Family Crest

Family Crest
Motto: I will never forget. [ Source HouseofNames ]

HUMANITY DOOMSDAY CLOCK - Moves forward to 2125 due to election of US President trump.

Estimate of the time that Humanity will go extinct or civilization will collapse. The HUMANITY DOOMSDAY CLOCK moves forward to 2125 due to US President trump's abandonment of climate change goals. Clock moved to 90 seconds to doom at December 2023. Apologies to Bulletin of the Atomic Scientists for using the name.

PLEASE QUOTE, COPY and LINK

While this material is copyrighted, you are hereby granted permission and encouraged to copy and paste any excerpt and/or complete statement from any entry on this blog into any form you choose. In return, please provide explicit credit to this source and a link or URL to the publication. Email links to mckeever.mp@gmail.com

You may also wish to read and quote from these groundbreaking essays on economic topics with the same permission outlined above

The Jobs Theory of Growth [https://miepa.net/apply.html]

Moral Economics [https://miepa.net/moral.html]

Balanced Trade [https://miepa.net/essay.html]

There Are Alternatives to Free Market Capitalism [https://miepa.net/taa.html]

Specific Country Economic Policy Analyses - More Than 50 Countries from Argentina to Yemen [https://miepa.net/]




Translate

Thursday, August 24, 2017

Restoring the US Middle Class - 6



In the interest of restoring a viable middle class to the United States of America, I will reproduce sequentially chapters of my book in this space. The title is 'Occupy Wall Street Plan 12: A Proposal for Twelve Specific Governmental Actions to Correct Some Economic Imbalances in the United States of America Kindle Edition'

The book is available as a Kindle book here : https://www.amazon.com/Occupy-Wall-Street-Plan-Governmental-ebook/dp/B00UK97C84/ref=asap_bc?ie=UTF8

My hope is that a more viable middle class will reduce class tensions.

NASA Study predicts end of civilization unless we equalize incomes: http://collectivelyconscious.net/articles/nasa-study-concludes-when-civilization-will-end-and-its-not-looking-good-for-us/

Occupy Wall Street Plan 12

6. Create a National Industrial Policy

Create a Blueprint for the Future

The United States should create a blueprint for our future economic growth. We should establish industries in which we wish to participate and then establish policies which encourage and protect companies in those industries.

Industries should be chosen on the basis of the likelihood that they will create good jobs in the future.

Critics Claim the Government Cannot Predict the Future

Critics argue that the government is unable to make sound predictions in this area since even private companies have difficulty doing so.

While that may be, there are countries which use this practice with great success and many more countries which are beginning to establish this process. The government of South Korea established this practice in the 1950's and was able to convert a nation of rice farmers and fishermen into an industrial powerhouse.

An economic policy is any law, regulation or practice through which citizens and companies can find profit opportunities or can be taxed or harmed. Considered as such, policies can be national, state or local, but usually attention is paid to policies at the national level because they have the greatest impact.

The United States Already Has a Policy

When considered in this fashion, it is clear that we already have a national industrial policy.

But, our existing national policy has been developed in a haphazard manner and does not protect our Economic National Security adequately.

For example, it can be argued that our existing industrial policy calls for exporting manufacturing jobs, sustaining a large trade deficit, transferring technology to foreign companies regardless of the effect on our domestic economy and allowing a privileged class of bankers to speculate in a variety of markets while under the protection of government sponsored insurance against failure.

That does not make sense.

Other Countries Plan Better

Other countries like Japan, China, Korea and Germany have created a conscious industrial policy with some effect in creating a better economy for their citizens.

It is time that we emulated those successful countries. Our future Economic National Security requires it.

It will be a serious undertaking, however, since it will involve changing some powerful economic sectors. We can predict that any industry or influence which seems threatened by economic change will mount a strong campaign against change.

And yet, our future depends on it.

How Japan Does It

As an example of how such a policy might appear, here is a description of the Japanese policy from POLITICS AND PRODUCTIVITY : HOW JAPAN'S DEVELOPMENT STRATEGY WORKS, Chalmers Johnson, Laura D'Andrea Tyson, and John Zysman, Harpercollins (January 1991) :

‘The allocation of resources among industries and activities can be evaluated not only according to its Ricardian efficiency but also according to two other performance criteria:

1. Its growth efficiency or its effects on long-term rates of growth of economic activity

2. Its Schumpeterian efficiency or its effects on the pace and direction of technological change.

These two criteria clearly dominated Japanese economic policymaking in a self-conscious way. Japanese industrial policy targeted industries and activities that appeared to the Japanese planners to have the greatest future growth potential and the greatest technological potential over the long run.

As Freeman argues in his insightful book on Japanese technology policy, "MITI saw as one of its key functions the promotion of the most advanced technologies with the widest world market potential in the long run."

