Harry,
At 20:38 04/10/2011, you wrote:
Keith,
(HP) While other economists were blaming
"overproduction", or "underconsumption" for the
economic crash, Henry George pointed out that
the cause was actually underproduction, and that
this was the problem that needed to be confronted.
As you say, goods and services might be needed
to drive "an economy" but where do they come from?
(KH) The frontal lobes of creative individuals.
Given a succession of new consumer products,
initially expensive, but successively
mass-producible downwards, then you can have a
socially-mobile (class-flexible), smoothly
growing economy -- a tide that lifts all boats.
Once that succession is broken for one reason or
another then the population then defaults to a
more rigid stratified condition. That is what has
been happening for the past 30 years or so. In
Europe and America we are now reproducing a
modern version of the Hindu caste system.
(HP) If we want to find out why the economy
crashes, we should look to underproduction for the cause.
(KH) Under-production is only one of the symptoms
that occur in a stalled economy.
(HP) Labor needs wages to survive. Why can't he
get wages? This is the basic question that must
be answered if we are to advance economic understanding.
(KH) The principal reason these days why labour
can't get wages in the advanced countries is that
he is not educated sufficiently to keep up with
advancing technologies. Overall, we have a
dysfunctional education system due to the state
takeover of mass education from the 1870s and,
subsequently, immense resistance to exploring new
methods and more relevant curricula for modern times.
Keith
Harry
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On Mon, Oct 3, 2011 at 1:25 AM, Keith Hudson
<<mailto:[email protected]>[email protected]> wrote:
Harry,
Well, thanks for the economics tutorial, but it
doesn't take us very far. You still haven't
answered my main point -- that it's the
availability of goods and services that drives
an economy. And a constant succession of new
ones if there's to be a growth economy.
When you say that wages are the reason for
production this is only another version of the
Keynesian proposition (which he later regretted)
-- that consumer-money drives the economy. But
without available attractive goods and services
above and beyond basic food and shelter then the
modern economy (as we conceive it these days)
couldn't have started. Once a (desirable) new
good or service comes along then the more
energetic among the population will be sure to
find the additional work (or higher paid work)
to get the money to buy the product. And once
the new good or service becomes cheaper because
of the new demand then other consumers will follow.
In reality, mass cash-wages and new mass
products more or less came along together in the
post-Black Plague European townships when the
feudal system had effectively been destroyed and
energetic young boys and girls from the
countryside wanted the new products (new clothes
fashions being among the more attractive) and
the opportunity to earn the cash to buy them in
the houses of the guild masters -- the
proto-factories of the industrial revolution.
(Here I'm telescoping two or three centuries of events obviously.)
But psychologically, it has been wants (not
needs) that have always driven economic
activity. One hundred thousand years ago (when
cash or wages didn't exist!), desirable wants
(not needs) were being traded along routes of
hundreds of miles. I'm talking of sea-shell
necklaces and tablets of red, yellow, and white
ochres for body-painting -- not needs but wants for status reasons.
Obviously there were many other necessary
correlates of the industrial revolution (new
energy systems, scientific discoveries, a
sufficiency of banks to accumulate necessary
investment capital) but it was the whole
succession of new products and services (mainly
status ones) which drove it forward so
relentlessly and when prosperity rippled
downwards (and status aspirations upwards). This
applied right up to about 1980. When this
faltered, vast new credit systems had to be
invented (and much extra government printing of
money) in the hope of keeping economic growth
going. But it has failed and we are now being
driven into a new post-consumerist era.
Keith
At 19:44 02/10/2011, you wrote:
Keith,
Remember there are two basic assumptions to
Political Economy. The one I mentioned, the
'least exertion' assumption and the other
assumption that "Man's desires are unlimited."
This assumption refers your point about the
restlessness of mankind. Whenever humankind may
have it wants more, and as desires are
satisfied so do other desires stretch out before them.
I distinguish between wants and desire,
something economists don't appear to do.
I may want to be a film star, but if I go to
Hollywood, take acting school, get an agent,
pester the studios, my want has become a
desire. In other words, desire is a want with intent to satisfy it.
We should understand that wages are the sole
reason for production. However, first we must put wages in context.
To survive, labor must produce food, clothing,
shelter, and other things. To accomplish this
he needs land for raw materials and a place to
stand, and for most of our existence he uses
capital perhaps a hammer or saw. He gets a
return for the exertion he expends in production. This return is his wages.
Wages in Political Economy are the return to
labor whether it comes as cash, commission,
salary, bonuses, or whatever. The return to the CEO is wages.
Because individual labor is so tiny compared
with the mighty corporation, it is
automatically assumed that labor is an adjunct
of capital. In fact, production takes place
because of labor not because of capital. Unions
are well aware of this and their tactic is to
walk out leaving the machines to rust and the roofs to leak.
