The Weiner Component Vol.2 #1 Part 3 Introduction

At some point during the 1980s, when I was a social science high school instructor, for the last two or three weeks of an eleventh grade United States history course I decided to teach a unit on the future.  We would examine the possibilities of how the Twenty-first Century might affect the lives of my students.  Virtually everyone in the class balked at this.  They absolutely refused to consider the changes that could occur and how these possible societal changes could affect their future lives as adults.  I had never faced this type of response before.  It was an interesting situation.  The future, even the immediate future was unknown.  The past was known and could in the minds of many also be idealized.  I did not attempt to teach this unit again.  From then on the course ended in the immediate present.

 

Is the general public that different from my students?  Do they idealize the “Happy Days” gone by and avoid thinking or dealing with the possible changes to come?  It would seem so.  Most people like dealing with what they know.  Unknowns to them are scary since these might easily change their living conditions for the worst.  (Unfortunately even so called knowns can bring about changes in the society.)

 

Most people (Family units) live economically on the edge; they are, more or less, living up to their financial limit and in many cases slightly or more beyond.  Any real change could throw them into financial disaster.  I would guess that a very large percentage of the population move forward with this concept, problem, or anxiety constantly before them.

 

Of course, change is constantly occurring: economically many low skilled and other occupations are diminishing, robotics are the new manufacturing tool, some new occupations are materializing.  The myth of a changeless safe society is just that, a myth.  But apparently the reality has nothing to do with the perceptions.

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We may ask:  What brings about societal change (both economic and political)?  Is anything ever fixed for a lengthy duration?  Is society dynamic, in an ever state of flux, constantly undergoing some form of evolution (growth, shrinkage) either positive or negative changes?

 

If change, gradual or otherwise, is a constant what then determines it?  Is it mainly political or economic?

   

In approximately 900 AD the Emperor Charlemagne set up what has come to be known as Feudalism in his massive domain which comprised most of what was to become Europe.  His lands were divided into fiefs (large estates or sections of land, some as large as modern states, each with its own population and largely self-sufficient).  These were ruled by individual nobles, who, in return for the fief owed their lord (Charlemagne) fidelity (allegiance and a given number of knights and other armed men when called upon by their lord, the king).   With the death of Charlemagne his empire was divided up among his three sons and the beginnings of modern Europe were formed. 

 

Wealth, at this time, was ownership and control of land.  The king divided his kingdom among a relatively small number of high nobles who owed him fidelity (men and arms in time of need).  These nobles divided their lands up into smaller estates to lesser nobles who owed them fidelity when called upon.  This process could continue into smaller and smaller estates numerous times, with each owing his lord fidelity/military support when called upon.  Each small estate also supported a number of knights.  Theoretically the king ordered the higher nobles to appear at a certain place at a certain time.  They, in turn, ordered their subordinate nobles to do the same and so on down the line, proceeding all way down to the knights and unarmored fighting men.  Thus the king was able to go into battle with an army.  After a few generations all sorts of complications would occur from this arrangement.

 

The use of money was not a factor.  Supposedly the circulation of specie had ceased by this period.  The use of fidelity replaced the need for money.  However according to quite a bit of historical research done from the middle of the 20th Century on the use of money, gold and silver coins, never quite disappeared.  Their use diminished considerably and at some point slowly began to increase, allowing gradually for the rise of cities and of the bourgeoisie or middle class throughout Europe.  For that matter the Italian City-States existed throughout the Middle Ages.

 

With the gradual rise of the bourgeoisie and the independent cities throughout Europe money was slowly returning to common use and commerce was also growing.  Wealth was slowly transitioning from land to gold.  And with this there was the slow rise of the modern nations and kings who could collect taxes and pay their armies.  They could also use their armies to break the power of the nobles in their countries.  This was exemplified by the French king Louis XIV who also became the model of an absolute monarch.  Modern nations were formed or defined under the kings. Within two reigns after Louis XIV the French Revolution came about and it would end in rule by the middle class.  The remnants of Feudalism and the nobility would persist, mostly on a name basis, until the end of World War I.

