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FunnyMoneyArtPowell-final

Thus ebook will be priced at 99 cents in accordance with the principles of marginal cost and elasticity of the demand curve.  Both are explained in the book.

March 2, 2016:This book is now available on Amazon Kindle at http://www.amazon.ca/gp/product/B01CH1LF6W?*Version*=1&*entries*=0

March 4, 2016:  Now available on Smashwords at:https://www.smashwords.com/books/view/620310

Now waiting for Smashwords to distribute it to various bookstores.

Here is a coupon to get this book for free until April 19, 2006 at Smashwords.  The code is HS63E.  Use the link above.

A mountain lake in British Columbia

economics102

How can we afford a universal basic income?

How can we possibly afford a universal basic income?

This appears to be the strongest argument against an income scheme. It also illustrates one of the basic problems in economic analysis.

When macroeconomic professors stand at the black board they generally draw an x-shaped graph and label one line to represent the real or physical part the economy and the other to represent the financial side. This is an important distinction because if one analyses economic problems only in financial terms the complexities of the financial system get in the way of clearly seeing problems.  Too often economic problems are analyzed in financial terms.

In the case of the universal basic income the question should be are we capable of producing enough goods and services to provide everyone with the desired standard of living.  The answer should determine the level of the basic income.

There are a number of economic issues with which we need to deal:  we have extracted the most easily accessible energy and mineral resources and those left require a lot of energy to get; there are serious problems resulting from the fractional reserve way of creating money; the work ethic is a problem in a high technology world; and there is a need to recognize our economy, what we call capitalism,  is based on legislation which restricts competition and allows some people to make profits they would otherwise not get.

I believe most of these need to dealt with at the same time.  Certainly a UBI should be introduced at the same time as a reform of the financial system. These are complex emotional issues and will be extremely difficult to resolve.

The book Funny Money: Adapting to a Down Economy, by the author of this post discusses these issues. Please have a look at it.

Pricing solar energy – the marginal cost factor

 The costs of solar energy are falling quickly and will probably soon be cheaper than more conventional sources.  Does this mean we will once again have large quantities of cheap energy and a return to economic growth?  Maybe and maybe not.

There may not be an immediate drop in the consumer price of power.

The maybe is because of the economic principle that price is equal to the marginal cost of the last unit produced and sold.This means solar will not influence the grid price until the whole current power infrastructure has been replaced. Until then the price will be set by whatever is the most expensive conventional power still being produced.  

It also means firms producing solar power for the grid  will be able to reap some windfall  profits as their costs of production will be lower and falling. Given the current corporate culture that firms have an obligation to maximize their profits regardless we have to anticipate most firms will take full advantage of the windfall. We observe that lots of oil reserves can be extracted at costs much lower than the current marginal cost for more expensive oil. This means some firms and/or governments are reaping windfall profits

The bright spot will be if and when the cost of solar falls enough for small units to be economical and for consumers to be able to afford them.

A further complication is the debt factor.  How much of the debt used to build the current infrastructure is outstanding?  If a large amount has to be written off, it will probably come out of what is called high power money.  If this declines rapidly  it could affect the money supply and cause some economic decline.

As the price of solar falls no doubt lots of large companies will get involved but sadly most if benefits may go to the one per cent in profits and the rest of us will be left out in the cold.  Expect turmoil rather than growth.

Occupational licensing – income protection, competition and competency

As the economy tightens occupational licensing is becoming more prevalent and controversial.  This blogger sees it as involving three issues – income protection, competition and competency.

Occupational licensing is the trend to require people in more and more occupations to have licenses to practice.  It has traditionally been used for professionals and is usually said to be needed to protect the public from incompetent practitioners.  As more occupations have required licenses it appears to have gone to ridiculous extremes.

Regardless of the public protection arguments the main function is to restrict competition and it appears to be working according to an article which shows higher incomes for those so protected. This is good for workers who are protected but does nothing for people who remain unemployed or otherwise unprotected from competition.  Another way to help people with income problems would be a universal basic income.  A UBI would ensure all people would have the opportunity for a minimum standard of living.

A UBI would also allow us to maintain a market economy based on competition with all the benefits efficiency and individual decision-making.

Occupational licensing also restricts the right of consumers to make choices about the services we purchase.  A lot of us do not always have the knowledge to evaluate a practitioner.  This blogger likes Milton Friedman’s proposal for certification by private organizations rather than licensing by governments. There could be different levels or types of certification.  This would help those of us with out knowledge and maintain our right to make choices for ourselves.

There are other ways of resolving the issues that lead to occupational licensing and these ways would protect the incomes of everyone, allow more competition in the economy and protect us from our ignorance.

Power of individuals and the universal basic income

Proposals for a universal basic income are bringing out lots of arguments which show a lack of understanding of the UBI and the nature of money. Here is an example in an article from  The Independent.

