13.8.1 Centuries since it was originally used. 20.8.1 Not so much determined but exaggerated. Date: Fri, 24 Aug 2001 07:57:32 -0700 From: "D. Gale" cyu@oz.net Organization: Dark Side of the Rainbow To: ipe@csf.colorado.edu Subject: Re: Paper, Tax Financial Speculation URL: http://csf.colorado.edu/mail/ipe/2001/msg00545.html > I was trying to get you to draw a distinction between (1) venture > capitalists, who are in the business for the long term because they actually > own or control the businesses in some measures (they are not creditors), and > (2) speculators whose aim is to make a profit in either the short or long > term but who do not aim to own or control the businesses on which they > speculate. The former are not driven by fads in a significant way. The > latter are to some degree. Some speculators are entirely faddish and > amateurish; they don't buy until the bubble is already visible and they > don't sell until long after the bubble bursts. I do understand how one can arrive at this view - however, it is important to remember that the two distinctions you draw are not independent from one another. In some cases, one person's motivation may include both of the two you've described - perhaps of varying degrees as to which is his primary motivation. In other cases, even when motivations are pure, speculative (ie. economically "irrational") effects on the market can spur on the more "rational" ones: investments that may have once seemed irrational (at least with respect to the general economy) become rational (with respect to personal gain) when the price is rising, regardless of the cause of the price rise. The price of gold remains an excellent example. Whether it's because the wealthy have been convinced that this is a good hedge against market instability, or if it's because governments (analogous to the wealthy because of its economic power) have been convinced that this is a good basis for their currency, the result is that the price of gold remains high - because the demand for this good has been raised despite its relative uselessness. Bubbles don't necessary burst - at least in the case of gold, it is only deflating slowly. Central banks do realize that if they dump all their gold immediately, it would cause a crash in its value, ruining the value of the gold they haven't sold yet. Better for them to play up the value of gold while selling it at the same time. If they can convince other governments to buy their gold, all the better. This is all very rational behavior, at least on the small scale (ie. these central banks are able to get the most out of the gold they hold), but is fairly irrational on the scale of the overall economy - the resources wasted on mining, trading, and transporting a useless product. The danger remains that if they are truly successful in convincing others that gold is a solid store of value, the silliness is perpetuated - either in other countries or when their own governments change. > > Some of the alternatives you have conveniently forgotten have already > > been mentioned in http://csf.colorado.edu/mail/ipe/2001/msg00363.html > > ...A change in the desire for such exports could be disasterous > > if the local economy has not focused on building up its ability to provide > > for itself. > I repeat: What is the alternative? Your reading comprehension skills continue to astound me. Shall I add the prefix "Alternative: " to every proposal? (Apparently it's been done without success at http://csf.colorado.edu/mail/ipe/2001/msg00363.html) Does it really take a genious to figure out that the other alternative being implied was that the goal of large scale economies should not be to accumulate the currencies of other nations, but rather to build up its ability to provide for itself? The principle is simple - it's hard to control people in other nations; you can't be sure they will always need your exports or accept the currency they've given you. Thus both an export economy and foreign currency should be used to build up economic independence, if true economic security is what your economy is after (though cooperative evolution would imply that a secondary goal would be to make sure your neighbors are able to help in times of natural disaster). > A stock market is inherently speculative. It is simply not possible to have > a stock market without speculation... The case that you have to make is why > a nation would be better off without a stock market than with it. Is this > really what you are writing about? The same difficulty of control applies to the stock market. If what you mean is the trading and accumulation of power over the employees of various companies, then indeed this part of the stock market would be worthless if they asserted their sovereignty. And in order to reduce the effect that uneven distributions of wealth has on the general economy (as described previously), the sovereignty of these employees should be encouraged.
Date: Mon, 20 Aug 2001 14:11:10 -0700 (PDT) From: John Yu cyu@oz.net To: ipe@csf.colorado.edu CC: pgunning@aus.ac.ae Subject: Re: Paper, Tax Financial Speculation URL: http://csf.colorado.edu/mail/ipe/2001/msg00526.html Patrick Gunning pgunning@aus.ac.ae wrote: > > Why the markets behave in this way is quite simple. It is the same type of > > price bubble that has hit land values in certain Asian cities and once the > > tulip industry in Holland. Any fad that hits the class of people who wield > > large amounts of economic power (in this case venture capitalists) drives up > > the price of that good, simply because the wealthy are buying it (of course, > > we've gone over all this before at > > http://csf.colorado.edu/mail/ipe/2001/msg00387.html). It is this same > > principle that has allowed a relatively useless mineral like gold to > > "maintain its value" over the centuries since it was originally used as just > > another medium of exchange. > The particular composition of consumer demand depends partly, but not > substantially, on fads. Thus, the venture capitalists do not act according to > fads in any significant way. Care to add backing arguments to your assertion? There are investors who do realize the nature of bubble economy investment and play a cynical game of chicken with one another - who can stay in the game longest before the crash begins? Then there are others who honestly believe what they are doing is beneficial to the economy by helping to "determine value" - and it would appear that you fall into this category, blinded by your ideology (which isn't really surprising; when faced with an argument worded in such a way that accepting it would diminish your self-esteem, one would expect you to resolve your cognitive dissonance by trying to disprove the argument in anyway possible). The fact remains that value is not so much "determined" by someone who is spending large amounts of money (wealthy investors for example), but rather exaggerated. Gold is not "valuable" as a store of value so much as the fact that many of the wealthy have been convinced that it is valuable. It becomes a self-fulfilling prophecy - the price of gold remains high simply because the rich buy it as part of their investment portfolio - not because of rational economics. The result is wasted time, effort, and energy on activities like mining and purification. > you seem to be using this forum to vent your unhappiness with the fact that a > trading society has wealthy people. If this is what you are up to, then it is > incumbent on you to suggest a system that would not result in disparate wealth > distributions and at the same time succeed in avoiding famine and recurring > wars and revolutions, and in providing other goods and services that people in > general want. Yes, consumers that hold large amounts of economic power do exist. Whether you think their wealth was obtained from slavery, taxation (isn't it funny American libertarians are as obsessed with the government/non-government dichotomy as others might be over religion or race?), exploitation, invention, or trade does not matter. The point being made is that their very participation in the market redistributes labor and resources in such a way that undermines the economic security of the rest of the population. > Capitalism is best known for the incentives it provides for invention, > innovation and adjustments to changes in environment and human conditions. If > people discard capitalism, they will suffer the consequences. Unless you have > some workable alternative in mind that can provide similar incentives or that > can generate substitutes for the things people want, your unhappiness with the > distribution of wealth is analogous to unhappiness with what you regard as bad > weather. Different people have different definitions of the word "capitalism" - I assume you are talking about an entire range of memes including market pricing, non-government businesses, and financier control. What would you call the same system with everything except financier control? Could it still be considered capitalism? Some of the alternatives you have conveniently forgotten have already been mentioned in http://csf.colorado.edu/mail/ipe/2001/msg00363.html However, even those alternatives do not prevent a local economy from becoming dependent on a more wealthy external one - and thus leaving itself open to exploitation. Even if the said powerful external economy were a utopian one where nobody was in need, as long as it makes no attempts to include the local economy in its prosperity, an economy is opening itself up to the whims of the changing tastes of the wealthy if it restructures itself to primarily producing exports in hopes the wealthy economy will provide it with the goods it really needs. A change in the desire for such exports could be disasterous if the local economy has not focused on building up its ability to provide for itself.
Date: Mon, 13 Aug 2001 06:46:23 -0700 From: "D. Gale" cyu@oz.net Organization: Dark Side of the Rainbow To: ipe@csf.colorado.edu CC: pgunning@aus.ac.ae Subject: Re: Paper, Tax Financial Speculation URL: http://csf.colorado.edu/mail/ipe/2001/msg00488.html Patrick Gunning pgunning@aus.ac.ae wrote: > Eric Ferguson wrote: > > I would say the "dot.com" hype of the year 2000 (and many other > > "bubbles" of earlier decades) proves that our stock market > > mechanisms are giving some atrociously erroneous messages (in > > our country, one firm with vague plans, huge spending out of huge > > loans, and producing no real added value, had a stock market value > > exceeding that of our biggest bank. The bubble has now > > collapsed.) Surely those are hardly "useful" signals either to > > management or investors? > Exactly why the stock markets have behaved the way they have is not an > easy question to answer. But it seems to me presumptuous to claim that > they are not performing their function without specifying clearly what > that function should be. Why the markets behave in this way is quite simple. It is the same type of price bubble that has hit land values in certain Asian cities and once the tulip industry in Holland. Any fad that hits the class of people who wield large amounts of economic power (in this case venture capitalists) drives up the price of that good, simply because the wealthy are buying it (of course, we've gone over all this before at http://csf.colorado.edu/mail/ipe/2001/msg00387.html). It is this same principle that has allowed a relatively useless mineral like gold to "maintain its value" over the centuries since it was originally used as just another medium of exchange.
