Money enough to buy output to end hard times

[John Gelles]

I have welcomed Curtiss to the ranks of the money cranks -- which are the ranks that include yours truly.

 

But I have not sufficiently  explained his position and theirs, and how these positions resolve in favor of monetary reform -- and away from debt-based money (toward money backed by supply side economics).

 

So why not give it a try?

 

Curtiss wrote:

". . . the only fair and equitable solution to a nation, or
a world, is to distribute the "fruits" of productivity
increases to EVERYONE.

"Returning to Social Security.  This argues not to increase
payouts based on either worker wages or the CPI.  It argues
that this increase should be indexed to annual productivity
increases.

"Then, and only then, can consumers purchase all goods
and services produced, without going into debt.

"[Why might the owners of capital agree to this?  They
may be tired of manic booms and crashes.  I assert that
it is the huge growth in debt that precipitates crashes.

"If everyone had enough money to buy all the goods and
services, there would be no debt, and there would be no
booms and crashes.]"

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If we accept the above Curtiss-economics, we challenge conventional wisdom that the prize we seek is stable prices -- and the way to achieve them is to raise interest rates, if prices inflate, and lower them, if unemployment inflates.

 

Curtiss, on the other hand says the prize we seek is consumer satisfaction of needs from current cash earnings and subsidies -- which means that goods and services would be sold without need of increased consumer debt.

 

The subsidy required above, Curtiss would measure by current gains in productivity -- which today we do not pay to workers -- but rather pay mostly  to capital ownership of business, whom we credit with such gains.

 

So Curtiss and I are singing off the same sheet of pro-labor music. But there is much that is still not clear:

1. Our system calls "productivity gain" the same output with fewer workers, as well as, more output with the same number of workers. 
   
2. Obviously, fewer workers won't do. This would mean some of us were being asked to starve to death (or get new jobs that are not mentioned in the relevant equations).  
   
3. Curtiss does not go into the mechanism for full employment which I believe money cranks owe to the public debate.  
   
4. Gelles does go into the necessary additional equations:  
   
   
   1. The "subsidy" required to increase demand is initially paid to government itself (the author of the subsidy) -- it is paid by way government spending of some "new money", not collected from taxpayers or borrowed from lenders.  
      
   2. The government spends this new money on whatever current priorities dictate.  
      
   3. This spending can be directed to reaching full employment if necessary; it can also be directed to raising the supply of goods and services where shortages may be a problem.  
      
   4. If the subsidy were merely paid to workers directly, as Ashford and Shakespeare hint (with binary economics), then the current priorities of society would be rated below the priorities of workers eager to buy highly advertised consumer stuff.

I'm already over the limit of stress-inducing mental modeling. It would be nice if anyone can follow this thread and keep the ball rolling -- until we reach consensus on social security, unemployment, price fluctuation (not stability), indexed incomes and savings, debt re-scheduling and write-off, and all the other bones of contention between the Concord coalition and those for whom money's reform comes ahead of trying to keep prices stable by turning workers out on the street and business to a bankruptcy court.

 

John Gelles

 

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----- Original Message -----

From: John Gelles

To: cybe...@topica.com

Sent: Wednesday, March 23, 2005 6:51 PM

Subject: Enough money to buy enough output to end hard times

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Enough money to buy enough output
To end hard times

 

We have finally infected Curtiss with the money-crank bug. Now we have to make sure he doesn't go off the reservation.

 

There are an infinite number of ways to match purchasing power to production -- thereby avoiding the critical shortage of monetized demand that can result in depressions and worse things (like tyranny).

But some of the ways to add money to the demand side may diminish the hard work needed to produce enough for everyone to avoid hunger and related want.

Our conservative friends accept the notion that fear of unemployment is an efficient way to motivate enough of the required hard work.

We liberals cannot accept the bad effect of unemployment on individuals, families and society -- hence we want a full employment solution.

 

We liberals also want a solution that tends to produce less junk -- and more products that will, in the end, strengthen the survivability of freedom and good conduct in general.

All of the above leads to the desire to curb laissez-faire and free markets with rules and institutions that encourage common sense objectives and systems to help us achieve them.

 

John

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