The future of work in an age of increasing automation is a topic that a lot of economic thinkers have considered. Frances Coppola ponders the question of how the future may look in a world in which automation is driving people out of the labour market:
Automation only happens when machines are cheaper to run than people, and it is probably fair to say that in the last few decades automation has not happened quite as fast as one might have anticipated because companies have discovered that labour in emerging markets is cheaper than the cost of investing in machinery. But as the standard of living rises in emerging markets, and the cost of technology falls, that will not remain the case. Hazlitt, writing in 1952, pointed out that it was automation of production that enabled families to survive without children’s labour, because the price of goods produced with the new machinery was so much lower than those produced in a more labour-intensive way. In the short term automation caused hardship, as people whose livelihoods depended on the old way of doing things lost their jobs: but in the longer term there was benefit to society in the reduced cost of goods that enabled many people to work less, and in the development of new industries to employ those people no longer needed in the old ones. The change we are seeing today is every bit as great, and the short-term consequences are the same – high unemployment, particularly among those with poor or irrelevant skills.
Automation should both require fewer people to work AND enable people to work less, since the whole point of automation is to reduce the cost of production, which in a competitive system would result in falling prices. Unfortunately this isn’t always the case: the owners of automated industry may use reduced production cost as an opportunity to take more profit, and they may use political influence to create barriers to entry and trade tariffs to prevent competition driving down prices. But assuming that governments don’t use subsidies and protections to keep inefficient companies alive and prices artificially high, where does that leave us in terms of employment and incomes in the future?
Where it leaves us is with increasing inequality, which of course is something that we have seen in recent years, alongside increased unemployment, which is another thing we have seen. And in a world where a minority, historically known as the capitalists own the physical means of production like factories, robots and patents this will result in greater inequality as labour becomes less and less important as an economic factor. The owners of capital will be able to produce to satisfy market demand with little labour input. This will result in more former labourers leaving that field and either becoming entrepreneurs themselves, or becoming dependent on welfare. I think this transformational phenomenon is already well under way in the West — and I only expect it to become more pronounced globally as automation becomes ubiquitous.
In theory, physical labour may become totally obsolete. If every house has a decentralised energy source like solar panels and reliable energy storage, as well as an advanced 3-D printer or molecular assembler that can produce almost physical object imaginable from a few basic recyclable chemicals then human poverty will essentially have been abolished. We can just spend the vast majority of our time doing things that we enjoy, while spending only a few minutes or at most hours a day programming our machines to fulfil our material desires.
That is the more optimistic vision. In a less optimistic vision, only a small minority of people will have access to such technologies as while the technology may exist, the costs of mass distribution remain too high (at least for a time). The vast masses, will be stuck in impoverished material conditions — dependent on welfare, and charity — without any real prospect being able to climb the ladder through selling their labour. Only a lucky few — who have an inimitably good idea, or a creative skill that cannot be replicated by a robot — will have a prospect of joining the capital-owning upper class. And for the others who are left out in the cold, political action may look attractive. Simply have the government take a larger chunk of the capital-owning class’s income or wealth, and redistribute it to the poor. Ideally, this would be done with the intent of abolishing poverty through making cheap electricity, internet access and molecular assemblers available to all. Less ideally, rather than giving the poor the means to fish (so to speak), it might instead take the shape of a giant welfare net, keeping the means of production in limited hands and simply confiscating and redistributing some wealth. These issues unresolved could create a lot of tension between the two classes. In a worst-case scenario, that could lead to social breakdown or even revolution.
Fortunately, I think that this can be avoided through voluntary charity. The billionaire class today is split between those on one hand determined to give it all away with the intent of improving the material conditions of the very poor — Bill Gates, Warren Buffett — and those on the other determined to create new futuristic technologies and systems — Elon Musk — that can improve the material conditions of the masses. As we proceed through the 21st Century and as the technologies of superabundance — solar energy, nuclear energy, wind energy, cybernetics, genomics, the internet, 3-D printing, molecular manufacturing, desalination, etc — create more and more wealth and more and more billionaires, this trend may accelerate. Simply, the wealthy may have so much wealth that eliminating material poverty through voluntary charity may in the long run be an obvious and inevitable move.
At first glance, I admit, a vision of a superabundant world where people who own only their labor eke out a meager existence seems frightening. But put your fears aside. In an ultra-productive world, a relatively tiny amount of non-labor resources would make your rich by current standards. Labor + zero non-labor assets = poverty; labor + token non-labor assets = riches. In any case, a slight charitable impulse in the better-off is all you need to ensure fabulous riches for every human on earth.
Once you’ve got a world this wonderful, the last thing you’d want to do is start down a potentially slippery slope with a high tech Russian Civil War at the bottom. Indeed, a more sensible reaction would be abolish the welfare state as obsolete. If half of us were billionaires, mopping up any residual human poverty with voluntary charity would be child’s play.
Ironically, this kind of world could be strangely like the decentralised and classless society that Marx originally envisaged. The route to which we appear to be travelling toward it on, though, is totally and completely different to the one Marx envisaged. Instead of violent revolution, the road to superabundance may be paved by technological progress made by the capital-owners.
azizonomics 
I think Caplan holds an overly optimistic view of the whole thing. Keep in mind that Marx did not see the rich as acting in a generous and egalitarian way completely voluntarily. While I share your optimism of technology greatly improving our lives, I don’t think it is going to make “half us billionaires”. Keep in mind that this is an issue of capital flows, even if half of the population enjoys the quality of life of a billionaire, that doesn’t mean that they will have vast amounts of capital which they can donate to people of lesser means. Simply using our 3d printers to give direct gives to the poor, or donating our excess solar energy to the poor, would probably not be enough to improve their quality of life in a way which would justify dismantling the welfare state.
While it is true that severe inequality in a society can reach a breaking point (as I talked about in my article on inequity aversion http://thehobbesian.wordpress.com/2013/06/27/inequity-aversion-and-public-policy/), it is also true that human societies can tolerate vast inequality without having a revolution occur, as we see in many countries today, like India. In those situations, vast wealth of a lucky few did not translate to greater economic equality, but rather, the culture adapted and created a social infrastructure which justified this inequality. We saw this with feudalism, where legal and cultural institutions ended up institutionalizing this inequality with a caste system. And I fear that this could just as easily occur in our own society. Keep in mind that even during the middle ages technology continued to grow and people’s lives were materially improving overall, however the social framework was certainly not one of equality, and the bulk of the population remained in a Malthusian trap of sorts where their lives were marginally improving.
Because when you have such inequality, a prisoner’s dilemma arises whereby those who are better off wish to keep their position, which means that they may be more likely to reinvest excess capital to maintain their wealth rather than simply giving it away to the less fortunate.
And if you look at the past 30 years, we are heading more in that direction than in the opposite. Wealth is concentrated in a smaller group of people, the middle class is slowly evaporating, and people are finding themselves on either one side or the other in this dichotomy. Yes, it is true that due to technological advances the material quality of life of a middle class or lower class person is better than what it was 50 years ago, but their status in society has not improved at all, and if anything has only been getting worse. And if you understand Marx, you know that he was not simply talking about a materially better life, he was talking about a society where social barriers and class structure was diminished(or outright abolished), and more people lived on an equal footing both economically and socially.
The fact is that greater technological advancement means lower income for many people, and of course we are witnessing the effect of incomes stagnating, the trend is undeniable. And as long as incomes for these people go down or stagnate, we will continue to have the business cycles which concentrate capital in a smaller number of hands, and further create a division in our society. I see no reason to believe that this trend will stop in the coming years, and I certainly don’t think that it has or will result in greater social and economic equality through charity alone. And because of this, I am not as optimistic that this trend will be peaceful. My guess is that we could see severe business cycles as job opportunities diminish for millions, and in which case, human civilization will have a great decision to make in the coming decades. And that decision will be to choose between living with greater inequality, or using involuntary distribution means(aka taxation/welfare state) to prevent this inequality from growing. The potential ecological threats from things like climate change will only worsen this. So while I like to remain optimistic, I have great doubts that markets and voluntary capital flows alone will be able to correct these problems. It will most likely necessitate social action of some kind.
Marx was an idiot. An Alcoholic I may add, and along with Freud, discredited due to their respective addictions, muddling their thoughts. Engels benevolence made Marx soft too.
Most of the very wealthy I have met, love to be benevolent, as it puts them at a higher social pecking order so to speak. They actually see the rich evil classes as that, a evil class to be battled with.
I think with increasing productive capacity and lower birth rates, humanity will see an explosion in material and spiritual wealth. Watch this space!
It’s not the rich I am worried about, it’s the billions of people which could be born with far less opportunities. The fact is that it is getting harder and harder for people out there and the middle class and professional class is having a harder time than they did 50 years ago. The last time humanity went through a period of change as rapid as this we saw some of the deadliest conflicts in history and plenty of social strife as well. I am still optimistic about what the future will hold, but governments will have to step up and do their jobs because simply trusting the market to work things out is not going to cut it.
Calling someone a drunk does not invalidate their side of the argument. It just means you’re too lazy to fully address their points.
Or it could be like the Culture…
See: Yannick Rumpala, “Artificial intelligences and political organization: an exploration based on the science fiction work of Iain M. Banks,” Technology in Society, Volume 34, Issue 1, 2012, http://www.sciencedirect.com/science/article/pii/S0160791X11000728
Great post, John.
If technology [in and of itself] was going to cause what you postulate, then it seems as this would have occurred this long, long ago. Again, the problem is not technology, but instead, the imbalance caused by the bringing forward for of future income [in the form of debt/money printing] in combination with mal-investment in areas which de-construct [and then transfer] wealth.
If you had only that amount of wealth actually produced in the economy [reserved for investment], and that investment was earmarked for productive wealth-producing economic activity [like the good old days], then the economy would be relatively in balance and technology would be at a level where it could catalyze change in a more symbiotic manner.
When things get out of balance as severely as it has [over the past 100 years], bad stuff happens all over the place. Technology’s effect on employment is not so different than its effect on Medicine, as we can no longer afford the technology in this field, as well. Same goes with the military.
Seems like the only place it is affordable is in super hi-line luxury items created for the super wealthy, the beneficiaries of this grand experiment in grand theft.
Unfortunately, much of what the powerful and wealthy enjoy about power and wealth is not only that they are better off than others, but that they can make the others suffer actively. For a long time now it has been possible to completely eliminate hunger and homelessness in at least a modest way. The fact that this was not done long ago shows that people in general, and especially the powerful and wealthy, do not desire that outcome. We can expect, therefore, that the increasing wealth brought about by technology will not be put to that use either.
On the other hand, fear of rebellion, crime, disease, and decay may well prompt the better-off to come up with Welfare and other payoffs. For the poor, then, the strategy is pretty obvious. For the rich, it’s whether the pleasres of sadism outweight the fear of reprisal.
Good observation. This was precisely the reason Sodom was judged:
“Behold, this was the guilt of your sister Sodom: she and her daughters had arrogance, abundant food and careless ease, but she did not help the poor and needy.”. Ezekiel 16:49 NASB
It all depends upon whether or not we awaken to realize that Finance is not your garden variety business model, but rather the model upon which every other business and individuals utterly depends. Also, they have every right to exist, but they do not have the right to dominate. Who else could make us all pretend that things have not ACTUALLY collapsed? Banking businesses and institutions, thats who.
Break up their monopoly on credit creation, and even more importantly their bias for financing only as loans and only for production…..and the fragility and instability of the economic system will be history. Individuals with inadequate incomes and corporations (other than finance) who also suffer from that same inadequate demand….Unite! You have nothing to lose but….a system that doesn’t actually function.
It’s hard to argue against the idea that technology is continuing to reduce the need for human labour, and the trend towards a super-rich class does appear to be significant, but I’m not convinced that many of these people are getting there by dominating the production and distribution of the stuff that we need for our survival and comfort.
The thing that the super-rich have in common is their ability to capture money and then manipulate it so that they can capture even more of the stuff. Much of the capturing and manipulation is done without direct involvement in anything that could be described as the productive economy.
Our problem, it seems to me, isn’t a concentration of the means of production due to the rise of technology, it’s a concentration of the means of commerce: money.
Money is the tool that we’ve developed for collaborating and sharing, and it’s pure genius. Unfortunately we also use it as a proxy for wealth, which means that everyone wants to have more of it and some people are hugely successful in getting and holding onto vast quantities of it, which means the rest of us are perpetually short of it for making, doing and sharing the stuff that we need.
Notwithstanding some well-publicised exceptions, I have little faith in the concept of rich people voluntarily redistributing their hoards of money to provide universal comfort and security for the rest of us.
If we want our society to benefit from the broadest range of inputs from the greatest number of people then we have to find ways of making money constantly available and mobile throughout our economy. This will require a mechanism that discourages the hoarding of money and a cultural shift away from using money as a proxy for wealth.
“Money is the tool that we’ve developed for collaborating and sharing, and it’s pure genius.”
Mr. Henry, the only genius that money holds is its ability to completely confuse 99.999…% of the people into believing that what seems so straight-forward [a tool to facilitate the exchange of goods and services] is actually the greatest EVIL ever conceived by the mind of Man.
The abstraction of labor-value into money-form hath wrought more theft upon this Earth than all forms of slavery/serfdom combined. And it is done without the majority having any idea what miraculous wizardry has taken place.
Even you, good sir, hail high praises for this Trojan Horse full of bankers, politicians, capitalists, and all the rest, patiently waiting in line in order to skim-off their share of your productivity.
I say, “Take your money and leave by the nearest exist.”