The author of the article claims a UBI will open the door for increased government control over people’s lives. This blogger figures the opposite will be the case and an income scheme will be a tremendous transfer of power to individuals.

The first and most important thing to say about a UBI is that it needs to be a part of a radical overhaul of the way in which we exchange goods and services and the way in which we create money.  Probably the current economic crisis is the result of our having used up the most easily accessible of energy and mineral resources.  There are lots of these left but they require lots of energy to extract.  The fractional reserve way of creating money also has lots of problems and needs to be reformed.

There are lots of people who want to tell others how to live and those of us who value Independence will always have to be vigilant and assertive.  This is separate from the UBI and will be an issue regardless.

Money represents purchasing power and giving it to people empowers them in that they can make purchasing decisions according to their values. This is different from food stamps in that stamps are for specified products and can hardly be the equivalent of money. A UBI will be a tremendous transfer of power to individuals and one would expect a lot of people to object to this.  Some of those who object will likely be the bankers whose power derives from creating fractional reserve money.

Another UBI issue is dependency.  Some people including the author of the reference article fear it will make us more dependent upon the state. I beg to differ because we should think of the UBI as an inheritance.  We can have it because we have such large agricultural surplus which is based on hundreds of years of agricultural and technological development.  We should all have a right to a share of the agricultural surplus.

The universal basic income will lead to a revolutionary change in the way we exchange goods and services.  Many of the issues are discussed in my book Funny Money: Adapting to Down Economy.  I encourage  you to have a look at it.  Details at the top of this blog.

The sophistry of feminist economics

My experience of women is that a lot of them naturally use the techniques of sophistry in their arguments with men.  A recent column on feminist economics in The Economist is a good example of this applied to economics. The column mentions the number of women teaching economics, the pay gap and mostly the unpaid work done by women.

The first thing to say in a criticism of feminism is that if your can make a person feel guilty then it is a lot easier to control them.  On this count the feminists have been very successful.  Us guys are supposed to feel guilty about our personalities, our relationships and our sexuality. Some feminists would have us believe that everything we do is to put down and control women.  Some feminists have DBS degrees. (The D stands for doctor.)  If you repeat an untruth often enough some people will come to believe it.

Most of the complaints relate to injustice of which there is a lot in this world.  The truth is that men inflict injustice upon both women and other men and women inflict injustice upon both men and other women.  We would be a lot better off fighting injustice wherever it is rather than having a competition to see who has experience the worst injustice.  The sophistry comes from focusing on a very narrow injustice and ignoring the rest.  We will not be able to deal with injustice or violence against women unless we also deal with injustice and violence against men

The column points out In 2014 only 12% of American economics professors were female, and only one woman (Elinor Ostrom) has won the Nobel prize for economics. This could be because male economists discourage women from studying the field or it could be because women are generally smarter than men and stay away from a field which is based largely on misconceptions and false motivators.  Maybe women are more reluctant to sell their souls to the almighty dollar.

The same may also be true for the pay gap.  A lot of women do not want the stress that goes with higher paying jobs.  It is a lot less stressful to encourage men to take these jobs and a lot of women put their partners under pressure.  Probably rates of pay are more a function of supply and demand for workers rather than a conspiracy of men to keep women from equal pay.

The issue of unpaid work is another case of a very narrow focus in order to promote the false premise that women are cheated because they do not get paid for the housework and child rearing that they do.  We are now talking about relationships and the fundamental of good relationships is that there must be a more or less equal two-way exchange. I believe this even though I have been accused of being selfish for saying it.  In a lot of traditional economic and marriage partnerships all or most labor was unpaid. In our industrial society some work is paid and some is unpaid. As technology has reduced the household work of the partnership and as standards of living have tightened, more women are working outside the house for pay.

Sometimes historical marriage relationships have involved a division of labour and in some cases the division of labour has been essential for survival.  This may be less so now and the division of labour should be for each couple to work out without the interference of feminists.  The important thing is that for the relationship to be satisfactory  the exchange needs to be more or less equal.  These days couples are not so dependent for survival on a relationship with a member of the opposite sex and any woman (or man) who feels cheated can easily break up.  With house work some women do it to themselves in that they decide what work should be done and how often.  It may be that asking men to help is really an attempt to power trip.

One of my concerns about feminism is that it does not encourage good relationships.  How can you hope for a good relationship when one partner is using sophistry to  make the other feel guilty so you can control him?

One of the greatest injustices against women in our society is that so many end up as lonely old ladies. It may be  this would be eased if women were to focus on building good relationships.  Statistically people in good relationships live longer than others.

Answering concerns about an income scheme

A discussion forum on the Canadian Broadcasting Corporation website brought out a number of concerns about proposals for a basic income scheme. There were more than 2,000 comments.  Here are answers to some of the concerns.

