Earlier this month, financial pundit Peter Schiff uploaded an interview with rap artist Chapter Jackson to YouTube. This fifteen minute plus video is called The Consequences of Free Money
, and it tackles welfare from a slightly unusual angle. This has long been a source of both amusement and anger in certain American political circles, the stereotype being black "welfare mothers" and "shiftless" black males who are lording it up while the productive (read white) middle class subsidises their lifestyles.
This is not an exclusively racist
viewpoint; there are quite a lot of blacks who feel the same way. As might be expected, like Larry Elder
they are those blacks who have never needed to rely on welfare, or social security as it is known in the UK.
While both Schiff and his guest make some valid points, neither of them sees the bigger picture. The implication of the video's title is spot on: "free money" breeds dependency. It is also not free, because someone else pays for it. Both Schiff and the undoubtedly talented Miss Jackson underline the point that this dependency creates what is better styled the poverty trap, a trap that once people fall into, they climb out of only with the greatest difficulty, and the overwhelming majority never do. But what are they forgetting, and what is the real solution?
Something Peter Schiff is certainly not forgetting is that people on welfare - black or otherwise - are far from the only ones who benefit from free money, and that most of this free money is created by the banking system and given to the banks...in order to what? To play stupid financial games that are detrimental to the real economy.
Schiff is so vehemently opposed to free money that he advocates raising interest rates
during the recession, but this is a totally misconceived action, even though it is the standard financial wisdom.
Cheap money is the lifeblood of the economy because it lowers production costs and enables people to consume more of what they both want and need. But this cheap money never goes to the people who need it: business people and other wealth creators. The current system is, frankly, insane, create billions of new money by QE, give it to the banks
, and allow them to do with it as they will.
The solution is to remove means-tested welfare payments and to institute a Basic Income for all. This is certainly feasible in the UK
, and would be in the US with certain reforms, in particular downsizing or dismantling entirely the redundant American Empire, and redirecting this free money the Fed gives the banks to the people.
While Chapter Jackson's attitude is admirable, as Schiff points out, she put herself through college, which takes a certain amount of both character and brains, but the simple face is that college is not for everyone, and without Basic Income or similar reforms, those at the bottom are doomed to be stuck in the rut forever, or in some cases an ever downward spiral.
In May, one of these characters - on this side of The Pond - found himself back behind bars yet again. Jamie Robery
will soon be back on the streets, but as no employer with half a brain would pay a living wage to a man of his appalling character, it is a sure thing that he will be back behind bars probably by the end of the year for another petty property crime. Earlier this year, Justice Secretary Chris Grayling announced a programme
aimed at breaking this cycle of offending, but it is not only the criminal underclass who need a helping hand and then some. There is now an international network aimed at instituting Basic Income
. It is doubtful if it can be established on a global scale, but certainly in industrialised countries: North America, Western Europe and increasingly the Middle East, it would be both practical and the way out of poverty for millions. It remains to be seen if either Peter Schiff or Chapter Jackson would consider it, especially the lady now that she is on her way up in the world.