Under conditions of imperfect competition and technological change, an allocation of resources that is Ricardian efficient-in other words, efficient by current market indicators-may not be efficient in the growth or Schumpeterian sense.'

Suggestions for A United States Industrial Policy

When we think about an Industrial policy for the United States, we recognize that it will be a huge undertaking because we have such a large and diversified economy.

Here are some things to consider:

** Encouraging oil replacement technologies to reduce dependence on foreign oil supplies is a natural

** Auto manufacturing industry is a great job creator and a success for Federal intervention

** Reducing or eliminating our BOP deficit will save many jobs in the USA

** We should not do obvious acts which can harm our military strength or increase the military strength of our potential adversaries - we should not sell missiles to Iran, for example

Mostly, let us recognize that mistakes will be made as we move forward, but the biggest mistake is to do nothing.

As the sage Yogi Berra is reputed to have said: 'You've got to be careful if you don't know where you're going because you might not get there.'

Monday, August 21, 2017

Restoring the US Middle Class - 5



In the interest of restoring a viable middle class to the United States of America, I will reproduce sequentially chapters of my book in this space. The title is 'Occupy Wall Street Plan 12: A Proposal for Twelve Specific Governmental Actions to Correct Some Economic Imbalances in the United States of America Kindle Edition'

The book is available as a Kindle book here : https://www.amazon.com/Occupy-Wall-Street-Plan-Governmental-ebook/dp/B00UK97C84/ref=asap_bc?ie=UTF8

My hope is that a more viable middle class will reduce class tensions.

NASA Study predicts end of civilization unless we equalize incomes: http://collectivelyconscious.net/articles/nasa-study-concludes-when-civilization-will-end-and-its-not-looking-good-for-us/

Occupy Wall Street Plan 12

5. Tax Away Great Fortunes, Great Incomes


Wealth Concentrations Reduce Wealth Generation

Huge concentrations of wealth and annual income harm our economy by diverting money away from risky investments in economic growth and into safety seeking investments.

It is well known that the primary criterion of investing is safety of principal. People with large amounts of money are risk averse and do NOT wish to risk that money in new ventures, preferring to find safer investments.

Our economy will grow faster and we will be more secure when we do not have extraordinarily large income and wealth concentrations. Then will capital have greater incentives to take risks and create growth.

The accumulation of great fortunes and large incomes in the United States has a deleterious effect on economic growth and job creation.

Wealth Creation Requires Risk

Economic growth and job creation comes from people who invest in businesses. It is well known that business investing is risky.

'Of all the new business startups, 1/3 eventually turn a profit, 1/3 break even, and 1/3 never leave a negative earnings scenario. According to a study by the U.S. Small Business Association, only 2/3 of all small business startups survive the first two years and less than half make it to four years', [http://www.gaebler.com]

And, since most jobs are created in small businesses, then it follows that economic growth and job creation requires risky investments.

Wealth Owners Want Safety, Not Risk

People who create large fortunes are mostly interested in preserving their capital. They become risk averse as their fortunes become larger. They do not want to invest in risky businesses.

This was first recognized by Keynes in his description of the Marginal Efficiency of Capital. In Keynes' graph, the Marginal Efficiency of Capital is a negatively sloped curve where higher returns are associated with lower capital amounts and lower returns are associated with higher capital amounts. In the graph the vertical axis represents percentage returns, the horizontal axis represents the dollar amount of capital and the MEC line represents the downward to the right sloping, negatively sloped curve of actual investments made.

We can see this demonstrated through classifying some investments as low risk and some as high risk in the United States today.

HIGH RISK INVESTMENTS ARE COMPARATIVELY SMALL - The total amount invested annually in venture capital business start ups and expansions, which are high risk, high profit investments is about $250 billion per year.

SAFE INVESTMENTS HAVE HIGHER DOLLAR TOTALS - At the other extreme, the value of United States Treasury bills is now about $15 trillion with some one or two trillion added each year. T-Bills are widely regarded as the safest investment in the world and are now paying about 2%.

All the gold mined in the world by 2009 was about 165,000 tons with a value of about 10 trillion dollars at $1,900 per ounce. Of that, some 19% is held by central banks as currency reserves.

The total valuation of homes in the United States is about $ 9 trillion after the price meltdown of the last few years. Residential real estate is usually considered a safe investment.

Commercial real estate is also considered a safe investment although somewhat more risky than houses. It is also worth about $ 9 trillion.

Although somewhat more risky than T-Bills, the NYSE is considered a safer investment than new business start ups for a number of reasons. The total valuation of all the companies on the NYSE is about $ 15 trillion.

In conclusion, it is clear both theoretically and practically that people with large incomes and fortunes do not wish to invest in business start-ups. Any activity that increases already large fortunes will take money away from people wishing to start new businesses, thus reducing economic growth and the Economic National Security of the United States.

