do that so uh i have a weird background my primary appointment's in economics i have a joint appointment law i'm a white collar criminologist i'm a former financial regulator i'm a serial whistleblower united that wants to imprison the felons on wall street uh my name is jack black but i'm in iceland apparently yes um and i was saying that iceland is the point so iceland has on a really good day and most days aren't really good days in iceland 320 000 population but they were managed they had three giant banks that brought down their economy they managed to convict the ceos of every one of those institutions plus many of the other leaders and they did this with a total staff that would be one of our us attorney's offices in the united states context so the problem is not the ability to prosecute and the savings alone debacle will be successfully prosecuted and got felony convictions and over a thousand insiders and those were hyper-prioritized cases involving the people in what we call the c-suites the ceos the cfos the former governor of illinois i know everyone does that i mentioned that as well it's a matter of will but it's also a matter of ideology and one of the terrible things economics does is tell people no as stephanie just emphasized no you can't no you you can't prosecute because a business person would never commit a crime no you can't regulate because that would be wrong no you can't intervene on behalf of people who are hurt because that will just make them worse off et cetera okay so let me just start with a baseline of stephanie talked about the difference and these people are really weird they call themselves fresh water and saltwater economists so it's strange i know but the uh the ultra ultra folks are based here in chicago or at least started here they're the fresh water and they're the ones who say oh no the market will fix everything and anything you do will just make stuff worse right right well the other folks are not much different that hence the tweedledum and tweedledee and they say well maybe we'll change it a little let me just give you baseline numbers to start this out the best estimate of economists is that in the united states the lost gdp through the course of this great recession and recovery will be 24.3 trillion dollars a trillion is a thousand billion okay these are numbers so big unless you study physics they have no meaning economists have no meaning for economists we lost 9.3 million american jobs we had over 5 million american jobs that normally would have been created that we're not we have ballpark 10 million foreclosures and you know four ish people times that gives you for the number of people in the household latinos households where there was at least a university degree lost 72 percent of their wealth that's the median loss blacks that comparable figure is 60 those losses are much greater than comparable latino and black households where there wasn't a university degree in other words you lost more wealth the better educated you were if you were black or latino the opposite pattern was true for whites right and it's in large part because of this refusal to talk about fundamental problems that there isn't a market let me just take you through the three big fraud epidemics that caused this crisis the first one was appraisal fraud right this is inflating the value of the house now you and i can't inflate the value of our house successfully the appraiser doesn't we have no leverage over the appraiser but the lenders do they say you want future business inflate the value and the appraisers publicly new media stuff online petition very savvy went to all the right government agencies said and it said this in the year 2000 think how long ago that was we are being extorted by the lenders to inflate the appraisal and if we refuse then we are blackballed and we are not given future business so that's not a market that's an extortion right right and that how successful we have surveys by 2006 90 of appraisers reported that they were personally subjected to that kind of extortion in just the most recent year right so this is the master liar's loans the industry's own anti-fraud experts report 90 of these are fraudulent nine zero no one ever encouraged banks to make liars loans and the lies in liars loans according to the attorney generals who investigated were overwhelmingly put there by the lenders and the lender's agents the loan brokers well how many liars loans were there well by 2006 40 of all the home loans made that year were liars loans that means there were over 2 million fraudulent buyers loans pumped out just in the year 2006 why because the commissions created the incentive to do this that's not a market that is how the system is rigged when senator sanders and senator warren say the system is rigged that's not colorful rhetoric that is an accurate description of the financial system as written by technical economists if they had the guts to actually write it but paul krugman isn't about to ever say that because he'd be drummed out of the academy but we say it all the time because we know it's true and the third epidemic of course is there's no such thing as a fraud exorcist so once the loans start out fraudulent because of the appraisal fraud because of the buyer's loans you can only sell them to the secondary market through a fraudulent representation and warranty so fraud begets fraud it's very biblical in all of this and we have numbers on this too you know this is what economists are supposed to be good at they're supposed to be good at incentives and they're supposed to be good at numbers and they are terrible at both of these things