On Friday, Glenn Greenwald did a piece called “What Collapsing Empire Looks Like,” in which he contrasted the cutbacks in essential domestic spending throughout the country with the “no problem” funding of Homeland Security and our two wars. Among other things, he said:
Does anyone doubt that once a society ceases to be able to afford schools, public transit, paved roads, libraries and street lights — or once it chooses not to be able to afford those things in pursuit of imperial priorities and the maintenance of a vast Surveillance and National Security State — that a very serious problem has arisen, that things have gone seriously awry, that imperial collapse, by definition, is an imminent inevitability? Anyway, I just wanted to leave everyone with some light and cheerful thoughts as we head into the weekend.
I agree with Glenn about the seriousness of the problem and the warped nature of the priorities among decision makers in Washington. In fact, I think these murderous wars and much of what passes for Homeland Security are making us less safe, so I think that much of that spending should cease because its consequences are negative.
However, I don’t agree with the seeming implication of Glenn’s post that a choice has to be made because the US can’t afford both the military/homeland security spending, and all the spending we need to do solve the immense problems we have. That’s a false choice. It’s not the basis on which this harmful spending should be stopped, because the truth is that “we” can afford it all.
A Government like the US, with a fiat money system, sovereign in its own currency, cannot go broke. We can afford to pay for defense and for re-inventing our society. We have to be careful about spending so much that we get inflation, of course. But that won’t happen until we recover enough to get to full employment. So, we’ve got a long way to go before we get there.
Meanwhile, we must not use a false frame to argue for stopping the wars and dismantling our Homeland Security apparatus. If we do, we’re liable to lose both battles at the same time. But more than that, the future of the United States depends on our being able to forget the idea that Government action is limited by the presence of a Government Budget Constraint (GBC). That constraint is a psychological neurosis of ours. It doesn’t exist in reality. It’s imaginary It’s a hangover from gold standard economics. Forget it!
(Cross-posted at FireDogLake.com and Fiscal Sustainability).