 

What brought about these changes?  How do we move from small, largely independent economic entities to rule by the bourgeoisie?  To answer this question we have to go to a force Karl Marx called “economic determinism;”   the economic system controls the political system.  During the Medieval Period the nobility controlling the land determined the development.  The society was not static but in a very slow state of flux.  With the change in the wealth base, land to gold, there was the rise of kings.  The wealth which enabled the kings to develop their nations and their absolutism was created by the bourgeoisie who eventually broke the power of the kings and set up middle class democracies.  The economic development of the different nations brought about the changes.  Those who controlled the wealth of the nation would eventually control the nation.

 

A relatively modern day example, on a smaller scale, would be racial integration in the United States during and after World War II.

During World War II the United States both had massive armies in the field and supplied them and their allies with the materials they needed to successfully pursue the war.  Prior to United States involvement in the hostilities that nation had been largely segregated, but with the war on there was a constant and endless need for war materials.  First the women were brought into the factories to work alongside the men, then the older high school students after their school day, and after that the orthopedically handicapped.  Finally Blacks, in 1943, were hired and because of the great need, were allowed to work alongside whites in the “battle for production.”

 

Economic necessity had brought about what was then considered a great change in the society.  Blacks not only worked in the factories; they also, as they moved north to get these jobs, ended up, in many cases, living among whites.

 

And irony of ironies, in the military, segregation continued to exist.  Black troops were commanded by white officers.  The exception being the Tuskegee pilots.  All pilots, in the U.S. Air force, were automatically given officer rank.  Blacks, who flew planes were consequently officers and had to be saluted by soldiers of lesser rank.

     Parenthetically this led to interesting situations.  In military bases, particularly in the Southern United States, white privates had to salute Black officers.  Here the rationalization became that they saluted the uniform, not the man.  Another situation occurred in the U.S. Navy, where no Black could become an officer.  A doctor volunteered to serve in the navy during World War II.  An investigation of his background revealed that he had a Black forbearer of which he was unaware.  The event of his volunteering was in the newspapers.  But the Navy could only accept him on the lowest core level.  Consequently he never served.

 

The U.S. Military sent a segregated, Jim Crow, army overseas to fight the Nazi/Axis menace and bring freedom to the world.  In the decade after World War II the military was integrated, one service at a time.  Despite some people’s contrary feelings there was no longer any practical reason to maintain segregation.  In 1954 the Supreme Court rendered its Brown vs. Topeka Board of Education Decision; and after another decade of resistance education in the U.S. became, more or less, integrated.  Defacto segregation in housing would very slowly break down but never really disappear.

 

The most effective weapon used by Blacks in most of the southern communities, besides marches and protests which made the nation aware of what was happening, was the economic boycott.  In 1955, in Montgomery, Alabama, Rosa Parks, a Black lady, refused to give up her seat on a bus to a white man.  She was taken off the bus and arrested.  For nearly a year afterwards the Blacks in that city refused to ride the busses and shop in many of the city stores. 

 

When all was said and done, principles of right and wrong were outweighed by the basic principles of economics.  In Montgomery, Alabama, an economic boycott desegregated the busses.  Other changes would come about brought by threatened or direct economic change: the “sit-ins,” desegregation of interstate busses, etc., etc., etc.  Perhaps the exception might be the Earl Warren Supreme Court decision in 1954 but, I suspect, the state of Blacks and what they were willing to tolerate at that time is what ended the Plessey vs. Ferguson Decision of the late 19th Century which made segregation legal in the South. 

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The Gross Domestic Product includes all the goods and services produced in the United States in one fiscal year, twelve months.  If we deduct from this the amounts needed for the development and replacement of outmoded and worn out machinery, all sorts of necessary research for the development of new products, and take the remainder and divide it by the number of people in the United States we have considerable individual incomes.  If the problem of a fair distribution could be solved no one in this country would be homeless, would go without proper medical treatment, or proper food levels of nourishment. 

