Ed,
What has changed since Adam Smith is the introduction of the controlled economy. The US has some 9,000 tariffs and quotas to keep out competition. Does that sound like Adam Smith? Umpteen billions of dollars are given to producers distorting the market. The agricultural subsidies are a disgrace. More billions go to consumers in a variety of ways. We have huge bureaucracies at every level of government, wasting American money with gay abandon. Direct meddling in the economy by inflating the currency and artificially depressing interest rates doesn't exactly sound like Adam Smith. Whereas the evidence is clearly seen that big government action is synonymous with failure. Yet, apparently, you favor big government. Harry ******************************* Harry Pollard Henry George School of Los Angeles Box 655 Tujunga CA 91042 (818) 352-4141 ******************************* From: [EMAIL PROTECTED] [mailto:[EMAIL PROTECTED] On Behalf Of Ed Weick Sent: Tuesday, October 07, 2008 7:44 AM To: futurework Cc: [EMAIL PROTECTED] Subject: [Futurework] Are the fundamentals sound? How many times have we heard politicians recently tell us that "the fundamentals are sound"? On hearing it, we are supposed to picture expansive landscapes full or wheat, oats or corn, and cows in green pastures that sweep off into the distance. Or we are supposed to picture workers with secure jobs doing their thing on assembly lines, or trucks and trains moving the stuff they produce to distant consumers, or families able to pay their mortgages and happy in their homes. The picture is supposed to be one of productivity and the expansion of material goods, of supply meeting demand and of nobody being left out if he or she wants to participate by putting effort into the economy. After all, it goes back to the 18th Century and Adam Smith, doesn't it? But are those really the fundamentals? In reading the business pages, one has increasingly come across words like credit, leverage and derivatives. One learns that a typical commercial bank lends about $10 to $11 for every $1 of capital on its books, but that investment banks have typically invested $22 for every $1 and even as much as $30 to for every $1. One also learns that the financial markets of today are highly sophisticated, consisting of very bright minds, very powerful information technology and vast amounts of data. In an earlier posting, I suggested that the economic world consists of two parts, a highly supplicated upper world equipped with technology that permits it to do things ordinary mortals would never dream of, and a nether world, consisting of ordinary mortals – people who either have or want ordinary jobs, urban and farm families who want decent houses and cars, and so forth. It is the latter that politicians and economists have traditionally thought of when they referred to the soundness of the fundamentals. But, judging from what has happened to financial markets recently and the impact this will have on the well-being of the goods and services economy, it may well be that the upper world has become fundamental. If it goes down the tube, everything else seems to follow. The assembly lines begin to shut down, crops are left in the fields, and the cows head for the hills. Don't feel badly, Adam Smith, you may have had it right in your day, but a lot has happened since then. Ed No virus found in this incoming message. Checked by AVG - http://www.avg.com Version: 8.0.173 / Virus Database: 270.7.6/1712 - Release Date: 10/7/2008 9:41 AM
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