Reciprocal System #569 "The Road to Permanent Prosperity" ch20-Economic Controls B [Thomas Newsome]

Transcript

hello everyone and welcome to my channel we do educational videos on this channel I'm mostly focusing on great theories of everything all-encompassing theories cosmologies Grand unified theories and um today is our 569th video on the reciprocal system of theory from W Dey B Larson and uh around 1959 Mr Larson proposed his two fundamental postulates about how he believed the universe operated first postulate states that the universe is composed entirely of one component motion existing in three dimensions in discreet units and with two re reciprocal aspects space and time Larsson plugged that first postulate into his second postulate which states that the Universe conforms to the relations of ordinary commutative mathematics its primary magnitudes are absolute and its geometry is ukian now um many of larsson's Associates including me uh not that I ever knew Larson or anything but Larson's followers including me I disagree with various aspects of that second postulate but um I don't think that's necessarily important uh it is more that that is kind of a consensus uh scientific Viewpoint and um that is those are the parameters that Larson uses to plug his concept of motion Universe of motion Larson isn't the first first uh philosopher cosmologist to come up with the idea of a universe of motion uh Renee dekart had those ideas as well as Thomas Hobs Arthur Edington and others but um I believe Larsson was able to make it work as a general theory because of his definition of motion as the relationship between space and time I was running at 10 mes per hour 10 miles of space in one hour of time space over time that's speed so um speed is pretty much the most common uh form of motion that we know of and that is a reciprocal relationship between space and time uh if you say I decided to start sprinting and started running twice as fast fast at 20 mph you can say that but you can also say I started sprinting and uh running twice as fast and now I'm running you can say 20 miles per hour but you can also say 10 miles per half hour either way is equivalent you can multiply the space or you can divide the time that's a reciprocal relationship now Larson spreads that out to apply to all forms of uh really scientific quantities they are all forms of motion matter is a form of motion energy is a form of motion pressure is a form of motion power is a form of motion capacitance is a form of motion acceleration is a form of motion force is a form of motion and they all can be expressed in fractions with space or time as the numerator and time or space as the denominator and space or time can have multiple exponents you can have uh for example force force is time over space to the second power matter is time to the thir power over space to the thir power and so you probably see how that works so Larson then uh through a process of deduction took his postulates and he deduced a theoretical Universe what his Universe would look like if his postulates were correct and then he wrote books comparing his theoretical Universe with the empirical Universe of modern science that they uh you know the aggregate of science had um you know performed laboratory and Observatory experiments uh to dve their scientific tables and in many cases Larson was able to recreate the scientific tables or practically recreate the scientific tables strictly from his theoretical universe so Larson ended up uh writing books on physics and chemistry and uh astronomy astrophysics and he also wrote his final book on metaphysics which uh has sections on religion and philosophy and psychology and biology and Larson also wrote two books on economics the road to full employment and the road to permanent Prosperity we are looking at his second book here the road to permanent prosperity it's primarily more of a I guess macroscopic approach to economics but it is also a scientific approach to economics Larson uh dispenses with the what he calls sociological approach of uh modern economists uh who try to um parlay their ideological viewpoints into Economic Policy uh you know Equitable Justice and um you know helping the poor and things like that and LaRon isn't opposed to those things but he says that you know um just like in science your economic system has to comply with the laws of physics the laws of economics and if they don't your economic system is going to collapse and uh Larson uh arrives at some very basic laws and very basic principles of economics and shows how uh in many cases um the economists are shooting for things that are impossible uh nonsensical absurd and um tries to set them straight on that and sets up an economic system with some recommendations that will lead to full and permanent Prosperity no busts in the boom and bus cycle or at least ways to mitigate those busts to make them just little ripples as opposed to catastrophic crashes and so on um we are uh about halfway through with chapter 20 of this book uh that is called the road to permanent Prosperity this chapter is called economic controls now if you'd like to uh get a grip on larsson's economic theory from the start of this book go back about 6 weeks in the uh library that and start from chapter one um and if you'd like a little bit more of a primer on the reciprocal system of theory uh how it applies what its ramifications are what these things mean discrete units three dimensions reciprocal uh scalar motion all of those things will be discussed in uh my first any of my first 474 videos on this subject um watch uh watch many of them uh because I pretty much uh try to explain the reciprocal system um 474 different ways and um but for right now we're going to just move forward here with chapter 20 more or less a assuming that you are an Intrepid uh truth seeker and that you're ready to um just go uh into the unknown if you don't have this background you still should be able to follow along uh with uh a lot of this information that Larson will be giving you here in chapter 20 on economic controls taking over a little bit less than halfway through another point where outside control is optional is in the determination of relative wages although the general relation between money and wages the money wage level must be set arbitrarily the economic system will establish relative wages for different occupations if it is permitted to do so however in most countries including the United States Rel relative wage rates are set by some legal or extr legal process and are based more on the political or and economic strength of the various occupational groups than on any value criteria in an era when resort to force as a means of resolving conflict claims is quite generally condemned the Persistence of tooth and Claw policies for the determination of relative weight age rates is a strange anomaly and certainly the results of these policies do not conform to any standards of Justice or Equity it can hardly be denied that free operation of the value