11.7.1 International equivalent of printing money. 17.7.1 20:09 A nation enslaved to itself. 17.7.1 21:03 A brief period using currencies. 23.7.1 A crash in the value of that currency. Date: Mon, 13 Aug 2001 06:35:04 -0700 From: "D. Gale" cyu@oz.net Organization: Dark Side of the Rainbow To: ipe@csf.colorado.edu CC: pgunning@aus.ac.ae Subject: Re: Wealth of Nations URL: http://csf.colorado.edu/mail/ipe/2001/msg00487.html Patrick Gunning pgunning@aus.ac.ae wrote: > (a) nations have incentives to maintain a strong currency in terms of goods > and (b) there is little hope that nations will shift to a 100% commodity, > or basket of goods, standard. Indeed they do, and if they determine that there is a way to achieve a stronger / more stable currency with respect to goods, then it stands to reason that they will adopt the new method. The likelihood of any action occurring on a wide scale just depends on the extent of it memetic propagation. Even without official government support, if enough people (whether in one nation or across many) begin to accept and hold notes backed by the goods used to measure inflation, it will become the de facto standard anyway. The "official" currency will fall by the wayside due to depreciation. > Another interpretation is that the U.S. military is protecting rights to > private property. Of course, I am not asserting that the U.S. military is > good in some sense. I am just pointing out that when you say that the U.S. > military "protects investments," you imply that the military is merely an > arm of U.S. investors (although that may not be your intention). The U.S. > military does much more than this. It promotes (usually unintentionally) > private property and freedom of exchange and therefore contributes not only > to the profits of the investors and their exchange partners but to economic > development in the nations where the investments occur. As with any instrument of foreign policy, there are both publicly stated goals that look good in the news media and unstated tacit agreements made by those overseeing the implementation of the policy. As you may know, a two time Congressional Medal of Honor winner once said, "the flag follows the dollar and the soldiers follow the flag. I wouldn't go to war again as I have done to protect some lousy investment of the bankers." While you may claim a right to control of a company, other people may claim a right to life. Military involvement in places like Iraq and Yugoslavia has certainly led to the loss of life. Indeed it may be some agree with you that protecting investment claims comes before protecting life. The connection you draw between the imposition of financier control to the general economic welfare of a country is a tenous one, as has been amply discussed at http://csf.colorado.edu/mail/ipe/2001/msg00302.html. > if a nation were to suddenly set up a commodity (or commodity bundle) > standard -- and if it could convince others that the standard will be > maintained for the indefinite future, and if the nation guaranteed that > foreign investments in domestic businesses would be protected from > confiscation and serious fraud, and that foreign investors could always > pull out of their investments and freely make foreign exchange dealings > -- that nation could attract huge amounts of foreign savings and > investments. Ah but you missed the point. It is not about attracting foreign investment at all, but rather establishing a stable currency for use by the local population. Investor control itself is unstable because the goals of investors are quite often at odds with those of employees - thus we have industrial actions like strikes. There can in fact be no guarantee that whatever currency you hold now will be valid in the future. If the people you depend on for goods and services determine that your possession of this currency is detrimental to them (as discussed in http://csf.colorado.edu/mail/ipe/2001/msg00391.html), they may abandon this currency altogether or simply refuse to accept the currency you specifically hold. It is only the will of those who do the work that keeps any medium of exchange viable. On a large scale (as in the example mentioned in http://csf.colorado.edu/mail/ipe/2001/msg00447.html), holding currency is in fact not what economic security is about, but rather the possession of the goods (and the technology to produce the goods) that the currency was supposed to buy.
Date: Mon, 23 Jul 2001 12:13:49 -0700 (PDT) From: John Yu cyu@oz.net To: ipe@csf.colorado.edu CC: pgunning@aus.ac.ae Subject: Re: Wealth of Nations URL: http://csf.colorado.edu/mail/ipe/2001/msg00453.html Patrick Gunning pgunning@aus.ac.ae wrote: > what leads you to believe that other nations (or more correctly their > investors) will come to believe that the U.S. is peddling a second-rate > currency? (By second rate, I assume that you mean a currency that they > predict will fall in value unexpectedly relative to other currencies.) It is interesting that you assumed that I was talking about U.S. currency, but let's for the sake of argument assume I was (however, it doesn't really matter what country's currency we're talking about, because the same principles would apply in any case). It is not so much the prediction of a fall in value that matters. A fall in value can be instigated. The more dollars a nation holds, the more likely it can make the price of dollars fall by spending their dollars. However, I am not talking about making the value of the dollar fall relative to other currencies (or "precious" metals), but rather the value to fall with respect to goods and services (that is, instigating inflation of the U.S. dollar by spending it). Why purchase goods rather than the mediums of exchange issued by other nations? If a nation determines that the basis from which the dollar gets its value is not a sound basis, and if the currencies of other nations around the world are issued in a way similar to the way the dollar is issued, then it follows that no currencies from around the world are worth keeping. If a nation backs its own currency with, for example, a basket of goods like that used to measure inflation, then they can trade their dollars for the goods listed on their index, using goods obtained in this way to issue new currency to be used domestically. > The Japanese who invest in U.S. stocks, bonds, and other assets are saving, > not buying goods... (b) that their assets are protected by U.S. property > law and other regulations. Your second assumption is a big one. It is one that reaches beyond the realm of economics into politics. There is no guarantee that laws in the U.S. will not change in a way that makes the Japanese unable to lay claim to their investments here. As a result, measures outside of economics will have to be taken by the Japanese to ensure that the laws protecting their investments remain - whether it is mere election campaign contributions or through military means. The United States military is already involved in nations around the world protecting the investments of American financiers. However, this kind of wealth is not secure. Governments do fall. Powerful militaries do get defeated, even by ragtag farmers. More secure wealth does not have to rely on the ever changing wills of governments in other nations that you have no "official" influence over. Again, the process is the same as that of becoming independent from foreign currency - the spending of it to purchase goods. Of course, the result of many nations joining in to spend any given currency (or group of currencies) will result in a crash in the value of that currency, although it will not affect the "real" productive ability of that nation (at least not in terms of labor, raw materials, and machinery).
Date: Tue, 17 Jul 2001 21:03:09 -0700 (PDT) From: John Yu cyu@oz.net To: ipe@csf.colorado.edu Subject: Re: Wealth of Nations URL: http://csf.colorado.edu/mail/ipe/2001/msg00447.html Patrick Gunning wrote: > That a country that issues a form of money that other countries adopt as > their own currency and which is used in international and and illegal markets > is necessarily not contributing to the wealth of the "global economy" and > therefore that issuance of this form of currency is not sustainable? > (3) That if a country cannot support itself without international trade, its > economy is in tatters? > (4) That you know what the "real work" done in an economy is? > (5) That a large subset of people can find sustainable ways to make themselves > independent of a money-using economy? We're not talking about "liberation from money" here, but rather from one specific nation's money. In terms that are perhaps more familiar to you, if it is easy for a "competing company" (in this case, the local government - or even your favorite anarcho-capitalist "free bank") to create an "alternative product" of equal or better quality (in this case, a medium of exchange), then the nation that relies on "exporting" their money to survive will "go out of business" (so to speak) - a banana republic that can no longer produce the cheapest bananas - a gold mining nation faced with central banks around the world selling off their gold reserves. The solution to a nation's dependence on financial services is the same offered to banana republics - diversify your economy into other sectors. Even if such other sectors are not profitable now (just as some of your personal investments may not be profitable now) they provide security in the future should your primary source of income today go out the window. Indeed if other nations do start to see your nation as merely peddling a second-rate currency, it is not so much the "actual" value of your currency that matters, but the perceived value - and its market price will go down as these other nations start dumping their reserves of your currency for others things. Independence from foreign currency simply means that a nation does not hold on to currency from other nations for any length of time, but immediately trades it for other goods. Imagine a passing fleet of alien spaceships not expecting to ever return to earth (analogous to a time in earth history when return to a nation involved great periods of time). Collecting the local currency is of no use to them - while they may engage in a brief period of trade using earth currencies, when they leave, they will only take "real" goods with them - and they then may even issue their own currency backed by these new goods they obtained from here.
Date: Tue, 17 Jul 2001 20:09:22 -0700 (PDT) From: John Yu cyu@oz.net To: ipe@csf.colorado.edu Subject: Re: Wealth of Nations URL: http://csf.colorado.edu/mail/ipe/2001/msg00446.html > yes, GDP/capita and income/capita are extremely rough indicators of > relative wealth and poverty for the reasons you give (omission of > barter, etc.), but economists like simple quantitative measures. While the attempt to condense the state of a nation down to a few numbers is admirable, this does not mean the measures used are always (if ever) actually valid. Even if places like Japan and Scandinavia register high on some scale of material wealth, what does it say about these nations if they also have high depression or suicide rates? Indeed economics itself is often more concerned with material goods than the psychological health of a nation, but does that mean these limitations in both theory and measurement should be ignored when determining political policy? It is almost a cliche that material wealth cannot guarantee happiness. If it is true that some people can be happy without many consumer goods, what is it about them that makes it so? It can even be argued that consumer culture actually makes people less happy because they are constantly being told that they don't have enough by commercial advertising. What exactly is our goal here? Do we limit ourselves only to increasing the production of material goods? Without television, did people thousands of years ago suffer from much higher rates of depression than we do now, with all our technological advancement? It isn't difficult to imagine a nation enslaved to itself - producing goods day and night, without rest, without time to actually enjoy what they are producing. By many economic measures, such nations would be considered prosperous, but are they actually happy living there? That would depend on their motivations - do they work because they have no other choice? Do they work because they feel dissatisfied and must achieve some goal? Or do they work because they actually enjoy the process of the work itself? There are various possibilities, each with different degrees of effects on the people living under such conditions. The mass media already plays a large role in creating the second situation above. Let's not forget to reexamine our goals every once in a while - is the focus on increased material production still valid in all sectors of an "advanced" economy - and to what end? If economics is a science that ignores social psychology then it is a science that belongs only in the classroom, not in practice.
Date: Wed, 11 Jul 2001 11:21:09 -0700 (PDT) From: John Yu cyu@oz.net To: ipe@csf.colorado.edu Subject: Re: Wealth of Nations URL: http://csf.colorado.edu/mail/ipe/2001/msg00434.html > The argument that most of the wealth of these British Model > countries was obtained by exploiting the poor ("less developed", > "underdeveloped", "least developed", "third world", "south", etc.) > countries is not borne out by the historical facts, although SOME > of this wealth was acquired in this way. Let's imagine a nation that appears to have a very strong economy. Because of this apparent strength, its currency is held by the people in countries around the world. It eventually gets to a point such that the majority of notes issued by this country is actually being held and circulated in foreign nations - sometimes in the black market, sometimes as official replacements of the currencies of those other nations. Incredibly, this nation's economy appears strong despite a huge trade deficit - it imports much more than it exports. How is this sustainable? It turns out what this nation is actually exporting, is its own currency, while it imports real goods. It is the international equivalent of printing money. Because this nation is the source of that money, its economy appears prosperous, because other people around the world are doing the work. What was apparently the result of its prosperity is actually the cause. In reality, this nation's economy is in tatters - it does not have the ability to support itself. (Spain, for example, after it become a source of gold taken from the New World, became a supplier of money for the rest of Europe.) It is only through circumstance that those doing the real work have not attempted to make themselves independent from this nation's currency. > that capitalists exploit wage-earners because they (capitalists) > contribute no "value" to GDP/capita is contradicted by the facts > too, but that is another long story. As was described before (in http://csf.colorado.edu/mail/ipe/2001/msg00146.html), the use of GDP as a measurement of economic progress is flawed because it is not independent of the commericialization of a society (having sex with my wife versus having sex with a prostitute). In addition to that weakness, however, there is another. Economic activity may be required because of circumstances unrelated to the economic system, and yet such increase of economic activity does not necessarily mean the nation is more prosperous. For example, the GDP of a nation after an earthquake or destructive civil war may show great improvement (because of the need to rebuild), but the well-being of the population is quite likely much worse than what they had before the earthquake or war.
