Money is Scarce
Misconception/Lie 6
Scarcity plays a major part in the neoliberal philosophy. By creating the illusion of constraint or a limited supply of something, it is simple to form the perception, in the public consciousness, that there are limits on potential aspiration. It curtails what is possible and reins-in the hopes and dreams of those who are vulnerable.
More insidiously, the false scarcity justifies the suffering, imposed on vulnerable groups. The constraints on supply are used to excuse cuts in public services, services that these groups rely on to help them find a stable footing in the community. Benefits, created to provide those on the margins with a basic standard of living are reduced or cut due to their ‘unaffordability’.
The scarcity affects human behaviour too, by encouraging competition. If something is in short-supply, it is natural to put a greater emphasis on ensuring the security of supply for you and yours, and a higher disregard for the needs of others. This results in a shifting of the moral and ethical compass of the community.
These three effects are indicative of how a simple change in framing can alter the entire philosophy of a society. As a collective, there is a reduction in aspiration and an increase in suffering for the people most in need. On the other side of the equation, there is a decrease in the amount of empathy afforded by society which reverts to relief that it’s not you who is suffering and a constant fear that it could be.
Of course, I am not proposing that there is no such thing as scarcity. The most obvious limit on the human race is time. Each of us has a limited life span. The resources of the planet, although vast, are nonetheless, limited. All of the necessities of life like food, shelter and water are finite. Communities and cultures have existed and grown in every corner of the earth through an evolution of learning to survive within the constraints of their ecosystems, for thousands of years. These true scarcities mould the life that gets built around them through the process of natural selection and evolution. Nature provides and controls the extent of our economy.
Similarly, when false scarcity is widely accepted as the truth, society evolves to ‘fit’ the narrative. The lie is in no way complex. In fact, it is so simple, that as far as I can see, there only two fallacies are required, to build the narrative that deludes the population.
One is infinite and the other is unnecessarily restricted. Let me explain:
The first is currency. Government, as I will repeat ad infinitum throughout this series, is the monopoly issuer of the currency. It has infinite ability to increase the money supply and can purchase anything that is for sale in the national currency. In addition, the Government authorizes commercial banks to make loans, which do not add to the net money supply due to their corresponding liability. However, as long as the bank is comfortable that the loans will be repaid, through credit checks, any amount of loan agreements can be made.
The Government has an infinite capacity to create the currency it issues. There are no financial constraints on a currency-issuing Government.
There was a time when banks had to restrict the amount of currency in circulation. This happens when the currency value is ‘pegged’ to another currency or a commodity such as gold. The UK came off the gold standard in the 1930’s but before that, it was theoretically possible to take your £10 note into the bank and demand gold in return. The Bank of England had a limited supply of gold, so it would have been feasible for the Bank to run out of gold if too many depositors demanded to be paid in gold.
After WWll, the UK, with many other countries, agreed to stabilize the global financial markets by pegging their currency to the $. The $ was still pegged to gold, so in effect, most of the nations of the world remained on the gold standard until President Nixon announced that the US were breaking the peg agreement in 1971.
Since then, most of the major economies have been fiat, able to create currency at the tap of a keyboard at the Treasury Dept. Many economists, politicians and media pundits seem to have trouble recognizing the changes this made to economic potential, the fact that there was no scarcity of currency.
The second scarcity is employment. The scarcity of jobs is a political choice through an economic concept with the acronym NAIRU. I will explain this idea in a later installment of the series. Suffice to say that by creating a shortage of jobs, business owners have no exterior incentive to improve wages, benefits or working conditions.
People are relieved to be in a job and unlikely to rock the boat in case they jeapordise their employment. This precarity is increased in a society where the population are encouraged to take on debt in the form of mortgages, tuition fees, car loans or credit card repayments. A month or two without income could bankrupt a person and leave them homeless.
Full employment, on the other hand, turns the table completely. Businesses then have to compete for staff, offering good wages and benefit packages, on the job training and apprenticeships straight from school. The distribution of profits can be more evenly dealt out and society and the economy better balanced.
Unemployment is a political choice. The Government could buy up all idle labour at any point and put it to productive use in any community. The fact that this is not even discussed is indicative that this grinding down of the working population is a deliberate attempt to subdue them. This is unnecessary in a nation that has all the resources it requires to give its population a decent standard of living.