Can we have a civil, thoughtful discussion on this?

McDonalds
Disneyland
Hollywood

 

A quick search finds the following definition of capitalism.
"an economic and political system in which a country's trade and industry are controlled by private owners for profit, rather than by the state."
And the following for socialism.
"a political and economic theory of social organization that advocates that the means of production, distribution, and exchange should be owned or regulated by the community as a whole."

While the word "increases" seems to be lacking in both, it would appear our differences are more related to ownership, individual(s) or collectively. Would you not agree?

 

Actually, the term 'one world government' is misleading, no doubt intended to elicit a certain response, like the word 'socialism'.

Fact is, you either believe in rule of law, or you don't.

[Rule of law: to facilitate well-ordered relations between naturally self-interested individuals.]

Now, for rule of law to operate, you need government (law) at these levels:

1.local (parking regulations etc)
2.state (courts to deal with state concerns etc)
3.national (supreme court, management of defence, labour laws etc)
4.and finally - yet to be achieved, because it's a work in progress - international law (management of international disputes).

Interesting observation: while law can regulate punishments for criminality, it will never be possible to eliminate violence between individualsBUT it might be possible to eliminate violence (war) between nations, simply because it takes time to mount an attack on another nation.

Indeed, some of the smaller nations involved in the design of the UN Charter (in 1946) took the aims of the new Charter seriously, and urged adoption of a UNSC without veto power.

But ofcourse the great powers, with self-interest uppermost, and confident in their own self-defence capabilities, insisted on institution of SC veto.

And so.... we are subject to the endless, confronting TV images of children being slaughtered, in insane, preventable wars.

"one world government" cf rule of law?

 

Would a one world form of government have to be a socialist form of government?

Actually the key to "rule of law", regardless of the form of government, working is for the vast majority or nearly unanimous acceptance of the laws created under which all must live.

 

In Monopoly, just like the real economy, the game can never run out of money. Click HERE for the official rules. Last paragraph first page.

Remember that money is, when you break it down, just a way to keep score. In Monopoly and the real economy. We create money as a way to store our productivity in a measure, or unit of account. If you ran out of money in Monopoly, a business that wanted to get done couldn't and the same in a real economy.

Now, if that has you asking, WTF is this guy talking about? Then we need to start at the beginning and work ourselves up to this point.

 

The modern form and implementation of Georgism are called Land Value Tax. It is really about correcting the tax structure to avoid creating negative incentives for positive activity.

For example. If I put an addition on my house, I will employ the workers and purchase the raw materials to build it. But I may decide not to because I don't want to pay a higher tax. That dis-incentive means the construction companies and material makers won't earn my dollar.

LVT taxes the land, not the dwelling, it incentivizes the more efficient use of land because no one is penalized for building, the very thing that gives land value in the first place. Because all land is taxed at the same rate based on it's market value, this also discourages speculators buying up land, not building on it in the hopes that others around their land will build and create value for the speculator who benifits from the sale of the land he never improved.

 

There are definitions and there are our experiences to flesh-out the definitions.

To me the difference is the willingness to recognize the growing failure of capitalism and that the failure is due to, and corrected by, a change in the relationship between those who own and run the business vs. those who work and create the value of the business.

 

Let me see if I have this right:
A government creates money by spending, it spends to create space in the economy, so it can't run out of money while ever there is something to buy to create space in the economy?

But what about budgets, deficts and debt?

 

I can see a use for that in Australia immediately. We have a real estate bubble going on that has made buying a dwelling - flat or house- impossible for many. It’s been caused by big tax concessions to wealthy investors like negative gearing property and capital gains tax concessions. They've bought up a LOT of property, borrowing lots of "free" money to do it and pushed the housing prices up and up and up. The bubble just keeps getting bigger. A land tax would help rein it in.

https://theconversation.com/explainer-why-negative-gearing-is-bad-policy-21882

A land tax on corporations could bring in quite a lot of revenue. It could be figured on land use , too. Heavy polluters would pay more land use tax.

Most importantly, it would be fair: those with more land pay more land tax.

 

Your statement that "the key to "rule of law" is working to achieve "nearly unanimous acceptance" is worth examining.

Indeed, most people only accept (or desire) the very notion of the rule of law because it likely enhances their own personal security .

But most people are more motivated by their own self-interest and ideology than any notion of 'rule of law' ie establishment of justice, promotion of the common welfare, etc.

That's why the Dems and Repubs in the US fight for the right to elect the justices to the Supreme Court who most nearly align to their own ideology.

No sign of "nearly unanimous acceptance" there - it's more like a 50/50 split of the population of the US.

In other words, the tension between individual freedom, and a desire for a well-ordered community aka rule of law, is very real; and overlaying this is the desire for power or control of society by any one group or individual].

That's at the national level.

At the international level, this complex interaction of the desire for power and promotion of particular ideologies is very evident, and not surprisingly, at this stage in history, overwhelms the latest attempt to establish good international relations as identified and promoted in the UN Universal Declaration of Human Rights.

Observation: the left promotes the UN project, while the right works to hinder its effectiveness (indeed sometimes calls for UN's dissolution).

So examination of the commitment to particular ideologies is required, if we are to move to a more sane, co-operative international order.

eg, re religion: there is only one 'God', but delusion presently has the upper hand, both in the 'clash of civilisations', and in particular ideological reading of even the same scripture.

re economics: there exists privilege and disadvantage, perhaps because of the continuing delusion that there are not enough resources for everyone .

And examination of all the other issues that men divide on.

 

First, let me make a correction:

"A government creates money by spending, it spends to create space in the economy,"

Should be:

A government creates money by spending, it taxes to create space in the economy...

Let's try this...

The only way to describe this is visually.

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(I) Investment, (G) government spending and (X) Exports (inflows). The water flowing out of the tub leaves via; (S) Savings, (T) Taxes and spending on (I) Imports (drains)


In the tub (which when taken as a whole represents the economy) above you have to imagine that the tub itself represents the nation's capacity for production and the water level represents the amount of money in the economy. If the water level is low there is productivity that wants to get done, but the amount of money circulating in productive areas of the economy is too low, there’s not enough liquidity. Side effects of an anemic economy are things like unemployment and unused productive capacity. That is, businesses purchase and acquire capital that ends up unused because of insufficient demand. For example, empty buildings, unused (or underused) computer equipment, 18-wheel tractor trailers parked and unused, fabrication equipment and assembly lines unused. These things represent business capital that companies have purchased much of which is still costing those companies money but isn’t being used to make the companies that purchase them sufficient profits.

Ok, so the water in the tub is analogous to money. Money exists because the government spends more than it taxes.

In the example above you have water coming into the tub via the faucet and water exiting the tub via the drain. The additions or inflows are; (I) Investment, (G) government spending and (X) Exports. The water flowing out of the tub leaves via; (S) Savings, (T) Taxes and spending on (I) Imports.

Thus, water (money) exists because the inflows exceed the outflows. The government has direct control over only 1 of the inflows and 1 of the outflows. If the government is trying to maintain the “level of the tub, it must make adjustments based on the other 4 factors. If exports exceeded imports and investment equaled savings, then the government, after allowing the level of the tub to get to the desired level (very close to the top) would have to open the drain, It would accomplish this by taxing more than it spends. By opening the drain slightly more than it opens the faucet. Failure to open the drain would result in an overflow, which in the real economy can be thought of as inflation, as the amount of money (water in the analogy) exceeds the capacity of the economy (the tub).

However, today, in the US imports (drain) exceed exports by Approx $700 billion per year and investment and savings are very close to being equal. Thus, the government must open the faucet slightly more than the drain in order to keep the tub filled. This creates what we have come to call deficit, however calling it a deficit is misleading because every transaction has two sides. The Government's deficit is a surplus to those in the private sector (you and me). It's what keeps the tub filled.

Unfortunately, our government doesn’t understand that

If the government spent and taxed at the same level (balanced budget) the tub would empty because the drains from the economy would exceed additions to it. We are lead to believe that the government must balance the budget, however, if you understand what I’m writing here, you know the government needs to use the budget to balance the economy not use the economy to balance the budget!!!.