6.7.1 Live within the law. Date: Tue, 10 Jul 2001 07:50:59 -0700 From: "D. Gale" cyu@oz.net Organization: Dark Side of the Rainbow To: ipe@csf.colorado.edu CC: hmaletta@fibertel.com.ar Subject: Re: Ar article you might find interesting URL: http://csf.colorado.edu/mail/ipe/2001/msg00432.html Hector Maletta wrote: > What de Soto says is that Western-like (and formally recognised) > property rights are a pre-condition for a market economy to develop > beyond the modest limits of traditional markets. It would be more accurate to say that Western-like property laws are a pre-condition for developing Western-like markets. Economies aren't subdivided into just two types - Western-like and traditional - any more than politicians can be subdivided only into capitalists or socialists. It is an oversimplification to assume that there are only two choices - "traditional" or "Western". > Such order of things in which they have the money is probably worth > changing, nobody seems to know how it could be changed any soon (or > at least, how to change it and keep material production growing). "Nobody" is a pretty strong term, but "seems" is very accurate. It is reflective of what ideas are allowed into the mainstream consciousness by those who hold the reigns of a nation's communication. Mere defeatism doesn't prove that a problem has no solution. If solutions are truly being sought, real difficulties must be honestly presented and answers must be earnestly sought from among the population. The world is big - finding that monkey who happens to be typing Shakespeare is difficult, but it certainly does not help to be only pretending to look, and immediately dismissing ideas from sources that one considers to be ideologically incompatible. Economic problems being grappled with by governments today are too often presented (by their news organizations) not as open-ended problems seeking solutions, but rather efforts to convince the population to support (or at least tolerate) a predetermined half-hearted "solution". "Growth" is a handy excuse to maintain a current economic system, but is there really growth? How is it defined? In terms of GDP (with all its faults)? In terms of how much the wealthy are spending on their vacations? "Growth" for one segment of the population that happens to wield large amounts of economic power can mean the exact opposite for the rest of the population. Who is consuming such new material production? If such production is being consumed largely by a small powerful class or (even sillier) exported to other nations, it would probably be more akin to slavery than growth. > > Why do these officials still have jurisdiction over these > > communities when their constituents no longer trust them? Why do > > these communities not have the power to live within the law by > > changing the law? > But humankind has tolerated obnoxious social systems from time > immemorial. Any sociologist in the classical tradition of Max Weber, > or any Marxist or Gramscian, would guess it is by a combination of > consensus (however reached) and the threat or exercise of physical > coercion... NGOs are very important in Peru, but they were > ruthlessly deprived of power by the Fujimori government, which had > a strong centralistic flair. Probably "consensus" like "nothing can be done, we might as well work within the system because every attempt to try a new system has failed in the past, and nobody is smart enough to come up with anything better." Oppression when there is no balance of military power between the oppressed and the oppressors is indeed an astute observation. An American "sociologist" and revolutionary once wrote famously: "all experience hath shewn, that mankind are more disposed to suffer, while evils are sufferable, than to right themselves by abolishing the forms to which they are accustomed." He then went on in an attempt to destroy the defeatist consensus of his time - and largely succeeded. Power can be deprived only if a population agrees to it. Even soldiers are part of a nation's general population. There can certainly be ways in which the non-militarized members of the population can be given more courage to resist the shoutings of a person like Fujimori. This has been thought of before - the population needs to have military parity with the forces manipulated by people like Fujimori. > Currency nowadays is "backed" by its own wide currency (sorry for the > poor pun). One demands it because one is pretty sure it could be > accepted in exchange for goods and services. A voucher signed and > countersigned by John Wu enjoys, I'm afraid, a vastly smaller > popularity. Thus organization and mobilization are important - after all, a "voucher" signed by some random person is good enough to get him a loan from a bank. Democracy itself is an effective method both of organization and mobilization (it will certainly get you more willing participants than armed soldiers on every corner). If these unofficial communities are sufficient to the point that they rarely need to buy goods and services from the official "corrupted" economy, they need only agree on their own currency, backed by their own possessions. They need to hold official "watered-down" currency only for as long as it takes to immediately spend it to buy something real, with which they can use to back their own currency. > > Why can't the people implement the plan themselves? > The people cannot, because they lack the means (the aerial photographs, > the satellite images, the land assessing instruments, the money to pay > the fees of notaries public and so on). Indeed information can be given to the people - but that does not mean implementation of the plan has to be out of their hands. If they decided they don't like the plan after they find out about it, then so be it. If the people of a community agree on who "officially" owns a stretch of land, that should be good enough - "official" notaries public are no longer necessary - they can notarize their own documents. Of course, this assumes that the government outside the community does not attempt (or is not able) to disrupt the democratic processes these poor communities use to reach their agreements.
Date: Fri, 6 Jul 2001 16:44:52 -0700 (PDT) From: John Yu cyu@oz.net To: ipe@csf.colorado.edu Subject: Re: Ar article you might find interesting URL: http://csf.colorado.edu/mail/ipe/2001/msg00421.html Not that I don't feel Hernando de Soto has good intentions and many good ideas, but I thought I'd throw in some rhetorical questions to put his ideas in context. > Throughout the third world, the formal systems of property rights taken > for granted in advanced nations simply don't exist. Are nations with the property rights that Miller is talking about truly advanced? Is property a goal, or a method used to achieve a goal? What is the goal? How does one measure the advancement of civilization? Is slavery advanced? Yet the slave-owners may live highly spiritual and intellectual lives. Should advancement be measured instead in terms of the lives of the slaves (or whoever is actually doing the work)? > It's de Soto's shorthand for the de facto property rights that rule the > world, his crystallizing metaphor for the common law at work in the most > lawless spots on the planet. What constitutes lawlessness? Just because something is within the law, does that make it right? If there can be law without justice, can there be justice without law? One hopes the two tend to intersect most of the time, but how can that be guaranteed? > People can't use their homes as collateral for loans to expand businesses, > for example. What are the source of loans? Why are there not alternative sources that do not require such "official" documents? Organizations are only as good as the people who run them. Who runs these organizations? > The poor live outside the law this way because living within the law is > impossible: corrupt legal systems and warped rules force those at the > bottom of the world economy to spend years leaping absurd hurdles to do > things by the book. Does this not point to a need for legal change? Why do the people tolerate local corruption? Why can they not change it? Why do these officials still have jurisdiction over these communities when their constituents no longer trust them? Why do these communities not have the power to live within the law by changing the law? > He can't afford to borrow from the loan sharks: they charge 25 percent a > month. Why aren't there better unofficial loan-makers? Why do larger, more democratically run banks not exist? Why is there the assumption that he needs to go through channels to obtain official currency at all? What prevents communities from issuing money backed by their own homes? What, if anything, is official currency backed by? How is that better than having them back their own currency? > Unfortunately, the impact of these steps remains hard to gauge because > Fujimori's interest fizzled before the credit-promoting phase could be > enacted. Why should his ideas need Fujimori's approval at all? Why aren't there ways for people to implement what they want regardless of Fujimori's opinions? > The private route, de Soto knew from experience, would title Haitians far > faster and more effectively. Sounds like typical anarcho-capitalist rhetoric. What's in it for private firms that will make them better? Who is paying them or are they doing it out of the goodness of their hearts? Why can't the people implement the plan themselves? > But Aristide, a shrewd politician, knew that whoever went into the > neighborhoods to bestow these new rights would gain enormous power. Why do titles have to come from an outside source? Why can't they come from an inside source? Are governments and nations not formed by the people within a geographical area - from the inside? What does it say about the government when political power is seen as coming from outside?
12.5.1 10:08 Nazism and Objectivism. 12.5.1 20:10 Value not determined by need. Date: Mon, 14 May 2001 13:56:42 -0700 (PDT) From: John Yu cyu@oz.net To: pgunning@aus.ac.ae CC: ipe@csf.colorado.edu Subject: Re: Efficency v. distribution (private) URL: http://csf.colorado.edu/mail/ipe/2001/msg00391.html Patrick Gunning pgunning@aus.ac.ae wrote: > > Malthus had a limited understanding of carrying capacity. While it is > > true that a given amount of resources has a finite limit on how many > > people it can support (varying with the state of technology at that > > time), what is missed is that the carrying capacity of a physical area > > is different from the carrying capacity of an economy. > I can't agree that the idea of a carrying capacity of a physical area. This > concept is valid only under conditions of given knowledge. But knowledge is > continually changing. What is today the carrying capacity of a physical area > according to the latest technology will tomorrow be different so long as > conditions exist that are conducive to the discovery of new knowledge. Of course technology changes, and depending upon the type of technology that is developed and how much of it is actually applied, the carrying capacity of a geographical area will change. Even the conversion of all matter in the area into energy is not necessarily the technical limit. But all that is beside the point. What exactly does the recognition of change apply to the state of the world at present? Just because my car is accelerating doesn't make it any less true that it also has a velocity. No matter how much technology is changing, if it's not applied, then it is of no use. How does your claim of technological change have anything to do with a market that directs a disproportionate amount of its resources to producing goods and services for those who have large amounts of what happens to be used as the medium of exchange? > > In a market economy, value is not simply determined by need, but rather > > value is determined by a combination of need and how much those "in need" > > have to spend. If you can't spend much, your needs are largely ignored. > Such things don't happen so long as to earn income, one must utilize > resources in ways that maximize the capitalized value of the gain from > exchange. Famines are characteristic of socialism, planned economic > systems, and war; not of more capitalistic systems. Oh please. Such unsubstantiated assertions and ambiguous terms coming from the ever rational Patrick Gunning? You have not attempted to show a direct causal relationship between an action and its effects. I smell the same semantic battle always brewing - each side attempts to redefine their terms until the events in history are considered to have happened under neither capitalism nor socialism - at which point they will have to talk directly about the actions involved, and how these actions led to the results observed. Let us cut to the chase, shall we? How does the capitalist market determine what is valuable and should be produced?