Thomas Picketty Suggests Changes to Keynesian Model

However, the situation has changed so much that Thomas Picketty in his book CAPITAL IN THE 21ST CENTURY has documented that the return curve is now a positively sloped curve. This means that the more money you invest, the higher returns you receive. The likely cause of this revolution in the capital to return ratio is that the large fortunes are now so large that they can control the institutional environment so that the laws favor their investments over smaller ones.

While the large returns Picketty attributes to large capital accumulations suggest a possibility of wealth creation investments, the actual effect may be very different since the primary motive of wealth owners remains safety of principal. It is likely that the owners of large fortunes look for safe, low risk investments and manipulate the regulation environment so that the returns are increased.

The implications of this change have yet to be determined.

Sunday, August 20, 2017

Restoring the US Middle Class - 4

Restoring the US Middle Class - 4

In the interest of restoring a viable middle class to the United States of America, I will reproduce sequentially chapters of my book in this space. The title is 'Occupy Wall Street Plan 12: A Proposal for Twelve Specific Governmental Actions to Correct Some Economic Imbalances in the United States of America Kindle Edition'

The book is available as a Kindle book here : https://www.amazon.com/Occupy-Wall-Street-Plan-Governmental-ebook/dp/B00UK97C84/ref=asap_bc?ie=UTF8

My hope is that a more viable middle class will reduce class tensions.

Occupy Wall Street Plan 12

4. End Free Trade

Free Trade Doesn’t Work

United States trade policy does not work. We adhere to a low tariff concept that undermines our National Security. It does so by transferring jobs to foreign countries and by facilitating huge trade imbalances which serve to transfer wealth created in the United States to our trade partners.

It is time to change trade policies so that we import only as much as we export.

Our trade partners do not reciprocate our trade encouraging practices and in fact use their trade laws and national customs to protect their domestic industries. It is time to recognize reality in trade.

Free Trade Doesn't Work; it's a fact and it's also the title of a book by Ian Fletcher [http://www.freetradedoesntwork.com/].

US Trade Policy Enforces Free Trade

Trade policy in the United States of America has been wedded to the idea of Free Trade since the 1950's.

One of the justifications for Free Trade and low tariffs for the USA was that we could promote industry in other countries by opening our consumer and industrial markets to the world.

Since the USA emerged from World War 2 as the world's major industrial power, we could afford to, we had an obligation to and our security was made stronger by raising living standards in other countries.

Since then many countries have developed strong economies by protecting their domestic companies and exporting products to the USA: China, Korea, Japan, etc., etc.

Due to their success, our relative economic strength has declined significantly to the point where our economy is now the first among equals instead of the acknowledged leader ; further, we are tied together with the other industrialized countries in an electronic embrace that we cannot break.

The time has come to abandon that policy and conduct our trade policy with attention to the real world and not to the theoretical world constructed in the 1700's.

Make no mistake, trade with other countries can promote our Economic National Security if it is managed carefully. Equally it can damage our security if it is left to market forces.

Harm to the US Economy

It is sufficient here to offer an estimate of the harm done to our economy by our recent and overwhelmingly negative trade balances.

By the term 'negative trade balances' I refer to the monthly and annual difference in current dollars between the exports of goods and services from the USA to other countries and the imports of goods and services to the USA from other countries as published by the US Census Bureau, Foreign Trade Division. This number is known as the Balance of Payments or BOP.

The BOP for the United States was either a small positive number - meaning the total dollar value of our exports exceeded the dollar value of our imports - or a small negative number until the mid 1980's.

In 1984, the BOP of the United States exceeded a NEGATIVE $100 BILLION for the first time. That means that in 1984 we bought $109.1 BILLION more of stuff from other countries than we sold to them.

In monetary policy analysis that means that our money supply was REDUCED by $109.1 BILLION in that year.

BUT, with the deposit money multiplier, it means that our GDP was reduced by about ONE TRILLION DOLLARS in 1984 alone. In that year, the GDP in current dollars was about Four Trillion Dollars.

SO, our GDP could have been reduced by about 20% in 1984 alone.

While there is some debate as to whether all that money was taken permanently from our domestic money supply and GDP or whether some of it was returned to the USA and used to buy T-bills, there is no doubt that the GDP reduction is significant.

That is just 1984.

We have consistently run a negative BOP ever since then.

Between 1984 and 2009, our cumulative NEGATIVE BOP was 7.3 TRILLION DOLLARS.

Using a conservative money multiplier of 10,that means our GDP was REDUCED by about SEVENTY TRILLION DOLLARS during the period.

In simple terms, we are not so rich we can afford to lose such substantial GDP every year to foreign trade. Unless this problem is corrected, it will bankrupt the United States of America.