The Progressive Theory of Employment Interest and Money

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How exactly the economy functions is a mystery to many. How are jobs created? Who decides what goods to produce, in what volume, and when?

It has been said that the economy works like the human body. Our vital systems continue to function without our actively directing them. We do not have to ‘tell’ our stomachs to digest food, our heart to pump blood around the body, our lungs to transport oxygen etc.  This saying is of course entirely false. There is in fact a driving force behind everything our body does: the brain.

The brain is to the body what the government is to the economy. Without a central processing unit (brain), we would die since we would be unable to breathe, eat, etc. without a centralised process of coordination (government), we would also die because there would be no jobs, no food. Worst stlll, with no environmental regulation, the air we breathe would be dangerously toxic, consisting almost entirely of carbon dioxide, which is lethal to all living things.

Many millennia ago, most nations’ governments were tiny, just as their economies were also tiny. Even recently at the turn of the 20th century, the Gross Domestic Product of the United States was a tiny faction of the many trillions it is today. This wealth explosion has come with the expansion of the government into all aspects of our lives.

Once we understand the government’s central role in a modern economy, we can move on to consider some central axioms. We hold the following to be self-evidently true.

  • Governments create wealth, jobs and income. Consider the example of the Soviet Union where there were no private enterprises at all. The fact that this economic superpower was able to increase potato production by record amounts each and every year shows that capitalism is simply unnecessary.
  • Negative consumption is harmful. Also known as ‘saving’, individuals who do not spend all their net earnings in the economy on consumption are deluded. If they believe this selfish behaviour is making them somehow ‘richer’, it is clear that their taxes need increasing in order to find an equilibrium point.
  • Low wages are corporate exploitation – corporations should not use the current absense of a ‘living wage’ to underpay workers. Employers should be damn happy that millennials are willing to give up some of their precious time to help out, yeah.
  • Regulation is always preferable to a ‘market solution’. Greedy corporations were not exactly falling over themselves to cut out carbon pollution before the government stepped in. It took the likes of Goldman Sachs in an outstanding show of corporate citizenship to run the carbon credits market. Whilst the world is still incredibly hot, there is at last some hope for the last remaining polar bears of the Antarctic.
  • High CEO pay is an inherent evil. Whilst it is true that movie stars like Matt Damon and Merryl Streep earn many millions, they give back in so many progressive ways and therefore deserve their pay. The corporate world breeds filthy bloodsuckers like Trump who spread only misery. Enough said.
  • There is such a thing as a free lunch – you can find many people on food stamps eating for free. Already, I hear the jumped-up smug Austrian camp guffawing that ‘Ja, but someone picks up the bill, nein?’. Well, yes, obviously the Federal Reserve pays for this. But, guess what Fritz, the Fed can print as much money as it likes. So, Herr Pedantic, free lunches obviously cost nothing. Now why don’t you put that in your lederhosen and smoke it.
Austrian Economists: government regulation over clothing choices would have been beneficial
richandrenee

What a hard hitting article Pbier. The quickest way to grow the economy would be for the government to raise the minimum wage by at least 50% – this would stimulate demand and everyone would be better off. Donald Trump knows this but won’t do it because he hates poor people and would rather see them suffer – even if it means the economy takes a hit.

CompassionateConservative
CompassionateConservative

I agree and I am glad you used the words “at least” because I would propose raising the minimum wage by 6,000,000% but only to oppressed minorities like those targeted by Donolf Trumpler’s illegal and blatantly unconstitutional executive orders.

drb6
drb6

A minor correction to otherwise excellent article:

High CEO pay is an inherent evil UNLESS the CEO is an oppressed minority. Then high CEO pay is a sign of progress

richandrenee

Exactly drb6 – no one can fault Lloyd Blankfein being duly rewarded for his hard work. He has created so much wealth – it’s only fair that he’s paid his share.

drb6
drb6

We could even argue that he is doing “God’s work”, as reported by accredited media. One also needs to properly compensate high-ranked womyx, such as Yahoo CEO, who has brought untold progress to the said company and put it ahead of all competitors. I am sure that a white male in her place would have been a disaster.

Black Lives Matter

On the high CEO pay part, we need some other exceptions — for example, for Lloyd Blankfein at Goldman Sachs, who is doing “God’s work.” Maybe we could have a “Blue Ribbon” Commission decide CEO pay?

CompassionateConservative
CompassionateConservative

Of course he’s doing God’s work. He’s one of God’s Chosen after all. Only a sickening Donald Hitler supporting lunatic would be so anti-semitic to disagree with that.

drb6
drb6

There is a better picture of Austrian Economists:

austrians.jpg
Black Lives Matter

Of course, Hitler was Austrian. Trump is probably Austrian as well.

“Austrian economics” is a complete joke. It is not even real economics; it’s a crackpot conspiratorial anti-government ideology posing as pseudo-economics. “Austrians” blame “the Fed” (or “the Fyyyyed,” as crackpot Ron Paul says) for all economic bubbles, crashes, and recessions. The reason they do so is because they can’t possibly fathom that the private sector could cause economic problems . . . so it must be the government!

