Dear editor,
Most of us (especially we elders) have played the board game Monopoly. In spite of growth in electronic games, sales of Monopoly still do well. Face-to-face interaction retains its appeal. But Monopoly also provides lessons in the current state of economic affairs.
A quick review: The Monopoly board has various properties, utilities, railroads and other locations where players land as a result of a shake of the dice. If a player lands on a property that has not been purchased by another, they can buy the property and thereafter others who land on that property are required to pay rent. Buying houses and motels for a property raises the rent, thus taking more of the other players’ money. To win the game a player must bankrupt all of the other players and essentially own everything and all of the money.
But before the game (the economy) of Monopoly can begin, someone must create and issue the money. Think of the bank in Monopoly as the U.S. Government Treasury and Federal Reserve Bank (the Fed) in America. In effect, the government of Monopoly, or of the United States, must create and issue the money. For anyone else to do so would be counterfeiting. The government must spend the money into existence.
The deliberately perpetuated myth that “the federal government has no money of its own, and must tax to spend” is false. Were it true, the first thing that must happen in Monopoly, or America, before the game (economy) can begin, is that the government must tax the players (citizens) to get some money that it can then give back to the players so they can start the game!
Obviously, the players in Monopoly, or the citizens and businesses of America, have no money of their own before the government creates it. This also means the government must operate in a so-called deficit. If the bank/government of Monopoly or the United States taxes back as much money as it spends into existence to balance the budget, the game will be over because no one will have any money.
It is understood the analogues presented here are simplistic, but the fundamentals are accurate. We can learn from Monopoly.
Lesson one is taxes do not pay for federal government spending. Just the opposite. Federal government spending provides the money we use to pay our taxes. There are four reasons for federal government taxes. Taxes enforce the legitimacy of the dollar as the nation’s official currency. They can be used to help control inflation. When applied progressively, taxes can reduce destructive inequality, and taxes can be used to reduce unwanted behavior (smoking, alcohol, etc.). Of course, all of this applies only to the federal government since it is the constitutionally authorized creator of the nation’s money. State and local governments cannot create money. However, there is nothing but ignorance preventing the federal government from doing far more “revenue sharing” with the states than is currently the case or was the reality in the 50s and 60s. This would eliminate the enormous debt burdens crippling state and local governments.
Lesson two is that the federal government can never run out of money. At the federal level, “How are you going to pay for it?” is always an invalid, deliberately misleading question. Whether or not something is funded by the federal government is a political decision, not a fiscal one. We see the Pentagon budget raised every year by Democrats and Republicans alike. Everything included, funding the billionaire enriching military/industrial/congressional complex costs over a trillion dollars annually. No politicians scream “How are you going pay for it?” or wring their hands in worry over the “deficit.” Tax cuts for the rich, trillions bailing out Wall Street banks, and billions in fossil fuel subsidies are the same. Politicians know who funds their campaigns. But try infrastructure repair, student debt relief, universal healthcare, or anything else benefiting average working Americans and the cries go out. “How will you pay for it?!” “The deficit!” “Indebting our grand kids!” The hypocrisy, the corruption, is beyond disgust.
The third lesson we can learn from Monopoly is that when all of the wealth is concentrated at the top, the game is over, the society is dead. Witness the world’s richest sociopath, blasting himself off for a 10-minute joy ride in space, receiving as many minutes of fawning corporate media broadcast time as global warming, an existential threat to all humanity, received in all of 2020. How is this not a society in decay?
To learn more, please watch economist Stephanie Kelton discuss the “Deficit Myth.”
Dave Svetlik of Kronenwetter
Editor’s note: Wausau Pilot & Review gladly publishes commentary from readers, residents and candidates for local offices. The views of readers and columnists are independent of this newspaper and do not necessarily reflect the views of Wausau Pilot & Review. To submit, email [email protected] or mail to 500 N. Third St., Suite 208-8, Wausau, Wis. 54403.