It is for this reason that the US government must run a deficit. The deficit “fills” the tub and ensures there is money, sufficient liquidity, for individuals corporations and the government to do business. That business is what creates jobs.

The problem, IMO is that most people think of the economy like this:



The problem with this model is that in our modern economy the government does not fund spending via taxes. In order to “see” why, wee need to create a diagram more indicative of how the economy really works…



Look at year 1, If taxes funded spending, but the government had never spent dollars into the economy, where would the private sector get the money to pay taxes?

The reality is that taxes don’t fund spending any more than you’d have to put water down a drain before you could get water from a faucet. The government creates and spends currency so the private sector can have money. Notice that the difference between each year's spending and taxes is a deficit to the government and a surplus to the private sector. Note that in year 3 taxes exceed spending, but the government doesn’t have more money because of this (the government CANNOT SAVE). Instead, the government ONLY has less debt (the government can never have money for this reason). The private sectors “surplus” is equal to the “government’s debt”. Said another way, the private sector has money only because the government creates debt. When the government taxes citizens and puts it in an account and buy bonds to earn interest to help pay for future SS benefits. What's really happening is that the government is taking it's own IOUs and buying it's own treasuries so it can pay interest to itself. It's a stupid game of semantics. It's like writing $1 on a piece of paper, sticking it in your right pocket, then reaching into that pocket and replacing it with a promise to pay interest on the IOU you created and sticking the IOU in your left pocket and at regular intervals, creating more IOU's to pay yourself interest.

In order to reduce the debt, the outflows must exceed the inflows. The government can only control the outflows via taxes and because imports exceeded imports the only way to pay down debt is to increase taxes (outflows) more than spending (draining the tub and destroying the economy).

Let's start there and see if it kicks up a discussion.

 

That's absurd. Of course tax revenues fund spending. Differences between revenues and spending are either borrowed or save. Water down the drain is the same water from the faucet with a time delay.

 

So then all you have to do is tell us where the money would come to fund a fiat government in year one. It can't come from taxes because if the government hasn't spent first, there would be no dollars in the economy to tax. It can't borrow, because the US government only sells US treasuries for US dollars. No dollars in circulation no dolalrs to purchase treasuries.

The fact is, money exists because government spends it, not because it taxes or borrows it. Taxing and borrowing have entirely different functions.

 

The gov issues IOU's.

 

Issues them to whom? In what form?

 

To whomever the start up gov owes. What ever form works. Could be the back of an envelope.

 

Yes, the government issues IOU's, but not in "whatever form". It issues IOU's in the form of dollars.

This is perfectly consistent with what I said. The government issues IOU's (dollars) and purchases the labor and real resources to provision itself. The next year it does exactly the same thing in the same order, it issues IOUs and then it taxes them back (primarily) in order to prevent inflation. Just as in the tub analogy, taxing is simply reducing the "water" level to keep the tub from overflowing.

But if, as you correctly point out, the government can create IOU's why would it need to tax in order to have the IOU's it creates?

It doesn't, the government can create as many IOU's as it wants. The real constraint on IOU creation is not the amount of it's IOU's collected in taxes or bonds sold. The real constraint is inflation.

That is, if it turns on the faucet (IOU creation and spending) but doesn't open the drain, the "tub" (economy) will "overflow" (inflation) unless there is another drain like spending on imports that removes dollars from our economy.

 

The could issue land grants or mineral rights or logging rights. There are many ways to get an economy going.

 

Sure the government could do those things, but that doesn't put government dollars into the economy. The only way US dollars enter circulation is via government spending. The only way US government dollars leave circulation is via taxes. Which is to say, ONLY the US government can create and destroy US dollars (as a fiscal operation).

Again, the claim I'm making is that taxes don't pay for spending. Taxes make room for spending, just like opening the drain makes room for more water. The government does not have to tax or sell bonds in order to create and spend IOU's.

Since 1980 the government has spent $73 trillion dollars into the economy. If it didn't tax (and destroy) most of those dollars, we'd have inflation.