If classical thinking is correct, there is
constant economic pressure on labor reducing
his wages no matter the increase in the power
to produce. The lowest level of labor, that is
those with interchangeable jobs are living
close to subsistence level. No matter the
amount of welfare that is provided for those at the bottom, it is never enough.
Left-wing media in the US are properly fond of
publicizing the number of children who do not
get enough to eat. Also, they record the plight
of seniors in these troubled times. Yet, in
Britain's welfare state the same is true. There
are a lot of children who do not get enough to
eat and seniors are barely making it through the winter.
The classical view is that when additional help
arrives to the very poor, in due course it is
followed up by increasing land rents. So, more
help is needed, but it is never enough.
This situation conveys a picture of weak and
helpless labor opposing mighty corporations,
yet if there was a just economy in which labor
(without need of unions) could simply refuse to
work, the picture would look very different.
A major problem in analyzing any present
economic system is that it is unbelievably
complicated. The basic economy has been loaded
with subsidies, tariffs, taxes, regulations,
government financial transfers, and special
deals of every description, that it is nearly
impossible to make any sense of it. The
diagrams and graphs that fill economic texts
their little resemblance to reality. So, they
simply do not know what to do, which is why I
describe their policies as "let's try this".
They try something and when it doesn't work, they try something else.
The US Federal Register records all the laws
and regulations that spew out of Washington.
The register reached more than 730,000 pages as
we entered the new century. By now it must be
nearing 1 million pages (80,000 more pages last
year). It is impossible to deal with the result of all these political events.
The only hope for economists is for them to go
all the way back to basics, such as that wages
are the reason for production. I fear they
won't do that for they have too much invested
in all the wrong analysis they learned and
developed perhaps over several decades.
Harry
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On Fri, Sep 30, 2011 at 1:56 AM, Keith Hudson
<<mailto:[email protected]> [email protected]> wrote:
Harry,
Let me take issue with you where you write:
<<<<
Much of the problem can be traced to poor
economic theory that makes "jobs" the focus of
policy, when the real goal should be wages.
(Incidentally, the effect of a tariff is to reduce real wages.)
By wages, I mean the return to labor. Labor
doesn't like exertion, so the less work needed
to get what he wants the better off he is. We
shouldn't be creating jobs, we should be making wages easier to earn.
Our goal should be to find out why it is
necessary for us to work 40 or 50 hours a week
to make ends meet, rather than trying to "make" jobs.
>>>>
I agree with you that the main problem is not
that of "jobs" but it's not that of "wages"
(that is, of those with least exertion) either.
It's too simplistic to say that people don't
like exertion. That's generally so. Given two
different ways of doing something people will
choose the easier. On the other hand, people
like activity rather than passivity and would
rather be doing something than nothing. Then
also, as regards 40 or 50 hour working weeks,
people generally prefer to spend most of the day
in the company of others rather than be trapped
at home with perhaps just one other person at
the most for company. This explains why, in this
PC world, the number of people working from home
in the advanced countries has already stabilized
in the low millions while scores, probably a few
hundred, of millions of jobs could easily be
carried out at home. Employees could save
themselves hours of stressful commuting every
day; employers could get away with paying less wages.
The real problem is neither "jobs" or "wages"
but goods or services. It is the need, or more
frequently the want, of these that drives people
to work in order to earn the money to buy them.
It is these which have largely become stabilized
in the advanced world. We have become locked
into a particular urbanized way of life in which
we have little time, energy or space to enjoy
new wants. Unlike any previous time in history,
even poor people enjoy much the same standard
range of goods and services as the rich. Not
only has the range become stabilized but the
supply has become increasingly automated requiring fewer workers.
The two glaring exceptions to the above are, of
course, education and health care. Because the
best quality of these is expensive the rich
still have a big edge on them at the present
time. However, they're both due for enormous
development. Quite when is another matter, but
as genetic research continues apace -- one might
say with good reason, explosively -- then we are
highly likely going to have innovative
breakthroughs that will be quite as equivalent
as the steam engine, the electric turbine or the
transistor were in the course of the industrial-consumerist revolution.
How these new services will be traded, and how
accessible they will be is another matter. This
will be the stuff of economics and politics in
the next era. Suffice it to say that economists
and politicians have still not realized that the
advanced countries have now largely stabilized
in the material sense. If the vast availability
of credit in the last 20 years or so has not
been able to maintain the economic growth that
has characterised the last 300 years then 2008
might be the year in which the new era actually
starts and, as it shapes up, when new economic
and political theory will be required.
Keith
At 17:54 27/09/2011, you wrote:
The interesting point of your Url, Arthur, is
that About.com showed how tariffs harm both the
country that they are aimed at and the country that imposes them.
Anti-dumping laws are worse then tariffs for
often they seem to be imposed almost
whimsically because some home grown monopoly
wants to maintain its higher prices. My
favorite example was the denial of entry to
chocolate candies because they contained sugar.
