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Modularization vs globalization
Hi Tom. Was it you who warned the ecopolitics earlier about Jay
Hanson? To be fair, his posting on money is relevant enough...
You've been around lists longer than I do. Do I approve this or not?
Roberto
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From: "Jay Hanson" <j@qmail.com>
To: <interdoc-y2k@jca.ax.apc.org>
Subject: [interdoc-y2k 19] Re: Modularization vs globalization
Date: Thu, 10 Dec 1998 19:52:03 -1000
----- Original Message -----
From: Roberto Verzola <rverzola@phil.gn.apc.org>
>Until we learn the basic lessons of systems design, and apply these to
>our own economy, we will be saddled with an unreliable, crash-prone
>economic system, one which will cause us endless suffering.
>
>There is another lesson we can learn from successful designs of the
>past. If a system is badly-designed, and suffers from too many global
>variables, any attempt at modification will likely produce even more
>unintended side-effects. Often, it is better to junk the misdesigned
>system altogether and to start again from scratch.
We agree again (great minds, etc.) <G>
Permission to reprint is expressly granted!
------------------------------------------
It's the Money, Stupid!
Jay Hanson, Aug. 10, 1998
... in the first place, I put forth a general inclination of all
mankind a perpetual and restless desire of power after
power, that ceaseth only in death. -Thomas Hobbes
Power tends to corrupt, and absolute power corrupts absolutely.
-Lord Acton
Money is power because money "empowers" people to buy and do the things
they want - including buying and doing other people (Babbitt just opened
four million acres in Alaska to oil drilling). Money is the ultimate
"political" [1] resource.
The economy "economizes" money - it tends to reinforce social hierarchy:
the rich get richer and the poor get poorer. [2] Moreover, the
accumulation of wealth invariably corrupts political systems [3] and is
"unsustainable". At some point, the wealthy will be able to bribe the
last honest politician and then chop down the last tree, catch the last
fish, shoot the last tiger, eat the last whale, until our complex
society finally spirals into "chaos and cannibalism". [4]
In his Second Treatise of Government (1690), John Locke blamed money for
scarcity. Prior to money, it was solely the usefulness of things that
counted, so a man had only what he needed. But money enabled a man "to
enlarge his possessions" more than he needed and caused scarcity.
Although Locke saw money as the source of the problem, three hundred
years ago there was plenty of land left so he recommended "improving"
the earth:
"Nor was this appropriation of any parcel of land, by improving it, any
prejudice to any other man, since there was still enough, and as good
left; and more than the yet unprovided could use."
But now that all the land is gone, Locke would see that we need a new
answer to the problem of scarcity - that money itself must be abandoned.
In 1970, M. King Hubbert reached the same conclusion.
Hubbert noted the fundamental difference between the properties of money
and those of matter and energy upon which the operation of the physical
world depends. Money is essentially an abstraction and not constrained
by the laws within which material and energy systems must operate. In
fact money grows exponentially by the rule of compound interest.
Hubbert suggested we do away with money and distribute "energy
certificates" instead:
"On this basis our distribution then becomes foolproof and incredibly
simple. We keep our records of the physical costs of production in
terms of the amount of extraneous energy degraded. We set industrial
production arbitrarily at a rate equal to the saturation of the physical
capacity of our public to consume. We distribute purchasing power in the
form of energy certificates to the public, the amount issued to each
being equivalent to his pro rata share of the energy-cost of the
consumer goods and services to be produced during the balanced-load
period for which the certificates are issued. These certificates bear
the identification of the person to whom issued and are non negotiable.
They resemble a bank check in that they bear no face denomination, this
being entered at the time of spending. They are surrendered upon the
purchase of goods or services at any center of distribution and are
permanently canceled, becoming entries in a uniform accounting system.