Impermanence,
I have a workshop full of tools that, when properly employed, can build beautiful things. But if I put a hammer or a chisel into the hands of someone who has little understanding of how to use them then hideous damage is surely done.
So it is with money. When we use it correctly it eliminates barriers to co-operation, allowing us to collaborate in the production and distribution of all of the stuff that we need.
Without money we would not now be living our lives in levels of security and comfort that would have been unimaginable 500, 1000, 5000 yeas ago.
Money is no more evil than a hammer or a chisel and to blame money for the woes of the world is to miss the opportunity that it offers to make the world a better, fairer place.
A couple of years ago I began a reaserch project into money which opened my eyes. I have since published a book on the subject in which money is explained: what it is, how we abuse it, and what we can do to make it work for everyone. You can find a link to it at malcolmhenry.com
The inhabitants of your Trojan horse take advantage of the system only because we allow them to. As soon as we undestand how to use the money tool properly the worst excesses of bankers, politicians, capitalists and the rest will be tamed and our productive economy can flourish for the benefit of all.
My dear friend, these are human beings we speak of, not an ideal form of life arrived from some other part of the galaxy.
I, too, wrote a book several years ago, all about women and how they could make your life an absolute paradise, but alas, this has not come to pass for those who grunt, groan [and give other signals indicating bodily status] in our species.
I do understand the potentiality of money, but there is no need for this EVIL turncoat. If you wish to swim in the waters of idealism, then please come over to my pool and take a dip into the clear sparkling waters where each man, woman, and child would have complete control over their labor-value produced. THIS IS FREEDOM!!
Any intermediary in the process will produced an opportunity that human beings simply CAN NOT resist [stealing], the urge that people have [in a social context] to try to get something for nothing.
The entirety of human civilization has been set-up around this one principle, and continues to this day with a fervor that all the kings, queens, princes, and all the rest could have hardly imagined.
No, your money and all of it’s cousins [those commodities used in its stead] must eventually take their rightful position in the landfill of absurd human ideas, ones sugar coated with idealism that thinly disguises the chewy center which entices the common man to believe that this delicious treat will solve all of his problems, the reality being quite like the female who is smiling as he comes in the front door and laughing as he exits the back.
This (Malcolm Henry of September 7 @ 7:10 pm) sounds about right to me, and I’ve been in business, politics, United Fund administration, state and federal government, and the military.
To believe in progress, our fellow bloggers on this thread seem to require (1) finding and installing a remedial macro system or (2) waiting patiently for humans to approach perfection. I have observed that individuals and families, if left alone, do just fine.
In the late 1940s US unions and other liberals (collectivists) tried to frighten everybody about “automation” causing unemployment. Rosie the Riveter’s husband or boy friend returned from war, studied disciplines in high demand by the expanding economy, and prosperity blossomed.
There were funds available, at competitive rates, for housing and starting/expanding businesses; but lenders expected to be repaid and were, so that there was money to lend to others.
Tox (above) wrote that if advancing technology caused unemployment, we would have 99% employment today. What we have had, after 70 years of Soviet Communist socialism, was described by an American tourist in Moscow: “Everybody has a job. Nobody works. Nobody has any money. If anybody had money, there was nothing to buy.”
Don,
A “remedial macro system” is most certainly required because our current one is unsustainable. It’s built on a model of ever-increasing debt which will eventually overwhelm the productive economy. We might be living through the beginning of the end right now.
I agree that people tend to do well when left to their own devices, but only within a structure that is designed to help them.
The structure that we have at the moment, which I call the productive economy, works very well in terms of manipulating raw materials and turning them into useful stuff.
It is less good at distributing said stuff to everyone who needs it.
We can change the structure to give everyone equal access to stuff that meets their basic needs.
As soon as everyone gets access to the basics as a right of being American (or British, or whatever) then you can get rid of a huge chunk of government (c.40% in the UK) and let the free market get on with what it does best.
You and I can still become millionaires if we choose to do so but we’ll have to get there by collaborating with the workforce rather than holding them to ransom.
@Malcolm Henry
“Money is the tool that we’ve developed for collaborating and sharing, and it’s pure genius. Unfortunately we also use it as a proxy for wealth, which means that everyone wants to have more of it and some people are hugely successful in getting and holding onto vast quantities of it, which means the rest of us are perpetually short of it for making, doing and sharing the stuff that we need.”
That is absolutely correct. Which is why Caplan’s assertion that half of us will be billionaires is absurd. He seems to think that non-labor material goods=wealth. This may be true in a purely objective sense, surely your average middle class guy has a better quality of life than the pharaohs did if you were to merely look at the material wealth they possess. But wealth is not just material goods, it is a position in society. And in our society money is representative of wealth, power and capital. The Pharoahs had tremendous capital, they could command entire pyramids to be built simply at their will. Even if 3d printers make us live as comfortably as billionaires, it does not mean that we will have tremendous loads of capital at our dispense that we can simply donate to the poor and save the world.
Capital is ultimately the power to compel human economic activity, it is expressed through things like money which you aptly described as a “tool” for generating collaboration and sharing. Someone with a 3d printer may be able to print lots of stuff, but they do not have the power to compel human activity unless they have some “tool” to enable collaboration and sharing. Money is obviously one such tool, but let’s be honest here, all this technological innovation is going to do is simply make things cheaper, we could buy expensive things for less money. If anything it will deflate incomes and cause less money to be circulating around the economy. It is not going to make half of us billionaires who are able to magically erase poverty with a simple charitable impulse.
The genius of the welfare state is that it doesn’t simply give poor people material goods, it gives them capital. It makes it so that the grandmother on social security has greater purchasing power. It elevates their position in society. And the difference between poverty and wealth is essentially about one’s position in society, and the amount of capital(economic power) they possess. It is naïve and completely ignorant of economics to suggest that markets and charity alone will create “fabulous riches” for all humanity. It may make us materially better off, but in terms of society I highly doubt it will create a utopian classless paradise, unless of course some kind of involuntary redistribution of wealth is involved. But in terms of this happening completely voluntarily out of the goodwill of the rich. Give me a break, that just doesn’t make any sense whatsoever.
A hearty round of applause for thehobbsian.
The only thing I take issue with the “the genuis of the welfare state”.
Far for genius I see the welfare state (as we know it) to be a worthy but clumsy attempt at preventing people from falling into abject poverty.
Key features of the system – means testing and parsimony – ensure that recipients are stuck at a lowly level in your hierarchy of capital in much the same way that minimum wage earners and zero hours contractors are little more than slaves.
We can easily organise ourselves so that everyone has enough of a share of the money tool to meet their basic needs and comforts as a right of citizenship, which will allow everyone to participate in the productive economy on an equal footing.
In my book I suggest that reform of our financial systems could incorporate a universal basic income that’s funded by a perpetually cycling fund that’s held in equal share by us all.
This would replace much of the welfare state, shrinking government by about 40%, and freeing up much human capital that is currently languishing on the sidelines or trapped in unproductive employment.
Yes I completely agree. If you consider that technological progress (not the machinery itself) is an asset that is truly owned by each and every citizen, that value (which is quantitatively inestimable, but undeniably great and sufficient) could be a pool of wealth upon which every one should be able to draw. This is what C. H. Douglas referred to as “our cultural heritage of productive potential”.
Also, so far as status/class is concerned, if one understands that the problem with the system is it fails to generate sufficient individual incomes to make it functional….the stigma of “being on the dole” should tend to lessen. It is a mistake to conflate personal values with the system. Not that personal values aren’t always INDIVIDUALLY relevant, but if the SYSTEM’S flaw is lack of individual income….then tarring the individual with shame about being “on the dole” is mistaken and denying individuals the actual solution to the system’s problems….is irrational.
BFWR,
Absolutely. Applause to you too.
@Malcolm Henry
I agree with you 100%. I support the welfare state, but I agree that it certainly is not the best it can do. But given the vast amounts of greed and free market fundamentalism in this world, I consider the fact that it even exists to be a monumental accomplishment.
I think you are right that what really needs to happen is a transition from the means based model of the welfare state to one which is a universal basic income or social dividend/credit/whatever you want to call it. One of the things that I like about American Social Security is that it is blanketly applied to all individuals over a certain age, regardless of economic means. For some elderly Americans, it is their source of the means of survival, for other, better off elderly Americans, it is simply another source of income, however, as a whole, Social Security has greatly decreased elderly poverty in America and poverty as a whole. Also, because Social Security is given to every elderly American, from the poorest of the poor to Warren Buffet, it does not have the stigma attached with other means based redistribution methods. People may decry “welfare queens” but nobody in this country looks at those who collect social security as being leeches, instead it is simply seen as a right afforded to all citizens. If basic income is seen as a universal right it puts the people who receive it on an equal footing in regards to it, which in my opinion makes for a healthier society.
So with that in mind I think that not only does a basic income make more sense economically, it would be better in social and cultural terms for our society than simple welfare. Since if everyone was afforded a basic income, it would lose the stigma associated with welfare, which along with charity are often seen as little more than alms for the poor. And it is important to note that “voluntary charity” is really no different from the welfare state in creating stigmas, if we truly had a significant portion of the population living off of charity they would be viewed as an underclass, hardly the “socialism” talked about in this article.
But anyways, I agree with you that it would be nice to see much of the welfare state replaced by a basic income, it would be more efficient, save more money, and protect citizens more than most other alternatives. However, I would propose that we still keep some welfare programs around for the disabled who may require more help and higher expenses due to things like medical care.
Why would people need a basic income when they can just get a job? This is like social security on steroids. I for one, would opt out of any such mandate if I could. Guaranteeing everyone a basic income would create so much moral hazard. Many people, even those without any disability simply will not work if they don’t have to. This will decrease funding for the “basic income”, requiring you to tax the working people even more, until it becomes so punitive to work a job, nobody will be working and the system collapses. Any such system that rewards idleness and punishes productivity will fail in the long run no matter how well it’s managed.
Tolyz,
“Why would people need a basic income when they can just get a job? ”
But what if they can’t get a job because they’re too young/old/sick/disabled/feckless/lazy?
“Guaranteeing everyone a basic income would create so much moral hazard. Many people, even those without any disability simply will not work if they don’t have to. ”
Moral hazard?
Should we be forcing the idle rich out to work, many of whom have done nothing to earn their riches?
What about the legions of lazy, incompetent, meddlesome, back-biting people who “work” in just about every organisation on the planet but contribute nothing productive in exchange for their salary? You know who they are.
What about the people who work hard and long to make stuff that causes nothing but harm in the world?
Why is the morality of being too lazy to work when you’re poor such an issue?
I think we should keep moral hazard out of the discussion or it will come back to bite us on the arse.
As for people not choosing to work, that’s fine by me. Why would you want to work alongside someone who doesn’t want to be there? Why would you want to employ someone who doesn’t want to be there.
If we remove the necessity of work for survival I can guarantee that we’ll see a rise in productivity.
We’ll also have a truly free market for labour, which means we can abolish all of the laws that get between employers and employees.
We also get to abolish huge chunks of government.
As you point out, funding a basic income by taxing jobs would be spectacularly stupid. I’ve written a book which includes an infinitely sustainable alternative.
If you’re interested you can get the book here: https://www.createspace.com/4350407
If you can’t afford the $9.99 you can download it as an eBook from Amazon for a few dollars less.
“But what if they can’t get a job because they’re too young/old/sick/disabled/feckless/lazy?”
Young people have parents so they don’t need to work. Old people have savings. Disabled people have charity. Feckless/lazy people quickly become motivated and proactive when they begin starving.
“Should we be forcing the idle rich out to work, many of whom have done nothing to earn their riches?”
No. You let them live how they want and squander their wealth however they want. Don’t forget that it’s mostly the rich that start companies and hire people. The rich also fund startups and entrepreneurs. They don’t actually need to get their hands dirty to fuel productivity. They can simply provide the capital.
“What about the people who work hard and long to make stuff that causes nothing but harm in the world?”
I don’t see how this is relevant. Basic income won’t stop that from happening.
“Why is the morality of being too lazy to work when you’re poor such an issue?”
It’s not an issue unless my money is taken by force and given to them.
“I think we should keep moral hazard out of the discussion or it will come back to bite us on the arse.”
Moral hazard will become a huge issue when half the labor force disappears and starts living off the other productive half.
“We’ll also have a truly free market for labour, which means we can abolish all of the laws that get between employers and employees.”
We can have this anyway with or without a welfare state. You can abolish even more government by not having a welfare state. Cutting out 95% of existing laws and regulations will make a much better society.
So how do you propose to fund this ubiquitous welfare state if not by taxation? Are you going to tax savings accounts?
The “lazy” accusation/puritanical warning is belied by the actual evidence. Even with the supposedly dregs of society, prison inmates, who, after having their food, shelter and medical needs met by incarceration, the one thing that becomes most meaningful to them is a job or some other purpose. Only the most severely mentally damaged do not try to find purpose. Even when work is relatively compulsory the vast majority of us find purpose in something, and more often than not in something other than work for pay. The market worshiping crowd’s attitudes are actually distorted/blinded to this by dint of cultural contagion.
Tolyz,
You’re stuck in a mindset that sees money as wealth and the holder of money as being somehow superior to those who have none.
Get over the fact that wealth is no measure of worth and see people as people. The rich are rich because of luck as much as anything else. Same with the poor.
I can earn enough to live for a year in a couple of months not because I’m morally superior to anyone, just because I’m lucky enough to have certain skills and lucky enough to have clients who will pay me to use those skills.
I see men and women all around me who have worked every day of their lives, and would still work you and me into the ground, yet they earn nothing more than a basic wage.
Don’t condemn the lazy and the feckless to starvation. All it takes is a few neurons to go astray and there, but for the grace of god, go you and I.
You cannot have a free market for labour when people are in fear of going hungry and cold.
If you get rid of welfare under our current system you will be stepping over people dying in the streets (if they don’t revolt and murder you first).
If you read the book you’ll find that I’m proposing abolishing most of the welfare state along with the taxation that currently funds it. Government will shrink by about 40%, which sounds like just your thing.
The UBI system that I propose is not welfare. It’s a fund that’s held in equal share by the citizens of the nation and cycled continuously through the economy to facilitate commerce. Government has nothing to do with it, never gets its hands on the money.
The common fund is cycled by applying negative interest to money, wherever it may be held.
If you don’t want your money to be recycled, spend it or invest it.
If you want to accrue wealth you’ll have to store it in some other form than money.
I don’t recall ever saying that wealthy people are superior to poor people. And you can’t lump all wealthy people in the same category. There are plenty of self-made millionaires who started out as hard working entrepreneurs. It takes a lot of skill, knowledge, talent, and work to create “luck” for yourself. There are of course obscenely rich people who are making their money by less than honorable means, most notably the financial industry. But even then, I don’t blame corporations as much as corrupt politicians since they are the only ones who are able to pass legislation, confiscate and redistribute wealth, start wars, and make life miserable for the rest of us.
And I don’t condemn the lazy and feckless to starvation. They do that to themselves. Under the current system welfare is unsustainable and will go away eventually when the government starts defaulting on its debt.
So for you UBI idea, would this be a voluntary fund or are people forced to participate? The way I see it, anyone who has a stable career will not contribute to this and everyone who wants to coast through life on someone else’s dime will be more than happy to sign up. Something like this can only work if everyone is forced to pay into it very much like social security.
Let me emphasize at the very start that this is NOT in any way a religious diatribe, but rather a philosophical/psychological observation and assertion.
In the same way that the first century concept of personal Grace created a symmetrically powerful mental construct which enabled both hope and freedom for the individual as opposed to the Old Testament orthodox and legalistic mindset, so will a symmetrically powerful credit creating and paradigm altering agency mandated to distribute (not re-distribute) monetary Grace, the free gift, to individuals enable a necessary balance and symmetry to the overweening power of the private banking license.
Symmetry is ubiquitous throughout nature and the cosmos…..except in finance. Is it any wonder then that there is economic unbalance and Banks are powerful enough to be too big to fail and can thus extort nation states and individuals into maintaining their monopoly on credit creation as well as the utterly restrictive forms (loans only) and purposes (for production only) of that creation ?
Symmetry is the underlying philosophical/psychological factor that will enable free market theory to become real in fact instead of only in theory….as now conceived.
I don’t mind religious diatribe. I’m pretty open minded about that sort of thing.
If you’re born with them: dumb luck.
You can only develop them in an environment that supports and nurtures you, and you don’t get that environment through anything but dumb luck. It’s nothing more than the roll of the dice of whose sperm hits whose egg and where they happen to be in the world when it happens.
The same goes for knowledge and the capacity for hard work. A combination of nature and nurture: dumb luck.
Youc an choose what to do with your luck but you don’t create it.
You are deluded if you think that the result of applying your luck – the money you manage to capture along the way – reflects your worth in the greater scheme of things.
A farmer spends a lifetime growing food that sustains the lives of thousands and dies a pauper.
A lawyer spends a lifetime helping corporations to con thousands of people in a hundred different ways and dies a multi-millionaire.
Whose contribution was more worthy?
Work is not necessarily noble and money is not necessarily a measure of worth. Admit these facts and move on.
“And I don’t condemn the lazy and feckless to starvation. They do that to themselves.”
So we let them starve? Or rob and murder us? Don’t pretend that this won’t happen, that somehow taking welfare away will force everyone to go and find a job and become your idea of a model citizen.
As BFWR has pointed out our system makes it impossible for there to be enough aggregate income to pay for aggregate production so there will always be a shortage of jobs that pay a living wage. Even if the lazy and feckless had the capacity to do a useful day’s work there will never be enough jobs to go around.
At the heart of the UBI proposal is the recognition that money only has any value because we all agree that it has. Therefore money is a common good, something that we own collectively. The dime belongs to all of us, not you.
Nobody will force anyone to participate in the UBI system, but if you want make use of our money then you’ll have to accept that a small percentage of the money you hold will be shaved off every hour by the UBI system. Not by the government, remember, but by us, the people who allow it to have value.
If you join the UBI system your share of the cycling fund will come back to you on the first day of each month so that you can spend it all over again.
You’ll have just as many opportunities (arguably more) to get rich under the UBI system as you currently do but you won’t be able to hold that wealth as money.
What’s not to like?
Sorry Malcolm, but I don’t share your sympathy with laziness. People can change their mentality. If you are lazy, then train yourself to be not lazy. I will not become a slave for someone claiming to be lazy and thinks that their living expenses should be someone else’s problem. Also, people can’t change their genes, but they can change their environment. Your environment can affect which genes are expressed. So there you have it. There is no excuse for sitting around doing nothing if you are fully capable of contributing to society.
As for the UBI system, I can’t imagine any working person would want to voluntarily participate in this. It will be comprised almost entirely of people wanting to ride the wagon with nobody willing to pull it. The system will be reduced to a lazy and feckless charity fund.
“People can change their mentality. If you are lazy, then train yourself to be not lazy.”
The world is full of people whose mentality disadvantages themselves or others – smokers, gluttons, workaholics, tail-gaters, misers, haters, skyvers, …. the list is endless, and you’ll be on it somewhere.
What traits do you have that we should be making you change?
Besides, the numbers of lazy freeloaders is tiny. In the UK c.3% of the welfare budget goes on unemployment benefits. Normally (before the recession) the proportion is less than 1.5%. Most of that 1.5% is spent on helping people who are between jobs, so the freeloaders represent some fraction of 1% of the welfare budget and an even tinier percentage of the population.
The rest of the welfare budget is spent on the elderly (over 40%), families with children, the sick and disabled, and topping up wages that are too low to be viable.
We who are fit, able and well-paid already support these people, but we do it under a financial/welfare system that is clumsy, inefficient, and ultimately unsustainable.
Your suggestion of replacing government welfare to private charity isn’t practical. It will result in widespread poverty and misery presided over by rich people with a variety of political, religious, and scientific axes to grind (see Victorian Britain for details). Why do you think the need for government welfare arose?
My proposal is an honest attempt to find a sustainable solution to the welfare problem.
By using money more intelligently we can free people from the constraints of welfare/charity and allow them to participate in the commercial world on equal terms as the rest of us.
I don’t understand why you would turn your back on an idea that will benefit you (fewer taxes, smaller government, more money for productive investment) and millions of people who are in genuine need simply because you hate the idea of a few lazy good-for-nothings getting a free ride. It’s perverse.
Apologies. The top bit of my last post was omitted. It should start with:
Tolyz,
“It takes a lot of skill, knowledge, talent, and work to create “luck” for yourself. ”
It’s all down to luck. Whether you believe that skill and talent are things that you’re born with or things that you develop.
Tolyz
First of all, simply “finding a job” is not quite as simple as you make it sound. If you haven’t noticed, most of the world has been in a severe recession the past 5 years characterized by high unemployment. Many people simply can’t find jobs. And the jobs that are around often don’t pay enough for them to survive on. In most countries, the minimum wage is so low that one can barely survive on it. And there are plenty of people who are making far above the minimum wage who are still struggling to survive and are drowning in debt. The fact is that unless you are making over $100k a year, you are going to have a very hard time supporting a family and being able to provide yourself with things like an education, adequate healthcare or a decent savings for retirement. Yes it is true that people can survive in such a manner, but their options are diminished and this lack of opportunity is handed down to the next generations, creating permanent under classes. I know plenty of smart people who are struggling just to pay for a decent education which will enable them to move up the social ladder. People can’t simply live the American Dream and make in life on hard work alone, the opportunities you have available to you will determine where you end up in life. And the fact is that due to low wages and high costs of living, billions of people have diminished opportunities. Those born with less have to work twice as hard to get to the same place where those born with more get to, and I think that is morally wrong as well as economically inefficient.
Also, the whole “moral hazard” thing is nonsense. Think about children from wealthy families, many of them have everything handed to them and could easily just live off of their families and do nothing with their life. However, when you look at the statistics, people from well to do families often do very well in their lives and have long and productive careers. The environment you are raised in and the attitudes you have often have more to do with someone’s willingness to work than whether they “have to” or not. People work for more than just money, they do it because your career defines you and gives you purpose in life. Certainly there are some who are lazy and will coast along if they can, but this has more to do with the individual and their personality than anything else. If you give a basic income which allows people to go to the school of their choice, and take the time to find a career they truly love, more people will be able to follow careers which they actually like instead of choosing one out of necessity. In turn this will yield higher quality work. When you have more options available to you, you will overall be healthier, happier and more productive.
And that’s really what people like Malcom, BFWR and I want, more options available to more people. And the fact is that the current market only model does not yield people as many options as other alternatives like a basic income model. Everyone should be able to work a job that they truly love, rather than simply taking any old one that they can get just to survive. It is possible to do this. And if we give everyone equal economic opportunity, we will see higher quality work and a stronger model because we will actually have one where success in the market is based off of merit and the quality of the work itself, rather than one where one’s position in life is dictated solely by how much wealth you were born into.
Your views of the market and where people can obtain income from seem to be either exceedingly naïve or completely ignorant of the current global economic situation.
Like I said earlier here somewhere, there is an almost unlimited demand for labor. People are having trouble finding jobs because it is too risky and too expensive for businesses to hire anyone. The problem in places like the US and especially Europe is that their governments have come up with so many pro-employee laws that businesses have to account for the myriad possible ways they can get sued and provide all the employee benefits that have been mandated by law. For example, in Spain they have excessive unemployment benefits for people who get fired, laid off, injured, or pregnant. Not to mention all the paid holiday requirements. No business can afford to hire anymore!!! You can’t hire an employee who produces $30,000 of revenue for the company if you are forced to pay out $40,000 in benefits each year. Get rid of stupid laws and regulations and you will be amazed at how quickly the economy will pick up.
If I learned anything studying economics, it that any government intervention in the free market system ALWAYS has the opposite of its intended effect. There are countless examples of this. The welfare handout system that you guys are thinking about is an attempt to solve the harmful effects of government intervention with more intervention.
Tolyz,
I agree that employment laws are an impediment to productive activity.
A universal basic income will remove the need for most employment laws, so they can be abolished.
You’ll end up with a truly free market for labour where employers and employees negotiate on level terms.
Here’s an article where I wax lyrical about zero hours contracts, which is how the world of work should work:
http://malcolmhenry.com/2013/08/22/i-love-zero-hours-contracts/
Let’s see if your idea works: http://youtu.be/iqKkERp-ias
Sounds like it’s about to be tried in Switzerland.
Absolutely the correct thing to do. Also, there doesn’t need to be any tax in order to finance it, you just create it out of thin air the same as banks do. There are 2 dirty little secrets of money and the economy. #1 the banks have a monopoly on credit creation (not exactly a free market situation) and #2 the deepest problem of current economics is the fact that there is never enough individual income generated to completely liquidate prices. So GIVING individuals more money is exactly what is needed
Yes. I heard about it yesterday and have just published an article about it here: http://malcolmhenry.com/2013/10/05/swiss-to-vote-on-universal-basic-income-how-about-that-for-a-referendum-scotland/
Their ambition is inspiring but I fear that their proposed funding method will be a failure.
This reply is to thehobbesian of Sep.12 @ 6:39 pm and tolyz… of Sep 12 @ 7:03 pm. Regrettably, the former is “He who knows not (about Social Security) and knows not that he knows not”. The latter knows (about regrettable idleness vs. productive work).
US Social Security is NOT “a model of the welfare state … which is a universal basic income or social dividend/credit/whatever”. It is a defined-benefit retirement program funded by WORKERS’ paycheck deductions and investment income from the Social Security Trust Fund. Unfortunately, government politicians can and have manipulated the program in ways that would have sent private management to prison! Employee contributions have increased several fold; benefits, if any, are at the discretion of Congress; and the Trust Fund was confiscated by LBJ (and Congress?) to fund the War on Poverty*.
Author P.J. O’Rourke (in “All the Troubles in the World”) tells a (true) tale of work and idleness. With relatively light WW II material and human losses and a homogeneous strong work-ethic population, Sweden chose to provide cradle-to-grave SOCIALISTIC DISTRIBUTION of profits from its heavily taxed prosperous CAPITALISTIC PRODUCTION. This eutopian society worked UNTIL …. Surprise! Too many people started opting out of productive work.
WORK is required to provide food, clothing, shelter, healthcare, etc. and the machines that make human work more productive and assure a better human condition in the future. Any opposition to motivation (work ethic), preparation (practical eduction and training), opportunity (economic expansion, free competition), or reward (low taxes, upward mobility) for productive work is an enemy of human progress!
UNJUSTIFIED idleness always has been and must be stigmatized.
* The War on Poverty has turned out to be war on families, opportunity, and safe neighborhoods.
Don,
“Sweden chose to provide cradle-to-grave SOCIALISTIC DISTRIBUTION of profits…”
Last time I looked Sweden appeared to be doing OK with it’s cradle-to-grave welfare state. I have yet to meet a starving Swede.