In reality, there were bubbles, crashes, and recessions well before the “Fyyyyed” even existed. The United States had no central bank from the time of Andrew Jackson until Woodrow Wilson, but the country had many bubbles, crashes, and recessions, including the Panic of 1890, the Panic of 1893, and the Panic of 1907, all of which led to serious economic and political upheaval.

Some “Austrians” are only partial idiots, so they try to blame “fractional reserve lending” in general, pretending that it’s the government’s fault again for allowing modern banking. This too is completely insane. Anyone can ALWAYS pile on loans even with only a fractional amount of money available by entering into contracts with others for cash flow; there is nothing the government can do to stop it. Even Islamic banks have de facto fractional reserve systems, even though superficially they supposedly do not. “Eliminating” fractional reserve lending would simply result in another de facto fractional reserve lending system, except with added transactional complexity — which would actually INCREASE economic turmoil by increasing counterparty risk.

The real cause of bubbles, crashes, and recessions is GREED. People follow the Herd Mentality seeking quick riches by doing what everyone else does. So prices go unsustainably up. Then the money doesn’t come in as expected, or the assets stop bubbling upward at the same rate, and people stop buying and start selling. So the prices crash. Then when money doesn’t come in as expected, businesses can’t meet cash flow requirements, so the businesses also collapse, and employees lose their jobs. Some starve. The assets lie fallow for a couple of years while the bankruptcy process plays out. Eventually terminated workers are rehired, usually by different companies. The instability, however, stops them from forming tightly knit communities and creates an employment situation marked by nomadism, fear, and turmoil. Womyn and minorities are hardest hit.

The real solution is a gift-based economy based on SHARING instead of GREED.

richandrenee

Ron Paul is Racist!

AccreditedThinker

Yes, it’s amazing how often you’ll hear alt-Right lunatics say the Federal Reserve† is owned and run by Jews… and in the next breath aver – out loud! – that they wish to destroy it! The blatant anti-Semitism is quite breathtaking; the sooner we get proper hate-speech laws in place, the better.

† As if a Federal agency (the clue, dear Trumpanzees, is in the name) could be “owned” by private individuals! Next they’ll be asserting Federal Express is privately owned.

littleshoppinlucy
littleshoppinlucy

If there wasn’t fractional reserve bank lending, young people wouldn’t be able to get student loans for education and that’s not fair on us 🙁

Please click on image to enlarge, thank you.

ndt5.jpg
MillionDollarBonus

Excellent article Pbier. It’s well understood by top economists that regulations promote economic growth. And what’s scary is that trump wants to cut regulations by 75%! This means there will be 75% less economic growth, and 75% less jobs for government regulators, many of whom are minorities and womyn. Really, this is all rooted in sexism and racism, which is always the case with Trump.

CompassionateConservative
CompassionateConservative

Excellent article sir. As soon as I saw the headline I knew that it was much more than a theory. I knew right then that it was a fact because Progressives are always right. Only a sickening racist, pedophobe, islamophobe, homophobe, transphobe, bigoted nazi like Adolf Trump would disagree.

MillionDollarBonus

Nice new term, pedophobe – I’ll be using this in the future. The politically correct term for pedophiles however, is “minor attracted persons”.

vacamuerta
vacamuerta

Who can forget Hillary’s deep appreciation of the vital role of government in job creation “dont let anyone tell you that its businesses and corporations that create jobs”.

..or indeed the Nobel prize winner Obama reminding small business persons that “they didnt create that business”.

Obama received a Nobel prize for saving the world from Bush’s continuous military interventionism and warmongering, bringing about global peace and stability.

I propose Obama get a Nobel Prize in economics too, for saving the world from Bushes ‘free market’ catastrophe, and xer/xis genius in somehow then producing an eight year long economic miracle, a miracle that enabled the continuation of the important work of Blankfein, Dimon, Soros and other vital players in the countries economic powerhouse?.

It is a tribute to Obama that he prioritized saving these minority owned businesses from the insane fluctuations of the far right’s ‘free market’.

Haters suggest that there was a link between saving these businesses and doubling the national debt – that present and future Americans are enslaved by a debt (that appeared as a credit in Goldman et al’s balance sheet) – that doubling the national debt was a ‘bad thing’. Economic simpletons just dont understand that money IS debt. Obama doubled the amount of money. Anyone can see that a good thing.

MillionDollarBonus

Exactly, Obama doubled the amount of money available for us to spend. 2x more money = 2x more wealth! Also, by massively increasing regulations, he proportionately increased the quality of goods and services. If you look at overall quality metrics, you can see that they track the number of regulations very closely.

hungrypirana
hungrypirana

Keynes and liberalism are like a mental patient with syphllis. His body of work is nonsense and its real-world application an exercise in decay, moral hazard, and entropy

#hate-speech

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