Date: Sat, 12 May 2001 20:10:41 -0700 From: "D. Gale" cyu@oz.net Organization: Dark Side of the Rainbow To: Patrick Gunning pgunning@aus.ac.ae CC: ipe@csf.colorado.edu Subject: Re: Efficency v. distribution (private) URL: http://csf.colorado.edu/mail/ipe/2001/msg00387.html Patrick Gunning wrote: > Both Darwin and Wallace arrived at their discoveries by reading Thomas Malthus, > a political economist and moral philosopher who based much of his thinking > (and particularly his principle of population) on Adam Smith. So I doubt that > it would have made much difference to the development of political economy > what Darwin or Wallace (or their successors in biology and other human science) > wrote. It seems again as if you are drawing unwarranted analogies between non- > human science and the study of human action. The point is not where the meme of "competition" came from. The issue is not even whether you believe Darwin or Malthus was more influential on all the people who developed opinions after their work was propagated. Malthus had a limited understanding of carrying capacity. While it is true that a given amount of resources has a finite limit on how many people it can support (varying with the state of technology at that time), what is missed is that the carrying capacity of a physical area is different from the carrying capacity of an economy. Take, for example, a scenario in which 10 people (farmers, etc) are able to support 20 people total and have reached the maxium physical carrying capacity of the area. Now take away some of those farmers and agricultural researchers, and turn them into limousine drivers, coffee/coca growers, and makers of gold mining equipment. What happens? While the physical carrying capacity of the geographical area remains the same, the actual carrying capacity of the economy has fallen. Famine becomes a social rather than a physical phenomenon. What causes such things to happen? In a market economy, value is not simply determined by need, but rather value is determined by a combination of need and how much those "in need" have to spend. If you can't spend much, your needs are largely ignored. If you can spend a great deal, much more of the resources of the population will be redirected to your desires. In the case of vast spending disparities, the rich and the poor are competing for resources available in the economy, and the result is that large sectors of the economy are diverted to producing whatever frivolous luxury flavor of the month the rich are buying. As for cooperative evolution, do the cells in your body compete for resources? Some do. Cancer cells, for example, divert so much of your body's resources that they ultimately destroy their host and, in turn, themselves. > do you think that a more equal distribution of wealth, achieved presumably at > the point of a gun, would result in a greater "sense of community?" Reread this again and consider where the point of the gun is: http://csf.colorado.edu/mail/ipe/2001/msg00302.html
Date: Sat, 12 May 2001 10:08:42 -0700 From: "D. Gale" cyu@oz.net Organization: Dark Side of the Rainbow To: ipe@csf.colorado.edu, pgunning@aus.ac.ae Subject: Re: Efficency v. distribution URL: http://csf.colorado.edu/mail/ipe/2001/msg00386.html Patrick Gunning wrote: >Before getting back to this proposal, I would like to explore the concept of >efficiency you seem to be using. Let me begin by discussing perfect >competition. I am not sure that I follow your comment about perfectly >competitive markets. I am sure that you will agree that there are no perfectly >competitive markets, in a strict economics textbook sense. There are degrees >of competition, of course. It is rather unfortunate that this aspect of Darwin's theories were so revolutionary - the emphasis on competition. In this view, everything from biological systems to social systems improve themselves by internal and external competition. Since Darwin's theories were first published, a great deal of research has gone into the study of competition and how it could be best used to promote "progress" or the "advancement of human society" or whatever you want to call it. As a result, competition is probably understood today much better than cooperation. Imagine if Darwin had wrote or been associated with the word "cooperation" instead of the word "competition." Biological and social research since him would have gone down an entirely different path. How the interactions between individual members of wolf packs or bee hives have on the survivability of the whole would probably be much better understood. Emphasis would have been put on how the individual cells of our bodies cooperate, rather than how individual human beings compete with one another. The difference between the words "competition" and "cooperation" would be somewhat analogous to the difference between the words "selfish" and "altruistic." Had Darwin happened to go down the cooperative path, his theories would have probably been much more closely associated with religion and explaining how religions serve to hold society together, rather than serving as the antithesis of religion today. In fact, had his research been focused on cooperation, Hitler would probably never had the chance to develop his concept of a super-race, and Ayn Rand would probably never have come up with her ideals of selfishness. In effect, neither Nazism nor Objectivism would probably have existed, and there would probably have been much less protection of trade secrets in economic systems today. Why force competing groups of individuals to reinvent the wheel if mutual cooperative development would be much more efficient?
2.5.1 They who decide. 7.5.1 Flowers, cocaine, and gold. 9.5.1 Redistributed to the financier. 12.5.1 Society is built up. Date: Thu, 17 May 2001 17:45:46 -0700 (PDT) From: John Yu cyu@oz.net To: ipe@csf.colorado.edu CC: pgunning@aus.ac.ae Subject: Re: democracy in the workplace URL: http://csf.colorado.edu/mail/ipe/2001/msg00394.html Patrick Gunning wrote: > Thanks for specifying the kind of property system that you have in mind for > society. It is much easier now to identify the source of your ideas. > With all due respect, this is socialism. Comforting isn't it? Now you can finally relax and fall back on all of CATO's well-honed "arguments against socialism." Quite amusing. Would you call me a Marxist if I were to call for a world in which none of the things people possessed were considered their own, but were held in common; in which none were in need because land and homes were distributed to everyone according to their need? That was from Acts 4:32-35, long before little Karl left yet another little brown mess to the exasperation of the adults around him. If all I ever read were the New Testament, would I be trying to classify everyone as either a pharisee or sadducee? Memes combine to form ideologies. One meme does not an ideology make. How many boxes do you attempt to put the people of earth into? Three? Four? A few billion? > That doesn't make it bad, just undesirable to the people who must live under > it. Now that's a bald statement. Have you gone and asked? Would you be willing to accept their choice if they chose something else? Do you really believe in democracy or is that merely something handy to sell capitalism with? Considering the various arguments you (or perhaps I should say, CATO) make against democracy (http://csf.colorado.edu/mail/ipe/2001/msg00310.html), the answers are telling. > More likely than not, the producer would demand payment in advance for a > product that he is uncertain whether he could produce. And he would turn > over ownership immediately before someone else claimed it. How is it you are measuring "immediately"? In atomic nanoseconds or geological centuries? Not all unused means of production are idle. Some have not been idle for years - though not idle, they are not used by the capitalist. Instead they are used by the employees. Who's incentives and productivity needs to be increased here? Not the ones doing the work eh? > Under the system you propose, a large portion of the current population, > whose survival depends on specialization, would be forced to starve by a > coercive state that does not permit one to conveniently own and trade the > products of his time and energy and thereby reduces the incentive to > specialize. How is it that you have made this leap of logic that there would be no specialization? There already is specialization - what is it you think would change? Your use of terms like "coercive state" are quite amuzing - straight from the Objectivist anti-socialism playbook eh? Reread http://csf.colorado.edu/mail/ipe/2001/msg00302.html and tell me again how you think the "coercive state" is preventing trade from becoming convenient in such a scenario.
Date: Sat, 12 May 2001 20:45:09 -0700 From: "D. Gale" cyu@oz.net Organization: Dark Side of the Rainbow To: ipe@csf.colorado.edu CC: pgunning@aus.ac.ae Subject: Re: democracy in the workplace URL: http://csf.colorado.edu/mail/ipe/2001/msg00388.html Patrick Gunning wrote: > Even under the property system I have in mind, the owners of assets have > the right to determine how their assets would be used. They could decide > not to sell them. The question is: _how they would ever come to own these > assets in the first place_. If they purchased them, would they also choose > not to allow them to be sold? What sense would this make? As I recall, you > have said that you are not writing about a proposal in which employers are > forced to give their assets to the employees. So how would the workers > democracy you have in mind come into existence? Would the prospective > workers themselves pay for it by buying assets? So the question is whether the "right" to own something you don't use should be a right at all, and whether it should be a right for person who is actively contributing to the economy to maintain control of the tools that he is using in his work. They could own the asset simply by using it. If it is not something they can use, then they lose the right to it. Of course, there will be disputes over what constitutes legitimate "use" and what does not. They could be settled either with respect to how much each individual involved needs that continued use for their survival or how much these uses affects the population around them. The syntax of your assertion of what I have said is interesting. You imply "employers are forced to give their assets to the employees" - while I would say "employees are forced to obey their employers." Who is making use of the tools of the business at this point? The employer certainly can't man thousands of computers or oil rigs by himself. As Proudhon would point out, the possession of the business is in the hands of the employees, but the property belongs to the employer. Are we still talking about incentives now, or are we talking about "rights"? How did the community determine which rights should be protected? Were they determined based on incentives, how much those rights served the community, or something else? > Surely, in accepting employment a worker agrees to follow the commands, > within limits, of the employer. He also agrees to be governed by the > employer's governance structure, which determines the incentives within > the firm. The incentives that come to be faced by the employee under > these circumstances are not the result of the property system; they are > the result of the choices of freely negotiating individuals within the > framework of the property system. You assume your version of a property system is a given, while the rest of society is built up around it. Groups of people exist before the laws are created. They agree on the laws simply as a tool to make their survival more convenient. If they determine their laws give rise to situations in which their survival is threatened, then certain laws are simply tossed out the window and ignored. Past agreement is also merely a convenience of the legal and social system. When the environment changes, so should the behavior of the community involved - assuming they value their future well-being and still remember what the original purpose of having laws in the first place was.
Date: Wed, 9 May 2001 19:43:44 -0700 (PDT) From: John Yu cyu@oz.net To: ipe@csf.colorado.edu CC: pgunning@aus.ac.ae Subject: Re: democracy in the workplace URL: http://csf.colorado.edu/mail/ipe/2001/msg00380.html Patrick Gunning wrote: > if you are writing here about the property system that I had in mind, then > I think we have different definitions. The property system that I wrote > about must make it possible for outsiders to takeover the "company." ...If > the workers of a company are allowed to decide on the property system, it > is possible that they would decide that the assets could not be sold. In > this case, the property system I had in mind would not exist. Indeed we do have different definitions. The property system you write about is merely one way of constructing the concept of property - another way you have just described quite well, the workers of a company can simply prevent its assets from being sold or the company from being "taken over," if they so choose. Some would call that the right to self-determination. If you claim to believe in democracy, then surely this should be allowed to happen. If you claim to believe in incentive, then surely those doing the real work should have full control of their economic lives. If you claim to believe in prosperity, well, we have just talked about the effect that large spending disparities has on the allocation of resources, haven't we? > The error in this argument is the failure to realize that the decision to > produce and distribute food depends on the incentives people have. If you > alter the property system by redistributing the benefits of production in > such a way that it takes away part of the incentive to produce food, there > may no longer be enough to feed the world. Indeed I agree. And indeed the property system has already been altered such that the benefits of production have been redistributed to the financier in such a way that it takes away part of the incentives of the rank and file employees to produce food (or whatever it is the company produces). What do you think a strike is, if not an indication of the lack of incentive for workers to work because the benefits of their production has been "taxed" away by management? > The solution to the problem you have in mind is to expropriate the wealth > from those whose parents, grandparents, great grandparents, etc. acquired > it by means of force or fraud while leaving them with the wealth they > themselves have been solely responsible for accumulating... Redistribution > programs that reward descendants of the injured who have done nothing good > and that punish descendants of the injurers who have done nothing bad is > not an good solution because it is difficult to separate the wealth that > was acquired in the course of history into the two classes: (1) wealth > acquired by producing services for others and (2) by wealth acquired by > force or fraud. Well I can certainly applaud you on your use of the vocabulary of a model modern-day libertarian. You still seem to assume that I am advocating some sort of organization that goes from house to house confiscating whatever is deemed excess wealth or unfairly acquired. The very act of attempting to determine what was unfairly acquired is difficult, time-consuming, and thus inefficient. Thus, while it is difficult to achieve a perfect balance in how reactive the market will be to various segments of the population, a less perfect balance can be achieved by simply allowing (shall I sound like a broken record?) employees to determine how salaries within their own businesses are determined. Whether these businesses were built from the result of force or fraud is not the issue. In fact, "fraud" goes back to the question of "legitimacy" that we have just discussed. ------------ And why my lofty rhetoric and arguments meticulous Inspire shouts of laughter and the hearty cry, "Ridiculous!", And why my social theories all seem so pre-Sumerian--- I'll be the very model of a modern Libertarian! - http://world.std.com/~mhuben/plofker.html
Date: Mon, 07 May 2001 08:16:01 -0700 From: "D. Gale" cyu@oz.net Organization: Dark Side of the Rainbow To: ipe@csf.colorado.edu, pgunning@aus.ac.ae Subject: Re: democracy in the workplace URL: http://csf.colorado.edu/mail/ipe/2001/msg00374.html > how do you define "legitimate?" Also, how do you define "economic laws?" Indeed "legitimate" depends on who you believe has the right to decide such things. It is only as good as the people involved. If everyone agrees something is legitimate, then it is. The more disagreement, the less so. "Economic laws" refers to the set of laws that concerns your definition of the word "economic" - those that deal with the production, distribution, and consumption of property and other forms of wealth. > I assume that informed people, including informed employees, would prefer > to have a market economy in which "property rights," in the purely legal > sense of "enforceable rights to control actions that may benefit or harm > oneself and/or others," exist. Perhaps you still misunderstand my opinion of market economies and property. Indeed, market economies are as valuable as local democracies in their ability to express what it is that the people of a population want (see http://csf.colorado.edu/mail/ipe/2001/msg00110.html). Sorry, we're not talking about "all-wise" political representatives nor "far-seeing" visionaries here - who is to judge that even material prosperity is all that desirable if emotional happiness does not always follow? One of the difficulties of attempting political or economic systems is that people are difficult to control - is the effort used to attempt any given type of control worth it? How can the lack of control be channeled "positively" (however you determine that)? Regardless of whether a government or corporate bureaucracy is officially democratic or not, people within such organizations agree on who to listen to. In effect, any method of social organization is democracy anyway, though it may be unstated, unformalized, and obscured. Property rights can simply be enforced by the employees of the company, with external help only if they request it. Consumers decide which companies best serve them through the market, while employees decide which individuals within the company best serve them through local democracy. > the chapter identifies many sources of inefficiency that would exist in > workplace democracy but that would not under the entrepreneurial system. > From the viewpoint of whoever controls the firm, efficiency means profit. Profit for whom? As you've said before, "I claim that when team production is directed by a decision-maker who stands to lose or gain the greatest proportion of what is to be gained or lost by the team... the decision is likely to be most efficient" - thus efficient only for the "decision-maker." Indeed because the perfect system is yet to be widely articulated, there will be aspects of some existing systems that are better than others, while the reverse is true in other cases (anecdotal evidence is easy), but let's not forget the problem we are trying to solve. You may often tell yourself that the wealthy are a boon to the world because they have contributed much and have thus been justly rewarded. While that may be true in some cases, it is also true that they are a drain on the world at the same time. Their presence in the market results in phenomena such as the building of expensive mansions by workers with low wage jobs. The problem with Keynes is that employment itself isn't the solution - what is being produced is at least as (if not more) important. Just as digging up holes only to fill them in again is a waste of resources (and thus inefficient) so is goods and services produced only for the rich (jewelry, security for auctions of paintings, etc). They say the world easily produces enough food to feed everyone - the problem is that there isn't enough distribution for it. Why isn't there? What are people doing instead? Cash crops like flowers, cocaine, and gold? Democracy at work is merely one method to alleviate this problem. There are others. How would you propose it be solved? Or do you feel that it is not important enough to solve? As von Mises said, "The rich adopt novelties and become accustomed to their use. This sets a fashion which others imitate." When the problem itself is spending disparity, making excuses for it is not the solution. While it may be efficient to decide heads of state by mere heredity, the question is not over how efficiently kings are chosen nor how efficiently their decisions are made, but how those decisions affect the people that have to live with them. You may continue to believe that the wealthy are a boon to the world, but do you deny that they also play a parasitic role as well? Clearly a more efficient economic system would eliminate the drain that such segments of the population have on the economy. It is merely a myopic (and economically dangerous) view of psychological motivation to think that these "boons to society" can only be motivated by material means. (See also http://csf.colorado.edu/mail/ipe/2001/msg00233.html)
Date: Wed, 2 May 2001 17:08:52 -0700 (PDT) From: John Yu cyu@oz.net To: ipe@csf.colorado.edu CC: pgunning@aus.ac.ae Subject: Re: democracy in the workplace URL: http://csf.colorado.edu/mail/ipe/2001/msg00369.html Patrick Gunning wrote: > Briefly, in order to understand why "democracy in the workplace," as you > call it, is ordinarily inefficient and that, as a result, would be rejected > even by the workers themselves Indeed if they choose to reject democracy, it is entirely within their right to do so. But the key point is that it is they who decide. If everyone in America wants to obey a military dictator, it is also fully within their power to reject democracy. At any rate, you have not clarified how you measure efficiency. Again - efficient for whom? See http://csf.colorado.edu/mail/ipe/2001/msg00314.html > The chapter, chapter 14, is at: > http://www.gunning.cafeprogressive.com/knowent/mi-14.htm > ...a person often believes that he can earn the highest profit by employing > other resources, which complement his own. To accomplish this, he must gain > control over (1) rights to command the actions of others and (2) rights to > decide on the use of non-human items that he regards as resources. These > rights initially belong to others... Because of the prohibition against > slavery in a free society, there is only one way for a person to gain > control over the rights to command others' actions (i.e., to gain control > over her work): the employment compact... He could cause the same good to > be produced by making individual contracts with the separate initial owners > of resources. Some nice discussions of your assumptions about what constitutes rights... However, the concept of "employment compact" makes the assumption that the "initial owners of resources" are legitimate. Ownership itself comes from agreement. The "right" to exclude everyone else from a piece of property starts at some point in the past at which the local population simply agreed on ownership, or the property was taken by force. Successive generations passed on such agreements so long as they suited the health of the community (or those in power). However, if it turns out this "right" to exclusion is being wielded by an individual in such a way that it damages the health of the community, there is nothing preventing the community from revoking the past agreement and instituting a new one. It is simply circular reasoning to start from absolute property rights to reach the conclusion that democracy makes no sense. It begs the question - what exactly is the purpose of economic laws? See http://csf.colorado.edu/mail/ipe/2001/msg00311.html
Date: Sat, 28 Apr 2001 07:59:36 -0700 From: "D. Gale" cyu@oz.net Organization: Dark Side of the Rainbow To: ipe@csf.colorado.edu Subject: Re: Please Comment on the following article Good old Tom Friedman and the New York Times. First, a discussion of the real arguments presented in the article, then some of the more glaring examples of misreporting... > Last year this same anti-globalization gang, in its most shameful hour, > tried to block passage by the U.S. Congress of the African Growth and > Opportunity Act, a bill enabling Africa's poorest countries to export > textiles to the United States with little or no tariffs, which is > critical for creating lots of low-skilled jobs. It is not so much trade that is being attacked but some of the other policies being attached to trade. After all, very few people are completely self-sufficient. If they were, they would need neither money nor trade. The problem is that certain policies, while not inherently regressive, give capitalists new weapons if they are not accompanied by other associated policies. Few American workers would have a problem with new cheap goods from Africa so long as their own means of making a living are not put on the line. The new weapon being given to the capitalist is that he can now threaten to fire his workers if they don't agree to the same working conditions and pay in more repressive societies. Free trade would not be a problem if workers were allowed to assume control of their own businesses. Of course, new competition from Africa may still cause the closure of American ones, but the alternative businesses these workers can turn to, in such a case, would have conditions set by the workers themselves, rather than capitalists who are merely trying to maximize personal profit, no matter which nation's workers they are trying to control. > Ghana, like so many African countries, has largely lived off aid and > the export of raw materials... "But people here are also worried they > won't be able to compete and that [Western] markets aren't as open to > what we can sell, like agriculture, as ours are to what they sell." > Mr. Sachs notes that one of the main reasons Africa has fallen so far > behind East Asia, Mexico or Brazil is because it has been stuck just > exporting raw materials, and has failed to create the legal and tax > incentives to attract the global investment and factories that would > create sustainable, diversified jobs. There is nothing inherently wrong with living off the gathering of raw materials. Somebody will have to do it, no matter what kind of economy we have. The problem is dependence on other countries for imports - if Africa cannot produce something themselves, they have no choice but to accept the prices others have to offer for what they need. Yes, indeed more diversified industry is good, but the root of the problem is ignored when this new industry is only being created to satisfy the desires of wealthy consumers in other nations. It is alternatives to the dependence on imported goods that are needed. Focusing on the products consumed only by the wealthy is a dead end for the general global economy, because it means there will always be a disproportionately large class of people that are producing goods for a small minority than can spend more money than everyone else. > The fact is, virtually all the leaders who met in Quebec to expand > trade were democratically elected, while the "people" in the streets > clamoring for "justice" were self-appointed or paid union activists. Clearly, the "representatives" are not all that representative. The more people an elected official is supposed to represent, the less likely he is taking all their opinions into account. The alternative is to simply ignore whatever comes out of these meetings on the local level. Of course, there may be communities that do agree with the agreements - if so, they are free to abide by them. As for those democratically-run communities or democratically-run unions that don't agree, then indeed, these "self-appointed" people can simply choose to do something else, either within their region, or within their company. ------------- Now some of the more obvious examples of reprehensible journalism - Broad generalizations that can be true even if stated negatively (assuming "Africans" meaning "at least two Africans" rather than "all Africans"): > Africans tell you that their problem with globalization is not that > they are getting too much of it but too little. Guilt and innocence by association rather than rational argument (ironic that this paragraph offers some immediate contradiction of the one preceding it): > The most democratic African countries... are the most pro-trade, the most > integrated in the world economy and the most globalized. The countries > that are led by dictators... are those most hostile to globalization, > openness and trade in goods and services. Another broad generalization and selective omission of the probable primary reason (the distance between Africa and Canada): > So if you were wondering why you saw so few Africans joining the > anti-globalization "festival" in Quebec, it is because they understand... Use of ambiguous and unsubstantiated assertions like "ill intentioned" (Borrowing from Friedman's playbook of broad generalization: Psychologists will tell you that people think of themselves as well intentioned, no matter what their opinions, no matter what side of a conflict. It is part of the process of self-justification that makes for a healthy sense of self-esteem): > with the exception of the environmentalists - this anti-globalization > movement is largely the well intentioned but ill informed being led > around by the ill intentioned and well informed (protectionist unions and > anarchists), who do not serve Africa's interests. Use of tenous cause-and-effect relationships (I could just as easily say "There is not a single example of a country successfully developing without some people getting diarrhea.") > "There is not a single example in modern history of a country > successfully developing without trading and integrating with the global > economy," says Mr. Sachs. Every media analyst will tell you that the use of terms that preclude exception (like "all", "never", "only", etc) are invariably false (irony intended): > By inhibiting global trade expansion they are choking the only route > out of poverty for the world's poor.
