To: A few friends and many Devious Defenders of the Status Quo (DDotSQ) on several mail lists in the English speaking countries. Hi Folks, You may recall that John Maynard Keynes has monopolized the first three words of the above subject heading for 63 years, while American author Charles Murray has concisely described the present condition of the English speaking nations with the last two words of the above subject heading. Clearly, there is a world wide conspiracy afoot to make sure, by enforcing the general theory, that the English speaking nations continue to lose ground. The progress of the conspiracy to date is attested by the works of the following authors, in addition to the works of Keynes in 1936 and Murray in 1984: REGULATING THE POOR, 1971, F. F. Piven & R. A. Cloward FROM POOR LAW TO WELFARE STATE, 1971, W. I. Trattner FAMILY AND NATION, 1986, D. P. Moynihan FAMILIES IN PERIL, 1986, M. W. Edelman THE POLITICS OF THE REAL WORLD,1996, M. Jacobs The global model at URL <http://www.freespeech.org/darves/bert.html> will support a serious discussion of both the macro and the micro aspects of The GENERAL THEORY for LOSING GROUND, while the attached file (Figure 8 of the global model) goes directly to the heart of the theory to illustrate how fixed costs in the budgets of parenting families will corrupt the operation of a free labor market. Of course, if you are making a nice living by writing and talking about LOSING GROUND, a serious discussion of the general theory may not be your cup of tea. The following two year old note may help to break the silence on this topic by providing a consistent set of macro data for the U.S. economy, which data is typical in structure for any industrial economy. WesBurt >>>>>>>>>>>>> begin note of 97-04-06 <<<<<<<<<<<< Subj: The Root Cause Of 2-3% Inflation and 5-10% unemployment Date: 97-04-06 10:42:50 EDT From: WesBurt ~~~~~~~~~~~~~~~~~~~~~~~~~ Dear Defenders of the Commonwealth, In a recent exchange of quotations on other lists, a contributor defined the tone and focus of our perennial public debate on money and poliical power with these two quotations: From Horace Greeley (1811-'72) 1, "While boasting of our noble deeds, we are careful to conceal the ugly fact that by an iniquitous money system we have nationalized a system of oppression, which, though more refined, is not less cruel than the old system of chattel slavery." From President Woodrow Wilson, THE NEW FREEDOM, 1913. 2, "Since I entered politics, I have chiefly had men's views confided to me privately. Some of the biggest men in the U. S., in the field of commerce and manufacturing, are afraid of somebody, are afraid of something. They know that there is a power somewhere so organized, so subtle, so watchful, so interlocked, so complete, so pervasive, that they had better not speak above their breath when they speak in condemnation of it." Here is a third quote which supports the conventional, but mistaken, wisdom that we can cure what ails an industrial society by nationalizing the banking system and regulating the issue of money by political edict as Nazi Germany, the U.S.S.R., and other nations have done with little success. This quote comes from FINANCIAL ENGINEERING, 1953, by Elmer Thomas, U.S. Senator from Oklahoma 1927-'51. Senator Thomas' limited edition book has many quotations which direct public attention toward the financial attributes of the wealthy and politically powerful, and away from the depressed financial condition of the great majority of the population which is the root cause of the social pathologies in every industrial society that does not satisfy the technical requirements for full employment and zero inflation. From the English financier, Meyer Arnschel Rothschild, 1745-1812. 3, "Permit me to issue and control the money of a nation, and I care not who makes its laws." Senator Thomas rather suggested that Mr. Rothschild's remark was in response to the publication of the American Declaration of Independence, the U.S. Constitution, The American Bill Of Rights, and Thomas Paine's proposals in AGRARIAN JUSTICE, 1797, to establish a stable and prosperous free market society by means of a subsidy to young families. With quotations like these, the contributor has clearly defined that small faction of the world "governing subsociety" which protects its vested interest in the status quo by focusing the public's attention on the "iniquitous money system," the "power somewhere" that is to be feared, and the wealthy Jewish money changer who is contemptuous of Democratic institutions. If William Shakespeare (1564-1616) had cast a member of this small faction in the role of Shylock, in his play, THE MERCHANT OF VENICE, they would have hanged Shakespear, as they tried to hang Thomas Paine two centuries later. Certainly, there is an evil minority among the wealthy and politically powerful that threatens society. Just as