Sweden’ system is far from perfect but GDP per capita isn’t far behind the US and away ahead of countries that let their poor die in the streets.
“WORK is required to provide…”
Absolutely, but our current system discourages productivity by forcing people into jobs that they hate, doing stuff that adds little or nothing to the sum of human happiness.
I could, if I set my mind to it, make a royal fortune gambling with financial instruments which would contribute precisely zero to keeping the world fed, clothed, housed.
I would struggle to make a basic living growing food.
“UNJUSTIFIED idleness always has been and must be stigmatized.”
Who judges what is justified and unjustified idleness? Tell me how you live your life and I’ll make a persuasive case that you’re living off the labours of someone else.
The lazy and the feckless will always be with us, as will the old, the sick, the disabled. We who have health and skills will always have to look after the rest. Accept it.
Don, Social Security is not designed as a defined benefit retirement plan, it is a pipeline which uses current wages to provide social insurance for the elderly. Unfortunately for many it has become a retirement plan because cost of living expenses and inadequate private sector retirement funds make it impossible for millions of people to save up enough for retirement. The lack of anything in the private sector which can compete with social security is not due to government taxation either, the elderly failing to save up enough during their working life to live independently has been a problem for centuries. As a result they would either be forced into poverty upon retirement, or be forced to rely on their children and grandchildren for support, which in turn creates costs for working generations that impede on their ability to save for retirement, thus perpetuating the cycle to the next generation. The other alternative is to simply delay retirement longer which creates downward pressure on the job market and increases unemployment for young people, which also results in an overall decrease in lifetime income and savings for them.
The defined benefit plan is a pipe dream in the private sector due to the decline of manufacturing, unions, long term employment with a single firm and the abolishment of Bretton Woods. The idea that the increased income from the abolishment of Social security would lead to more savings for workers is also a pipe dream because of what I just described of workers having increased expenses going towards paying for elderly and disabled family members. And defined contribution plans routinely fail to generate enough savings for someone to live off of, especially with people living longer.
Also, the notion that government “confiscates” Social Security is simply because the SSA can only invest in government bonds, thus bond sales to the SSA are labeled as “raiding” or “confiscation” by critics, when in reality this is how the SS trust was designed to operate. Even with its current liabilities Social Security could continue to make payments well into the 2030s, making it far more sustainable and stable than anything the private sector has to offer for you average worker. If the SSA could invest in private sector bonds like other public retirement trusts do it could alleviate much of these problems. But the characterization of the Social Security trust being “raided” by government is a dishonest mischaracterization when the fact that Social Security was designed to work this way is not taken into account.
Overall Social Security remains one of the most stable benefit plans available, it has resulted in a substantial drop in elderly poverty as well as an increase in employment rates. It has had a tremendously positive effect on the economy.
“In the same way that the first century concept of personal Grace created a symmetrically powerful mental construct which enabled both hope and freedom for the individual as opposed to the Old Testament orthodox and legalistic mindset, so will a symmetrically powerful credit creating and paradigm altering agency mandated to distribute (not re-distribute) monetary Grace, the free gift, to individuals enable a necessary balance and symmetry to the overweening power of the private banking license.”
BFWR, first of all, nothing is free. Secondly, one person produces, another consumes. This is about the extent we can understand economics. The rest is about organizing various shell games.
“…personal Grace created a symmetrical powerful mental construct which enabled both hope and freedom…”
What does this mean?
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Mankind is trapped and befuddled in a systemic and psychological trap. There may or may not be various conspiracies going on and about, (I lean toward there being none except perhaps a geo-political one) but the facty is that….there doesn’t even have to be any conspiracies…the systems upon which our lives depend and the psychology/mindset underlying them…make the economic/monetary and military actions taking place either necessary or a fait accompli.
For instance, long term historical evidence indicates that there is something in free market theory that is either missing and/or being misinterpreted. I believe that what is missing is the empirical data of cost accounting which indicates that total individual incomes are always scarce in ratio to total prices which makes the system itself price inflationary. What is being misinterpreted is current velocity theory of money that says there is more than enough money created to pay for production. Hence free market theory prevents economists from seeing that this anti-historical theory is false…and the actual problem goes unsolved.
Also, a favorite saying in many economic circles is, “There’s no free lunch.” Well, in the case above where the problem is a scarcity of total individual incomes and hence the actual solution is the universal distribution of a free gift of money….how do you fit that systemic need into such a puritan/moral(istic) individual mindset? We truly fight mental “powers and principalities”.
“What is being misinterpreted is current velocity theory of money that says there is more than enough money created to pay for production.”
This gets close to the nub of the problem.
There is plenty of money in the system for everyone to participate in the commercial economy to satisfy all of their needs and some of their desires.
The problem is that most of the money is neither available or mobile. Most of it is hoovered up and hoarded by people who believe that having money means that they are rich.
As you say, the problem is cultural as much as it is systemic. Our attitude to money has to change along with the way that we employ it.
There are good ideas for ensuring that money moves freely through the economy and for discouraging hoarding (some of which are incorporated into my book).
If we’re going to overcome the “mental powers and principalities” we have to find persuasive ways of articulating these good ideas.
This seems to be the only place to reply to Malcolm Henry of Sep 13 @ 9:13 am.
Sweden: O’Rourke wrote at a time when looming deficits pressured the Swedish government to cut back on cradle-to-grave freebies. I believe that, like the UK (thank you, PM Thatcher), Sweden has so far avoided the EU welfare-state train wreck.
Have you ever met a starving American who wasn’t mentally incompetent? Or drug-addicted (Thank you, Bil Clinton and Eric Holder). What Judeo-Christian truly democratic countries “let their poor die in the streets”?
Yes, I’m “living off the labors of others”, and others are living off my labors. It’s called free-market economics. I have given to private charity and been taxed to pay for government-run charity (“welfare”, etc.) — I note that private charity, relatively free of politics and bureaucracy, is far more efficient. Fortunately I have never required charity, public or private; if I did (from lack of health, savings, family), I would accept it and not feel stigmatized.
You asked: “Who judges what is justified and unjustified idleness?” YOU answered: “The LAZY and FECKLESS will always be with us …… as will the OLD, the SICK, the DISABLED.”
P.S. I trust I have enabled you to understand US Social Security. How goes the UK equivalent? Some time ago, I read some data on Eire’s (an EU nation?) very generous allowances for families, alleging budget-busting consequences.
The UK national health service has received significant negative press (citing both quality and fiscal problems) here in the US; it may be exaggerated by Obamacare opponents [There remains no doubt that it will cost MORE, deliver LOWER quality, and reach FEWER people]. Obamacare proponents never mention the UK or Canadian systems anymore.
OOPS – it’s thehobbesian, not Malcolm Henry, who mischaracterized Social Security (and still does).
Back to Truth About Social Security: the principal fact is that it is a WORKer’s retirement plan, NOT welfare to non-workers/poor/everyone.
Maybe not a “Defined Benefit” retirement, but benefits are defined /redefined by Congress. Contributions are also defined by Congress.
The logic of both profit and technological innovation is efficiency. The one of cost, the other of human effort and even human input. These are elemental aspects of these forces and so are not going to change. The third factor in the picture is the elemental reality of the productive process itself, and that is that there is a scarcity of individual incomes in ratio to prices that makes the liquidation of all costs (prices) impossible….that is unless you equate incomes with prices…without insisting that the supplement to individual incomes go into the productive process. This is just accountancy and its empirical data…and understanding that accounting’s economic effects are utterly embedded and so cannot be ignored or abstracted away.
Don,
The UK national health service is a behemoth that is riddled with inefficiency and faults.
It is also a magnificent example of how an idealistic notion – healthcare for all, free at the point of use – can become a working reality if there is the political will to make it happen.
I have rarely needed to use the service myself but I have witnessed it’s care of my family and friends and have been impressed, overall, by the results.
Its faults are the same as those of any large organisation and it is constantly being improved and developed to make it more effective and efficient.
I have seen many sets of data over the years which show that the NHS outperforms US healthcare (public and private) both in terms of outcomes and value for money.
This article from 2009 – http://liberalconspiracy.org/2009/08/14/uk-v-usa-the-basic-healthcare-facts/ (it came up on the first page of my search) – is typical, showing the NHS providing universal healthcare for $3,200 per capita as opposed to $3,700 for US public healthcare and $5,000 for private.
No matter how much free market rhetoric you throw at it you cannot escape the fact that it works.
Most Brits will defend the principle of the NHS, despite its faults. I believe it defines us as a civilized society, ensuring that no-one is condemned to pain and suffering just because they don’t have money to pay for medical attention.
factories, robots and patents… will result in greater inequality
Intellectual property is key to buttressing the hegemony of large high-tech corporations. The state should not be granting private enterprises monopolies on the use of new ideas (and certainly not for 20 years, an eternity in tech time). We must consider abolishing, or at least strongly limiting, the artificial knowledge scarcity created by the patent system. Alex Tabarrok has discussed this issue, but the most in-depth and radical treatment is Boldrin and Levine’s “Against Intellectual Monopoly” (the entire book is free online, naturally):
http://www.dklevine.com/general/intellectual/againstfinal.htm
IP comprises [imo] the most interesting inter-/intra-disciplinary subject-matter of our times.
Perhaps John will tackle this subject sometime soon.
This suggestion to abolish or foreshorten patents is the best idea I see here, and deserves consideration. It reminds me of Edward Teller’s proposal to Classify ONLY battle plans, while opening all science and technology development to competition. As to national security, he, along with other advisers to Pres. Reagan, was confident that the free world would overwhelmingly outperform the USSR. Teller’s example was “computing machines”.
On second thought, the experience of free world enterprises in trying to protect intellectual property rights in China casts doubt, or at least caution, on weakening patent law. Similarly, Teller’s work on national security during the presidencies of FDR, HST, Ike, JFK, LBJ, Nixon, Ford, Carter and Reagan could not possibly have alerted him to the possibility of a treasonous administration like Obama/’s.
“the experience of free world enterprises in trying to protect intellectual property rights in China casts doubt, or at least caution, on weakening patent law.”
Don, I’m not quite sure what you’re getting at here. Could you elaborate?
You’ve caught me off-base, John S — unlike national security, I have no experience in protecting intellectual property, patented, copyrighted, contractual, or “proprietary” (secret). I suspect that no system works when there are outlaws, especially foreign.
Buy farmland and purchase tools and trinkets which were built in a time when quality mattered. Then enjoy the arts. Simple really. BTW the Australian voting system is fraudulent! pencil marksvand mo voter signature invites fraud. I will accept whatever votes they throw me! I am looking forward to my party tonight and displaying my collection of William Banzai Art . Enjoy your weekend.
Awaiting election returns, Buddy. I trust you Aussies know the US classic voting fraud methods (before machines and along with paying cash):
1. The first voter’s blank ballot is slipped out to the operative, who marks it and gives it to the next voter, who casts it and returns his ballot blank. Repeat.
2. At the counting, an operative, holding a pencil stub, adds an opposing mark to each ballot he doesn’t like. The “mutilated” ballot is thrown out.
And the above doesn’t count (a) the crooked “hanging chad” episode in 2000 Florida, which would have given us President Algore if the FL Sec. of State had been a Democrat; or (b) The 2008(?) MN(?) Senate race which was flat-out stolen in a recount; or (c) current voter ID and voting machine fraud.
All of the above are perpetrated by inner city Democratic machines, and tacitly approved by the Holder Department of justice.
I got 2.2% of the primary vote and came 4th out of a field od 12. Not bad for $6k approximate and 4 weeks of campaigning. And the,Major 3 parties put me last on their how to vote cards!.Must have been a threat hey!
This was the 3rd place getter https://www.facebook.com/greensgeelong
And compare my Website
Facebook.com/buddy.rojek
I spent $3 per vote won so it a record for political efficiency, and 100% non MSM advertising expenditure. Never done before. Twitter.com #buddyforcoranga and Facebook was the only online medium I sued to get my message
And my new stint at Local Mayor One day after the election. Keep at top of people’s minds 😉
http://bayfm.com.au/newsroom/local-newsroom/25576-geelong-mayoral-fight-to-heat-up
Interesting post and comments. I too agree money is a tool – just sophisticated barter. My comment is on the people with loads of money. For instance Mr Gates and many others, have sufficient wealth to be able to cure everyone on the planet of “curable blindness” such as cataracts, but yet choose not to do so, If I had the money to do this then I would, but more importantly I would be unable to live with myself knowing I could have done this and did not, and I`m sure many others would feel the same. So how can the super rich live with themselves with this knowledge – I can only conclude they live by a different moral ethic. The same argument could be made of our politicians who will spend billions on wars yet for less money could do the same sort of projects – I would suspect producing a greater economic return as well.
Robbie: I suggest you not criticize Gates, whose Bill and Melinda Gates Foundation is, I understand, is the world’s largest and most effective private charity. [Needless to say, UN and government programs are vastly inferior]. I further understand that it hold the bulk of the Gates and Buffett fortunes.
You might ask them if they considered blindness.
How wonderful that altruism has seeped into the mega-billionaire class and that these model citizens can eek-out an existence on USD25B per.
These are people who gamed the system to the absolute maximum and are held up [by many] as heroes, when they are no better than the last turn-of-the-century’s robber-barons.
Imagine the number of people you have taken money from to amass such such incredible fortunes!
They don’t say, “Behind every great fortune is a great crime,” for nothing.
Well, Imp, Gates (Microsoft) has taken my money and yours too, I’ll bet. Buffett has made thousands of fellow risk-takers wealthy without “taking” money from them or anyone else. When GM, Ford and Chrysler, and their unions, abused their oligopoly, foreign companies started “taking” our money. Call it competition among sellers and choice for buyers and investors.
The opposite is “Combination in restraint of trade”, fraud, misfeasance, etc.
Of course there are plenty of undeserving and even criminal wealthy — the Clintons and Algore come to mind, each with reported 9-figue fortunes without a single day’s honest work; and the (name forgotten) Goldman co-chair, NJ Senator and Governor (Dem. of course), and manager of a hedge fund, $100 Mil. or so of whose funds can’t find.can’t be found.
As you often write, the public needs to wise-the-hell-up, including throwing out the entrenched politicians who are sworn to uphold the laws and serve the people, but don’t!
DG, how do you believe it is possible to amass a fortune of USD50B?
Microsoft is [was] a virtual global monopoly, number one. Number two is the fact that a guy who may have some good ideas is not entitled to take such a large percentage of the profits [again, this gets back to IP]. This, in and of itself, demonstrates the inequity of the system.
Warren Buffet is simply a leach-extraordinaire who has provided little but aptly demonstrating the skills necessary to perfect the shell game.
Until the stealing stops, mankind will continue down this path of lying and fraud, while employing the brightest among us to conceive of new and stealthy methods to make what is yours and mine, theirs.
And, of course, the Ace in the hole is war, the ultimate brainchild of our species, that method which employs all the rationalization/titillation in one grand reality show, particularly reserved for that culture that has the most dysfunctional sociopaths who, by definition, do whatever it takes to amass fortunes.
We live in a time where political leaders rationalize the slaughter of children. Do we really need to know anything more about how systems work and the lengths people will go to for satiate their insecurities?
Individualization is not only necessary to bring out the best in people, but, just as important, to prevent the worst from coming out [when these very sick people collaborate on some diabolical plan to, once again, fleece the peeps].
I`m not criticizing them as such – I`m criticizing all of the ruling elite (private and government), I`m sure they and many others give millions to charitys, but they could do much, much more, but do not – and as a % of their discretionary income possibly less than many ordinary people give. Blindness was just an example I`m sure there are many other illnesses that could be eradicated – like leprosy.
if you live in the UK on an average wage the marginal rate of tax is (accorig to official figures) about 40% I worked it out with a friend to be nearer 60% but what do I know – we only pay on shore taxes – and cannot afford taxhaven status. If the ruling elites were paying taxes at the same rate then they would have far less to give away – and far less wealth.
BTW I would say the worlds most effective charity would be doctors without frontiers,
There will be plenty of work for engineers and programmers in the future to make robots to take care of the elderly and for low skilled workers to be employed as caretakers. Labor isn’t going to be obsolete anytime soon.
http://www.futurepundit.com/archives/009198.html
And this will continue to happen. Inflation causes the cost of capital goods and labor to go up, causing what’s referred to as the Ricardo Effect. Business looks to cut costs thereby employing machines to do the work of humans. This causes unemployment to increase which does after every “boom/bust” cycle. Now tack on Obamacare. Not good but it’s been the plan all along. Wait until the next bust. Sad.
Socialized medicine has “been the plan all along”, but NOT by We the People in the US, who know better. Co-president Hillary brought the plan out in the open in the 1990s, and was soundly rebuffed by Congressional Democrats.
Yes Don, true, socialized medicine has been the plan all along as it is with all Govt’s that have an objective of ultimate Totalitarianism. That is one of the final chess pieces to be put in place.
I should specify that in this case, it’s really not socialized medicine but corporatized/fascist medicine.
Actually, it was blown out of the water by BIG Pharma, the insurance companies, and all other private interests feeding at this carcass.
If you are going to have a sick care system, then socializing it is the only way it can work.
OK, guys — let’s not quibble over labels. Would you, including impermanence who is a physician, agree that healthcare, like any good or service, should be a transaction between a willing buyer and a willing seller?
That is my preference, plus a safety net of IN KIND care (like the military’s Sick Call), not insurance. Charity, whether public or private — food, clothing, shelter, healthcare — should not provide incomes/benefits greater/better than wages.
“Charity, whether public or private — food, clothing, shelter, healthcare — should not provide incomes/benefits greater/better than wages.”
Why not?
“Fortunately, I think that this can be avoided through voluntary charity. ”
And where are you on the tooth fairy?
“Indeed, a more sensible reaction would be abolish the welfare state as obsolete. If half of us were billionaires…”
If my grandmother had wheels she’d be a wheelbarrow.
Re Malcolm Henry @ September 8 @ 6:09 pm: Why not? Because I should “work for a living” if I can. If I can’t or want to retire, there’s savings, investments, family and community (voluntary) charity. In no event should government confiscate your income or savings to give me a lifestyle superior to your’s or other workers’.
Many people who are perfectly capable of working for a living are lucky enough to live off the labours of others. Some had rich parents.
Others were in the right place at the right time and got rich quickly without breaking sweat.
And there are legions of lazy, unproductive rich people in senior positions in the public and private sector all of whom live off the labour of others.
If your logic applies to those on government benefits then it must also apply to all of the above. There is no moral distinction between them and those who are too poor, too old, too sick to work for a living.
So who does the means testing on the idle rich?
“Means testing”? Do you intend to deliver checks/things to everyone who isn’t idle rich? In the good old days of small towns and simple values, if a hungry person came to your door, you gave food without checking his net worth. Think about it — my scheme requires no means testing.
Now if you’re thinking of redistributing/leveling wealth (“progressive” income tax, inheritance tax, etc.), you might as well go with Marx and Obama, because you will never get agreement about who is undeserving. And get ready for a “Nomenklatura” of high-living elites protected by the palace guard.
Lastly, we the voters sure as hell need to control salaries and “bribes” of elected and hired public servants. [Remember, the AVERAGE federal job pays almost TWICE as much as the equivalent private-sector job, when benefits are included]. And shareholders need to start doing the same with corporate elites!
I don’t want any means testing of any sort, but your assertion that those who “work for a living” should get higher incomes than those who don’t demands means testing of everyone who doesn’t work for a living, not just the poor. So we’d have to means test the idle rich and remove any income they get that exceeds the minimum wage. I’m sure we agree that this will never work.
Instead of means testing I want everyone, as a right of citizenship, to get a chunk of money to spend every month regardless of how active/idle/rich/poor/worthy/unworthy they are.
If you and I then choose to go to work to supplement that basic income we are free to do so. The reward that we get for that labour will be negotiated on equal terms with the employer: if he pays enough to be attractive, then we will do the job. This will be a true free market for labour because no longer will we be forced to take whatever job/pay/conditions the employer offers.
In order for the basic income system to work we have to stop pretending that money = wealth and devise a mechanism that encourages the continual recycling of money throughout the productive economy.
We can still accrue personal wealth but we will have to store it in something other than money.
I discovered on my campaign, after doing a root and branch review that our Health system does not ask for any ID to access, so Don, board a plane, come to Australia and get a free operation courtesy of the Australian Tax payer. Just borrow someones “Medicare Card”.
Its insanity!! and must have been abuse for years!. I made it one of my platforms and the media has not run with it, so it must be a deliberate attempt to fund the healthcare of dictators and despots around the world.
Re Malcolm Henry of Sep. 9 @10:10 am: I did NOT write that “those who ‘work for a living’ should get higher incomes than those who don’t”! I wrote “In no event should government confiscate your income or savings to give me a lifestyle superior to yours or other workers’ “.
I’m trying to make it clear that government should stay OUT of incomes, lifestyles, etc. and serve only as a backup to private charity in funding real (in-kind) necessities of life, not luxuries.
In America the founders gave us “unalienable rights, (including) life, liberty and the pursuit of happiness”, free speech/religion/assembly/press, right to bear arms, security of persons/houses/papers, etc. We added breathable air, drinkable water, national parks and interstate highways. Unfortunately, Amendment XVI (authorizing unlimited income tax) allows government to TAKE as much money from the people as it can get away with. We COULD amend the Constitution to legalize GIVING much of this money to people and institutions who don’t earn it, but we haven’t. Politicians have found that they can buy enough votes to perpetuate and grow the pillage (transfer payments, “redistribution”, grants, loans, contracts, etc.) without calling attention to legal impediments.
No one is confronting the logic of both technological innovation and profit. Which one are you going to dispense with? With a re-distributive taxation and monetary system you must dispose of one of these. However, with a Distributive monetary system it is not necessary to do so.
Can you explain what you mean by a “distributive monetary system”?
One that recognizes that debt and loans are not the only monetary reality or possibility. Debt/loans combined with a new monetary paradigm of monetary grace, the free gift will compensate for the employment effects of technological innovation and global wage arbitrage, and also for the historical scarcity of individual income revealed in the cost accounting data of any business which shows an inherent scarcity of total individual incomes in ratio to total prices that must be liquidated. This will make the economy more robust.
I’m struggling to understand what you’re advocating but it sounds like a combination of money issued debt-free by some sort of sovereign body and a mechanism for equitable distribution of said money among the citizens.
Am I close?
Yes. “Free” market theory currently lacks a symmetrically powerful countervailing credit creating force to the private banking license. It also fails to compensate for the effective demand reducing effects of technological innovation. Adding a new monetary paradigm of the free gift enables free market theory to become free in fact.
By “a new monetary paradigm of the free gift” do you mean some kind of universal income?
Yes.
Can you tell us how that would work in practice? How would it be funded and distributed?
I can’t speak for BFRW on this, but from past conversations with him and my own ideas of how this would work would be allowing some new money creation from central banks to be directly floated to the government agencies which administer the social credit. And this would be possible because the introduction of a social dividend would potentially reduce the need for new money from the financial system. So some of the money which is normally created from the fractional reserve system would instead be created from debt free issuance in the social dividend. This would reduce the tax burden needed to fund such a redistributive measure which would free up markets more. It would also reduce the need for bond sales which can hurt liquidity in financial markets and increase debt load. Also it would cause an overall reduction in debt reliance for the creation of new money. There would have to be some taxation involved to fund this however so that inflation can be kept in check.
There is also the possibility that a government could create a second “preferred currency” which is limited in its liquidity with goods and services and could be designed to deflate over time in relation to the general currency, or possibly gain interest over time so that it can be the preferred medium for money hoarding, thus reducing the risk of deflation during market downturns. Governments can issue the currency to counter inflation as well as using the increased reserves of general currency for things like no interest loans to students, government agencies, business start ups and such. Losses from interest free lending can be made up for from tax revenues. It’s essentially something that could replace bond issuance as the dominant form of raising government funds.
Your proposal to allow the central bank to create debt free money which is then spent into the economy by the government is similar to that of Positive Money (http://www.positivemoney.org/blog/) in the UK.
I like the debt-free issuance of money (and PM’s proposals that banks should no longer be allowed to create money as loans) but I’m less convinced by the government getting to decide where/how it’s spent. As soon as you let government get involved in the distribution of money you can be sure that someone will benefit dispropotionately at the expense of others.
Using newly created money to part-fund a basic income or social credit is a bad idea because it results in an ever-increasing money supply, which can only be tamed by taxation and/or some complicated system like the parallel currency that you propose.
Taxation is vexatious and unpopular. It invariably results in unfairness, and is costly to collect and police.
My own proposal is to provide a universal basic income from a perpetually cycling fund of money that is issued monthly and has to be spent into the economy within a month.
The same relatively small pot of money (c.£50,000 million in the UK) would be used over and over, being spent by recipients and collected from the economy via a continuous negative interest charge at the banks.
The negative interest discourages hoarding and encourages investment in profitable activities.
The UBI removes the burden of welfare and the taxes that currently pay for it. People retain more of their income and can choose what to do with it.
” As soon as you let government get involved in the distribution of money you can be sure that someone will benefit dispropotionately at the expense of others.”
Well I think that could be said about anyone who is in charge of the money supply. However, to answer your question, one way to avoid this pitfall is to replace many of the government programs with independent agencies, similar to central banks or legal systems which can be charged with operating independently to political goals. Almost similar to a Silvio Giselle type scheme. Have public entities which are independently run which debt free money can be floated to, and they can distribute it. This would probably reduce many of the concerns of having a political entity controlling the distribution of money.
“Have public entities which are independently run which debt free money can be floated to, and they can distribute it.”
I can see the attraction of what you’re suggesting and it might be an improvement on giving new money to the government to spend, but it’s still going to benefit the few (who are the lucky recipients of these independent agencies largesse) at the expense of the many.
Money has a value only because we all agree that it has. If we collectively agree to create new money then its value must belong to all of us in equal share. Surely the most democratic way to add new money to the economy is to divide it equally between us and let us spend it.
The UBI distribution system can be used to add new money whenever it’s agreed that there’s not enough to keep the productive economy functioning.
This article exemplifies a limited understanding of markets. There is an endless demand for labor. Technology has advanced dramatically since the stone age times. Using the reasoning found in the article, we should have 99% unemployment.
What if the empirical data shows that you cannot have a free market….unless you create and distribute a supplement to individual incomes?
There are varying degrees of un-free markets. The more un-free it is, the less efficient it becomes. You can have an extreme example where it is prohibited to start a new business and you must be on the payroll of an approved corporation. In that case, the ability of a market to function is severely impeded. In societies like that, there would emerge a large black market that attempts to bypass regulation. Even in US where we have far from a free market, it is still possible to be an entrepreneur. Technology can’t stay in the hands of the elite forever. Eventually the little guys will acquire it and take advantage of increased productivity and are able to produce wealth for themselves instead of depending on an employer for a paycheck. For every job technology destroys, it creates two new jobs applying that technology. People need to keep learning skills and adapt to changing technology.
“For every job technology destroys, it creates two new jobs applying that technology.”
This not true. And it will become less and less true.
How can you say that? Technology does not implement itself. Until every conceivable desire of every human on Earth is met, there will be a demand for work. I think we are a long ways from that.
What of it? I’m saying that there will be less and less rational need for employment as technology advances. I’m also saying that the orthodox belief that there is adequate demand created….even now, is wrong by looking at the empirical data and understanding that money does not re-circulate except via an enterprise which guarantees a scarcity of incomes to prices.
So educate me, BFWR. What is this ground-breaking new technology coming out that will destroy jobs without creating new ones? I’m afraid thousands of years of technological advancement are proof against your theory. Machines certainly don’t maintain themselves and machines that build machines don’t build themselves. Once a new technology has been developed, it is not in its final form. There are thousands of ways it could be improved and eventually made obsolete. What technology does in terms of jobs is it gets rid of the menial jobs and replaces them with higher level jobs that are more interesting and allow for creativity and engagement.
It isn’t just from groundbreaking technologies (although there are many on the horizon that will contribute to what I say) it’s the acceleration of technological innovation that is doing it. Also, you’re not recognizing that profit’s logic is also efficiency. Without a supplement to individual incomes free market theory…..isn’t free in fact.
“money does not re-circulate except via an enterprise which guarantees a scarcity of incomes to prices”
I’m having trouble wrapping my mind around what you just said. You might be assuming artificial barriers to entry into the labor market or business as a competitor, or both.
No, the cost accounting data of any ongoing business which clearly shows that less in individual incomes is created in ratio to prices combined with the fact that money does not re-circulate except via businesses means that this scarcity is systemically guaranteed.
RE: tolyzharkikh just above, and elsewhere on this thread @ Sep 8 and BFWR just below @ Sep 8.
tolyz and others above and below have refuted BFWR’s negative (but I would hate to have to prove a 2.00 ratio). People who eat are indeed more numerous over centuries. I’m reminded of the climate-warming fools and fraudsters who ignore factual geologic and human history because it doesn’t fit their models.
A business borrows $100k and pays $40k on wages, salaries and dividends. They spend the rest on capital equipment and the various other expenses a business inevitably must incur. That is a total of $40k in demand created, but because all costs must go into prices by cost accounting convention that leaves the economy with a ratio of $40k in demand and $100k in prices needing to be liquidated. This ratio is repeated for every business, and no matter how much money re-circulates there is always more prices created and needing to be liquidated than incomes produced. In other words in the normal act of production the rate of flow of prices always exceeds the rate of flow of incomes. Graphed through time this will show two upward sloping lines that are diverging. The top line is prices the lower line is incomes. This is the picture of the inherently price inflationary nature of the productive process. Furthermore the above inflationary fact is only at the moment of a good or service’s initial creation. As the product or service normally touches businesses at least several times before it reaches retail sale to an individual where all costs are finally summed including the retailer’s, it continues to widen this gap with each business it encounters. If not only initial production, but the entire productive process from initial creation on through to retail sale to an individual is inflationary you cannot resolve it by injecting money into the economy via businesses because it merely exacerbates the underlying inflationary nature of the productive process. The solution requires a supplement to individual incomes that does not first go into the economy.
But where does the remaining $60,000 go? It doesn’t just disappear. It goes to the equipment/service provider for that company, which gets recirculated back into the economy because they end up spending the $60,000 as they see fit.
Correct, but only about 40% of that BUSINESS income, once again, actually ends up becoming INDIVIDUAL income. You and every other economist it seems confuse total money with individual income, that is, effective demand.
I think you are referring to the last 40 years of stagflation in the US where prices rise and incomes stagnate. This has nothing to do with improved technology and everything to do with the expansion of credit that has occurred. If you look before 1975, incomes have kept pace with rising prices and standard of living was increasing. Technology serves to improve standard of living, not decrease it. In the real long term (100s of years) incomes have generally risen because the cost of goods decreased relative to incomes. Cost of goods decreases because they are cheaper to produce because of *gasp technology!
Footnote to mine of Sep 9 @ 2:47 am: I was trying to refer specifically to the exchange about technology creating 2 new jobs for each it destroys. Tolyz Sep 8 @ 7:59 pm and BWFR Sep 8 @ 8:19 pm.
Don, I did not mean that as an exact number. I was just making a point that the more technology we have, the more doors open for applying that technology. A new technology can be combined with existing technologies in an exponentially growing amount of applications. Look at computers for example. They have created a mind boggling amount of new applications and jobs for developers/engineers while getting rid of many number crunching jobs.
It will ALWAYS be less expensive to exploit the poor than to create and maintain complex deteriorating machinery. Anyone who thinks otherwise is living in a world of science fiction.
Current velocity theory claims that individual purchasing power can be increased. However, this is fallacious because it cannot re-circulate without going back through the costing system that is a necessary part of every business and which guarantees the scarcity ratio of individual incomes to prices. Accounting convention must evolve to rectify this scarcity of individual incomes, and the only way that this can be accomplished is a DIRECT supplement to individual incomes before it goes back into commerce/the economy. If you just keep injecting money in the form of loans (which is the current way of trying [and failing] to keep the economy in equilibrium it incurs total costs greater than total incomes and the disequilibrium between prices and incomes remains and the debt continues to build up until it is unrepayable….as it is now.
BFWR, I find some of your vocabulary and syntax hard to follow but you have absolutely hit the nail on the head.
For those who are struggling to make sense of what you’re saying I’ll try to express it another way…
The money that people spend on stuff has to come back to them by some means so that they can re-spend it on more stuff. Re-cycling money from producers to consumers is essential for a thriving economy.
But the prices charged for stuff is always more than the wages paid for its production, so the money that’s recycled via wages is always less than the money needed to pay for the produce.
Government recycles a bit of extra money by taxing profits and spending as benefits, etc. but this isn’t enough to fill the gap.
The remaining gap can only be filled by people borrowing money which is created by banks when they make loans.
This money has to be constantly repaid, which means more loans have to be made to replace the repaid money.
Interest has to be paid on all of the loans, which reduces the amount of money available for consumers to pay for the stuff that’s been produced, which can only be replaced by money created by loans, and so on ad infinitum.
Our system requires a spiral of ever-increasing consumer debt which is ultimately unsustainable because the loan repayments will eventually overwhelm the rest of the economy.
Yes, except taxes are actually money already created and so are not “extra”. And any deficit spending by government does not adequately fill the gap because that spending goes either to a business where the scarcity of incomes to prices is again re-initiated or to individuals in the bureaucracy who are taxed and that also reduces their purchasing power. The gap is an elemental aspect of commerce/the economy which cannot be equated without a new consumer financial paradigm of a direct gift to individuals before/without it first entering the economy.
“…except taxes are actually money already created and so are not “extra”.”
By “extra” I mean money that has not been recycled as wages.
The money represented by the gap between prices and wages is captured by capitalists, and much of this is hoarded or used for financial gambling, which means it’s unavailable for recycling through the productive economy.
Government collects some of this money as taxes and recycles it as benefits and as wages/costs of running government departments.
But, as you say, this doesn’t, and can never, solve the problem, which is a structural one. The system is designed to fail.
Yes, but remember ANY money re-circulated merely re-initiates the scarcity ratio between incomes and prices necessary for an equilibrium. The system truly is set up to fail. Keynesian stimulus and the continual injection of more money as loans cannot equate prices and incomes. Only a direct supplement to individual incomes can approximate that.
Thank you Malcolm for putting that into English. This whole wage entropy theory seems plausible, but if it were correct, then how come working class people are still able to buy anything after so much time has passed since the start of civilization? Or even a better question is how did civilization get to the point where wages are initially high compared to prices in order for them to go down over time? It means that at some point in history, wages have had to increase compared to prices.
I think the missing component here is that working people produce much more than they get paid in wages. Normally, this excessive input of labor is enough to pay for corporate profits and prevent real wages from going down. It ultimately comes from our ability to extract energy from natural resources like the sun, wind, water, oil, and chemical reactions. The energy return on investment (EROI) is very high for those energy sources and it gets distributed throughout the system.
“This whole wage entropy theory seems plausible, but if it were correct, then how come working class people are still able to buy anything after so much time has passed since the start of civilization?”
The continual injection of money into the economy in the form of loans palliates the erosion, but does not resolve it. Hence the repeated recessions and intermittent depressions that have occurred.
“…how come working class people are still able to buy anything after so much time has passed since the start of civilization?”
What BFWR says (Sep 9,..12:52am).
I can’t give any numbers to back this up, but looking at my own lifetime and those of my parents and grandparents (i.e. 1900-ish to present day) suggests that the availability of consumer credit has filled the gap between prices and wages in recent decades.
Prior to the 1970s the population of Scotland was relatively poor in terms of material stuff, recreational traveling, home ownership, etc. The abundance of these things in the last few decades has been funded by credit cards, loans, mortgages.
“I think the missing component here is that working people produce much more than they get paid in wages.”
This is central to BFWR’s point about the system’s failure to recycle enough money to keep the production-consumption machne rolling along.
But it’s also (which I think is the point that you’re making) a cause for optimism. There is an abundance of stuff on the planet and plenty of efficient ways to turn it into stuff that we need, so no-one should want for their basic needs.
Poverty is the result of our failure to give people the means to share in the natural bounty. The problem is one of distribution which money, if we use it correctly, can solve.
In my book I put forward suggestions of how this could be achieved while allowing productive capitalism (which is actually very good at getting things done) to flourish.
The only thing that wehave to give up is the idea that money = wealth. People can still become fabulously wealthy but their wealth can’t be held, in the long term, as money.
Money as a means of facilitating commerce is genius, but using it as a proxy for wealth is at the root of all our economic woes.
“Money as a means of facilitating commerce is genius, but using it as a proxy for wealth is at the root of all our economic woes.”
This would be like saying that having everybody on the honor system is genius, but that won’t work either.
Money is a disaster because people [institutions] control it. If history shows us anything, it clearly demonstrates that human beings organize for the express purpose of using the power of the group to exploit individuals.
Arm people with a weapon such as money [which allows the few to control the labor-value of all] and you end up with the mess we witness today, and apologists by the score telling us that the image in your rear view mirror is not quite what it seems.
Economics is that branch of human intellectual folly burdened with the task of explaining how so few people end up with so much. Genuflecting to the alter of money is little different then painting the your walls with gold and telling the people to take solace [and enjoy your suffering] as there is a much better life waiting for them in the great beyond!
Impermanence,
If not money then how do we manage the business of exchange? How do I get the food that I need to eat when I have no land on which to grow it? How do I get the house that I need to shelter me when I have no materials or skills to build it?
Every breath that you take in life, every keystroke that you make when you reply to this post, everything that makes your life secure and comfortable was and is facilitated by the exchange of money.
How do you propose we manage these transactions without money?
“If not money then how do we manage the business of exchange? ”
We manage it such that each individual retains complete control over their labor-value produced [as the primary condition], as money is NOTHING but a extremely poor representation of this value.
Understanding the dynamic of human labor is the key to understanding economics, so if you substitute the former for the later, then human beings become subservient to a pure abstraction and economics becomes the joke that it is.
Money is the first and most important step to central planning. It is EVERYTHING [to the Elite] because it is not really money, it is human labor. And if you can control human labor, you control the world.
Of course, these wonderful people used to accomplish this task through outright ownership, then by tying you to the land, but now they have formed a delightful partnership with governments in order to enforce this “legal tender,” something that imprisons the people in numerous ways, including the malignant growth of both institutions through the most EVIL symbiotic relationship ever conceived [banking and government].
Does it not strike you as being a bit odd that such an incredible percentage of the wealth in this world is in the hands of so few people? This would not be possible without money, because it’s primary purpose is to serve as a mechanism to steal from people without their even suspecting it.
You are absolutely correct when you state that money is pure genius, pure EVIL genius.
“We manage it such that each individual retains complete control over their labor-value produced [as the primary condition]..”
You haven’t told me how we would do this in practice, but let’s suppose there is a way of each individual retaining complete control over their labour-value produced. This merely exchanges one concentration of wealth (as money) into another concentration of wealth (as labour-value produced). What happens to those who are unable to produce anything of value?
You appear to be anti money because a few people use it to exploit many. I can understand the sentiment but why destroy the tool just because it is being misused?
Money is already a very successful tool for collaboration. It allows anyone, regardless of their ability to produce, to get a share of the stuff that they need in order to survive and prosper.
The problem is the distribution of money. Our financial system is designed to concentrate money in the hands of the few who are successful at capturing it.
We can easily change the system so that money circulates continuously from consumers to producers so that everyone is able to buy what they need when they need it.
A universal basic income funded by a mechanism to cycle a relatively small amount of money continuously between market and consumers will do the trick.
The UBI will level the playing field between employers and employees, creating a truly free market for labour because no-one will be forced to work in order to survive.
The recycling mechanism will discourage financial gambling as it will effectively be a tax on money. The longer you hold money the more of it will be lost to the recycling mechanism.
Successful producers will still be able to take profits and accrue wealth but it will have to be held in something other than money, and its accrual will be much harder and slower because it will depend on the labour of an emancipated workforce.
Where’s the evil in that?
