May be time to consider new pricing and taxing ideas for the digital economy. Time for a bit tax?? An indirect turnover tax on digital traffic. There are different ways to get at the savings in order to get at needed infrastructure. A gasoline tax is one, a bit tax might be appropriate for the emerging economy.
arthur From: Keith Hudson [mailto:[email protected]] Sent: Thursday, August 16, 2012 1:51 PM To: RE-DESIGNING WORK, INCOME DISTRIBUTION, , EDUCATION; Arthur Cordell Subject: RE: [Futurework] Arthur's 1st belief Arthur, Why I wrote about banks is that we seriously have a problem with the accumulation of sufficient savings in order to pay for investment in infrastructure and production machinery. Proportionately, a modern nation-state is not able to save and invest anywhere near as much as it did 100 years ago -- or even 50 years ago. America can't afford to even maintain the roads and bridges that Eisenhower built in the '50s. Keith At 17:43 16/08/2012, Arthur wrote: I mean that with the use of mechanical means, automation, information technology etc.,,etc..output to serve our needs can be met with a fraction of the labor that was needed in the past. We are awash in goods. Economic slowdowns are a function of inability to clear warehouses and store shelves. Economic problems are largely a function of lack of effective demand. So we have to get money into the hands of those who need but don't have the means to meet their needs. Hence there is a distribution problem. The money and banking issue is, agreed, an issue. And an important backdrop to the future of the system. In the short term though we can alleviate a lot of the suffering, uncertainty and anxiety through relatively simple ways to distribute money and goods to those in need. Longer term we have to rethink what we understand by "economy". One definition I have always used is that economics is the allocation of scarce resources among competing uses. Scarcity used to apply to tangible things (things to be dug out of the ground, etc.,), increasingly scarcity seems to apply to intangible things (environment, crowding, "quality of life" etc.) Arthur From: [email protected] [ mailto:[email protected] <mailto:[email protected]> ] On Behalf Of Keith Hudson Sent: Thursday, August 16, 2012 4:44 AM To: RE-DESIGNING WORK, INCOME DISTRIBUTION, EDUCATION Subject: [Futurework] Arthur's 1st belief At 21:17 15/08/2012, Arthur wrote: 1. That western capitalist society has solved the production problem. Largely so (perhaps!). But what was the production problem in the first place? It's actually a fascinating piece of history which you would never discover were you to read text books on economics or banking. What the sea merchants of England (the first capitalist society in the world) learned to do in the 17th century was to form merchant banks in London (as also contemporaneously in Amsterdam, Gdansk, Genoa and one or two other seaports in Europe). Each bank (London had about 150 of them) consisted of a small group of trusted friends (usually no more than a dozen) who would insure one another's ventures, lend to one another and mutually guarantee loans that any of them might make to other (trusted) friends outside the group who might be facing a temporary financial difficulty or who needed money to build a house or for a new project. During the same period, similar groups of trusted friends in the provinces formed "country banks" in most counties of the countryside (but nowhere else in the Europe and Asia because provincial banks were vulnerable to constantly marauding armies). The trusted friends of a typical country bank would consist of a few of the local large farmland-owners and also the businessmen of the new small towns that were springing up all over the country. In times of exceptionally good harvests, the land-owners could only charge cheap prices for their food; thus prosperity would spread through all classes, including normally poor people who could then afford to buy the new goods (new iron tools, warmer wool clothing) that were being made in the townships. The country banks were then be awash with businessmen's profits. At times of exceptionally poor harvests, the town businessmen suffered through the general lack of prosperity but the land-owners could charge the earth for food and the country banks would also start accumulating surpluses. Depending on the weather and the consequent extreme harvests every few years, many country banks would frequently have surplus funds in their strong rooms that they had no immediate use for. However, they soon learned to send their spare cash to London where the merchant banks (with their high profit margins from international trade) could pay good interest rates to the country banks, making the rich partners thereof even richer. Then -- with new scientific ideas in the air (the Royal Society forming in 1660) -- some of the country banks wanted to invest money in new local schemes (e.g. canals. iron trackways to their stone quarries, wool-weaving belt-driven factories). If they didn't have enough funds of their own then the merchant banks of London would be only too pleased to lend money to them (so long as they received dividends in due course!). However, this would only start to happen when the merchant bankers of London got to know the country bankers, and vice versa -- when they felt they could trust one another implicitly -- when the other's "word was their bond". Thus a pattern of capital transfers began in the 17th century whereby some (mainly agricultural) countries would be sending money to London, which would then be recycled to other (proto-industrial) counties for their new projects. But