certainly, there is also an evil minority among the rank and file population that threatens society. And it is the standard practice of this first evil minority to incite the rank and file to blame all of society's failures on the majority faction of the wealthy and politically powerful. In contrast with the grand deceptions and theft committed by these evil minorities, the majority faction of the world's "governing subsociety," that is, the wealthy, healthy, intelligent and powerful members of society gave the world each step of progress that humanity has made toward a stable and prosperous society; from the holy scriptures of the several religions to the Magna Charta 1215, the English Common Law, the Elizabethan Poor Law 1601, the Speenhamland system 1795, the American Declaration of Independence, the U.S. Constitution, and the Articles in addition to, and amendment of the Constitution The American Bill Of Rights). Can any of us ordinary people identify any practical alternative to casting our lot with this progressive majority faction of the "governing subsociety" that rules the world, past, present, and future. The trick, of course, is to be able to tell the good guys from the liars and deceivers, and for that we need a valid conceptual model of how the world works when governed by the public opinion of a majority of ordinary people under universal Direct Democracy. This perennial cultivated, but mistaken, public opinion which indiscriminately blames money and poliical power for the world's social pathologies has not changed since biblical Israel (twelve tribes) demanded a King in B.C. 1120 (I Samuel 8:1-5), but money and poliical power are not the root cause of the social pathologies that have cursed humanity since Samuel's time. The symptoms of the root cause are the high unemployment, inflation of the currency, over-run public budgets, and excessive public debt that were easily managed in an agrarian society, such as the United States prior to the closing of the frontier. But these symptoms cannot be ignored after a people experience THE GREAT TRANSFORMATION, as Karl Polanyi called it in 1944, and leave their self-sufficient farms, firms, and villages to form commercial or industrial ities, Nation States, and Commonwealths based on free trade and a highly developed division of labor. "Civilization should be a blessing to mankind, not a curse," as Thomas Paine said in 1797. The politically correct explanation of the curse has always been that the rich and powerful who teach, manage, and govern the rest of us are the cause of our high unemployment, inflation of the currency, and over-run budgets. To the contrary, the technically correct explanation is that the curse is caused by a defect of omission in our public policy which is both invisible to a the great majority of the successful, wealthy, and powerful, and kept a SECRET OF THE TEMPLE from the rest of us by that small faction intent on defending their vested interests in the status quo. That defect of omission is our failure to allocate the First Tithe (10% of the Gross National Product) to our developing human assets (5% for education and 5% for subsistence). We were one of the first modern nations to allocate 5% of GNP to universal education. But we may well be the last modern nation to allocate the second 5% of GNP needed to raise the purchasing power of parenting families to parity with the purchasing power of families or households without children. When the expense of supporting children is $5,000/year/head it does not take a computer scientist to figure out why the expense of supporting children is the easiest expense to fob off on the rank and file, in the interest of reducing the total tax rate by a few percentage points and maximizing the market for usury in the short run. The great majority of parenting families can be depended on to do whatever it takes to support their own children. But the long run costs of withholding this technically required subsidy far exceed the savings of a few percentage points on the tax rate. Should we not ask why Karl Polanyi wrote 312 pages on THE GREAT TRANSFORMATION, but failed to mention the technical requirements for full employment in a free market, which requirements were well known and published by the very Protestant founders of the American Economic Association (AEA), Henry Carter Adams and Richard T. Ely in 1887, and, by the very Catholic Church of Rome in 1891? This topic needs a technically complete model of a real national economy if we are ever to discover, and disclose to the public, the root cause of the disorders of our industrial society. My data is for the U.S. economy, but the financial and physical structure is typical of all industrial nations in which the standard of living is based on free trade and the division of labor. Here is the data that I look at, tell me if you think it is not a valid model of an industrial society. Following the work of Nobel prize winner Wassily Leontief in INPUT/OUTPUT ECONOMICS, 1966, the U.S. physical economy of 1995 has two parts, (1) the GDP which we consume or save each year, and, (2) the purchased material transactions (PMT) which is work in process for future GDP, as follows: July 1995 U.S. Gross Domestic Product (GDP), the sum of government and household spending . ...............$7,024.9 Billion/year. July 1995 U.S. workforce 131.9 million. Average Value Added per worker...................................................................$53,2 59/year. July 1995 U.S. business to business purchased material transactions (PMT)..........................................$10,537.4 Billion/year. July 1995 U.S. total physical economic transactions by non- financial public and private sectors, (excluding financial speculation) ...................................................$17,562.3 Billion/year >From FEDERAL RESERVE BULLETIN, uly 1995 U.S. Money and Debt measures, ($Billions): M1..................................................................$1,144.9 Billion M1 is the Medium of Exchange and turns over 15.3 times per year to generate the $17,562.3 Billion/year of physical economic transactions above. M2, excluding M1............................................ $2,569.4 Billion M3, excluding M2................................................$773.1 Billion L, excluding M3..............................................$1,056.6 Billion Debt, excluding L.............................................. $7,864.5 Billion ---------------------------------------------------------------------- Debt aggregate ...............................................$13,408.5 Billion If we consult our best historical macro indicator of national efficiency, that is, the profile of the U.S. Consumer Price Index from 1789 to date, we find that the 19th century was a period of high wages, full employment, and stable or slowly falling prices with bursts of inflation only when the nation was at war. By the turn of the century, the U.S. had been transformed from an agrarian society of small holdings to an industrial society of multinational corporations, and has experienced the curse of rising unemployment with 2-3%/year inflation ever since Pope Leo XIII proposed a "Family Wage" in RERUM NOVARUM, 1891. We have to ask why Pope Leo XIII proposed "Family Wages" as an obligation of employers, thereby leaving the Church without guidance on this question until Pope John Paul II finally equated the "Family Wage" to a family allowance from the public revenue on page 44 of LABOREM EXERCENS (On Human Work), 1981? It is technically impossible for employers to pay the "Family Wage" and remain profitable in a competitive market. When mandated by the legislature, the burden of the "Family Wage" on employers creates the levels of unemployment we see in Europe today, except for Switzerland. Here is the technically valid and ecologically necessary solution being proposed by the Church of Rome and demonstrated by Switzerland, the Scandinavian countries, Japan, and maybe Germany, but condemned in the American public mind by the faint praise of U.S. Senator Daniel Patrick Moynihan and retired Senator Bill Bradley, and the determined opposition of an evil minority of the wealthy and pollitically powerful members of the "governing subsociety." There are long standing vested interests in the United States which are ever and always opposed to any attempt to inform the public about how the economic system operates. This opposition is surely innocent where propriatary knowledge of corporate techniques and methods is concerned. But when that opposition keeps the American public uninformed of the corporate techniques and methods; that John J. McCloy saw incorporated into the domestic policy of Germany after World War II, and Douglas MacArthur saw incorporated into the domestic policy of Japan after World War II; that opposition must be called into question by public disclosure and discussion in an open forum. If two or three of us could achieve a consensus on the optimum financial structure of a corporation or commonwealth, and trace its roots to the first tithe in Genesis, we could re-educate the chattering class and thereby enable public opinion to restore our industrial economy to its full potential efficiency in the use of labor and non-renewable materials. Think about it, our world laboratory of nations provides examples of every variation from, and every degree of compliance with, this simple and obvious technical requirement for a stable and prosperous society. The Chinese and Russians are thinking about it. Yea though I walk through the valley of the shadow of death, I will fear no evil: for I have illuminated the valley before me. With all due respect to the 23rd PSALM, I remain, Sincerely yours, WesBurt >>>>>>>>>>>>> End note of 97-04-06 <<<<<<<<<<<<
