The Abominable $1200 Gift: Timeo Danaos...
“It arrived while I slept,” a Facebook friend said (I quote from memory), grateful for the $1,200 deposit in his bank account from the fairy “IRS TREAS.” It’s magical. You have done nothing (except being unwillingly subject to the risk of a coronavirus and work ban) and a tax-free gift appears in your bank account! It should happen more often, right?
This will be the first terrible consequence of the “Economic Impact Payments” sent or being sent to more than 80 million Americans. Many people will think that if it can be done once, it can be done regularly, like every month to finance a guaranteed income. Many MMT proponents think that money creation can finance any goodies that they or the majority want.
One absurdity in the abominable gift is that the crisis that motivated it has been partly caused by the donor himself, both by omission and by commission. By omission: the federal government was incapable of preparing, at least minimally, for a pandemic, which, it was known from SARS in 2003 and MERS in 2012, could happen, while such preparation could be viewed as the production of a public good falling within the role of government if it has any useful role. By commission, because the federal government’s regulations prevented private efforts to increase supply, and because (under the Korean-War Defense Production Act) it added price controls and bureaucratic allocation that prevent markets from minimizing the damage. The whole crisis has been a humongous government failure, and governments are using it to claim widespread powers that most people did not suspect existed.
Moreover, if many individuals prohibited from working need the check direly, many if not most Americans could, for now, live without it. Some may even barely notice it.
Another terrible aspect of the abominable $1,200 gift is that it serves not only state propaganda in general but also the personal propaganda of a president who is facing an election in a few months. He sent a letter to all recipients, disguised as a personal letter, stating that “our top priority is your health and safety,” that “America will triumph yet again—and rise to new heights of greatness” (the words “America” and “great” had to be there), and that “we will do it together, as one nation, stronger than ever before.”
Usually, and contrary to this letter, the Trump administration writes “nation” with a capital N–anywhere it can plug the word–and we can only wonder what bureaucratic-political battle must have been waged over this and other parts of the letter. Perhaps there is hope?
Finally, it’s even not a gift. It does not come from the signatory’s personal money, but from future taxes that the recipients or their children will have to pay; or else, from the inflation that will result if the federal largesse (more than $96 billion for the Economic Impact Payments only) is financed by money creation instead of borrowing.
In the Aeneid, his great epic poem, Virgil tells how, in the 13th century BC, the Greek army faked retreating from the siege of Troy and left behind, ostensibly for some deity, the famous Trojan Horse, full of soldiers, hoping that the Trojans would bring it inside their walls. A Trojan priest tried to persuade his fellow citizens not to do it, saying
Timeo Danaos et dona ferentes.
(I fear the Greeks even when they bring gifts.)