 

We are currently tied to an archaic economic model which, among other things, is shrinking the middle class toward nonexistence.  We could, in the near future, conceivably end up a nation of upper and lower class, with a token middle class; and with more and more of the wealth going to the upper class and less and less to people able to purchase the goods and services provided.  It would be a situation similar to that of the late 19th and early 20th Centuries and could result in a depression far greater than that of 1929.

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If we go back to our earlier premise that in order for goods and services to be continually increasing then those goods and services must be continually consumed:

Production of Goods and Services = Consumption of Goods and   Services

The problem in insuring this positive circumstance is the proper distribution of the money needed.

 

How can this be done?  If we follow Adam Smith’s market-place model the distribution will actually decrease as control of wealth passes, more and more, to a small group leading eventually to a massive breakdown of the Business Cycle: recession and depression.  And this breakdown could be a meltdown on a world basis causing all sorts of disruptions both within and between nations.

 

How do we avoid this economic breakdown?  The simplest means would be through transfer payments.  The government taxes everyone on a graduated basis: the more one earns the greater the percentage of tax paid.  It then transfers or pays out to those earning below a certain economic level bringing these people up to a “so called” minimum standard of living.  Thus the government is ensuring a level of consumption which would guarantee continued production of goods and services.

 

Of course, transfer payments is an attempt, albeit a necessary one, to avoid economic disaster.  It continues an old economic system with yet another variation and allows the market model to continue to work.  What is really needed is a new economic model which would allow for an equitable and continual distribution of goods and services.  And that means a redefinition of the concept of work, with an extended system of remuneration, a fairer tax system, and a new understanding of the concept of money as a means of exchange rather than as a means of wealth.

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The basic societal economic decisions: What to produce?  How to produce it?  And for whom to produce it?  These are currently largely determined by the “market;” i.e., demand.  The entrepreneur determines there is a market for a particular product.  He/she then will produce it at the lowest possible cost; and then ship it to the various market(s) where it can be sold at the best possible price.  How would these decisions be made in a non-market economy?

 

Parenthetically, when these decisions were made in the mid-20th Century in the Soviet Union by central planners there was no real correlation between decision and actual needs; and often parts of the system broke down temporarily when vital parts like bolts or a specific type of screw had not been produced in enough volume to meet the needs and the manufacture of something like automobiles had to stop until the bolt or screw had been manufactured and shipped to the auto plant.

 

It would seem that these market decisions would still have to be largely made by some form of demand.  Of course the government would have to control the process since income was no longer a factor.  In fact, somehow, government would have to control the entire process.  But then again I suppose in this digital age with computers, we can be a lot more efficient than the Soviets.  But can computers determine demand?

 

The concept of ownership and wealth would also have to become different.  The idea of group responsibility, snergy, would have to change.  We would all have to become our brother’s/sister’s keepers; each becoming responsible for all others.

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To create a new economic model we have to first redefine the concept of work.  In the early 1930s during the depth of the depression the Roosevelt Administration had a group of economists, in Washington, D.C., define the concept of work in order to be able to measure its growth or contraction.  They created, what they called the Gross National Product, which was supposed to measure the wealth produced in one fiscal year, as the form of measurement.  This is now the Gross Domestic Product (G.D.P.).

 

The question for them was: What to measure?  They decided to include all those aspects of effort that earned money.  They did not include such domestic efforts as homemaker or childcare since these were non- remunerative activities.  Interestingly, in some European countries, housewives and/or mothers are given two week vacations away from their families at government expense.   Even today different societies place different values on what constitutes work.

 

What, then, would constitute work?  Does it have to be something which is remunerative?   Can it be virtually any activity?  Does it have to produce something: material?   Ascetic?

     Suppose we define work as any effort to achieve something; then building something is work; thinking is work; writing or learning would also be work.  Virtually any activity which brings about any kind of change would be work.

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Let’s start with one type of effort: education/learning.  Every society, no matter how primitive or advanced, has some form of teaching its youngsters to successfully function as adults.  Education, learning should not only be a form of work, it should be considered one of the primary forms of employment in any society for it readies the next generation to continue the progress of development of the society.  Gandhi, in the 20th Century, during his crusade to equalize society in India said, about the Untouchables that among them with proper learning could be another Einstein or Newton.  Can not the same thing be said about the poorer elements of the United States?

 

Do we search our young to find the truly brilliant individuals and then nurture them to their full development?  No, in the United States we provide, by law, primary and secondary education, albeit at different qualities depending on where the youngster lives and goes to school.  Then he/she may apply for some full or partial scholarship or pay tuition and go on to a Community College, University, or Graduate School.  The cost for this must be borne by the individual or his/her parents

 

Education is a right in this country to which every youngster is entitled through high school whether or not he/she or their family want it.  It is general and teaches a level of literacy which is supposed to allow the youngster to function later as an adult.  Would it not make more sense, as is done in many European nations, to actually prepare the child for a specific endeavor based upon his/her ability?  Education would still be a right but it would also be a privilege.  The youngster has to earn his/her advances and would consequently be trained to the fullest of his/her ability, from preschool through graduate school or anywhere in between.  Each individual would be trained to the fullest of their ability.  Late starters could be also worked into the system.  No one would be wasted; all the potential Einsteins, Newtons, Rembrandts would be found and allowed to develop.  This would indeed be a positive usage of the concept of work.

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Despite Adam Smith’s concept of “hands off” by government in his market model, governments, particularly of industrial nations, have never totally kept hands off their economies.

 

The question that arises in the 21st Century is what is or what should be the role of government in dealing with the economy?  If we look at the United States Constitution it begins in the Preamble with the phrase “We the People. . . .”  The document had to be approved by a majority in nine of the twelve states participating.  (Rhode Island had refused to deal with any part of the process.)

 

If we then ask, after studying the Constitution, what is the major purpose and/or function of the government?  Is it to protect the property rights of the few or provide for the welfare and prosperity of the many?  Are we protecting property rights and allowing more and more people to live at substandard level of existence?

 

     A “nation so conceived and so dedicated,” to paraphrase Abraham Lincoln, is or should be “of, by, and for the people.”  If we accept Lincoln’s premise then the government has a responsibility which is to serve all of its people; and that means to provide for them economically when they cannot or are not allowed to provide for themselves.

Donald Trump enters the Oscar De LA Renta Fash...

The Weiner Component, Volume 2 – Economics in the 21st Century: #1: Change & the 21st Century: Part I Introduction

 

Prenote: I find myself getting bored with Donald J. Trump and his machinations.  He, as President-Elect is setting up a government which seems that it will wipe out any progress made in the 20th Century on.  Will it?  We’ll have to wait and see. 

Meanwhile the stock market is rising to new heights.  Is that because of President-Elect Donald J. Trump or in spite of him?  Again we’ll have to wait and see.  Basically the issue with Trump is that we, the public, will have to wait and see what he does after January 20, 2017, when he becomes President of the United States.

Meanwhile I will begin a new version of my book, “Economics in the 21st Century.

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Volume 2 #1 – The Purpose of Government in the 21st Century:                                                            Introduction: Part 1

 

The past is always safe, particularly if it is mostly imagined.  It is a known when balanced against the future which is always unknown and therefore unsafe.  In the presidential election of 2016, Donald J. Trump was elected by a minority of voters who were fearful of the changes that were occurring in society.  Trump promised to bring back the past.  He would bring back the values and conditions that supposedly were while Clinton would continue forward to a changing society.

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 With the election of Donald J. Trump, as President of the United States by a majority of people from the smaller states the country choose the candidate that got the minority of popular votes but the majority of electoral votes.  Hillary Clinton actually won the election with nearly three million more votes than Trump received.  The voters who choose Trump actually choose to stay with what they believed would be a return of the past, to the supposed happy days when there were jobs for all the low skilled workers.  Trump would, he said, “stay the course” and continue the process of lowering taxes.  He would continue the war effort in the Middle East and the War against Terror.  He would bring back all the jobs that had moved overseas and take the country back to its happy days, whenever they were.  He would reform our society, making it as it had been in the past.

 

Of course “reform” historically was a euphuism for change or raising taxes among the ordinary citizens of the country.  Trump has promised to lower taxes for the wealthy.  Ordinary people would object to a tax raise but how can they be unhappy about reform, semantical games.  The problem is that the government is spending billions of dollars daily above what it collects in taxes pushing the National Debt (which President Clinton had begun to reduce) to new astronomical levels.  Trump will lower taxes for the wealthy and the corporations.  He will have to make up the difference somehow.

 

There is currently one vacancy on the Supreme Court and one Justice in her eighties.  From what I understand Trump should be able during his tenure as President to probably make two appointments to the Court.  This should make the Court 6 to 3 in favor of the conservatives.  The significance of a solid conservative balance on the Supreme Court is that it might, among other things like individual rights, finish striking down Roe vs. Wade; and thus take away the right of choice from slightly over fifty percent of the population.  The majority of women, according to the surveys taken, are overwhelmingly in favor of choice.  It would be a decision imposed by a minority upon the majority.

 

 This seems to be Trump’s version of the “good old days.”

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But despite what is currently happening with Donald J. Trump as the new President-Elect no one really knows what he will do as President.  Still the Twenty-first Century holds the promise of all sorts of social and economic changes for the people of the United States, the other Industrial Nations, and even for the emerging non-industrial countries of this world.  The question, of course, is whether these changes will be positive or will they be otherwise.  Our traditional economic model will no longer function (if it ever did properly beyond the theoretical stage).  Technological change, particularly that of the Computer Revolution is moving forward at a rapid pace.  The changes are speeding up. 

 

     With these changes the concept of employment (What is work?) is/will also undergo evolution.  Low skilled jobs are and have been disappearing in the United States; some highly technological occupations are and have been coming into being.  A large number of factory and many white collar jobs are moving overseas where they can be performed at a much lower cost.  The economy today is a world-wide one with the individual nations still being essentially nationalistic.

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     For the last three to four thousand years the concept of work has been fairly constant.  It has essentially been effort related to survival: production of food, shelter, clothing, and gradually entities needed for recreation.  Up until the Industrial Revolution it took ten or more people working full time (sunrise to sunset) to provide the fundamentals needed for one individual to have the leisure time to be a priest, government official, artist, or someone not having to work for survival.  With the change over from a hand-craft society to a machine- operated one the ratio has changed and continues to decrease.  From ten to one we gradually went to one person supplying everything for one hundred people.  With the coming and continuance of the Computer Revolution the ratio has gone from one supplying everything for one hundred people to one supplying what’s needed for a thousand individuals, with the possibilities of eventually going well beyond that number.

 

     What then happens to both the concept of work and the need to work when all the rudiments can easily and almost effortlessly be supplied?  Traditionally man (and woman) have earned their bread like Adam (after being expelled from the Garden of Eden) by the sweat of his (her) brow.  Now, ironically, we have returned to garden conditions.  Can we handle them?

 

     Today, at the Second decade of the Twenty-first Century, we seem to be well into the Computer Revolution; but, I suspect, we are only seeing its initial stage. 

 

The government constantly monitors and publishes the unemployment percentage of the working population.  They are thrilled when it decreases by one or several tenths of a percent.  Politicians like Donald Trump, are constantly promising to decrease unemployment.  The President will proudly proclaim and take credit for any tenth of a percent decrease.  The goal, as far as the government and public are concerned, seems to be a healthy economy with full employment in an era when computers are rapidly increasing the rates of productivity and many corporations are downsizing while increasing their output.  We seem to be squarely and hopefully looking historically backward.

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Many thousands of years ago a man-like creature first picked up a rock or piece of wood and used it as a tool or weapon for the first time.  From that time on the concept was passed to others and they did the same, eventually discovering that they could chip the rock into a specific shape and sharpness and sharpen the wood, fire-hardening a point.  Over the multitude of years types of tools were developed.  Mankind developed more and better means of increasing his productivity, of making life easier for himself.  In fact his conscious or unconscious goal during all the years of his existence has been to produce more with less effort.

 

During the 19th Century the emerging handicraft society began to change in England and then Europe and the United States with the gradual development of machines; this became known as the Industrial Revolution, when manufacturing changed from hand-production to machine production.