Being non negotiable they cannot be lost, stolen, gambled, or given away
because they are invalid in the hands of any person other than the one
to whom issued. If lost, like a bank checkbook, new ones may be had for
the asking. Neither can they be saved because they become void at the
termination of the two-year period for which they are issued. They can
only be spent." [5]
Hubbert concluded that under his proposed system individuals would not
have to work longer than about 4 hours per day, 164 days per year, from
the ages of 25 to 45, but would still receive lifelong income.
"Insecurity of old age is abolished and both saving and insurance become
unnecessary and impossible."
The start of the new millenium is an ideal time to dump economics in the
trash and invent something new. Hubbert's proposal for a new society
goes a long ways towards addressing problems that have stumped
economists for the last 200 years: "work", "redistribution", "social
security", "social justice", and "sustainability".
Hubbert's ideas should be studied carefully by everyone working for a
better future. It's the only realistic proposal on the table.
Jay - www.dieoff.com
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[1] When I use "politics" or "political", I simply mean "one coercing
another" in the broadest sense. To "coerce" is to compel one to act in
a certain way - either by reward or punishment. When I use the term
"economics", I mean "standard" economics.
[2] For example, whether or not a factory owner "economizes" - pays his
workers and suppliers no more than the absolute minimum he can get away
with - is ultimately a "political" question. With respect to wages,
what is "economical" from the owner's point of view is not "economical"
from the worker's point of view.
[3] "I see the White House is like a subway - you have to put in coins
to open the gates." - Johnny Chung (1997)
[4] Easter's End, by Jared Diamond (1995) http://dieoff.com/page145.htm
[5] Hubbert's Prescription for Survival, A Steady State Economy, by
Robert L. Hickerson (1995)
http://www.ganesa.com/ecotopia/hubbert/hubecon.htm
MONEY-PRICE MALFUNCTION
The relationship between prices and natural resources is nonlinear. The
market does not reflect long-term declines in natural resources such
as oil. The market is like the float in a carburetor: as the engine
demands more gas, the float falls and allows more gas to flow in from
the tank. But the float has no information concerning the amount of gas
left in the tank until the fuel line is unable to keep up with demand.
So it is with the market. As the demand for oil increases, the increase
in price signals oil companies to pump more oil out of the ground -
which lowers prices again. The oil market has no information about the
amount of oil left in the ground until production is unable to keep up
with demand.
In October 1980, Julian Simon challenged Paul Ehrlich and colleagues to
a $1,000 bet that in ten years the price of any raw material they
selected would fall (measured in constant 1980 dollars).
In October 1991, Ehrlich paid up. The prices of the five minerals chosen
(copper, chrome, nickel, tin and tungsten) had dropped substantially.
Obviously, prices did not reflect the fact that ten years' worth of
minerals had been taken out of the ground.
Simon proved that prices DO NOT reflect the decline of natural
resources.
THE MONEY SUPPLY
Money (an abstraction) represents a claim against part of our biosphere
(something real). The Federal Reserve increases the money supply -
increases demands on our finite biosphere - to keep the economy growing.
Obviously, this process is inherently unsustainable too.
"The Federal Reserve has three main tools for maintaining control over
the total supply of money and credit in the economy. The first is the
discount rate, or the interest rate that commercial banks pay to borrow
funds from Reserve Banks. By raising or lowering the discount rate, the
Fed can promote or discourage borrowing and, thus, alter the amount of
revenue available to banks for making loans.
"The second is the reserve requirement. These are percentages of
deposits, set by the Federal Reserve, that commercial banks must set
aside either as currency in their vaults or as deposits at their
regional Reserve Banks. These percentages cannot be used for loans.
In 1980 the Federal Reserve gained the authority to set reserve
requirements for all deposit-taking institutions.
"The third tool, which is probably the most important, is known as
open market operations. It is the buying and selling of government
securities. When the Federal Reserve buys government securities from
banks, other businesses or individuals, it pays for them with a check
(a new source of money that it prints) drawn on itself. When this check
is deposited in a bank, it creates new reserves - a portion of which can
be lent or invested - further increasing the money supply."
[ http://www.usia.gov/usa/econoutl/pt7.htm ]
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