have you ever seen a krugman column that has the numbers i've just given you right never do you expect to see it soon no you don't you ever seen a vote a white collar criminologist no i mean why would you so you know go to another discipline that has expertise anyway the numbers and these are from the industry itself and these are the clown the high clowns of the industry right are that by the end of 2000 by the mid of 2000 over half of all the representations of warranties looked at were false and i can tell you with my bank whistleblower hat that one of our founding members was the top guy at citigroup really senior senior vice president staff of 300 reporting to him who found that 80 percent of the representations and warranties that citigroup was making to fannie and freddie were knowingly false reported this including to this guy named bob rubin that you may have heard of and as bob rubin testified to the financial crisis inquiry commission i was assured that the situation was resolved it was by firing the guy that blew the whistle and continuing to defraud they don't call it the dismal science for nothing listen i want to i don't want to let the session expire what we do want to do is allow some time for q a because we really want to hear from you we want to engage with you so we have definitely planned to build that in but i don't want to let this session get by without making a point that both bill and i make routinely in our own work and that we make when we talk to groups and organizations and other staffers and when i was on the hill uh this was a really important point for me to get out there and so i'm going to get this off my chest okay are you ready when somebody asks you how are you going to pay for it whether it's infrastructure investment whether it's climate change whether it's healthcare for all whatever the big bold agenda item is how are you going to pay for it in my opinion the most correct and powerful answer is to simply say congress will authorize the spending because that's how it actually works that's the truth that's how it all works if you're talking about congress doing anything how did it get done how did it happen that we did infrastructure the last time we did infrastructure a bunch of people went in and said yes to infrastructure the vote itself the authorization triggers the spending and the government is never think about this right what do people say well how are you going to pay for it you're going to have to cut something else out of the budget you're going to have to cannibalize someone else's program if you want to put more money into medicare or social security or uh infrastructure or whatever it is right you're going to have to cannibalize somebody else's program or you're going to have to raise taxes because everything has to be paid for and you're going to have to find the money or you're going to end up what doing something just so physically irresponsible and that fiscally irresponsible thing is called running away deficit running a deficit you can't possibly run a deficit because what will happen if you run a deficit oh my god the world will come to an end we're in hawk to the chinese there are bankers they own us they trump up all that fear right here of china we're going to burden the next generation so then they make us feel guilty and terrible and awful because we're we're hurting our grandbabies and so they tell us that's gonna happen then they make us afraid of bond vigilantes who are going to come and uh they're gonna downgrade our debt we won't be able to borrow any more we're going to end up in a third world country sort of situation greece will happen if we don't get our so-called fiscal house in order we all know we're going to end up like greece and the excuses piled higher and higher and higher inflation hyperinflation you want to end up like zimbabwe or germany so they feel they erect a wall i'm telling you this wall is the greatest barrier to entry to the progressive agenda i have ever seen in my entire life if you can't penetrate that wall and you don't realize that there is as i said an army of economists with real phds that came from real universities who will stand beside you and help you articulate a narrative that explains exactly why it is the case that the government is fundamentally different from a household from greece which is a country that by the way gave up its currency and adopted this crazy thing called the euro which is like adopting a foreign currency which is at the root of problems in the greek debt situation that governments have the ability when you're like the united states to authorize the spending they are the old think about this where does the united states dollar come from does it come from china is it does have a little stamp on the bottom it says made in china where does the us dollar come from it comes from the federal government of the united states comes from the government and can't come from anywhere else what happens to you if you try to create dollars maybe in your basement or something well there's a word for it right we call it counterfeiting and you go to jail the united states government is sovereign in its own currency it's the issuer of the currency the rest of us businesses municipalities detroit puerto rico right you and i small business owners we're all just simply users of the currency we're users of dollars and we're in a very different relationship with the fema dollar we can only afford to spend what we can earn and what we are able to borrow and lenders care very much about our capacity to repay loans okay sitting not too far from me is the son of the late and great heiman minsky one of the most important economists of the last century and minsky is famous for articulating financial instability and talking about why it is that businesses and households can get themselves in a situation where private debt becomes a huge problem we see that everywhere today student loans mortgage debt right private debt can be an absolutely critically uh devastating problem right for people who take on debt but for the federal government of the united states of america that spends collects taxes and borrows in its own sovereign currency things work very differently and most people have never been it's never been explained exactly how governments go about financing spending in a country like ours like in canada like australia like in the uk why countries that operate after the gold standard are very different right we are basically running around operating our government operating our economy as if we're still on a gold standard what did williams jane bryan say about the gold standard what do you call it cross of gold right never again on across the goal only we still are making economic policy as if we are constrained by gold standards if we have to find money if we have to dig up a shiny rock from under the ground somewhere in order to give us the ability to move resources around in the economy this isn't what we did in world war ii this isn't what we did during the new deal right what did they do they authorized the spending they mobilized the resources they put people back to work and by the way another one of men's most important contributions was for decades this man promoted the idea of a federally funded jobs program a job guarantee program right and one of the things that senator sanders has done is to revive the second bill of rights this is what he's talking about he talks about economic insecurity and why people are so afraid why people are angry and why people are turning out in thousands and thousands uh for his rallies and so forth there is such a high degree of economic insecurity in this country one in three people is either living in poverty or is in near poverty they're economically insecure one in three we're talking about 105 million americans right so he says he wants federal uh he wants health care to be a universal right he wants people to have a right to an education making public colleges and universities tuition free and fdr said as part of his second bill of rights that along with those two ought to come are right to employment we're going to tell people in a market economy you need to have money in order to survive you must ensure that there is way for people to earn a living and so i want to put that out what happens too often is take infrastructure for example right a large-scale infrastructure investment program is something that historically both sides could get behind republicans could get behind infrastructure right and uh it's not viewed as wasteful government spending it's not viewed as an intrusion into what the private sector is supposed to rightly be doing and so forth so you say well let's have a big infrastructure investment program god knows we need it the american society of civil engineers says that we are in deficit to the tune of 3.6 trillion meaning we should be spending 3.6 trillion or so to get our national infrastructure up to stuff in this country senator sanders introduces a piece of legislation and says let's take a big bite out of that problem let's go for a trillion dollars over the next five years and what happens how are you gonna pay for it and he says we're gonna pay for it by closing past local we'll get the money somewhere so we'll raise taxes and what do the republicans say no you won't we can't vote for it we can't vote for it because it involves tax increases what i'm suggesting is that these are two separate issues not that there's no reason no rationale no justification for increasing taxes to affect distribution concentrations of power and other sorts of problems absolutely but if you think that you need to go out and find money under the seat cushions in order to be able to afford the infrastructure investment program as the issue of the currency you've got things fundamentally backwards okay i keep seeing a hand i don't know if you're telling me to stop talking or you want to ask questions of the poor are women and children and a lot of values because the work that they're doing is either not paid or located you know the kind of security war is very critical that it doesn't get backed out but we also do another argument you're welcome yeah absolutely so articulating uh a policy the way you just did right defending the policy on its merits and pointing out the broader benefits to society to the economy and so forth is exactly i would say the right way to go about doing it um if i can we'll go about five more minutes and then we'll do a whole bunch of q a but please go to that side and come to the mic um anybody that wants to be lined up actually in particular the point you made is an example of how a national entity is different than a single household right income is not destroyed under a scheme under which mothers for example who stay home are paid right the income is still within the system and this is one of the reasons why it's the worst possible metaphor to think from what is life like for me with my personal budget to what a nation state is that has a sovereign currency so here's a thought experiment it's um then our early 1940s france has just been defeated the nazis are threatening to invade the united kingdom churchill's running the deficit should churchill surrender we would all think that was crazy but that is exactly the logic that you get of well you can't spend money to help poor people well why not you have every capability of doing so the question is is it going to make your society better off and the answer in almost all cases is yes remember i told you the lost gdp in the united states over the course is 24.3 trillion dollars compare that to the numbers you've heard it'll give you some idea of perspective that even these very large spending programs are actually tiny compared to the cost of austerity the cost in the united in the eu because of austerity is massively greater than 24.3 trillion virtually every college graduate in huge swaths of europe italy spain course greece but many other countries as soon as they graduate they leave the country because youth unemployment is at or about 50 in each of the three nations that i've talked about you want to talk about investment for the future you take your allegedly most productive to be folks with the university degrees and you say we don't want you go to some other country well that'll be good for growth down the road and all of this is with the rhetoric that we're doing this for our children we're sending our kids into mass unemployment to protect them in any other sphere any other academic field you'd be laughed out of the academy here you get a nobel prize what is the greatest prize awarded by the establishment let me tell one one story and then i know there's a long line of people but i just want to drive this point home about where's the money gonna come from where's the money gonna come from that's the big hurdle before you can get anything on the progressive agenda through how do you pay for where's the money gonna come from when the economy was hemorrhaging 800 000 jobs a month right at the height of the great recession uh the deficit exploded absolutely exploded why because 800 000 people a month for losing their jobs losing their source of income meant that tax revenues just fell off a cliff people not working not earning an income not paying income taxes right better income taxes meanwhile spending to support the unemployed automatically explodes why because you're providing unemployment compensation and food stamps and other forms of medicaid and other types of uh spending right so the deficit blows up ben bernanke goes on 60 minutes and he sits down with scott pelley and they're talking about all the government has done to intervene in the in the wake of the great recession all of the money to bail out wall street the deficit blowing up and so forth and he says is that taxpayer money you're spending taxpayer money now listen to what bernanke says i'm going to quote him it's not taxpayer money we simply use the computer to mark up the balance sheets in the account we simply use the computer to change the numbers in the balance sheet so if we need to lend money to goldman and aig and whatever we have a computer at the new york bed and somebody types in some numbers and all of a sudden there's new money created as a consequence of winning now shake your head because it sounds crazy only that's how all government spending works he's not saying we're trying this new thing out and we're going to use the computer this is how modern money works we are not on a gold standard anymore this is how it all actually works one more example because it's empowering and then i either return to bill where we go to q a okay one more example years ago green spanish chairman of the federal reserve alan greenspan is testifying before congress under oath as chairman of the fed and he's posed a question by congressman paul ryan and congressman ryan is trying to get social security partially privatized and he wants alan greenspan he wants to tee up a nice softball pitch that greenspan can just knock out of the park so he asks greenspan to agree with him on the following so ryan says wouldn't you agree with me that now is the time to begin to move towards a system of personal savings accounts that is code for privatizing social security shouldn't we begin to move to a system of personal savings accounts because as we all know the system is unsustainable it's going broke we're going to have to make major changes so forth and so on and ryan ends the question and alan greenspan leans into the microphone and he delivers paul ryan's horse nightmare and it was great and you can youtube and he says well i wouldn't say that social security is unsustainable as it's currently configured there's nothing to prevent the federal government from creating as much money as it wants and paying it and that's the part that should be obvious but it is an obvious but that's the part that should be obvious we can always mail the checks we got the we got the printing press we can always make it on every promise to every retiree today tomorrow and into the indefinite future we can always do that but then greenspan made the really important point this is the point that people in the community and the activist organizations need to understand here's what greenspan then goes on to say the question is how do you set up a system which ensures that the real assets are created that those benefits are employed to purchase it's a direct quote and it's greenspan so i have to translate so what he's saying is we know that we have demographic changes taking place the baby boomers are moving into retirement women are having fewer children they're going to be fewer workers left behind producing things that are going to be needed by everyone in the economy so greenspan says how do you set up a system that ensures the real assets are created that those benefits are employed to purchase