 

The early machines were mostly made of wood and were operated by water-power, and shortly thereafter by steam power.  With the invention of the electric motor and development in metallurgy the machines became metal and also more highly efficient, multitudinously increasing their productive capacities.  Where in the Eighteenth Century it took ten people to produce enough to free one from labor, now gradually one person could produce enough to supply ten individuals with all their basic needs.  Life and the concept of work changed.  A percentage of the handicraft people were displaced becoming superfluous; these were the luggites.  Machines did their work a hundred times faster than they could by hand.  The level of productivity brought about by the Industrial Society achieved by the middle of the Twentieth Century a level of supply of goods and services in the Industrial Nations that had been inconceivable earlier.  It also brought about the Business Cycle — prosperity, recession, depression, and recovery — in a never ending pattern erratically coming about in shorter or longer periods of time.

 

Recession and depression, presumably caused by overproduction, brought about a situation in which there was fair to large scale unemployment, reduced consumption of goods and services in an economy where the overall workforce strongly desired to work and consume but could not.  The economy had broken down, ceased to smoothly function.  The willingness to work was there but the economy could not utilize it.  For one reason or another the basic rudiments that caused the economy to smoothly flow no longer worked. 

 

The question here is why?  There is a ready and willing workforce anxious to labor and consume the goods and services produced but there is no work for them and very little for them and their families to consume.  WHY?

 

The grease that allows the economy to function is money.  The distribution of that entity throughout an economy, the amounts that each family unit earns or has determines who will get how much of the goods and services produced.

 

How then is money distributed within a society?  The different occupations receive different levels of remuneration.  Unskilled labor, which is mostly grunt type work requiring generally brute strength only would be the lowest paid earnings.  In many cases, not enough is earned to provide for the basic needs of an individual or family.  Skilled labor, on the other hand, can go from a fair standard of living to a level where the amount of money earned cannot possibly be spent because of its vastness in the millions.

 

Money can also be stored, not used for consumption, but put into banks or other financial institutions where it earns interest.  In addition it can be used as a commodity where it can earn profit.  Used this way it tends to increase the productive capacity of a nation; but this has nothing to do with the distribution of goods and services.

 

Money, in the form of profit (Adam Smith’s “invisible hand”) becomes the motivating force behind production of both goods and services.  Profit, from the sale of goods or the charge for services and the accumulation of money is the motivation for production.  This accumulation allows a small percentage of the population to amass large amounts but again, has nothing to do with a reasonable distribution of the specie.

 

It can be argued that Adam Smith’s “invisible hand” works on every level of the economy.  Given a choice the laborer, white collar worker, executive, entrepreneur will take that position which pays the greatest amount or has the best advantages.  Therefore each entity within the society is functioning where he/she can in their own interest; doing the best for themselves and their family unit.  But, again, what has this to do with a fair distribution of the National Income?

 

Several interesting questions arise here: Is money really related to the production of goods and services?  And if it is not then in what way would distribution be accomplished?  Since volume of production is tied directly to volume of consumption how, if we are to avoid upturns and downturns (constant recovery and recession), can we maintain a steady course of production and distribution of goods and services? 

 

The economic model (capitalism) was stated in 1776 by Adam Smith in his book “An Inquiry into the Wealth of Nations,” which was published that year.  Smith designed his model for a pre-industrial nation, for a time when production could not meet the overall needs of everybody in the society.  We are now almost into a postindustrial society moving rapidly through and into the computer Revolution.  We are still prone to the vicissitudes of the Business Cycle.  Can we afford this kind of continual economic up and down turn?

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The Twenty-first Century promises to be a time of intense change.  If we continue to adhere to what we have now then the economic upheavals can be catastrophic.  The Great Depression of 1929 could be mild compared to what we may face. In 2008 we faced such a situation.  It was avoided by massive spending by Presidents Bush and Obama.  

 

Donald Trump seems to be pointing toward the pre-2008 period.  He could, during his four year presidency, bring us back to an economic situation as bad as or far worse than the potential 2008 Depression. 

 

To avoid the possibility of negative economic change within our economy the country needs a new economic model or it has to make massive changes within our present system.