The Equanimist

Invest in US

Posted in Economics, Economy, Political Economy, Politics, Public Policy, Socioeconomy by equanimist on August 16, 2010

I

Where do stewards who hoard currency (incentivization to put people to productive work) think that average people are going to get money?

Where do average people get money? Can they print it?

How does flow and use of money (economic engine) work? Can socioeconomy (presently) function without some kind of currency actively cycling through it?

The single most pressing issue facing the US remains a lack of US jobs—as opposed to unemployment, which concept is clouded by unemployment insurance: jobless aren’t exactly unemployed for so long as they receive money from the government to pay bills but in a sort of limbo between employment and unemployment.

While fundamental causes of hoarded currency may include utter lack of perception/understanding of socioeconomic principles (including civic responsibility and patriotism as same apply to the wider world) combined with inability among people vying for acceptance (and conditioned to think one way or another) to “put two and two together and get four” on their own when they are being told it is ten, the proximal cause of unemployment is hoarded (misused) currency. This can and must be quickly addressed.

II

Currency (so-called “paper money” measured in dollars and cents) is not commodity but tool. That US people were able to produce with credit (pseudo-currency) more than they could afford with circulating (real) currency is testament to the fact that there is not enough real currency circulating through the economy.

The US did not furnish too many jobs. US people did not live beyond their means, but credit to supplement available incentivization provides evidence of irrational distribution of paper money, which is disproportionately concentrated in the hands of a few who do not use it.

Lack of current in currency can be the result of a confluence of factors including too-high pay packages at the top combined with too-low investment by top earners and businesses, too-low taxes on top earners and wealthy businesses, too-low wages at the bottom, and too-high prices for goods and services (in this case, the direct result of pull from the top as evidenced by increasingly unequal wages).

That the modern steward class would sooner allow US infrastructure to decay than make currency available is testament to a radical change in attitude of US stewardship that took place over several decades.

III

Why does it bother currency-hoarders that US masses buy the very iPods and PS3s and HD TVs that keep them entertained (and otherwise oblivious to a changing power structure)? Surely it must bother them because they are not doling out the money with which to make future purchases, or, they are but they are not including enough to meet other expenses.

Why does it bother them that average US people are well educated in order to be more productive, better-quality servants? Surely it must bother them because they and their representatives have cut and continue to cut education spending. Isn’t high pay supposed to attract the best and the brightest? Aren’t small class sizes supposed to lead to better-educated students? Hasn’t the US system suffered by most metrics?

Why does it bother these hoarders that average people can afford their own homes? Surely, average people must live some place.

Past US stewards (i.e., our progenitors) might have been thrilled by the extraordinary accomplishments that we made as a society. Yet, their children revolted against the socioeconomy that made these possible. The “greatest generation”, spoiled (perhaps) by two terrible wars, bred a generation (the current steward class) that is preponderantly fearful, callous and avaricious beyond reason. These compulsive people are committed to a “zero-sum-game”, “tough-love” vision of life incompatible with civil society because it undermines systems that civilize.

Modern US stewards take indiscriminately from people whom they see as adversaries (i.e., everybody else) in order to hoard, while they would undermine with an army of lawyers and lobbyists the institutions that make possible US socioeconomy and gamble that US middle class will accept the change passively.

Worse, modern US stewards fail to understand the risk—that we are what we are—not what we would wish to be. If US stewards act like Mexican, Indian or Chinese (or pre-war US) stewards then, all else being equal, they’ll recreate Mexico, India or China (or pre-war America). Consider, for example, Mexico is so fantastic that its citizens streamed across the US-Mexican border at great personal risk to be illegal immigrants and all that that entails.

There is nothing in the last few hundred years of western history that suggests that average western people will suffer degradation indefinitely while their stewards enjoy ever-increasing wealth. The result of wealth consolidation and deficient current then, instead of safety, is likely to be ruin (preceded only by volatility and risk).

IV

Consolidated wealth must be wound down to a sustainable level and invested at home.

It is no longer enough to stimulate US demand. US people must spend more on US goods and services or jobs won’t come back. To that end, average US people need more real money to spend and strong incentives to spend it domestically. Further, it will not be enough to furnish more credit for the purpose: this crisis is predicated upon credit in place of currency.

The Credit Gamble [which seems something like, “If we (a minority of stewards) make credit available and show what it can do then the broader steward class (the same that has been consolidating money) will be forced to pay when the rent comes due because average people will be unable to do so”], this gamble did not pay off.

Modern US “stewards” do not tend to see themselves as such but see themselves as adversaries of average people and popular government: aristocrats. These aristocrats see only how fat their wallets get, and, thinking that they are successful just as long at they make more money to hoard, they continue to siphon the lifeblood (fiat currency) off our socioeconomic system.

Doubling down would be foolish.

V

To suggest or, worse, believe that people who have and businesses that have consolidated wealth will spend (in an “uncertain environment”) more than they make (that is, that they will suddenly spend down their savings to reinvigorate the US economy) because their taxes are lowered is absurd and would not be worthy of consideration except that it is suggested by those who view success in terms of hoarded currency and their surrogates.