25.4.1 Church of Satan Date: Sun, 29 Apr 2001 17:08:43 -0700 (PDT) From: John Yu cyu@oz.net To: ipe@csf.colorado.edu Subject: Re: WTO, GATT, CATO URL: http://csf.colorado.edu/mail/ipe/2001/msg00363.html > You did say that CATO (or more correctly the people at CATO) would disregard > any finding that there was some other way to achieve peace and prosperity > except market capitalism. I doubt that this is true. Though it wasn't intentionally stated, it would probably be far easier to get large numbers of individual supporters of an organization like CATO to abandon their past support than it would be to get the organization itself to abandon its past assertions of dogma. The chances of convincing the Ayn Rand Institute, for example, to start referring to Rand as a misguided pawn are probably much less than convincing individual members, because the views holding up the organization are much more institutionalized and entrenched than the views currently held by its individual members. On the other hand, this is not to say such organizations may not react to new developments by redefining its dogma, rewording what they consider to be "capitalism," "liberty," or "selfishness," or allowing discredited past platforms like gold standards to fade gently into the background and be conveniently forgotten. > If you find a better way to achieve prosperity, then by all means suggest it. Again, we have gone over many such things in this forum already - but it is hardly surprising that even individuals will react to differing opinions with knee-jerk denials, especially if it they associate the validity of their past thoughts with their own sense of self-worth. In any case, I hate to drag up old skeletons, but the following discussions were never finished: Problem: unemployment and inflation Alternative: paper money backed by a basket of goods like the CPI Encore: http://csf.colorado.edu/mail/ipe/2001/msg00258.html Result: additional employment (in businesses that produce what's on the CPI) causes no inflation Problem: disparity in spending power results in resources (that are more urgently needed elsewhere) being wasted on the frivolous desires of the rich Alternative: democracy in the workplace, particularly with respect to pay Encore: http://csf.colorado.edu/mail/ipe/2001/msg00302.html and http://csf.colorado.edu/mail/ipe/2001/msg00314.html Result: wealth redistribution without having to resort to bodily contact, while still preserving incentives to produce
Date: Wed, 25 Apr 2001 10:43:58 -0700 (PDT) From: John Yu cyu@oz.net To: ipe@csf.colorado.edu CC: pgunning@aus.ac.ae Subject: Re: WTO, GATT, CATO URL: http://csf.colorado.edu/mail/ipe/2001/msg00355.html Patrick Gunning wrote: > Everybody would claim that one of the _stated_ goals of these organizations > is the promotion of economic prosperity. But it is not possible to know real > goals for certain. Besides, attributing goals to these organizations, which > arose politically, is a tenuous business. The different factions that helped > create the organizations had goals, of course. And the factions that > perpetuate their existence also have goals. But as for the organizations > themselves, it seems a waste of time to attribute goals to them. The best > way to understand them is to observe the actions of the members and > participants. True, true, and true. > > it is in fact propsperity through market capitalism that CATO > > supports - in other words, they are an organization that supports one > > particular method. > You are wrong about CATO, John. Why don't you read some of the articles > about these organizations... Different participants may have different > goals and opinions. So studying the "Cato view" may require some time. From http://cato.org/about/label.html: "Only in America do people seem to refer to free-market capitalism--the most progressive, dynamic, and ever-changing system the world has ever known--as conservative." I don't know how you would interpret this sentence, but it appears this is quite illustrative of CATO's view on market capitalism. Perhaps you think I haven't been properly exposed to libertarian views? Perhaps you think I haven't been encouraged at nearly every point in a dialog to read books with titles like "Atlas Shrugged"? Perhaps you think I haven't heard of attempts by lower-case libertarians to distance themselves from the (American) Libertarian Party? Perhaps you think I haven't chuckled at the doctrinaire selfish atheism of Objectivists, or the occasional quoting of Alan Greenspan in an attempt to use gold to back paper money? Perhaps you think I never saw the posting of a link to http://www.churchofsatan.com/Pages/SatObj.html at the forum at http://capitalismmagazine.com that was shortly removed from the forum by their system administrators. It was quite humorous. What would you say if I asked you to read Kreeft and Tacelli's "Handbook of Christian Apologetics" (some of which can be found at http://www.apologetics.com/pages/twentyarguments.html)? What would you say if I asked you to read some of the refutations of libertarian-capitalist arguments at http://flag.blackened.net/intanark/faq/secFcon.html? (Let me know if you do, because I haven't.) Would you say you have better things to do with your time? Would you say you've already been exposed to all this before, and feel no need to wade through it again? Would you ask me to provide you with some better reasons for reading them or a summary of the points I think you missed? I will allow you, Mr. Gunning, to be the looking glass through which I see CATO, whether you feel up to it or not. I will offer you my warmest congratulations if you can change any of my "pre- conceived" opinions about them.
20.4.1 Physical and psychological methods. Date: Mon, 23 Apr 2001 18:13:52 -0700 (PDT) From: John Yu cyu@oz.net To: ipe@csf.colorado.edu CC: pgunning@aus.ac.ae Subject: Re: external effects on foreign workers and the environment URL: http://csf.colorado.edu/mail/ipe/2001/msg00353.html Patrick Gunning wrote: > CEOs are rather special individuals. They are hired specifically > to earn profit for their corporations. If they fail to do so over a > considerable period of time, their employers will oust them or someone else > will takeover the corporation and replace them. Agreed - indeed this would be hardly surprising in a capitalist run corporation. One could hardly expect a financier to continue to support a CEO that is not producing enough money for the financier's pockets. Of course, this goes beyond the CEO. The capitalist is only willing to look favorably upon any employee of the company as long as he or she is producing some profit for him. However, what good is the financier? Is it the financier that should be the judge of his employees? Or is it the workers that should be the judge of whoever has control of the company? From which starting points are your arguments being made? The good of the economy? The welfare of the people that make up the society? If the financier fails to make decisions that result in a decent life for the employees of a company, it is in the interest of the workers to oust him, and take over the company themselves. > At the same time, the selective process that enables them to obtain and > keep the jobs for which they are hired makes them especially sensitive to > monetary inducements and their surrogates, like threats of violence. Are you suggesting that there are only two methods of influencing CEOs? Either with money or blood? Would you say they have little free will to be influenced by anything else? Would you say you follow similar motivations? Of course, this assumes the CEO needs to be influenced at all. What is the root issue being dealt with? Why does the CEO need to change for everything else to change? The CEO is one person. He can say, "Do this!" or "Do that!" but if nobody around him takes him seriously, then there's no need to influence any of his thinking. > IPErs interested in the issues raised by the protesters in Quebec can find > a helpful and readable CATO Institute-sponsored paper. No doubt you find solace in reading articles from an organization that advertises Friedrich August von Hayek on their home page. Other people might find comfort in weekly sermons or mailing lists like http://www.ainfos.ca/en/. When a person holds controversial opinions, he is constantly faced with the fear that he may be wrong, that he may be ignorant. Reading things that reaffirm such shaky opinions is quite comfortable because he is met with little cognitive dissonance. So the question to ask is what the goals of the CATO institute are. These goals will be reflected in the claims they make about the WTO, GATT, or globalization. Of course, I'm sure everyone writing for CATO will claim one of their goals is economic prosperity. But this claim comes with strings attached - it is in fact propsperity through market capitalism that CATO supports - in other words, they are an organization that supports one particular method. Should other methods be discovered that better enable economic prosperity, CATO will most likely either deny them or disband altogether, because it is simply not in their charter to follow any path other than that of market capitalism.
Date: Fri, 20 Apr 2001 10:45:50 -0700 (PDT) From: John Yu cyu@oz.net To: ipe@csf.colorado.edu Subject: Re: external effects on foreign workers and the environment URL: http://csf.colorado.edu/mail/ipe/2001/msg00349.html > The fact, as we all know it, is that few CEOs take account of > the effects of their actions on the workers in the labor markets in other > countries or on the people who contract diseases through the degradation of the > environment unless they are forced in some way to do so by law or non-legal > coercive threats. This is also true in general of drug dealers, politicians, > preachers, and academicians. There are many ways to bring about change - two of the biggest categories are physical methods and psychological methods. As you've said, physical methods can include extra-legal coercion or threats of it. Physical methods can be direct or indirect. Direct methods range from threats, to bodily forcing the person to perform certain actions, to removing the person from the seat of power. Indirect methods may include boycotts, trade sanctions, or simply acting as if the person weren't there - individual humans really don't have all that much power to do a whole lot, unless other people actually follow their commands or advice. Psychological methods can range from actually convincing the person to change his mind to merely getting him to accept something he doesn't agree with. An example of the latter is when a minority accepts the results of an election that they don't agree with - on the basis of following majority opinion. Another example, is the acceptance of a command from a dictator or upper- management, despite personal objections. Of course, the ideal solution would be to make the person actually want to do what you want them to do. It may take some discussion, it may require questioning their definitions, premises, and leaps of logic, it may even require the use of "underhanded" psychological and sociological tools, but in many cases, this may often be easier than physical means. There are some fascinating examples in the chapter on self- justification in Elliot Aaronson's "The Social Animal".