So why would you want to discourage people from saving money? When people have money saved up, they can take advantage of investment opportunities. Keep in mind that investment grows the economy while consumption contracts it (productive vs wasteful spending). In a way, its very much like what we have now with permanent low interest rates encouraging borrowing and spending with no consolidation phases. I don’t think there are many wealthy individuals who hold large cash positions because they know that inflation is always eating away at their savings. So they move their money somewhere productive like stocks and bonds and once again, the money is not just sitting somewhere in a vault. The only institutions who would hold a lot of cash are probably banks who need to keep minimum reserves. I assume the velocity of money is still somewhere above 1, which means that on average, the money supply exchanged hands at least once (hopefully I’m interpreting it correctly). The other thought I had is if money does get concentrated in someone’s hands and doesn’t enter the economy, that has a deflationary effect, which means that prices go down and purchasing power goes up. That would actually benefit the average person who is not in debt and would actually encourage people to get out of debt, which I think is very healthy for the individual.
Money can only re-circulate back through the economy through a business. A business, by cost accounting convention must re-coup all of its costs, not just its labor costs. Hence no matter how much money re-circulates (velocity theory) more in total prices is created than total individual incomes…..and this is only in the initial production of a product. Each business that product passes through the same scarcity of incomes to prices is re-produced.
The problem with economics in general and velocity theoory in particular is accountants seldom think in terms of the economic effects of cost and economists have only begun to recognize the importance of accounting….and yet have not dug a little deeper than the mere debit and credit aspect of accounting for the empirical data and the datum’s economic relationships to each other.
Investing money in the productive economy is absolutely the way to go and should be encouraged, but investing is not the same as saving.
Saving is hoarding. It’s the same as putting cash under the mattress, which removes the money from the productive economy.
It is, of course, useful to have a personal hoard of money to smooth out the bumps in our cash flow, buy a car, or deal with an emergency. But we have to recognise that this is stagnant money so we should restrict ourselves to as small a hoard as we need for these things, and no more.
“I don’t think there are many wealthy individuals who hold large cash positions because they know that inflation is always eating away at their savings..”
Businesses and individuals are currently sitting on huge piles of stagnant money that is losing value and has been for years. A Swiss bank was recently charging wealthy customers negative interest to hold their euros and customers were flocking to it because it felt like a safe place to hoard their wealth in an uncertain financial world.
“So they move their money somewhere productive like stocks and bonds and once again, the money is not just sitting somewhere in a vault.”
The money that’s used to buy stocks and bonds sometimes gets spent on business expansion but mostly it just buys more stocks and bonds, which means it just gets transferred from one bank account to another without facilitating any productive activity.
“I assume the velocity of money is still somewhere above 1,”
What makes you think that? The UK GDP figures in my post above suggest that the vast majority of the money in our economy sits idle for most of the time.
When money is invested in something productive it gets spent (on wages, materials, equipment). GDP figures include money that’s been invested/spent on productive activity.
” if money does get concentrated in someone’s hands and doesn’t enter the economy, that has a deflationary effect..”
That sounds plausible in theory but it doesn’t appear to be happening. I see many reports of money being concentrated in fewer and fewer hands but inflation continues unabated.
This is why I think the velocity is above 1: http://research.stlouisfed.org/fred2/series/M2V?cid=32242
Despite money being hoarded by institutions, I believe that inflation continues unabated because the total currency in circulation continues to increase because of new money creation. All this deficit spending by the US government is being financed by new money created by the fed and some of that money finds its way into the US economy. I don’t know how things work in the UK.
The graph that you link to shows a velocity ratio of 1.579 for M2 money.
If you dig into the same website you’ll find the velocity of M1 money is nearly 6.6.
M1 is the component of M2 that accounts for currency and demand deposits – what most of us use to pay for stuff – which is about $2,500,000 million of US money.
6.6 x $2,500,000M = $16,500,000M which is very close to the entire GDP of the US in 2012.
So nearly all of the transactions in the US are made using cash and checking account money.
M2 (M1 + individual and small savings) is c.$10,000,000 million, of which $7,440,000M is in savings accounts, which can only contribute a tiny fraction to GDP (because most of GDP is accounted for by the M1 velocity ratio).
M3 (M2 + large and long term deposits) is around $16,200,000M, of which $6,200,000M is in large and long term savings which are deemed to have zero velocity, so contribute zero to GDP.
So $13,700,000M (85%) of US money contributes little or nothing to GDP because it’s lying idle in bank accounts or being used for financial gambling.
As for QE in the US, I haven’t been following the debate. But in the UK it’s not possible for QE money to enter the productive economy because it’s issued to banks in exchange for government bonds and these transactions occur in the reserve accounts of the banks.
As for QE encouraging banks to lend (create new money) into the productive economy the general consensus seems to be that this hasn’t happened to any significant extent.
QE has a limited impact on inflation because the newly created currency is cordoned off somewhere sitting in a bank and not entering the real economy. But part of the $1T deficit that the government is running is being funded with newly created money and part of that money is paid as wages to contractors and contractor companies who spend the money into the real economy.
Tolyz (Sep 11 6:45pm)
In the UK the government has been given the profits from QE as spending money, which is a relative small percentage of the total. (£6,400M from a total of c.£375,000M, I think).
Don’t know what the figures are in the US.
Malcolm, money is not concentrated in the hands of the few. When you earn money and put it in the bank, you essentially lend it to the bank, who then lends it to someone else. Money never stays in one place for a long time. Wealth, however, can be concentrated in the hands of a few. That includes real assets like real estate, gold, etc, not the currency we use to make transactions.
Tolyzkarkikh,
I used to believe what you say:
“When you earn money and put it in the bank, you essentially lend it to the bank, who then lends it to someone else.”
but I have discovered that only the first part is true.
The money that we “have” in the bank is indeed a loan that we have made to the bank. The balance in our account is nothing more than a promise that the bank will return the money to us when we demand it.
But the bank doesn’t use this money to lend to other people. Bank deposits are added to the reserves of the bank and are used for daily settlement between banks.
When banks make loans they create new money (deposits) out of thin air. As long as all the banks are lending at a similar rate and the borrowers are spending it there is very little ned of bank deposits for daily settlement. This is how we ended up with so much debt in the system.
You can find out more about it here: http://www.positivemoney.org/how-money-works/advanced/
On your other point:
“Money never stays in one place for a long time.”
I used to think the same thing but now I’m convinced that most of our money is idle for most of the time.
In the productive economy the velocity of money is relatively high as people buy and sell the stuff that they need for everyday living. But the money that’s captured as profit or excess income piles up in the bank.
Some of this money is used periodically for big ticket spending, or business expansion, but most of it just sits there doing nothing for most of the time.
UK GDP averages out at around £4,000 million/day, or £28,000M/week, or £112,000M/month.
The UK money supply is c.£2,200,000M. If all of that money was continually on the move, even on a slow monthly cycle our GDP would be about 20 times bigger than it actually is.
“You haven’t told me how we would do this in practice, but let’s suppose there is a way of each individual retaining complete control over their labour-value produced. This merely exchanges one concentration of wealth (as money) into another concentration of wealth (as labour-value produced).”
Labor-value IS wealth. THIS is the difference. Money is nothing but an abstraction, one that IS subject to manipulation [which is the problem with it].
How it will work is that everybody will be independent, an idea that is lost among people who see the purpose of social relationships as nothing more than stealing [politely called citizenship, employment, investing, etc.].
“How it will work is that everybody will be independent, ”
What does that mean in practice?
Where will I get my food, my fuel, my clothes, the laptop on which I’m typing this?
“Where will I get my food, my fuel, my clothes, the laptop on which I’m typing this?”
M, there are many, many things that need to change in this world that I do not have the exact answer for, but this does not mean that they should not change.
These answers become apparent as you move down the path. The ONLY reason to keep the current system is to enable the theft.
Fear not, as mankind will not forget how to make stuff. What may take place is that more stuff will be locally produced and hand-made. Although technological advances will be attenuated, who cares? The quality available should increase with many more choices [compare the ubiquitous McDonalds to the family restaurants of yesteryear].
The bottom-line is, how am I supposed to know? It will happen as it happens, but only if the majority figures out what an incredible scam the present system is [as are all systems].
And, btw, if you really want to find out the answers [the Truth], find the nearest tree and ask away. Listen and you will have all the Truth one man can handle.
The citizen’s dividend will encourage all of those same things (decentralization of money, greater valuation of things made by humans as opposed to automation) AND reduce the monopoly power of the private banking license, widen the kinds of credit available for distribution from loan only to loans and gifts and the purposes for financing from for production only to both production and consumption….so its all upside. Also, because gifting money to individuals necessitates much less continuous money creation than forcing people into the current loan only paradigm for consumer finance….it actually is a way to reduce monetary inflation.
That a citizen’s dividend will negatively effect the bottom line of the most powerful entities in the economy, the too big to fail banks, is also a good economic effect, and of course why they will fight that idea in order to maintain their extortionary monopoly power…which just happens to be what everyone must have to operate a business, have what they can afford and even what they must have to survive.
We must not let the perfect be the enemy of the Good.
I understand and share your emotional response to the madness of the money world as we know it, but beyond that our paths must diverge.
The conversation with the tree might edify the soul but it will do precisely nothing to solve the practical problems that we face.
You say “It will happen as it happens,..”
Nothing that benefits humanity “just happens”.
The better future that you crave will only come to pass if people think, decide, design and build the things that will make it better.
I think the majority have long ago understood that the present system is a scam that benefits the few at the expense of the many.
The challenge now is to develop ideas that demonstrate there is a practical alternative.
“I understand and share your emotional response to the madness of the money world as we know it, but beyond that our paths must diverge.”
It is not emotion, but instead, non-intellectualism. Where our paths diverge is that you wish to have your cake and eat it too, that is, to fix a system that by its very design destines it to failure [like all systems].
“The conversation with the tree might edify the soul but it will do precisely nothing to solve the practical problems that we face.”
Again, you must have an “understanding” of the non-intellectual. The answers are simply, but so not lie so much in your ability to understand them, instead, in your ability to be aware of them.
For example, you want a better world? Well, who among us does not know what needs to be done to bring such forth?
“You say “It will happen as it happens,..”
As do all things…
Nothing that benefits humanity “just happens”.
Oh really, then perhaps you can enlighten us as to the origins of matter. 🙂
M, thinking is just a tool pointing towards the Truth, not Truth itself. Those who believe they actually understand the world [intellectually] don’t understand much of anything, as it is not what you understand that matter, but instead, what you understand that you can not understand that means everything.
Impermanence,
We’ve been down this path before. While I would agree with you that the ultimate nature of both consciousness and the physical universe is probably subjective one cannot just sit and observe while someone is slicing up 4 month old babies right next to you. Such mystical mysticism does not recognize the completely real nature of our temporal existence.
Impermanence,
Sit under your tree, do nothing but meditate, and see what happens.
Matter will do what matter does all around you but it will not give you one single atom of sustenance or shelter.
Pain and death is all that will “just happen” to you.
By all means spend your spare time contemplating universal truths, and share your wisdom if you feel you must, but have the decency to roll up your sleeves and engage with the practical business of keeping yourself and the rest of your species alive and comfortable.
“Such mystical mysticism does not recognize the completely real nature of our temporal existence.”
Steve, what you state above has no meaning [no offense intended]. The point of the non-intellectual is simply to provide access to awareness.
Nobody wants to sit around while bad things take place, but the best hope we have [in reacting appropriately] is to, first and foremost, “perceive” the situation as accurately as is possible. This is best accomplished through the non-intellectual, as has been espoused by all the great sages throughout the millennium. Don’t take my word for it.
I ask you, “Do you want a better world?” You already learned how to make a better world in kindergarten, but somewhere along the journey to adulthood, these lessons are unlearned, replaced by the new lessons that create miserable human beings out of us all as we are forced [to some degree] to participate in a system that holds-out lying, cheating, and stealing as morality rewarded by satiating your battered conscience with material fluff.
Living in one of the wealthiest areas in the world [SoCal], I see people every day driving down the freeways displaying their rewards for being good soldiers in the battle to take the most from the most. If you can see through the tinted windows, though, you will see [quite clearly] the look of despair and regret on these faces lost in the intellectualism that promised them the stars and delivered [instead] Hell on Earth.
“By all means spend your spare time contemplating universal truths, and share your wisdom if you feel you must, but have the decency to roll up your sleeves and engage with the practical business of keeping yourself and the rest of your species alive and comfortable.”
M, you are missing the point. I am not contemplating any Universal Truths, as there are none to contemplate. I am simply suggesting that there is an alternative method to go about doing things. Let me give you an example.
I am a physician. There is an enormous problem in the United States [and the world] with health care. This debate has taken basically the following form; either the government should pay [universal health care] or the insurance companies should administrate the system. Neither of these alternatives address the real problem, which is, that society can not afford the technology.
The answer to the health care problem we face is simple [as are all solutions]. Prevention only. Of course, nobody talks about this option, because intellectually, people are caught up in the idea that somebody should be fixing everything for you [and a million other things], but this will be the solution in the end, that is, a health care system as opposed to a sick care system.
The same simple solutions can be instituted in all institutions, but [intellectually, and through self-interest], people have been convinced that the real solutions are impossible [or impractical, or undesirable], when, in actuality, they are appropriate [do-able, i.e., sustainable].
Just like making everybody the owner of their labor-value. Although this is something you simply con not conceive of, it is the answer.
Your texts are full of contradictions and I have neither the time nor the energy to spare on teasing them out.
I wish you well with your endeavours, especially promoting prevention over cure in the US health (sickness) system which is, intellectually, a very sensible approach.
I hereby withdraw from any further correspondence with you.
“I hereby withdraw from any further correspondence with you.”