(The beet-sugar monopolists struck again!)
Among other things, I sold typewriter ribbons
for a manufacturer in the UK. An export order
price was close to half the homegrown price.
Were we dumping? Not really, for our low price
was necessary in the competitive global market,
but we wouldn't have sold them had we not made
a profit from them. (Incidentally, the "slave
workers" were Scots working in Glasgow.)
The "child and slave labor" ploy that is
offered isn't valid. Take away their export
jobs and what would they do - become corporate
CEOs? The jobs provided by exports are
life-savers. As has happened, because a good
and clever worker is worth more - and is
needed - advancement becomes possible for some
- which is the beginning of a middle class.
Incidentally, "slave labor" is one of the lines
pushed by the Tories when they were advocating
protection against Liberal free traders. Now
it's been adopted by the monopolists of Unions
and Corporations (usually working together) as
they attempt to benefit by raising prices to everyone else.
Much of the problem can be traced to poor
economic theory that makes "jobs" the focus of
policy, when the real goal should be wages.
(Incidentally, the effect of a tariff is to reduce real wages.)
By wages, I mean the return to labor. Labor
doesn't like exertion, so the less work needed
to get what he wants the better off he is. We
shouldn't be creating jobs, we should be making wages easier to earn.
Our goal should be to find out why it is
necessary for us to work 40 or 50 hours a week
to make ends meet, rather than trying to "make" jobs.
It seems we have a new, or updated, economic
problem every day. We slap a band-aid on it,
then wait for it to need another band-aid.
Does it not occur to modern economic theorists
that they may have things wrong and that the
thousands of "publish or perish" papers that
flood the libraries are written within a unsustainable context?
Oh, well, I suppose I had better just wait for
the next ridiculous nonsense that poses as
economic policy miserably to fail - whereupon
it will be repeated in some other way only to fail again.
I wonder what silly tariff or anti-dumping action will be effected tomorrow?
Harry
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On Tue, Sep 27, 2011 at 6:28 AM, Arthur Cordell
<<mailto:[email protected]>[email protected]> wrote:
This kind of comparative advantage can be
viewed as a kind of dumping. Where products are sold below cost.
<http://economics.about.com/od/termsbeginningwithd/g/dumping.htm>http://economics.about.com/od/termsbeginningwithd/g/dumping.htm
Strictly speaking it is not classical dumping
but where prison and child labour is used and
where environmental and labour laws are either
non existent or ignored, then it can be argued
that the true costs of production are not being
reflected in the price of the product.
Short term benefits must be weighed against
longer term costs to the developed country as it
loses manufacturing capacity, design capability,
etc., jobs, etc., to the low cost exporting
country. short term gain can bring long term pain
arthur
From:
<mailto:[email protected]>[email protected]
[ mailto:[email protected]] On Behalf Of Ed Weick
Sent: Tuesday, September 27, 2011 9:04 AM
To: Keith Hudson; RE-DESIGNING WORK, INCOME DISTRIBUTION, EDUCATION
Subject: Re: [Futurework] Professional Ethics (of economists)
Keith:
The practice of comparative advantage is carried
out more widely and more precisely than ever
before. Most finished goods are products of
several different material sources and/or
operations. Most international trade these days
consists of resources and part-goods
cris-crossing the world before final assembly.
Me:
I think that in today's world we need a more
up-to-date understanding of "comparative
advantage", one which incorporates the question
of advantage to whom. I have a little book on
my shelves entitled "The True Cost of Low
Prices: The Violence of Globalization" by
Vincent Gallagher, who was a researcher for
various international agencies. It doesn't deny
that countries that produce goods for Walmart or
components for Microsoft have a comparative
advantage, but points out that many of the
people who do the work in those countries are
often close to being slave labour and are
sometimes slave labour in fact. We tend to see
low wage costs as being advantageous, but tend
to omit the thought that they may be
advantegeous to us but not necessarily to the workers who make things for us.
Ed
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--
******************
Henry George School
of Social Science
of Los Angeles
Tujunga CA 90243
<tel:%28818%29%20352-4141>(818) 352-4141
******************
Keith Hudson, Saltford, England
<http://allisstatus.wordpress.com/2011/09/>http://allisstatus.wordpress.com/2011/09/
--
******************
Henry George School
of Social Science
of Los Angeles
Tujunga CA 90243
<tel:%28818%29%20352-4141>(818) 352-4141
******************
Keith Hudson, Saltford, England
<http://allisstatus.wordpress.com/2011/09/>http://allisstatus.wordpress.com/2011/09/
--
******************
Henry George School
of Social Science
of Los Angeles
Tujunga CA 90243
(818) 352-4141
******************
Keith Hudson, Saltford, England http://allisstatus.wordpress.com/2011/09/
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