Date: Tue, 27 Mar 2001 09:10:54 -0800 (PST) From: John Yu cyu@oz.net To: ipe@csf.colorado.edu CC: jgrabner@law.com Subject: Re: Overconcentration ... now it's not funny anymore URL: http://csf.colorado.edu/mail/ipe/2001/msg00311.html Johann Grabner wrote: > this has nothing to do with economics anymore but with criminal > behaviour. You take another person's property and use it for > yourself. That is called - depending on the circumstances - theft, > robbery, extortion, looting and so on. The only unusual thing is > that the thiefs decide "democratically" who gets which share of > the stolen property. Indeed I wish we were still discussing economics. How is it that you believe laws are written, upheld, and passed on from generation to generation? They are only as good as the community that agrees they are relevant. Was it not criminal behavior when Martin Luther not only held but advocated his heretical views on Christianity? Surely. Was it not criminal behavior when the Americans threw off British rule and stole from the King of England? Surely. Is it not criminal behavior when someone living in a totalitarian country denounces the government? Surely. It seems you assume morality derives from the law, rather than the other way around. Do you believe the Catholic delegates presided over by Paul VI at Vatican II were trying to promote immorality (or amorality) when they wrote: "If one is in extreme necessity, he has the right to procure for himself what he needs out of the riches of others"? Of course, there's nothing inherently immoral about driving on the wrong side of the road. If everybody did it, it wouldn't be a problem. Some laws merely facilitate the smooth running of a society - or in the case of property laws, the smooth running of an economy. If certain traffic laws cause more accidents than prevent them, it logically follows that they should be replaced (or simply removed). You have not made an economic argument as to why economic laws exist. If the purpose of these laws is to promote the prosperity and well-being of the economy, then economic laws must be judged on that basis. I refer you to the discussion on the purpose of economic systems in http://csf.colorado.edu/mail/ipe/2001/msg00233.html
Date: Mon, 26 Mar 2001 14:08:29 -0800 (PST) From: John Yu cyu@oz.net To: ipe@csf.colorado.edu CC: pgunning@aus.ac.ae Subject: Re: Workplace injuries [was Re: Overconcentration] URL: http://csf.colorado.edu/mail/ipe/2001/msg00305.html Patrick Gunning wrote: > Carlos Holguin wrote: > > All states of the U.S. of which I am aware remove workplace injuries > > from general civil liability (tort) laws. It is generally acknowledged > > that these worker's compensation systems are designed to limit the > > liability of employers for workers' injuries, and the historical record > > is quite clear that they exist because employers, not employees, > > prevailed upon state legislatures to enact them. > If no laws existed in a pure market economy, market based incentives would > exist for employers and employees to write contracts and make compacts that > would establish the optimal incentives for employers and employees to take > actions to establish the most efficient injury prevention system. Such > contracts or compacts would cause the employer's decision about > the design of "the workplace" to include the worker's anticipated costs of > injuries as a cost of production. This would presumably not result in zero > injuries, since it would be profitable to incur some employee injury risk > due to the high cost of prevention and low cost of the injury to the > employee. Workplace-safety regulations are merely one method among many of reducing on- the-job injuries. While the spirit under which these laws are enacted is admirable, that does not mean better alternatives do not exist. However, the alternative in which employers and employees "agree" on acceptable work conditions is subject to the same failures in which monopolies and oligarchies "agree" with consumers on the price and safety of the goods they produce. If there is only one employer, or if all employers are offering nearly the same things, then employees have nothing but a choice among the least of many evils. The difficulty for workers to create their own alternative outside of the existing set of choices is much higher than it would be for workers to simply assume control of some of the existing set of choices. Thus it would simply be economically more efficient for employees to declare democratic administration. In this case, external workplace-safety regulations would not be needed since those most affected by them are the ones making the decisions, and the same cost-benefit analysis with respect to amount of money spent versus amount of safety gained can be performed, except without the extra entanglement of managers who must fulfill the third agenda of producing a return for their employers. Again, I'll refer all the predictable objections to http://csf.colorado.edu/mail/ipe/2001/msg00302.html
22.3.1 Risk to the local economy. Date: Fri, 23 Mar 2001 13:53:37 -0800 (PST) From: John Yu cyu@oz.net To: ipe@csf.colorado.edu CC: danko@kpi.kharkov.ua Subject: Re: Macroeconomic Implications of International Marketing for Transition Economies URL: http://csf.colorado.edu/mail/ipe/2001/msg00297.html > But consider that ferrous and nonferrous metals generate almost 40 percent > of Ukrainian exports, while fuels and energy products account for 40 percent > in the country’s imports and the country is dependent on them. > An economic downturn could adversely affect Ukraine not only through lower > demand for its products but also through worsening financial conditions under > which energy is being made available to Ukrainian consumers. Ukraine is > particularly vulnerable to developments in the energy sector given the high > energy intensity of its industry, large import dependence and the chronic > non-payment problems. Indeed it is unfortunate for Ukraine to be so dependent on energy imports. This indicates two of the risks of relying on international trade. (1) The flow of imports can be disrupted by many things Ukraine has little direct influence over - sudden inability by the supplier nations to produce the imports for whatever reason, or greater demand in third-party countries that makes these imports prohibitively expensive for Ukrainian consumption. (2) The flow of exports can also be disrupted by things Ukraine has little direct influence over - economic downturn and the resulting lowered demand, or quality/price competition from new economic development in third-party nations. Determining what goods foreign nations need would be one important positive aspect of international marketing. However, what if it is determined that foreign nations don't need anything? Or if the things they need cannot be produced by Ukranians efficiently? What if the people of one's nation are simply naturally inefficient and cannot hope to compete on the international market in any sector? Are they doom to death? Surely not - they need only focus on their domestic economy. While I'm not against economic or technological progress, it should only come at a pace that Ukrainians have the stamina to maintain. The continued reliance on an export economy means Ukrainian industry will continually have to face possible competition from upstart industries in other parts of the world. If they do not overcome such competition, they will not be able survive the loss of the imports they are dependent upon. One alternative is to develop domestic supplies of energy. If Ukraine is so dependent on that now, surely additional supply from domestic sources would be welcome to Ukrainian consumers. This is not to say that domestic producers must be protected by import tariffs. After all, if Ukraine needs energy, tariffs would only make it more scarce rather than more abundant (assuming the abundance of energy supplies in Ukraine was the goal). Ukrainian energy development would be domestic investment in the future health of its own economy. However, if there is no hope of any reliance on domestic energy, then some form of alliances need to be made with nations that do supply it. The more they need goods that can potentially be produced in Ukraine (for example, desert nations that lack fertile soil), the more likely candidates they are for some kind of agreement. It won't be easy however - international alliances are not easy to maintain. The closer the political and cultural goodwill Ukraine can make with these nations, the more likely Ukraine will be able to count on them as a future source of vital imports.
Date: Thu, 22 Mar 2001 11:00:45 -0800 (PST) From: John Yu cyu@oz.net To: ipe@csf.colorado.edu Subject: Re: Macroeconomic Implications of International Marketing for Transition Economies URL: http://csf.colorado.edu/mail/ipe/2001/msg00290.html > international marketing implementation is an essential, though sometimes > neglected, element of successful economic reforms. Although I agree with the general theme that the development of marketing is important, there are two types of marketing that should be distinguished. The first is market research - determining what needs exist and what kind of products best fulfill those needs. Clearly, this has value. The second, however, is advertising, which can itself be broken down to two types - a source of information or a source of psychological exhortation. While the second is of questionable value to anyone but the producer, the first can in fact be valuable to the rest of the population. However, even then, the focus of information on one product while ignoring the virtues of available alternatives borders on misinformation because of what has been omitted. > Economic growth, keeping unemployment low and preserving currency > stability were always among the major concerns of state economic policies. > Export sector development is a vital element in meeting those objectives. I have to agree with Frank Sammeth's caution that domestic development must come first. The export sector is important only if there are goods the country must have that cannot be produced locally. And even if the local economy cannot produce certain goods at the moment, it is in their interest of economic security to develop the local ability to produce as many vital goods as possible. > Nevertheless, in order to compete successfully at the sophisticated global > market place export companies should acquire critical and indispensable > skills and know-how in international marketing, and apply them > systematically. Without applying international marketing approach companies > can successfully export only raw materials and energy resources, which is > not enough for sustainable economic growth. Indeed skill development is important, even if only for improving the domestic economy in the absence of an international one. However, there is nothing wrong with a nation that can only export raw materials, so long as it is not dependent on imports for vital finished goods. If the local economy is self- sufficient to the point of producing everything they need without recourse to external aid, then even if only their excess raw materials are exported in return for non-vital finished goods, there is no risk to the local economy that results from such trade relations. > transition economies without improvement of international marketing > competitiveness can put at risk the national economy of the corresponding > country since importers will tend to buy more while exporters will be not > capable to grasp opened opportunities. This will cause significant trade and > current account deficits, decrease sales of local companies on the internal > market bringing them to the edge of bankruptcies and vast redundancies. A distinction can be drawn between the ability of a nation to produce certain goods and the actual production and sale of these domestic goods. If other nations produce these goods much more efficiently, there is no need to worry about their products taking over the domestic market as long as the ability to produce these goods domestically is not lost. While it may seem a short-term waste to maintain equipment and skills that are not currently used, they are a source of economic security in the long run - for example, in case economic or natural disaster disables production overseas, or if greater demand in third- party nations causes the availability of these imported goods to drop to an unacceptable level. It is analogous to learning CPR - even if you are not using it on a regular basis nor expect to ever have to use it to save someone's life, it is still valuable to the health of the population to have as many people trained in CPR as possible.
12.3.1 16:09 Proved itself wrong 12.3.1 17:35 Creating make-work. Date: Tue, 13 Mar 2001 07:10:57 -0800 From: "D. Gale" cyu@oz.net Organization: Dark Side of the Rainbow To: "Hector E. Maletta" hmaletta@overnet.com.ar, ipe@csf.colorado.edu Subject: Re: Economics and Spirituality URL: http://csf.colorado.edu/mail/ipe/2001/msg00263.html "Hector E. Maletta" wrote: > You're idea of privately issued money echoes eerily of Hayek and Mises. > Pat would be delighted with your (or O'Donnell's) proposal of everyone > having the right to print money, and many private currencies competing > in the market. Only I fail to see how this beats a system in which the > Central Banks issues money only in return for foreign currency assets or > similar security, and keeps enough reserves to back the notes in > circulation as in currency-board-like systems. Indeed I don't dispute the similarities, but I hardly count on the support of Hayek and Mises fans. There are at least four axes along which economic theory develops. (1) The goal of defending the rich or defending the poor, (2) the amount of government involvement, (3) the amount of democracy in the institutions of the financial structure, and (4) the scope of the decisions made by such institutions. I would put Hayek and Mises on the side of the rich, less government, less democracy, and large scope (the WTO for example) - but that's a different story. The issuing of money by non-government organizations only shares the less government side of the second axis. If taken together with democracy, it can be still be on the side of the poor. As for scope, that only depends on how large of a geographic area (or number of people) these democratic organizations cover. The difference between commodity backed notes and foreign currency backed notes is that there is no dependence on the existence of foreign countries. Economic security is aided by the fact that financial disaster in other parts of the world will not affect the local currency. As for keeping reserves to back notes (as in Fort Knox), it is certainly a relief that gold is not so vital to our economy, so that it can simply be stashed away never to be seen again. However, if the commodities represented by the notes are actually useful (as they should be in order for the money to have value), then there should only be as much guarantee on the availability of money as there are real goods to consume - thus they are issued by the producers when these goods are actually produced.