How do we pay for a basic income scheme?

There are two answers to this question.  The first is that it would replace a range of existing social welfare payments and would make these payments with more efficiency.  Employing fewer people this would increase the need.  Also I believe subsidies should be given to consumers rather than producers so this would release a lot more money for an income scheme.

For the second answer we have to focus on the agricultural surplus, the excess production by each agricultural worker which allows food for people to do other things. Without the agricultural surplus we would not have civilization as we know it.

Until now the agricultural surplus has been distributed via employment but the current level of technology is making this more difficult.  Thus the interest in a universal basic income scheme.  We should note that the agricultural surplus is based largely on petroleum and could be somewhat precarious.

As most of the technology that has gone into the agricultural surplus has been developed over the last 2,000 years and most if not all of us have ancestors who worked on that, we should consider it a part of our inheritance. We are all entitled to a share.  We should have a collective responsibility to ensure everyone has the opportunity for the same standard of living as most other people.  The amount of payments should depend upon the population and the quantity of goods and services we are able to produce.  If this ratio goes up then the payments should go up and if this ratio goes down then the payments will have to go down.

I believe there are some serious problems with the way in which our economy creates money.  As an income scheme involves money this would be a good time to deal with that problem.

How do we stop people from smoking dope all day?

The simple answer to this question is that we do not. We do not need everyone to work all the time to maintain the agricultural surplus.    We no longer need a work ethic.

A basic income scheme would be a tremendous transfer of decision-making power to individuals (from governments and from bankers who create money via the fractional reserve banking system) and we have to allow people to make their own decisions and to take or benefit from the consequences.  The agricultural surplus should give us all the right to decide what to do with our time.

An income scheme would be communist.

This blogger dislikes the isms because they tend to be mostly meaningless.  As I understand communism it involves treating people humanely and government control of the economy.  It seems to appeal to people who wants to tell others how to live their lives.    I believe we should try to treat people humanely and I do not want others telling me how to live my life. As decision making power goes with money an income scheme would be a transfer of power to individuals.  It is difficult to think many communists would want that.

A guaranteed basic income scheme would help with a lot of social and economic problems but such major changes would go against a lot of vested interests.  Even people who would benefit the most are likely to fear the unknown.  Therefore concerns need to be taken seriously.

This blogger has just published an eBook Funny Money: Adapting to a Down Economy which discusses a lot of these issues. The price is only 99 cents.  I encourage you to have a look at it. Until April 19, 2016 you can get a free copy from Smashwords.  Use the link and code at the top of this weblog.

Some concerns about the Swiss money creation referendum

The Swiss are going to hold a referendum on a proposal to change the way in which money is created by transferring this function from private banks to the central bank.  The more I think about this the more I see it as an attack on banks by people who do not really understand what money is and how the financial system functions, or should I say by people whose understanding of money is different from mine.

I believe there are some serious problems with the current fractional reserve way of creating money and anything which might lead to reform is to be encouraged.  However, I would like to see some debate rather than letting those who would tell the rest of us how to live win by default.  I want to see a libertarian reform in which decision-making is by all individuals rather than a select few.

Here are two links to information about the referendum. One, two.

Money is a tool to facilitate the exchange of goods and services and is backed by the agricultural surplus of which we have a huge amount although its continuation is somewhat precarious.  The fractional reserve way of creating money gives great power to bankers who create money each time they make a loan.  The Swiss critics are right about that. Money represents purchasing power for people who hold it and those who create money can decide to whom they will transfer that purchasing power. Transferring the money creation function to the central banks would be transferring power from one small group to another. I am not certain bureaucrats would be any better at making decisions in the public interest than private bankers.

A more libertarian approach would be to combine monetary reform with a universal income scheme and to call money agricultural surplus credits.  This is explained in my just released ebook Funny Money: Adapting to a Down Economy.  The book also talks about the problems with fractional reserve banking. (You may get a free copy of this book from Smashwords until March 19, 2016. See previous post.)

In reforming the way in which we create money two other factors need to be considered.  The total amount of money available needs to be flexible up and down as the quantity of good and services exchanged varies. If it is not flexible we should expect inflation or deflation, both of which rob people of their savings.  The Swiss proposal says the central bank would use its statistics facilities to help in this.

The other concern is interest.  I believe the charging of interest on loans is a Ponzi scheme which leads to periodic financial crises.  This too is in the book. I did not see anything in the proposal to indicate how interest would be handled.  It could be the people who crafted the proposal do not see that interest is a problem in money creation.

I fear that not too many people truly understand how money works in the economy and how the fractional reserve way of creating money is a serious problem.  Reforms are needed although I can not see that transferring money creation from one small group to another small group will be a satisfactory reform.

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