To: A few friends and many Devious Defenders of the Status Quo (DDotSQ)
on several mail lists in the English speaking countries.
Hi Folks,
You may recall that John Maynard Keynes has monopolized the first three words
of the above subject heading for 63 years, while American author Charles
Murray has concisely described the present condition of the English speaking
nations with the last two words of the above subject heading. Clearly, there
is a world wide conspiracy afoot to make sure, by enforcing the general
theory, that the English speaking nations continue to lose ground. The
progress of the conspiracy to date is attested by the works of the following
authors, in addition to the works of Keynes in 1936 and Murray in 1984:
REGULATING THE POOR, 1971, F. F. Piven & R. A. Cloward
FROM POOR LAW TO WELFARE STATE, 1971, W. I. Trattner
FAMILY AND NATION, 1986, D. P. Moynihan
FAMILIES IN PERIL, 1986, M. W. Edelman
THE POLITICS OF THE REAL WORLD,1996, M. Jacobs
The global model at URL <http://www.freespeech.org/darves/bert.html> will
support a serious discussion of both the macro and the micro aspects of The
GENERAL THEORY for LOSING GROUND, while the attached file (Figure 8 of the
global model) goes directly to the heart of the theory to illustrate how
fixed costs in the budgets of parenting families will corrupt the operation
of a free labor market. Of course, if you are making a nice living by writing
and talking about LOSING GROUND, a serious discussion of the general theory
may not be your cup of tea.
The following two year old note may help to break the silence on this topic
by providing a consistent set of macro data for the U.S. economy, which data
is typical in structure for any industrial economy.
WesBurt
>>>>>>>>>>>>> begin note of 97-04-06 <<<<<<<<<<<<
Subj: The Root Cause Of 2-3% Inflation and 5-10% unemployment
Date: 97-04-06 10:42:50 EDT
From: WesBurt
~~~~~~~~~~~~~~~~~~~~~~~~~
Dear Defenders of the Commonwealth,
In a recent exchange of quotations on other lists, a contributor
defined the tone and focus of our perennial public debate on
money and poliical power with these two quotations:
From Horace Greeley (1811-'72)
1, "While boasting of our noble deeds, we are careful to conceal
the ugly fact that by an iniquitous money system we have
nationalized a system of oppression, which, though more refined,
is not less cruel than the old system of chattel slavery."
From President Woodrow Wilson, THE NEW FREEDOM, 1913.
2, "Since I entered politics, I have chiefly had men's views confided
to me privately. Some of the biggest men in the U. S., in the field
of commerce and manufacturing, are afraid of somebody, are afraid
of something. They know that there is a power somewhere so
organized, so subtle, so watchful, so interlocked, so complete, so
pervasive, that they had better not speak above their breath when
they speak in condemnation of it."
Here is a third quote which supports the conventional, but mistaken,
wisdom that we can cure what ails an industrial society by
nationalizing the banking system and regulating the issue of money
by political edict as Nazi Germany, the U.S.S.R., and other nations
have done with little success. This quote comes from FINANCIAL
ENGINEERING, 1953, by Elmer Thomas, U.S. Senator from
Oklahoma 1927-'51. Senator Thomas' limited edition book has many
quotations which direct public attention toward the financial attributes
of the wealthy and politically powerful, and away from the depressed
financial condition of the great majority of the population which is the
root cause of the social pathologies in every industrial society that
does not satisfy the technical requirements for full employment and
zero inflation.
From the English financier, Meyer Arnschel Rothschild, 1745-1812.
3, "Permit me to issue and control the money of a nation, and I care
not who makes its laws."
Senator Thomas rather suggested that Mr. Rothschild's remark was
in response to the publication of the American Declaration of
Independence, the U.S. Constitution, The American Bill Of Rights,
and Thomas Paine's proposals in AGRARIAN JUSTICE, 1797,
to establish a stable and prosperous free market society by means
of a subsidy to young families.