The government cannot save dollars, at least in any meaningful sense. The best example, as I said in the post that started this discussion, the Social Security Trust Fund is an exercise in pure semantics. Operationally it's nothing more than a Rube-Goldberg operations meant to meet the expectation of voters who don't understand that the government could sell the treasuries it purchased with US taxpayer dollars and either pay down debt (which would simply destroy $2.1 trillion dollars, or it could refund those dollars to taxpayers and continue Social Security as a pay-as-you-go system like it was before 1981 (?) when the SS trust fund was created. Since the government does not need to sell bonds or collect taxes in order to spend there is nothing that prevent's the government from creating all the money it wants and paying benefits.

Here I'll let Alan Greenspan explain:

[video=youtube;DNCZHAQnfGU]https://www.youtube.com/watch?v=DNCZHAQnfGU[/video]

 

You were talking about a start up gov. At some point a system of money must be implemented which could consist of gold, silver, sea shells, or very large circular rocks with hole in the middle.

 

From Greenspan's lips to God's ear...

 

Or paper notes and a federal government decrees that everyone that participates in commerce in the nation must pay a portion of their earnings as a federal tax payable only in the dollars the government creates. Then create legal tender laws that ensure that parties can only ask for and must pay in dollars the government creates unless they both agree to accept and make payment in another form.

Now let's go back to your original response.

Now, explain why the government must borrow dollars it creates in order to have dollars.

The dollar is a token, a debt, an IOU the government creates so people can earn them and pay their taxes. Dollars are just credits for paying taxes, but since we all need them to pay taxes, they are useful as money. The tax effectively creates a state of unemployment and people must earn the dollars to pay the tax, thus the value of the dollar is extrinsic, equal to the consequences of non-payment of the tax.

As an example....If I tell my teenage kids I will reward them for chores, then they have the choice to earn the reward if they want to. If they don't want to anything, nothing gets done. If I tell my kids I'm imposing a $100 weekly tax payable ONLY in the dollars that I create (we'll call them Dad Dollars), then they are effectively unemployed and chores must be done or they will lose 1 day of cell phone time for every $10 they are short at the end of each week.

So here the value of the dollars I create is equal to the punishment I can impose in the event of non-payment, which in this case is losing their highly coveted cell phones. In the real world, the government can take your dollars, your property or even your freedom.

Now I tell them how much they can earn for specific jobs and pay them in dollars I create, I create employment. I might even tell them that for every dollar they earn beyond the $100 required they can spend them at the mall or go to the movies with their friends.

If the kids collectively owe me $200 but I tell them I'm concerned about the amount of debt I'm creating and I only create $190 Dad Dollars, then at least 1 of my kids won't be able to pay the tax at the end of the week though no fault of their own.

Ok, so coming full circle...

Now, please tell me, why would the government have to collect its own dollars as "revenue" to provision itself?

The only thing that's absurd is the idea that the government must collect its own IOU's to have money. To be clear, the government must collect at least some of it's IOU's to prevent inflation, the amount depends on the factors I listed in the OP, that is, exports and investment (inflows) and savings and exports (outflows) and then after determining the amount of labor and real resources available determine the level of spending and taxes.

 

Maybe we could communicate more efficiently if we would choose words that have previously been defined in the dictionary that most closely match the experiences we wish to describe.

Capitalism seems to work quite well for those of us who live within our means. I've never had a complaint with any of the businesses I've worked for, although I've had disagreements with some bosses, but not about my wages. Those who are employed by others are always free to find another employer who may value their work more.Most workers today don't actually produce a product but simply perform a necessary function which is but a small part of the finished product. Someone working in a bakery for example may simply pour bags of ingredients into hoppers which the machinery then measures, mixes, shapes , bakes, and packages while another employee may simply place the final products into boxes to be loaded onto trucks for delivery. And such employees are probably paid much more than a small bakery where the employees have to measure, mix, shape, bake and package by hand. Of course a competent person could start their own business and pay whatever they feel they are truly worth, assuming consumers agree with the value they feel they are worth.

 

You have it backwards, the need for law is the motivating factor. The powerful have no need of law.

The purpose of Law is to administer justice, and promote and protect the common welfare

The ideology of the right, based primarily on self-interest and personal profit, precludes 'nearly unaminous acceptance' of both the need for and content of the law.

The right's antipathy to the UN project is no surprise.