[The following is a brief treatment of the complete blog on economics and how to restore full employment [see the next page]. I hereby give you permission to reprint it as long as you include its copyright notices for mailing [or emailing] to your legislators, local newspaper editors, pastor, et cetera.]
[Since it is too long [was a three page MS Word document] for most length limited online submission systems, you will find yourself forced to use the paper-and-U.S.-Mail method. But if you know someone unemployed, you also know the value getting to recovery and full employment.]
[Please delete these three top note paragraphs and write your own cover letter. Or just reprint the piece below starting with the “Fellow Americans” salutation. Or replace that salutation with your regular “The Honorable Senator/Representative HIS/HER NAME.” Above all communicate with your Congress people! They represent you. By the way, even your state governor can be a good lobbyist on your behalf.]
Letter to Editor or Guest Editorial
Fellow Americans:
How long are we going to put up with our artificial economic crises? As a society, we have the means of production, but people are not able to work them. We need the goods and services we would produce to exchange for our daily requirements: food, clothing, shelter, transportation, et cetera. But the system for such exchange has stripped its gears. Again, why do we tolerate this insanity?
Our first problem is we are killing ourselves, those around us, and millions of people around the world. While we sit on our hands and bemoan our difficulties, seniors, the ill, and the unemployed, are increasingly not buying their prescriptions nor seeing their doctors because they lack the funds. And they may be buying cat food to survive. If they have not become hospital emergency cases yet, they may deteriorate that much before this year is over. The proud are the most vulnerable. And the children suffer in portentous silence.
And we are destroying our society. People with money constantly call for lower taxes to preserve their shrinking funds. Because shrinking governmental budgets force new reductions in services every other week, our highway bridges are gradually collapsing, our public health facilities gradually closing, and emergency police and fire agencies increasingly unable to respond. We are trending toward a society in chaos, where those who can afford the expense will live in securely walled communities and travel in armored caravans of tracked vehicles. The rest of us will live and die in the streets.
So why do we suffer this insult to our human aspirations?
Nobody has money, we reply. Too many people are not working. Nobody is hiring.
Why not? Well, we are in a recession. A bad one! Maybe it will become a depression. Maybe we are going to see our own Great Depression!
In addition to our above suicidal direction as a society, we have three specific and immediate problems, 1) our myopic circular thinking about economics; 2) our economy’s systemic flaws triggering this mess; and most significantly, 3) getting to economic recovery, i.e. generating a sustaining volume of transactions, i.e. restoring the economy’s currency flows to levels that can support our living standards.
Regarding our myopic thinking, we have to stop saying that the problem is the lack of money. Money is only a convenient medium of exchange, commonly called a currency, we have agreed to use; the supply, tracking, and regulation of which we have delegated to the government on our society’s behalf. Our looming impoverishment will actually be from our lack of production, not the lack of money.
If we want a different money, or currency, all we have to do is agree on how to name and denominate it, how much to print, and how to distribute it. Getting such agreement would be difficult however, because too many of us confuse a currency with the wealth we let it represent in our daily transactions. [A temporary, supplemental currency would be more feasible. In the face of any replacement proposal, American patriots would defend the American dollar until their own extinction.]
Regarding the economic triggers, we have both general and specific problems. In general, we have trouble accepting that economic booms and busts, peaks and valleys, or cycles, are the normal side effect of the operation of two of our most cherished institutions: our constitutionally based rule of law, and our free enterprise economic system.
We all know lawyers can write contracts which give their clients advantages in market transactions, but we do not usually think about the ramifications of such skill for the whole society. And we all know that production efficiencies, family (or corporate) resources, and even the passage of time, can work to the advantage of a single entrepreneur, or a demographic group of them [be they farmers, bankers, option traders, venture capitalists, or whatever], but again we avoid designing our systems to deal with these implications.
Instead, we pretend that what free trade theory assumes, a “perfect” market, i.e., everybody equal; actually exists. In reality, no such balanced market has ever been. And the degree of the imbalance is critical. The more the imbalance, the more dramatic the downturns. Why? If you think about it, the reason is simple. With the leverage of greater wealth, people controlling capital accounts for endowed individuals and corporations increasingly demand higher return rates. What right thinking capitalist would not?
When the less fortunate can no longer afford that price, those fund managers have the option of “taking their bat, ball, and glove, and going home;” that is, simply refusing to play economic transaction games for as long as their demands are unmet. Withdrawing their funds from participation happens any number of ways.