With quotations like these, the contributor has clearly defined
that small faction of the world "governing subsociety" which protects
its vested interest in the status quo by focusing the public's attention
on the "iniquitous money system," the "power somewhere" that is to
be feared, and the wealthy Jewish money changer who is
contemptuous of Democratic institutions. If William Shakespeare
(1564-1616) had cast a member of this small faction in the role of
Shylock, in his play, THE MERCHANT OF VENICE, they would have
hanged Shakespear, as they tried to hang Thomas Paine two
centuries later. Certainly, there is an evil minority among the wealthy
and politically powerful that threatens society. Just as certainly, there
is also an evil minority among the rank and file population that
threatens society. And it is the standard practice of this first evil
minority to incite the rank and file to blame all of society's failures on
the majority faction of the wealthy and politically powerful.
In contrast with the grand deceptions and theft committed by these evil
minorities, the majority faction of the world's "governing subsociety,"
that is, the wealthy, healthy, intelligent and powerful members of
society gave the world each step of progress that humanity has made
toward a stable and prosperous society; from the holy scriptures of
the several religions to the Magna Charta 1215, the English Common
Law, the Elizabethan Poor Law 1601, the Speenhamland system
1795, the American Declaration of Independence, the U.S. Constitution,
and the Articles in addition to, and amendment of the Constitution
The American Bill Of Rights). Can any of us ordinary people identify
any practical alternative to casting our lot with this progressive majority
faction of the "governing subsociety" that rules the world, past, present,
and future. The trick, of course, is to be able to tell the good guys from
the liars and deceivers, and for that we need a valid conceptual model
of how the world works when governed by the public opinion of a
majority of ordinary people under universal Direct Democracy.
This perennial cultivated, but mistaken, public opinion which
indiscriminately blames money and poliical power for the world's social
pathologies has not changed since biblical Israel (twelve tribes)
demanded a King in B.C. 1120 (I Samuel 8:1-5), but money and
poliical power are not the root cause of the social pathologies that have
cursed humanity since Samuel's time. The symptoms of the root cause
are the high unemployment, inflation of the currency, over-run
public budgets, and excessive public debt that were easily managed in
an agrarian society, such as the United States prior to the closing of the
frontier.
But these symptoms cannot be ignored after a people experience THE GREAT
TRANSFORMATION, as Karl Polanyi called it in 1944, and
leave their self-sufficient farms, firms, and villages to form commercial
or industrial ities, Nation States, and Commonwealths based on free
trade and a highly developed division of labor. "Civilization should be
a blessing to mankind, not a curse," as Thomas Paine said in 1797.
The politically correct explanation of the curse has always been that
the rich and powerful who teach, manage, and govern the rest of us
are the cause of our high unemployment, inflation of the currency, and
over-run budgets. To the contrary, the technically correct explanation
is that the curse is caused by a defect of omission in our public policy
which is both invisible to a the great majority of the successful,
wealthy, and powerful, and kept a SECRET OF THE TEMPLE from the
rest of us by that small faction intent on defending their vested interests
in the status quo.
That defect of omission is our failure to allocate the First Tithe (10%
of the Gross National Product) to our developing human assets (5% for
education and 5% for subsistence). We were one of the first modern nations
to allocate 5% of GNP to universal education. But we may
well be the last modern nation to allocate the second 5% of GNP
needed to raise the purchasing power of parenting families to parity
with the purchasing power of families or households without children.
When the expense of supporting children is $5,000/year/head it does
not take a computer scientist to figure out why the expense of
supporting children is the easiest expense to fob off on the rank and
file, in the interest of reducing the total tax rate by a few percentage
points and maximizing the market for usury in the short run. The great
majority of parenting families can be depended on to do whatever it
takes to support their own children. But the long run costs of
withholding this technically required subsidy far exceed the savings
of a few percentage points on the tax rate.
Should we not ask why Karl Polanyi wrote 312 pages on THE GREAT
TRANSFORMATION, but failed to mention the technical requirements
for full employment in a free market, which requirements were well
known and published by the very Protestant founders of the American
Economic Association (AEA), Henry Carter Adams and Richard T. Ely
in 1887, and, by the very Catholic Church of Rome in 1891?
This topic needs a technically complete model of a real national
economy if we are ever to discover, and disclose to the public, the root
cause of the disorders of our industrial society. My data is for the U.S.
economy, but the financial and physical structure is typical of all
industrial nations in which the standard of living is based on free trade
and the division of labor. Here is the data that I look at, tell me if you
think it is not a valid model of an industrial society.
