Dear Lurkers on list Future-Work, This will complete the recent two posts which addressed the macro and micro aspects of the global model at the subject URL, prior to my rejoining list Future-Work. Hopefully, these two recent posts will help to dispel the silence which has settled on the frequent posters on list Future-Work. Perhaps they are thinking about how much of simple systems methods they were not taught in school, and did not have the good luck to learn on the job. I apologize to all who might have received duplicate copies of these two recent posts. Cheers, WesBurt >>>>>>>>>>>> Begin recent Post <<<<<<<<<<<<<<<< Subj: Fig.8, the Micro Model at URL <.http://www.freespeech.org/darves> Date: 99-02-17 16:15:59 EST From: WesBurt To: Frequent posters, lurkers, and innocents on several mail lists. Hi Folks, The Global Model at URL <.http://www.freespeech.org/darves> may be accessed by key words: global, system, model, engineering, economics, and religion. Figures 1, 2-3, and 6 illustrate the "macro" aspects of the model, which were discussed in previous posts of 99-01-18 and 99-02-02. This post will discuss the "micro" aspects of The Global Model which are illustrated in Figures 7-9, and 8. Figure 10 shows the history of the United States as defined by the value of the dollar which steadily increased for a century, except during wars, and then steadily declined at the rate of 2-3%/year through the twentieth century. Our money will continue to decline in value through the twenty-first century if the century old systemic defect of omission in American public policy remains in force. There is no natural or physical limit in either our political or our monetary systems which will arrest that inflationary trend. Two more charts were added to the URL since the 99-02-02 post. Fig 1 shows various macro measures of the present condition of several advanced nations plotted against their total tax rate (% of GNP). I wish I had ratios of direct to indirect taxes for those advanced nations, recall that the U.S.S.R. collected 92% of its public revenue from indirect taxes. Fig 2-3 shows the 37 year profile of three macro measures of the United States; the U.S. M1 money supply, the Dow Jones Industrial Average (DJIA), and the U.S. M3 money supply for the years 1957 through 1994. I invite those of you who are dismayed to see economic data for the United States represented as a "Global Model" to recall that our "global governance" is yet in the formative stage, while the U.S.A. has already "been there and done that" over the last two centuries as it evolved from thirteen colonies of the British Empire to a world super power whose money, the U.S. dollar, has replaced the British pound as the current "global currency." Clearly, the present performance and trends of the international (global) monetary system are unsustainable, and also unacceptable to the sovereign nation-states that now challenge the dominant role of the U.S. in the global economy. Some people would like to see the U.S. reduced to about 100 million Americans living in a third world status. Others are proposing a new global currency to be introduced, from the top down by the Global Resources Bank (GRB) at URL <http://www.grb.net/>, or, from the bottom up by Local Employment Trading Systems (LETS) at URL <http://www.cyberclass.net/turmel/gold.htm>, in competition with the U.S. dollar. And yet others would establish a global government with sufficient military power to lay violent hands on all this global chaos and straighten it all out according to their hearts desire. IMHO, each of these reform factions is playing with a short deck. They presume to establish a new world order without correcting the systemic defect of omission in the existing capitalistic world order. If any one of these reform factions were to be successful in fully implementing their financial reforms, their utopian world would still experience the same 2-3%/year inflation, 4%-10% unemployment, trade deficits, and budget deficits which curse today's industrial nations, because the systemic defect of omission in our public policy is not addressed by any of their proposals. My 30 year inquiry into this Teflon Topic, together with hands-on experience with geographically distributed mechanical systems, suggests a more modest, but more certain, approach to a sustainable global social order. That is, an approach which will hopefully avoid doing to the whole world what the American Civil War did to the American States. Recall that the defeated Confederate States remained under-developed until the Great Depression of the 1930s was ended in the 1940s by World War II, and the stimulus of war production asserted the truth of the 1966 REPORT FROM IRON MOUNTAIN, On The Possibility and Desirability Of Peace. That more modest, but more certain approach, is to hold on to the gains in world order which our world of nations has made since the end of World War II and correct the systemic defect in the public policy of the two