This is what organized Medicine has been telling me for the past 30 years. They don’t want to hear it either.
I understand.
Solving the elemental/radical instability of the economy involves directly addressing the actual problem…a scarcity of individual incomes with a supplemental gift of income to same. Who/what institution is the 800 lb. gorilla in the current economy? Finance. The addition of a gifting paradigm to the loan only paradigm of Finance breaks up their monopoly on credit creation as well as their restrictive bias of financing only for production…when lack of the ability to liquidate prices (consumption) is the underlying problem.
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John,
This is actually a question related to your previous post on saving (‘put up or shut up’).
How does one explain the fact that whilst gross and net private saving (in the US) are apparently at all time highs, the personal saving rate is still relatively low compared to the past.
Personal saving rate:
http://research.stlouisfed.org/fred2/series/PSAVERT
Also, do you know where to find data on gross or net private saving as a percentage of GDP? FRED only has data which seems to include ‘government saving’, i.e.:
http://research.stlouisfed.org/fred2/series/W206RC1Q156SBEA
http://research.stlouisfed.org/fred2/series/W207RC1Q156SBEA
(These inevitably show a downward trend given US current account deficits and government budget deficits.)
Thanks!
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Ah, David Graeber is a nascent Social Crediter. First anthropologists, then….some century, economists.
http://t.co/ItXWltrCvH
I wish someone somewhere in here would define “UBI”.
Don,
I’ll give it a go, as I see it (other interpretations are available).
UBI = Universal Basic Income
Universal: every citizen gets it regardless of wealth, income, age, ability, employment.
Basic Income: enough money to cover the costs of food, clothing, housing, fuel, communications, etc. – everything that you need (as distinct from desire) to participate in the everyday life of the community in which you live.
The version that I propose in my book is called the Common Cashflow Fund.
It’s a pot of money (c.£60,000 million in the UK example) that’s owned in equal share by all the citizens of the nation.
Every month everyone gets their share (c.£1,000/month in the UK example), paid into a special CCF account from which they can spend it via a debit card or transfer it into a normal bank account.
Any money that’s left in the CCF account at the end of the month is returned to the pot. Use it or lose it.
Every hour a small percentage (0.0034% in the UK example) of all money that’s held in every account in every financial institution (except for the CCF) is removed and added to the CCF pot so that, at the end of each month, the pot is full again ready to be redistributed on the first day of the new month.
The fund cycles perpetually.
Coins and notes are abolished (in the UK example they are converted into the digital money for the common cashflow fund).
Most welfare benefits are abolished along with the taxes that currently fund them and the government departments that administer them.
Hope that helps.
Thank you, Malcolm. Your plan seems to have significant merit, especially the “basic” (need, not desire) criterion. If it could be convincingly demonstrated to be “workable” — e.g., self-perpetuating — it would be less difficult to sell to voters and to operate than my basic in-kind Safety Net (mess halls, public clinics, etc.).
However, no system can provide adequate food, clothing, shelter and medical care to all as long as a Nomenklatura has the power to import, de-educate, brainwash and corrupt masses to do its bidding, i.e., fleece/control producers in a police-state. You and I, and most of our fellow Azizonomics posters, know numerous ways to identify this Hell on earth: “1984”; absolute (government) power; monarchy; dictatorship — Nazi, fascist, Communist; theocracy; etc. It’s really quite simple: who is master and who is servant — the people or government?
BAD. Europe and Great Britain: George Orwell wrote “1984” and “Animal Farm” to warn against a Soviet Empire type takeover of Democratic Socialism, in which he was a true believer. Victory in the Cold War has, so far*, prevented that horror, but EU and UK bankruptcy (and revolution?) looms from welfare-state (socialistic) politics/policy. Churchill and Thatcher had memorable words to describe creeping socialism; I call it simply, “too few givers, too many takers”.
WORSE. In four and one-half years, the US has slipped from a prosperous republic with an unsustainably big government into a lawless Marxist class and race revolution leading inexorably and intentionally to bankruptcy. Half of our people are wards of the state, and to some degree are obedient soldiers in the Nomenklatura-led revolution. Most of the half who work and take care of their families aren’t aware that Constitutional liberty is under concerted attack. We few patriots/Libertarians/tea partiers/etc. have only two chances to awaken our people: the 2014 and 2016 elections**. Fortunately, Obama and the elite have been caught in overconfident and overreaching crimes, even stepping on the toes of some elite media.
* Global Muslim Jihad intends to rule the world, and continues to gain as resistance remains pacified.
** We must coalesce a Loyal Opposition — loyal to our Constitution and people.
Don,
I share your frustration with government that seems to become ever more pervasive and intrusive but I think your analysis falls short of revealing the whole picture.
You ascribe all that’s wrong with the world to socialism without acknowledging that the system is being fleeced from both ends.
You identify yourself as one of the givers, feeding a mass of welfare takers to your left. If you look to your right you will see a small elite of mega-takers who are robbing you and everyone else to an extent that makes welfare look like petty theft.
The ever-widening gap in wealth between the top 1% and the rest of us is merely an indication of this phenomenon. It doesn’t even begin to describe the scope and scale of the power that these people wield.
Some of them are passive participants in the game of global control (they may not even realise that they’re players) but many of them are actively manipulating our dysfunctional financial and political systems to further enrich themselves at the expense of the rest of us.
The global jihad that you fear is a creature of this elite, which has deliberately funded and inspired the conflicts that you see on your screens. War is a wonderful way to amass fortunes and has the added advantage of distracting the populace from the enemy within (just so long as the war is somewhere else and we’re killing people who look and sound different to us).
The need for the welfare programmes that you so detest is a direct result of the elite’s capturing and controlling the majority of the wealth of the planet.
I am tired of the rhetoric of right and left, socialism v. capitalism, libertarianism v. paternalism.
There are many on both sides of these fences who are genuinely trying to make the world a better place for all of us but the dogma of their creed poisons and paralyses, forcing them into doing things that harm us and preventing them from doing things that would help us.
You want a loyal, patriotic opposition. I just want pragmatism. I want to identify what doesn’t work and replace it with stuff that does what we need it to do.
But the rhetoric of right and left blinds us, preventing us from seeing both the problems and the solutions.
Concentrating our efforts on hating and dismantling big government will do precisely nothing to solve the underlying problem.
The problem is our failure to share the bounty of the planet and the solution lies in designing mechanisms that allow us to share while encouraging productive people to be productive.
If you want to put it in the terms of which I’m so weary then I’m arguing for more socialism and more capitalism, which hopefully demonstrates how useless these terms and standpoints really are.
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Malcolm (Sep. 13 @9:13 a.m.):
Our dialogue* has become quite helpful to me in understanding why “good” people so often fail to work together to achieve common objectives. Appropriately and commendably, young and ambitious John Aziz retreats back to macroeconomics, and Ukrainian-descended Aussie Buddy Igor Rojek has become a political candidate. So I pick on you — sorry!
BACKGROUND. (1) You want pragmatism? Here’s my model: “Select those alternatives whose probable consequences are preferable”. But one must START with identifying “preferable consequences”, AND in real life, especially in politics and public policy, one must decide which are non-negotiable values and which are of lesser or more temporary importance. [e.g., U.S. Communist theoretician Saul Alinski gave his followers, including Barack Obama, a clear summum bonum: “Everything we do, we do for POWER”].
(2) History. (Disclaimer — I am NOT a historical scholar, only an octogenarian retired engineer and concerned father and grandfather). You are a Brit, I an American. While our two nations have close and enduring ties (for which both our peoples and the rest of the world should be grateful), I think of British democracy/personal liberty as descended from the Magna Carta — the King delegating powers to the nobility — and other top-down concessions to the people over centuries; in contrast, the founders of the USA, imbued with British idealism, started from scratch: “We hold these Truths to be self-evident, that all Men are created equal, that they are endowed by their Creator with certain unalienable Rights ….. that to secure these Rights, Governments are instituted among Men, deriving their just Powers from the Consent of the Governed.”
(3) Present situation. Your nation avoided the Sovietization feared by Orwell, but now suffers the consequences of the welfare state; my nation has recently been seduced and betrayed from that into impending totalitarianism.
YOUR LAST POST.
You make one specific assertion that is in total disagreement with my knowledge bank: that global jihad is a creation of “our (the West’s) dysfunctional financial and political systems”. Muslim jihad — to conquer, kill or convert every human non-believer on the planet — has been around for centuries. Giving Muslim colonies independence and creating Israel after WW II brought it back to life, and Arab oil (discovered and developed by Western companies) has financed it. If the US can move beyond our former-(?) and pro-Muslim president, then the biggest Muslim risk reverts to the UK and EU nations from non-assimilating immigrants.
I have two other disagreements, both general and pervasive. (1) There are no “fences” between corrupt government and greedy capitalists. You seem to regard government and non-government elites/oppressors as separate, whereas I (in the US) see most non-prosecuted private fleecing as conspiracy, legal and illegal, using the monopoly power of government — dare I call it “big government” or “socialism”? (War-mongering, policing the world, etc. are examples). (2) You decry dogma, labels, rhetoric and “useless”/slander-caricatured terms, but your analysis is based on them (left/right, socialism/capitalism, etc.). They can and should be replaced by “telling it like it is”. It isn’t “big” government that I oppose, although excessive government always retards growth, it’s unConstitutional expansion usurping citizens’ rights and livelihoods in order to provide power to politicians and profit to cronies. Unscrupulous politicians (including dictators and would-be dictators) obfuscate reality/truth behind left/right, Democrat/Republican, rich/middle-class, etc., and make sure that no one dares to mention that “sharing and encouraging productive people to be productive” happens when government stops manipulating the economy, education and public information.
I can address areas of our agreement, but most will be evident if we avoid false labels and resist being duped into skewed judgments, group envy and name-calling.
* If you or postmeister Aziz think that our exchanges are taking too much public space, we can switch to email (canddguier@aol.com).
P.S. to my reply above (Sep. 22) to Malcolm Henry. I’m confident that we both concur with Thomas Jefferson: “I have sworn upon the altar of God eternal hostility against every form of tyranny over the mind of man”.
Orthodoxy of any kind tends to become a mental tyranny. Paradoxically, the only constant of the temporal universe is change. The only way to find one’s way in Life and know how to adapt systems which are subject to the constant changes of the temporal universe is to contemplate Wisdom (not religion) because it is the only eternal and unchanging thing in the cosmos.
What economics needs is the wisdom of FAITH/CONFIDENCE to GRACE individuals with more money than they make earning so that the economic system will actually function as it is only imagined to now (orthodoxy). This will engender HOPE which will also engender goodwill (LOVE).
Faith/Confidence, Hope, Love and Grace. These are the natural condensations of Wisdom, which is the higher order level of thinking (philosophy) and acting (policy) that will result in the optimum inner and outer solution. All of Man’s systems could be and should be based on these condensations. And that Wisdom and its temporal reality….is only a thought (realization) away.
I hope that Thomas Jefferson would allow me to change “hostility” to “opposition”.
Hostility breeds hostility and is, as far as I can see, the enemy of those who would like to get things done.
No doubt the three of us (and Thos. — like you — put a lot in writing, probably with a faster word-processor!) would hold that some tyranny is lesser than other s. Maybe like “The punishment fits the crime”?
Belated word on behalf of Jefferson: my dictionary’s definitions of “hostile” range from “warlike” to “unfriendly”.
Don,
I don’t mind you picking on me. I want to hear from people who have put some real effort into thinking about these things, who can test my own ideas and assumptions.
I also don’t want to clog up the comments by dissecting the minutiae of your posts, which will be of little interest to anyone else than the two of us.
Instead I’d like to ask you what are your “preferable consequences”?
When I ask this question I too often get a litany of things that are opposed, things that are not wanted. I’m hoping that you’ll be able to give me a list of positive outcomes that you’d like to come to pass.
Malcolm (Sep. 23 @11:04 am). Thanks for the gracious invitation. I’ll respond thoughtfully after I take care of a couple of pressing projects: to do everything I can to push congress to defund Obamacare*, and to decide when/where Mrs. Guier and I will move to a senior citizen community.
* While Obamacare flacks are still claiming a positive step toward universal healthcare and the Obama administration is still spreading the same old disproven lies, partial implementation proves that it will RAISE costs (to both patient and government), REDUCE coverage, and LOWER quality. Even the NY Times admits it, and a new Forbes study reportedly projects cost INCREASES of $7,500 per year per family (I’m assuming that is the total of both patients’ and government costs).
Don,
Good luck with both of your pressing projects. I look forward to hearing your “preferable consequences” in due course.
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BFWR: what is your plan to provide money to individuals without trashing currencies of the money-printers and credit of other nations/states/cities?
It will require a separate credit creating agency that is independent from politics. Ultimately like (in the USA) a fourth branch of government. This agency’s mandate would be the direct distribution of the dividend and discount monies to individuals and participating retail merchants. The dividend would approximate THE GAP between the total cost of consumption and the total costs of production (including all exports). The discount is based on the total cost of consumption OVER the total cost of production. And remember, giving individuals money requires a hell of a lot less continual money creation than loaning them the same amount, resulting in less actual monetary inflation.
It does not matter how difficult such a task might be, it must be done…..if we truly want a free and functional economic system. Actually it is only apparently difficult because the beauty of consciousness is that once a mind changes, it’s actually changed…and this occurs instantaneously. You just have to awaken people to their true self interest. According to recent sociological research you only have to make something real to about 10% of the populace before a tipping point is reach and that reality becomes almost inevitable.
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