Following the work of Nobel prize winner Wassily Leontief in
INPUT/OUTPUT ECONOMICS, 1966, the U.S. physical economy of
1995 has two parts, (1) the GDP which we consume or save each year,
and, (2) the purchased material transactions (PMT) which is work in
process for future GDP, as follows:
July 1995 U.S. Gross Domestic Product (GDP), the sum of
government and household spending . ...............$7,024.9 Billion/year.
July 1995 U.S. workforce 131.9 million. Average Value Added
per
worker...................................................................$53,2
59/year.
July 1995 U.S. business to business purchased material
transactions (PMT)..........................................$10,537.4
Billion/year.
July 1995 U.S. total physical economic transactions by non-
financial public and private sectors, (excluding financial
speculation) ...................................................$17,562.3
Billion/year
>From FEDERAL RESERVE BULLETIN, uly 1995 U.S. Money
and Debt measures, ($Billions):
M1..................................................................$1,144.9
Billion
M1 is the Medium of Exchange and turns over 15.3 times
per year to generate the $17,562.3 Billion/year of physical
economic transactions above.
M2, excluding M1............................................ $2,569.4 Billion
M3, excluding M2................................................$773.1
Billion
L, excluding M3..............................................$1,056.6
Billion
Debt, excluding L.............................................. $7,864.5
Billion
----------------------------------------------------------------------
Debt aggregate ...............................................$13,408.5
Billion
If we consult our best historical macro indicator of national efficiency,
that is, the profile of the U.S. Consumer Price Index from 1789 to date,
we find that the 19th century was a period of high wages, full
employment, and stable or slowly falling prices with bursts of inflation
only when the nation was at war. By the turn of the century, the U.S.
had been transformed from an agrarian society of small holdings to an
industrial society of multinational corporations, and has experienced
the curse of rising unemployment with 2-3%/year inflation ever since
Pope Leo XIII proposed a "Family Wage" in RERUM NOVARUM, 1891.
We have to ask why Pope Leo XIII proposed "Family Wages" as an
obligation of employers, thereby leaving the Church without guidance
on this question until Pope John Paul II finally equated the "Family
Wage" to a family allowance from the public revenue on page 44 of
LABOREM EXERCENS (On Human Work), 1981? It is technically
impossible for employers to pay the "Family Wage" and remain
profitable in a competitive market. When mandated by the legislature,
the burden of the "Family Wage" on employers creates the levels of
unemployment we see in Europe today, except for Switzerland.
Here is the technically valid and ecologically necessary solution being
proposed by the Church of Rome and demonstrated by Switzerland,
the Scandinavian countries, Japan, and maybe Germany, but
condemned in the American public mind by the faint praise of U.S.
Senator Daniel Patrick Moynihan and retired Senator Bill Bradley, and
the determined opposition of an evil minority of the wealthy and
pollitically powerful members of the "governing subsociety."
There are long standing vested interests in the United States which are
ever and always opposed to any attempt to inform the public about how
the economic system operates. This opposition is surely innocent
where propriatary knowledge of corporate techniques and methods is
concerned. But when that opposition keeps the American public
uninformed of the corporate techniques and methods; that John J.
McCloy saw incorporated into the domestic policy of Germany after
World War II, and Douglas MacArthur saw incorporated into the
domestic policy of Japan after World War II; that opposition must be
called into question by public disclosure and discussion in an open forum.
If two or three of us could achieve a consensus on the optimum
financial structure of a corporation or commonwealth, and trace its
roots to the first tithe in Genesis, we could re-educate the chattering class
and thereby enable public opinion to restore our industrial economy to its
full potential efficiency in the use of labor and non-renewable materials.
Think about it, our world laboratory of nations provides examples of every
variation from, and every degree of compliance with, this simple and obvious
technical requirement for a stable and prosperous society. The Chinese and
Russians are thinking about it.
Yea though I walk through the valley of the shadow of death,
I will fear no evil: for I have illuminated the valley before me.
With all due respect to the 23rd PSALM, I remain,
Sincerely yours,
WesBurt
>>>>>>>>>>>>> End note of 97-04-06 <<<<<<<<<<<<
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