English speaking nations, the U.K. and the U.S., which created the existing capitalistic world order. The U.S. is presently perceived by the rest of the world as a "sink.' That is, as a black hole which is draining too many of the human assets and too much of the natural resources from the rest of the world, thereby leaving the third world nations underdeveloped and the first world nations resentful of our wealth and power. The history and visible symptoms of this systemic defect in U.S. policy is most clearly shown in Fig 10 of the Global Model, and the advantage of correcting the defect, or the cost of neglecting it, are most conveniently examined with the aid of Fig. 8 of the Global Model. We may bring Figure 8 into sharp focus by looking first at that part of the Global Model entitled THE WHOLE DIVINE LAW which is followed by charts 7, 8, and 9 (the missing title of 9 is "Unit cost of productive output") with each member of the whole population located somewhere along the common horizontal axis of each chart. Notice in Figure 7 the obvious fact that development must be paid for and completed, before the productive period begins, in the life- cycle of a person, or, in the life-cycle of a capital asset. The only significant difference between the two classes of productive asset is that the capital asset begins its productive period at its maximum design efficiency and is scrapped at the end of its productive life, while people enter the workforce at low wage rates, advance to their peak performance at about age 45, and then retire at about 65 years of age and live on social security, pensions, and investments for ten or more years. Clearly, the flow of today's goods and services as shown by the upward arrow in Figure 7, represents an "interest free investment" by members of the workforce in the developing dependent members of the population. That "interest free investment" is a blessing to the developing members and a burden to the working members, and our only options are to keep the rate of investment adequate and to distribute the burden equitably over the productive taxpayers. Figure 8 shows the necessary conditions for employment, that is, an acceptable margin for both the employer and the employee, at any level of an employee's productive capability. Figure 9 shows the one variable in human affairs which can approach equality for all members of the workforce, that is, the "Unit cost of productive output." But, the total effect shown by Figures 7, 8, and 9 is presented more clearly in Fig. 8, "The U.S. Systemic Defect of Omission," which is scaled to 1993 prices for a U.S. workforce of 132 million people. The distribution of income shown in Fig. 8 is intended to suggest that the burden of supporting dependents at $5,000/year/head will affect a major part of the workforce. If the public education system, at about $5,000/year/student, were not presently covered by the 30% tax rate, the impact on the family budget of workers would be $10,000/year for 1-12 students. For college students, the impact on the family budget of workers is much more than $10,000/year/student. It is worth noting that the U.S. defense budget, the expense of public education, and the expense of supporting dependent children, each amount to about 5% of GNP. The defense budget should properly be shown as a dependent expense on the left side of Fig. 8, along with the prison system, the welfare system, the medicaid system, and the social-security system. Each of these functions provide significant amounts of employment for the workforce, without delivering additional goods and services to the world market, in excess of the net after- tax purchasing power of the workforce. Notice that the expense of supporting children (5% of GNP) reduces the after-tax purchasing power of the workforce by about the same amount which the defense budget (5% of GNP) adds to the after-tax purchasing power of the workforce. It is unfortunate that the 1966 REPORT FROM IRON MOUNTAIN, on the possibility and desirability of peace, neglected to mention the possible use of a children's allowance (5% of GNP) as a substitute for the large defense budget (5%of GNP) which, since the end of World War II, has kept the U.S. economy from sinking into another depression. There are international organizations (for example, UCL/ETES The Basic Income European Network at URL <http://www.econ.ucl.ac.be/ETES/BIEN/bien.html>) which are presently proposing a universal basic income for each person which would leave every member of the workforce on Fig. 8 with an after-tax income equal to 70% of his earned income, just like the high income folks on pages two, three, and beyond of Fig. 8. Why does the more modest proposal, to subsidize only the support of children, not have a corresponding international organization promoting the less expensive, but more certain approach? Lets hear from the frequent posters, lurkers, and innocents on several mail lists. WesBurt >>>>>>>>>>>> End recent Post <<<<<<<<<<<<<<<<