this was chicken-feed compared with what was required -- such were the number of new ideas tumbling out of the scientific excitement of those times. Far more money (that is, gold coins) was required than was coming from the gold mines. For this reason new money had to be made. It wasn't real money but it was an adequate practical substitute. These were notes that were hand-written by banks and used between them. These were promissory notes. These were used not only between banks but also between businessmen who trusted the banks. Whenever possible these promissory notes were exchanged backwards and forwards many times before finally being deposited in a bank account or exchanged for real money at the bank counter. In due course, these promissory notes were printed, requiring only the signature of a bank's partner. Gradually, over a period of a century or so these promissory notes became increasingly widespread and were known as banknotes. Every bank had its own banknote design. Because they were trusted ("as good as gold") then any businessman with a temporary surplus of banknotes on his person or in his house would feel himself just as vulnerable to thieves as if he were hoarding gold coins. So, increasingly, businessmen and others would ask the banks (the merchant banks and the country banks) if they, too, could become depositors. In that case, they could simply deposit their banknotes and, instead of taking gold coins away, they were given a bank account with a credit entry. >From then onwards (18th and 19th centuries), the amount of banknote money grew enormously as the industrial revolution grew. It didn't take the place of gold, of course. In times of panic many people would rush to the banks and exchange their banknotes (and their credit accounts) for real gold coins. Gold coinage would be too little to keep the economy going at full speed, so for a while (usually a couple of years) while people got their nerves back, and banknotes resumed again, there'd be an economic recession. When the economy resumed then, for practical reasons, the gold coins would disappear again into the bank vaults and banknotes would do most of the heavy lifting. Yet another new paper document arose in the 19th century and this was the personal bank cheque. This, too (if it was "open") could be used backwards and forwards for most sizeable transactions until, by 1900, there were far more personal cheques being used in England than banknotes. So we had a massive superstructure of personal cheques resting like an inverted pyramid on a smaller number of banknotes which was, in turn, resting on a smaller number of gold coins. Then again, with the invention of the personal credit card, the inverted pyramid becomes even larger. The order and extent of practical money use for the ordinary consumer expanded enormously and goes thus -- credit card --- personal cheque --- banknote -- gold. The ordinary consumer never uses gold at all. It is too rare and too valuable for practical use. Then again, there is yet another inverted pyramid of new pretend-money items sitting on top of credit cards! This time they're not used by individuals but by the banks themselves. They are a vast array of documents (electronic this time, not paper) created in order to augment the money circulation system even further in order to keep the Western economies going. These are derivatives such as CDOs (Collateralized Debt Obligations), and CDSs (Credit Default Swaps). All these arose since the 1980s. The money system has now become very dangerous indeed -- as we have been experiencing since the 2008 Credit Crunch. Because the system is so large with so many complex interesting layers it can no longer unwind as it used to do before about 1900. Before then, whenever there was a trade panic (a large business or a bank collapsing, say, due to foolish directors) the financial system would rapidly unwind until many businesses and banks went completely broke and the more prudent banks had paid out almost their gold coin that had been kept in reserve. These panics used to occur every ten years or so. Afterwards there'd be quiescence for a while. But then, as confidence in banknotes and cheques returned, the economy would survive. Gold would return to the banks' vaults as reserves. Within a year or two the economy would be restored at full strength. Today, the capitalist system in the West is now in danger of breaking down completely. Because central banks (officially) excoriate the use of gold as a currency then the present economy can't fully unwind. The major banks (and even some large firms such as General Motors) are not allowed to go bankrupt. Instead governments print more money. But they're actually delaying the problem. No Western government yet knows how economic growth can be revived. The banks can't, or won't, lend to business start-ups. Large businesses sitting on large amounts of money don't know what to invest in. So what can we reply to Arthur's question? The production problem was solved once. It's no longer soluble by present methods of money printing. We'll either have to sit the present situation out as a long term depression (while the governments pluck up the courage to purge the worst banks) or face a hyperinflation catastrophe (when many banks will be destroyed more dramatically). Keith Keith Hudson, Saltford, England http://allisstatus.wordpress.com <http://allisstatus.wordpress.com/> Keith Hudson, Saltford, England http://allisstatus.wordpress.com <http://allisstatus.wordpress.com/>
_______________________________________________ Futurework mailing list [email protected] https://lists.uwaterloo.ca/mailman/listinfo/futurework