If the US did not attract business sufficient to employ US people and jobs were vanishing for that reason then tax cuts could be used to attract business and restore jobs. But business attraction is not now relevant to US job creation.

There are plenty of businesses headquartered and/or doing business in the US. Despite tax cuts, it will remain cheaper to produce goods and services in China and India and Mexico. Believing the bottom line the single most important function of business, US businesses will continue to outsource absent some incentive to produce goods and services in the US. The “savings” that outsourcing yields will continue to go to a small few who have steadily awarded themselves higher pay and severance packages at the expense of “working” people absent some force acting against them. And, jobs will not come back as the result of tax cuts.

Instead, taxes should be raised substantially on top earners. Further, tax law should be modified to tax extraordinary wealth that is not invested in projects that put people to work. Using this money to create US jobs will begin to make up the slack in currency circulation without devaluing the dollar.

Obviously, it is difficult for elected US officials, increasingly pageant winners and right-hand men—not stewards per se, to distribute money to the middle class, which will spend it wisely (just so long as they spend it domestically). But, the US government must also pressure wealthy businesses to expand domestically and pay more in wages (in a deflationary environment) and simultaneously take money from same wealthy businesses (i.e., stewards who own/manage same) to distribute to US middle class.

[One might argue that businesspeople borrowed from future growth to buoy their own incomes: by beggaring their countryman and leaving same laden with debt, while packing away the higher yield of outsourcing—not putting it to use abroad to create foreign middle classes or distributing it at home to sustain their own way of life but always “leaving it to others” to do these things, these businesspeople ensured that the US would lose jobs, spend down its capital, accumulate debt and ultimately collapse like a house of cards when the cheap money stopped flowing.]

VI

High taxes, however, are not sufficient solution.

The wake of a staggering Chinese trade surplus and Buy Chinese incentives (borrowed, perhaps, from decades-long success of “Buy American” programs) provide another opportunity to institute an Invest in US program. Unfortunately, it will be a harder sell than it was a few years ago when inferior products seemed a plague, but it should look the same:

1.) All containers entering US ports should be thoroughly inspected. Inspection costs should be paid by the importers themselves—not US middle class.

It must be within a country’s purview to verify that contents of shipping containers are as listed and meet well-defined standards; and, if one genuinely wants to stop crimes including everything from trafficking in guns and human slaves to terrorism, it is a wise policy.

Moreover, it would remove an artificially low barrier to outsourcing and perforce make same more expensive absent tariffs. Special relationships with countries whose standards, wages and security mirror our own should be recreated.

2.) Illegal immigration should be stanched. While not as big a population as that of China or India (or China and India combined) the illegal population represents a substantial group that will work for extremely low wages and, as such, negatively impact wage growth.

While the US is and should remain a melting pot, a society is not likely to absorb a group twenty-times its size and maintain the status quo.

Let us be quite clear, while there are US policies that have done disservice, the sum total US policies have done great service to US people and foreign people all over the world.

Adding, in too rapid fashion, too many people of any nationality, religion or ethnicity that do not support core US principles threatens the US socioeconomy because it is likely to tip the balance away from core positions.

3.) Insourcing should be dramatically curtailed. Our institutions have not expanded to include more than 6 billion people vying for positions. In order to rebuild US capital, US positions must be substantially limited to US citizens.

The US cannot employ, educate, feed and etc. the whole world. The US can employ, educate and feed some foreign people and lead by example.

4.) Taxes should be raised on corporations and wealthy; and, in the meantime, money should be printed to replace credit and invested in projects with long term benefit, esp. infrastructure, education, defense and clean-energy technologies.

It should go without saying: Infrastructure makes every daily pursuit possible. Safe neighborhoods, reliable power lines, running water, driveable roads, sound bridges and so on and so forth are indispensable to civil society and high productivity. Of course, to the extent that these suffer civil society and productivity must also suffer.

But, civil society and productivity also suffer when children are poorly socialized and educated. Successive generations must be taught the core principles, techniques and skills—the wisdom upon which success is predicated or be all but guaranteed a darker tomorrow.

History makes clear that the world is navigating treacherous waters. And, the US is in a weakened state. Cuts in defense spending could not be timed more inappropriately than now. While new bombers and manned aircraft might be put on hold, the US would be foolish to divert money from myriad technologies as diverse as unmanned aerial vehicles and energy production that will ensure US hegemony.

The US cannot stand up for freedom and democracy and lie prostrate at the feet of foreign despots. Clean, cheap energy technologies sufficient to US demand will ensure our independence, while creating hundreds of thousands of jobs and products to export. Stewards should hasten such technological advances while putting people back to work.

VII

The positions outlined here are in keeping with a long US history of independence, freedom and equality under a strong central government.

Make no mistake, while it is indeed possible that the US has changed so that we will welcome socialism or peaceably abide poverty and starvation it seems unlikely.

Fundamental change no more exotic or painful than restoration of flow of currency can change the tide. If we hope to avoid the real dangers on our present course, we will make the change.

There is no magic place where money doesn’t flow but people prosper.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: