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>From: "Durant" <[EMAIL PROTECTED]>
>
> the suggestion is to go back to keynesian economy, isn't it?
Dar Eva:
Far be it for me after reading one difficult book to answer this question
definitively. And yet, you have hit the nail on the head. Galbraith argues
that it was movement from a Keynesnian economy to a monatarist policy that
removed the goal of full employment from the economic equation. The
monetarist with their Nairu which made unemployment a deliberate part of
economic policy effectively destroyed the concept of full employment, one of
the main planks of the Keynesians. With that decision, came the following
consequences, high transfer payments to the unemployed, lower wages because
of surplus workers and income transfers from the middle class to the
capitalist class which had capital to loan.
> But that came to an end in the 70s due to unsustainable public borrowing
> and cuts in profits/recession, didn't it?
Thomas:
I don't know. Which came first, the chicken or the egg. Did we borrow more
because unemployment went up and new social services were put in place to
alleviate and compensate those who were unemployed. Was it because the
lords and masters of government didn't follow Keynesian Theory which said
stimulate in downturns and pay back in good times and they just forgot to
pay back? Was it macroeconomics in terms of the basic price in energy in
1973? Was it the elimination of work because of computerization? Think,
would we still have full employment if we had not invented the computer?
Possibly.
> Now we reached the same "result" through a re-hashed
> monetarist and then neo-liberal avenue.
> What would be the new feature in this
> suggestion of renewed state intervention in re-distribution?
Thomas:
If the governments (plural) had constantly raised the minimum wage, for
example, in Ontario were I reside, it is $6.85 Canadian which is about $4.25
American to try and get a baseline number. In 1968, Galbraith states the
minimum wage was equivalent to $6.50 American in 1994 - probably about $7.00
American in 1999 giving us poor, a shortfall of approximately $3.75 less for
every hour worked than I would have made in Ontario in 1968. This amounts
to a shortfall of $150 a week or $600 a month for a person working for
minimum wage.
Now, if all the working poor were working making an extra $600 a month, this
would constitute a "state intervention". My logic says that would make a
considerable difference from the current situation.
> How come the word "capitalism" was not mentioned?
> Non-virtual profits are falling - there is not enough to
> re-distribute. Is the mechanism - markets/profits is working?
> The global markets are limited - there is, I'm afraid, the
> classic contradiction.
> Do you really think it can be fixed?
Thomas:
Well of course there is another answer to the comment "not enough to
redistribute" and that is there is no demand because 50% the people have
very little disposable income. And Galbraith argues, to me quite
successfully, it is because the working poor after rent, grocery's and
transportation costs are broke. And of course all those on welfare,
pensions, disability, etc have in most cases not seen any COLA increases
while small quarterly inflation figures constantly add up over the years.
My mother who is on governemt pension got her COLA increase for the last
year, I think it was $.52. That is not realistic, is it?
Galbraith also argues that it is not just full employment that is necessary
but that prices should also be managed to some degree. Part of the problem
of low profits is that competition - that highly touted good - has taken all
the profit out of goods production. With little or no profit in the
production of goods, then the corporate tax contribution is almost nil,
which leaves governments to make up the shortfall through borrowing or
taxing labour income even more. I am not against profits, as long as
profits are taxed fairly. In the 60"s, government income was roughly equal
with 50% coming from labour income and 50% coming from corporate profit
income. The ratio is now, 80% labour income and 20% corporate income.
As to virtual profits earned by speculation, when times are good, they
reinvest and do not declare any profits and when they lose, they claim their
loses and do not pay any taxes or greatly reduced taxes. One of the
thoughts I had was that labour should have the same option. If I get laid
off a good paying job and take a lesser paying job, why can I not deduct my
loss of income as a valid income loss just like business and speculators do?
>
> Eva
> [EMAIL PROTECTED]
Respectfully,
Thomas Lunde
>