After the especially big killing, they can deposit their funds beyond anybody’s reach in a secure foreign bank. More commonly, they just transform their holdings from volatile but working equities, i.e. stocks, to cash and equivalents. Or they may do an ego trip, buying multiple new and opulent residences. [Remember also, that huge numbers of “boomers” have been, and hopefully still are, trying to save for their retirements.]
Nevertheless, when increasingly sizeable chunks of funding go on the shelf, their absence blocks every transaction through which those dollars would normally have flowed. So accumulated wealth engenders out-of-balance markets. A small decline in sales starting with ordinary oversupply is innocent enough until the disappearance of skittish participation dollars magnifies its effect. Then the small crunch cascades into employee and vendor layoffs, followed by foreclosures, and bankruptcies. As more dollars get scared and run away, a tsunami of disruption wastes whatever happens to be in its path.
Regarding recovery, think of entrepreneurs with their money on the shelf as having been busy beaver who successfully built profit dams across their available revenue streams. Now, while those beaver are happy in their private ponds behind their dams, the rest of society, especially those below the dams, experiences reduced revenue flow, or total drought.
Everyone can see that such revenue dams need better spillway controls, otherwise removal by a DNR [Department of Natural Resources] bull dozer or explosives expert. Historically, in countries where civil order has deteriorated, such a bull dozer takes the form of a revolutionary tribunal creating people’s courts to convict and execute the offending demographic, maybe entrenched landowners or industrialists.
But in the great democracies, valuing both law and free enterprise, such dams must be controlled or removed by legislative action. No easy task when the legislators’ campaign funding comes largely out of the revenue ponds created by those beaver dams!
And, since the dams are constructed of big contracts, loans, and mortgages, interlaced with expectations of continuity in currencies and valuations, and mudded in with a slurry of constitutional and contract law, clearing away their obstructive debris and that of other failed structures downstream will be a lengthy task for the legal system, especially the bankruptcy courts. In the meantime, if production sits idle, goodly numbers of people will starve.
Hence, sanity demands we create other revenue channels, other back way access ports into our system, to get the neediest back to work! It is very important that these revenue streams put these neediest to work because their needs are so great they will never think of socking any such employment returns away. Thus that revenue will circulate and circulate, from the bottom of the economic pyramid on up. The alternative is what we have now, the big deficit spending of the recovery bills, but too much of that money just disappears into the beaver ponds and legal debris piles of obstructing contracts and court actions.
On the other hand, if we install these temporary bypasses, adapting our system to get along without the beavers holed up behind their dams, an unanticipated benefit will kick in. The new configuration will challenge some of the pond dwellers’ security and competitive instincts sufficiently for them to pull their dollars and talents off from their safe shelves. And those funds will again flow into the working transaction mix.
This back door revenue channel approach will become a powerful new tool for governments confronted by these severe economic disruptions! So, what is it? It is the use of a temporary, emergency currency operating in parallel to the log jammed American dollar, but bypassing the impacted legal morass of old contracts and failed credit lines.
The government will support this temporary currency only long enough to re-prime the system, and get real value flowing once again to those who want to work. Then it recalls the currency. And, since this plan does not depend on up front dollars, it creates a relatively low-cost path back to full employment.
The above is the simplest explanation I can give of government side economic responsibilities. As the sole-source provider of the equal protections of the law, and a lot of other important things for society, government economic functions and operations are very different from that of private enterprise.
Government is, above all, the competition committee responsible for ensuring that all citizens in this economic league have a fair shot at the opportunities. Over the last decade, the federal government has “blown” that responsibility, and now we are experiencing the result. You could say, to protect Americans from such abrogation of responsibility in the future, we need to add one more right to our famous Bill of Rights, the right of every citizen to a balanced and productive economy!
For a more complete, but slightly more academic explanation of the causes of our crises, and the tools for restoring full employment, see my blog, www.plaineconomics.com. The plan is in the middle, section 4. If you find the reading difficult, no problem.
Just make sure this plan gets to its real audience, your federal legislators, your senators and congressional representatives! Tell them in clear, emphatic language that you expect them to use this new tool to break through the revenue dams the busy entrepreneurial beavers have created, to ensure resumption of the employment and production levels to which we are accustomed.
They need to hear today that you want their action! And they need to hear the same thing from you again next week, and the week after that! Only then will they begin to represent you, along with their wealthier, more visible constituents.
For those of you who are God fearing, and profess your love for all mankind, for the love of God, take real mercy on your fellow man. Demand the political action that will save their lives, and maybe your own.
Thank you. Jac Bajema
©May, 2009
