[GJM] Money reform and prosperity for all [CITS Capital & Debt Watch Reply]

[W. Curtiss Priest]

Dear John,

I've now read Morrison on "Keynes Without Debt."
(see Gelles below)

Whether a government should spend without incurring
debt requires a cost-benefit analysis that is difficult
to do.

And, just arguing that WWII spending brought US prosperity
isn't sufficient.

If a government spends any money without corresponding
debt, the government is printing money and diluting
the money supply.

And, any and all such spending is simply a "flat tax"
similar to when governments raise funds by applying "fees."

Inflation will rise in direct proportion of the spending.

The costs:

	o  inflation punishes people who save
	o  inflation disproportionately is a burden
		on people with fixed incomes or pensions
	o  government directed spending may, or may not
		provide a useful economic stimulus
	o  government spending may or may not work in
		tandem with the market system

The benefits:

	o  such spending directly raises employment
	o  government directed spending may, or may not
		provide a useful economic stimulus
	o  government spending may or may not work in
		tandem with the market system

The reader has noted that the last two costs and the last
two benefits are phrased identically.

Here is the heart of the problem of doing a balancing of
costs and benefits.

If we ignore these last two "forces" -- the first two "costs"
tells us that spending without debt is bad.

So, to do Keynesian spending -- i.e. -- providing an
economic stimulus beyond that which markets and nonprofits
create, we must fully convince ourselves that the overall
stimulus is so great and wonderful that the "first two
costs" are outweighed by the secondary benefits, a more
robust economy, better "outputs and inputs," etc., and
those pensioners will be better off despite lowered
spending power -- because "their boats rise."

What plagues the US is, at the least, enormous debt
everywhere and the gradual decimation of "heartland
industry."  Those who argued that service jobs would
fill the void did not anticipate:  1.  massive illegal
immigrant labor,  2.  massive outsourcing, and 3.  massive
trade deficits

So, what you and Morrison need to do is convince "us"
that Keynesian spending (whether with or without debt)
will solve today's problems.

For example, unlike 1935, we do not have 25% unemployment.
So, WPA (Works Progess Administration), while it produced
wonderful infrastructure, it is not a clear solution to what
ails employment, today.

As for the trade deficit, there is a petition circulating,
and various congressmen asking for "trade protection."
(This is not Keynesian)

And, for what currently ails the US, trade barriers WOULD
solve many of our problems.  In the electronics industry
(as used by Japan in the '50s) we could then have a
concerted program to recreate our electronic parts industry.

For, only when such parts, "Made in USA," cost less than
such same parts made in Japan or Korea, could we restart
our consumer electronics industry.  What is China a net
importer of?  Electronic parts.  What are the major exports
of Japan and Korea?  Electronic parts.  Where is the lowest
wages for reasonably skilled workers?  China.  So, electronics,
except for, say, speciality medical instruments, is assembled
in China and shipped here.

To beat China, we would have to do what Sweden did, thirty
years ago, and bet on improved automation.  In 1985 I
visited Asea AB, and I viewed room after room of assembly
automation with no workers in sight.  But, this requires
a massive infusion of capital, and, this "bet" is difficult
to wager with money going, rather, to Chinese imports.

What is more likely is, China will take the trillions of
US dollars and invest in "robotics" and as their labor
rates rise, they will have a steady capital flow into
that automation.

Might the US government purchase such facilities and just
give them away?  Only if the US changes the "industrial
policy" of this country's federal government.  Starting
with Reagan, any and all industrial policy was halted.  The
arguement was:  "only free markets best know how to allocate
such capital."

So, we are stuck with a free market that has created the
largest wealth disparity in the history of the US, has 
destroyed better paying jobs, etc.

Regards,

Curtiss
Editor, CITS Capital & Debt Watch

John Gelles wrote:
> 
> Thanks Curtiss for your exchange on AMI and your own thoughts on
> equity, supply, and "economic democracy" -- this term being shorthand
> for political democracy coupled with economic security for the
> individual and rational advantage from technology being accepted by
> the nation-state.
> 
> As all on this forum know (and give not a damn to hear more about) I
> have been preaching forever on what amounts to "Keynes Without Debt".
> 
> The article by that name is available at
> http://www.paecon.net/PAEReview/issue39/Morrison39.htm
> and at http://www.ustaxreform.us/1016.htm
> 
> I will send any of our members $100 cash money if they will read these
> articles and change the world to follow their prescriptions.
> 
> The articles are the brainchild of Ron Morrison -- whom I understand
> to be a Professor of Computer Science and Physics --
> 
> (Ron Morrison - Wikipedia, the free encyclopedia
>   Professor Ron Morrison is the head of School of the computer science
> department of the University of St. Andrews and the inventor of the
> S-algol programming)
> 
> The many other advocates in this field, including me, ought to take
> their cue from Dr. Morrison and get together to inform the world on
> "which way is up".  Too many of them are in the business of selling
> books and writing for the vanity publishing universe.
> 
> John Gelles
> 
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-- 


	   W. Curtiss Priest, Director, CITS
      Center for Information, Technology & Society
         466 Pleasant St., Melrose, MA  02176
   781-662-4044  BMSLIB at MIT.EDU http://Cybertrails.org