what he's saying is how can you make sure that we're going to be productive enough economy in the future to make sure that when we send the checks out as promised in whole without cuts that there's enough stuff for everybody to have some to consume without generating inflationary pressures without causing us all to compete for a shrinking pool of actual output and the way and that's the right answer and that's the debate that we should be having we shouldn't be talking about whether we can afford this and that where are we going to find the money we know that it's not about financial affordability the debate we should be having on the social security side is what greenspan is saying what can we do today what can policymakers do today to help ensure that 10 years 15 years 25 years from now the u.s economy is productive enough to allow us to enjoy a rising standard of living to allow us to have everybody have a better and better life going forward when we know we're going to have fewer workers in the workforce and more retired people to care for what are the investments that we can make in our infrastructure in education in research and development and technology in all these what would you be doing today if you were trying to plan for an economy that you want and need to be more productive in the future and that's where the debates should almost always be focused on real resource use on real constraints in the economy if the but if the real resources are available the financial resources can always be deployed to achieve broader macroeconomic and political and social goals it's not about how are you going to pay for it in financial terms it's about how you're going to pay for it in real terms do you have the people do you have the raw materials do you have a spare capacity if we want to do a trillion dollars of infrastructure investment we can have the money to pay for it do we have the skilled labor do we have the capacity the excess machine tools and so forth that we need those are the constraints in an economy in a modern era like the united states government not the financial constraints so i just say that when we're talking greenspan we're talking literally and i'm rand devotee an executor of her will please come forward and in the usual injunction you can see how many people are in line try to keep it free because before manufacturing and i had the opportunity to actually be in this building trade show and all these amazing automated technologies um how do we deal with the possibility that most manufacturers could be taken away by automated technologies in the future and then we looked into the economics of a guaranteed okay let me partially review the question so people who may not have heard uh his question is he has worked in manufacturing and has a question about uh the prospects of robots taking over more and more of the work and have i looked into the economics of a basic income guarantee and the answer to the last question is yes and not as closely though as many of my colleagues at my university and some graduates of our program but here's what i can tell you uh i think that i have sympathy for basic income with conditions and there are many conditions okay it is not a panacea and the idea that we're just we've entered or we are entering an era in which nobody's going to have to work because the machines will do all the work and we'll just mail checks to everybody seems not plausible to me the part that scares me about the basic income guarantee is this is a proposal that had support from people like milton friedman chicago school many of the libertarians absolutely love this idea because then some of my libertarian friends people that i've known for a long time love this idea why because it you just uh send somebody a check and then it's all up to them how they want to live their lives but guess what else you do you take away all the other programs so the the thing is sold almost always as a replacement for virtually every other form of security of welfare of guarantees of programs that are designed to help people be unemployed and be impoverished and so forth and so what if somebody came up to you and said i'll mail you a check for 15 000 a year for 25 000 a year every year on the 1st of january you're going to get a check in the mail uh no more health care you know there's no medicaid there's no medicare there's no social security there's no unemployment compensation there are no food stamps there are there's no income tax right there all that stuff goes away right all of it's gone but you're going to get a check for 25 000 or so the first of the first of january and you'll be good so you've given up programs that took decades or in some cases longer uh more like a century to put in place and to protect and to build on over time but you sacrifice all of them they're all gone on the promise that you're going to get your one check and everybody gets it that's the other thing it's universal which means what poor people get their check they pay for the the cheapest medicaid or the cheapest health care that they can possibly find they pay for education they pay for their housing or whatever and then they have nothing left so they've consumed their entire check the wealthy get their check and do what buy more apple stock so what do you suppose happens to wealth inequality as a consequence i think it gets way way and i'll just channel my wife's work june carbone is an expert on the family men in particular get vastly worse when they don't work because they actually contribute less household work when they are completely unemployed than when they're working 60-hour cards so i think for a very long time humans are going to very much need jobs so we are oriented towards job guarantee programs as opposed to basic income programs thank you when i was campaigning for bernie rarely but occasionally the socialist issue would come up and what i would say to people is that let's be honest all of the wealthy democratic successful countries in the world are a mixture of capitalism and socialism the only question is what is the mix and how is it structured what i would like to ask you is if you could comment about the economic benefits since we're on that spectrum toward the capitalist end as everyone knows um if you could comment on the economic benefits broadly speaking to lessening the wealth and income inequality putting more hands in more money in the hands in the pockets of people who will spend it and generate economic activity all right i'm going to leave that macro part of the question to stephanie to answer but i'll answer a different aspect of it and that is what's really driving inequalities in large part compensation systems and the compensation systems yes they cause inequality but as i showed in the examples these are the real drivers of fraud as well and that fraud think of the 24.3 billion trillion excuse me costs those are unbelievably large costs to a system so you're you're correct we've gotten enormously out of whack we've swung very much toward chicago school policies and the results have been crippling and they far exceed the resultant income and wealth inequality they're actually destroying wealth it's not simply they're redistributing the pie unfairly they are now shrinking the pie and they're shrinking it a lot i'll just say on the inequality and the kind of mixed system democratic socialism uh rewarding countries or something like that look keynes this is writing a long time ago right kings uh against his general theory in the last chapter the general theory the first voting sentence he says the two greatest failures of the modern system is not about capitalism are it's failure to provide for full employment and it's arbitrary and unjust distribution of income those two things are related to what they as you allow income to get more and more unequally distributed and until a couple of years ago it was the case that senator sanders had a talking point and that was that 99 of all the new income was going to the top one percent okay then a year passed and it became 58 in the recovery since the economy began to recover 58 going to one percent well that's still clearly vast inequality right what happens when you're shoveling wheelbarrows full effect metaphorically of cash to the very very top to the top how what is the marginal propensity to consume for people in the top 1 how much uh how much consumption have they put off when the refrigerator goes broken or the car needs a repair you know these these folks are not withholding any kind of consumption because they don't have the money to do it giving them an extra little bit of money isn't going to generate economic kind of aggregate demand but when you redistribute in favor of the 99 that will spend virtually everything and that lot of 90 to spend almost everything you're going to get uh better economic performance less inequality means higher demand means higher employment means all kinds benefits and that's what the nordic countries do better with their tax system is they keep now there are problems emerging but they do keep a better handle on inequality through the taxes uh so i fear that i may know the answer to my own question i think you might have touched on it briefly based on my own research should i completely altering fundamentally our economic structure and the system my question is this given given that the federal reserve is a dual dichotomic entity in the sense that they print basically monopoly money that they can print their will and the fact that they've loaned it out to the government at interest who then charge us i believe they charge us a certain like basically we pay our taxes so essentially my question is how do we ever compensate the deficit if the free fake money is being loaned out to the government at interest that we can never pay back okay um so we do we do uh we paid it back once and we let's talk about this because this is this is a good kind of way to segue into this have we ever paid off the national debt in this country the answer is yes when did we do it 1835 1835 who was president how did it go very good a student a students usually sit in the front row big way back that's exactly right way to history we did pay off the national debt once and it was absolutely catastrophic are there other occasions in which we ran large surpluses there are other some people some democrats think of the clinton surpluses as a badge of honor a sign a mark of fiscal responsibility why if only we could go back to the good old days of the clinton budget surpluses when we were showing the world that we as a party knew how to behave responsibly we ran those budget surpluses look there's all kinds of material out there dean baker if you google dean baker clinton and santa claus you'll get a terrific class do that and read that piece i've written about this as well what does a surplus mean it means that the government is going like this more than it's going like this that's what a surplus means they collect 100 billion and they only put 90 billion back into the economy now the government is running a surplus well the rest of the economy is in good because that's how balance sheets work the rest of the economy is in deficit now watch me do the reverse i'm government i'm going to run a deficit this time i'm going to put more in 100 billion than i'm going to tax out 90 i have a deficit of 10 billion where did the 10 go it went into the rest of the economy into the non-government part of the economy my deficit spending produced a surplus somewhere else in the economy this doesn't happen sometimes it doesn't happen maybe it happens always and everywhere and to the penny government surpluses are the deficits are the accounting record of surpluses in some other part of the economy and if your goal is to kill the government deficit i tell you my friends you have set an agenda for yourself which is killing surpluses in the rest of the economy but nobody tells you that nobody tells you that they've convinced us that in order to demonstrate fiscal responsibility we must do what balance the budget or better yet have a surplus so this is again where we come to the difference between the sort of economists who are the deficit hawks who would tell you that we should have constitutional amendments to all this and everywhere balance the budget go back to the gold standard so and so forth and the more forgiving economists the deficit dubs who say well sometimes even though it's unpleasant you know budget deficit is the right thing to do you run those when the economy is weak and then as the economy begins to recover you move toward austerity because that's what they're telling you this is this is consistent with what krugman has written in his columns deficits in weak economies surpluses as the economy improves site over the course of the business cycle you balance your budget right you better budget over the course of the cycle this is not the proper goal for macro policy you balance the economy if you set the agenda to force the economy to balance the budget you get situations like greece greece finally achieved a primary budget surplus they didn't anybody want to drink places nobody would want to do that because they forced their economy to push the budget into balance instead of allowing the budget to balance the broader economy and we've run significant surpluses how many times in our history we heard we understand your question yeah actually it was the federal reserve is not the problem the fed is another problem uh i just want to suggest first off to everyone to check out the bill black report on the real news network it's really great um the depression and the financial crisis both arose out of real estate speculation as people seek to monopolize the value of the earth for themselves people have no access to the bounty of the earth so we're left competing with each other by selling our wages in scotland today there's a very strong movement for land justice i know that these movements exist in australia as well um is there space in the progressive movement for a system which returns the wealth of the earth to all of its inhabitants through the implementation of land value a taxation answer is yes it's a serious uh proposal the economics always had substantial support i i won't go through the technical aspects of but the whole concept of economic rent is is really what you're getting at so yes michigan and i'm through mission united we love you more than ever our governor has implemented a emergency manager which comes in and guts everything takes away our emergency rights and our ability to hold the government accountable right now this city council and so i was just wondering if you could explain um how everything that is good that i've heard you speak about how do you get past an emergency manager approval because actually there's a lot of governors in a lot of states that are getting ready to copy snyder's emergency manager which takes away all the democracy rights that any united states america has so i was born in detroit and grew up in dearborn and this is something very close to our hearts it isn't just that they've done this but they've done this uh essentially to every city uh in detroit not in michigan of any size that has a black majority population uh as well so it's it's racialized so first technical answer states are not sovereign nations they don't have their own currencies states do have to balance their budgets by and large but that's why the stimulus bill had a significant revenue sharing component now it should have been much larger but what killed it it was a coalition of the republicans and the blue dog democrats the new you know new democrats who got together to destroy that and that again this is stephanie's point these are self-imposed constraints coming in large part of the democratic party as to what establishes supposedly serious reasonable people and they have enormous consequences we've been focusing on the economics but people die that's right people end up with children yes my stepfather died of miso from it's very personal with me as well and this is our point we can do things about all of these we have the capacity as a nation but we have checked our will because of this ideological construct that has no basis in real economics so the line is and i mean no racial component with this that you know the way you enslave people is but to get them to put on the chains themselves and that's what an economics program is your kids or you yourself were carefully trained and taught that you couldn't really do much of anything and that is a complete lie and lies have consequences yes thank you um professor calvin you have enlightened us that we are a nation in its own currency so um can you um equip us the audience as we go forth and spread the good word about regarding congress just being a matter of authorizing the spending for programs such as large infrastructure