Date: Mon, 12 Mar 2001 17:35:30 -0800 (PST) From: John Yu cyu@oz.net To: hmaletta@overnet.com.ar CC: ipe@csf.colorado.edu Subject: Re: Economics and Spirituality URL: http://csf.colorado.edu/mail/ipe/2001/msg00258.html Hector E. Maletta wrote: > It is not a paradox in economic theory or analysis. It is a paradox of > capitalism. Suppose the government (in the situation you describe) pays > no heed to the IMF advice, does not rise the rate of interest nor > curtails government spending. The result will be, in the short term, > less unemployment, but rapid inflation. You may correctly assume I am not a fan of Friedman (for fairly obvious moral reasons). However, nor am I a fan of Keynes (his propensity for creating make- work annoys me). I am in fact not arguing in favor of spending tax money just to create jobs. What I do favor, however, is the redistribution of labor to the industries that produces goods that everyone needs. If there is demand for some basic good, then employment can be refocused to increase the supply of that good. Now this may sound like "Marxist central planning" to some ears, however, there are alternative ways to achieve such labor redistribution without central planning. One is by making sure the consumers in the market all have relatively equal amounts of spending power, thus naturally leading to a more evenly distributed allocation of resources with respect to which consumers are ultimately being produced for. And one of the ways we can ensure that consumers will tend to have relatively equal amounts of spending power is by allowing the power to decide salaries, wages, and bonuses to rest in the hands of each company's workers. > > Again, as John O'Donnell has suggested before > > (http://csf.colorado.edu/mail/ipe/2000/msg01740.html) > I have not gone into the details of O'Donnell's proposal, but relating > monetary expansion to the expansion of "the basket of goods used by the > average person" is equivalent to linking the rate of per capita monetary > expansion to the growth rate of per capita GDP. This is, with some > allowance for imprecise language, the classic formula of monetarists, > the primeval and quintessential neo-liberals, and hardly a recipe for > the people's happiness and full employment. You are free to call me a supply-sider, but it is not the monetarist method of issuing money that I am suggesting. Rather, the source of the money is not the Federal Reserve, but instead the producer. A farmer produces a bushel of wheat - then he (or his organization) issues a note backed by that wheat, and he spends it himself. That is how his money finds its way into circulation. When his note is redeemed, he simply hands over his wheat and destroys the note. Of course, there may be fraud analogous to the loans made in modern banking - a farmer issuing more notes than he has wheat to cover. Thus some notes from certain farmer's organizations may be more trustworthy than others (rather like the various relative values of bills on the foreign exchange today). Returning to the basket of goods concept above, organizations may issue notes based on a diversified index of the total goods produced by their members, thus adding additional stability to their notes.
Date: Mon, 12 Mar 2001 16:09:27 -0800 (PST) From: John Yu cyu@oz.net To: ipe@csf.colorado.edu Subject: Re: Economics and Spirituality URL: http://csf.colorado.edu/mail/ipe/2001/msg00256.html Hector E. Maletta wrote: > Economists, in turn, offer assessments of economic situations and > analyze the probable consequences of various possible courses of action. Agreed, and indeed they should. Of course, some assessments will be more flawed than others. It is also quite likely that analyses that differ in opinion represent different political ideologies, are supported by politicians of differing ideologies, or are tailored by the economist to fit their own pet world-view. > The consequences are not always pleasant, not because of insensitivity > on the part of the analyst, but because sometimes the choices are all > hard to swallow. If Mike McKeever would find some day (Heavens forbid) > that his salary at the Vista Community College has been reduced by one > half, and no other source of income is available at his home, he would > be forced to inform his family that expenditure would have to be reduced > in a similar amount, at least until he can find another better-paying > job elsewhere... If McKeever's family must reduce their expenditure by > so much, they would have to make certain hard choices, and it is in those > hard choices that values and priorities show. The analogous national prescription to fix such an ailing economy, by the prevailing economic thinkers at, for example, the IMF, would be to raise interest rates and cut fiscal spending in order to keep inflation under control. The result is mass unemployment, and, many would argue, greater misery. But at least the currency would be stable. Just when the country is in a time of its greatest need, when people are suffering from lack of goods, why then is the solution to have more people doing nothing (ie. unemployed)? Is that not the opposite of what a healthy economy should be doing? Logically, it is only when the population is completely sated and has no more desire for anything else, that such unemployment should naturally result. If an economic system or theory is prescribing unemployment (doing nothing) at a time of need, then it has reached a paradox and has proved itself wrong. The goal, then, is to find the holes in logic that led to the paradox and plug them, or to restart from a new set of assumptions. Again, as John O'Donnell has suggested before (http://csf.colorado.edu/mail/ipe/2000/msg01740.html), money that is issued based on the production of some basket of goods used daily by the average person would both put a curb on inflation and yet still enable full employment, as long as they are producing the goods used to back the currency.
Subject: Moral Economics - Last Essay From: mckeever Date: 09 March 2001 02:50 UTC URL: http://csf.colorado.edu/mail/ipe/2001/msg00247.html TWENTY-FIRST ESSAY 3-8-01 Moral Economics - Essays On The Relation of Economic Theory to the Moral Perspective in POVERTY AND DEVELOPMENT: AN INTER-FAITH PERSPECTIVE. [www.wfdd.org.uk/] This is the twenty-first and last of an occasional series of short essays about how economic theory interacts with a moral perspective. These essays have attempted to illustrate the interaction of traditional economic thought with the moral perspective as outlined in the fine work referred to above. That short book was the result of a consultative process involving many thinkers; it was written by Roger Riddel and is published by the World Faiths Development Council [email: wfdd@btinternet.com; URL: www.wfdd.org.uk]; it attempts to find common areas of agreement among the world's major religions on economic development issues. The entire series of essays may be viewed at: http://www.mkeever.com/moral.html ************************************************* OBSERVATIONS Below are the author's personal reflections on the subject; these are offered with humility since a consultative process with many thinkers was not involved in their gestation. Their faults are mine alone while their virtues, if any, reflect some of the debate swirling around the world today. I thank you for your patience and indulgence. These observations cover two areas: first, is there a set of economic policies which facilitate a moral society[?]; and, second, what are some possible outcomes if present policies are not altered. 1. NATIONAL ECONOMIC POLICIES Economic theory suggests that a good society is achieved when market forces are allowed to operate freely; evidence shows that some material measures of human benefit are achieved in that situation. On the other hand, evidence also shows that some people are made materially worse off while many people suffer spiritual and cultural damage from that situation. Economic theory also suggests that the world will be a better place in the long run after market forces have created more jobs and wealth. But, I believe it was John Maynard Keynes who said: "In the long run, we're all dead." RESULTS OF MARKETS Based on the evidence to date, it is clear that allowing market forces to operate without effective controls actively harms some people while benefiting others. DUTY OF NATIONAL GOVERNMENTS A responsible national government speaks for all the people in its country; as such, it has the duty to protect its vulnerable citizens from the harmful effects of free markets while taking advantage of the benefits they offer. In practice, this means for example that domestic food markets should be protected from cheaper food imports if domestic farmers will lose their livelihood and become homeless job seekers migrating to cities. This protection can take the form of tariffs, quotas or domestic content requirements. This is justified because protecting families from misery is a higher duty that protecting the rights of business enterprise to make profits. In a broader sense, a responsible national government has the duty to protect weaker portions of society from stronger portions. It can be argued that business interests have more power today than working people in determining wages and working conditions. This is true in the USA as well as in the developing countries. A responsible national government will take actions to provide labor with some bargaining power so that power to determine wages and working conditions is more evenly divided. CONTROL CAPITAL A major difficulty with this issue is that capital is free to move from country to country in search of cheaper wages while workers are less free to move to higher paying jobs; a business owner can close his factory in a high wage location and re-open in a low wage location, effectively removing any bargaining power from workers in high wage locations. This argues that a responsible national government would prevent capital from leaving the country to seek lower wages; however, since competitive firms in other countries will seek lower wage costs, domestic firms will be harmed by higher wage costs. The remedy is to protect domestic companies that pay higher wages by enacting tariffs, quotas and domestic content requirements. Such a policy is in direct conflict with current trade agreements that call for reduction or elimination of restraints on trade. Again, such actions are justified because protecting families from misery is a higher duty that protecting the rights of business enterprise to make profits. While such actions will interfere with market forces and perhaps reduce somewhat the gains from trade, today it is clear that national governments are the primary source of protecting society's less powerful from market forces. Faith based thinkers wish to prevent economic forces from harming people; they do not rely on the dubious concept of 'trickle down' to help society's powerless. 2. FUTURE TRENDS Probably the only thing less certain than suggesting economic policies is predicting the future; nevertheless, some predictions are listed below. RESULTS OF INCOME AND WEALTH DISPARITIES The growing imbalance between poor and rich people will probably continue if current economic thinking continues. As the trend toward accumulating wealth by rich people continues, the poor will have less and less; as a result, they will lose hope of obtaining more than a survival pittance of material goods. The rich will continue to be rich, but the market opportunities for growth will shrink, as the population becomes less and less able to afford to buy the products that show a profitable return. Thus, the middle classes may shrink until we have a master class and a servant class, similar to the Middle Ages in Europe. Individual hand-made goods will be the way that rich people flaunt their wealth and the only way that skilled, intelligent can aspire to middle class status. At some point, there is likely to be a bloody revolution in one or more countries. Measures to change income distribution offer a possible means to avoid this outcome. PROTECTIONISM Since globalization facilitates and accelerates these trends, there will probably be a backlash against globalization and toward protectionism as a way to keep wealth in the country that produces it instead of transferring wealth to already wealthy countries. NON-MATERIAL VALUES But, even more interesting is a possible movement toward a non-material society wherein status and satisfaction are derived from spiritual, familial and societal values instead of material values. As people lose hope of succeeding in the race to material wealth they will naturally seek solace and success in other areas; these other areas will require almost no material goods. There will be a growth in religious fanaticism and spirituality in addition to the values just mentioned. This is already evident in movements such as the Taliban, fundamentalist Islamic laws and the rise of conservative religious sects. The two movements - protectionism and increased spirituality - may coalesce onto a single force, or they may just co-exist. Time will tell. What is abundantly clear is that the consumerist, material culture now spreading around the world is intellectually and spiritually bankrupt and has no uplifting aspect to it. People will soon come to understand that and react against it. Michael Pierce McKeever, Sr. Economics Instructor, Vista Community College, Berkeley, CA URL: www.mkeever.com [Note: no 'c' in mkeever]

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