system as in the goods markets would produce far more Equitable results of course correction of this situation could only be accomplished as a part part of a more general program that would address other major problems of the economy and thereby attract a wider range of support adoption of some program along the lines suggested in the road to Full Employment his first book on economics to assure continuous employment for all those willing and able to work would at least be required but since correction of these other weaknesses in the economic system should be undertaken in any event reform of the procedure for wage determination is a feasible and well worthwhile addition to the objectives price control is generally associated with wage control in economic thinking but as has been explained in the preceding Pages the general price level is a result of actions taken ahead of the goods markets and therefore cannot be controlled directly price controls for the usual purpose to hold down the cost of living are thus futile they may however be applied to certain individual items for special purposes in which case whatever reductions are applied to the prices of the controlled items are offset by automatic increases in the prices of other other products finally there is the question of control over interest rates this power exercised by the Federal Reserve System in the United States has a significant effect on the economy an effect that is generally detrimental in present day practice where the prevailing policies call for throttling business activity as the primary means of controlling inflation a problem here is that the interest rate cannot be increased above the normal competitive level or decreased below that level without subsidizing the difference this point is not generally recognized it is of course obvious that the cost of borrowing goes up when the interest rate is raised but most observers fail to see that maintaining an interest rate below the free market level like wise involves subsidizing and additional costs keeping the interest rate artificially low requires issuing new money for the purpose the entry of this new money into the circulating stream raises the market price level consumers in general thus lose an amount of buying power equal to that gained by the borrower borrowers who get the benefit of the lower interest rate the foregoing identification of the points at which controls can be applied to the economic mechanism and the types of control that can be exercised carries with it the implication that no other control is possible this is correct however certain measures that are intended to control other aspects of the economy are currently considered feasible and appropriate on the basis of accepted economic theory and are frequently put into effect when some modification of those features of the economy appears to be desirable but these measures either do not accomplish the results at which they are aimed or do so at the cost of introducing collateral effects of a d detrimental nature that far outweigh the meager accomplishment the description of the controls that are possible will therefore be supplemented by some consideration of the most important of these controls that are either not possible at all or not feasible from a practical standpoint Direct Control of the general price level the usual meaning of the term price control is impossible for the reasons previously explained in detail the reasons why control over the general level of real wages cannot be exercised were also explained in the previous discussion control of the amount of real purchasing power available to the task consumers um I'm sorry control of the amount of real purchasing power available to the consumers is another impossible task more money can be injected into the economy but this this does not add any purchasing power it merely dilutes the value of the money previously available for purchases and does not enable buying any more goods from this it follows that increasing demand the centerpiece of most of the modern prescriptions for improving the performance of the economy is impossible in real terms the incre inreased demand is simply an inflationary addition to the money purchasing power and it has all of the disadvantages of any other money inflation as well as the stimulating effect on business that its Advocates want to produce furthermore it is inevitably followed by deflation demand in real terms is determined by production and it cannot be increased by changing the money labels so far the discussion in this chapter has dealt with controls over the operation of the economic system the objective of that operation is to put Goods of the desired kinds into the hands of the individuals who have participated in the economic process but some portion of these Goods must be allocated to paying the expenses of the governmental agencies that make organized economic activity possible and most of this is usually recaptured from the workers and suppliers of capital who receive the larger shares of the proceeds of the economy thus a certain amount of redistribution of the products normally takes place this redistribution is completely under the control of the appro roate agencies of society and it can therefore be used for a variety of purposes in addition to raising the revenues needed to pay the costs of government here then the community has at its disposal a method of control over the ultimate results of economic activity that is exercised after the economic system has completed its work in many cases it is possible by means of these Readjustment measures to accomplish the same objectives that the nation is now trying to attain by the use of controls that affect the operation of the economy there is a big advantage in so doing because free operation of the economic system is geared to production of the maximum values and any modification of the auto automatic operation therefore involves a loss of productivity not infrequently there are undesirable collateral effects as well handling the redistribution as the last act avoids these productivity losses and other adverse effects the minimum wage situation is a good example as emphasized in the earlier discussion if anyone is paid more than the market value of his Services the real earnings of the rest of the workers in the community are reduced below their market value by the same amount the adjustment is automatically accomplished by an inflation of the price level no employer can afford to pay wages above the market levels unless his competitive position is such that he can recover the added amount by adjustment of his price structure for this reason the existing minimum wage laws do not require anyone to pay the minimum wage they simply forbid the employers to hire anyone at a lower rate the result in a great many cases is that the worker loses the employment opportunity thus these laws are major contributors to the current rate of [Music] unemployment and uh Larson gets into those matters in uh detail in his book The Road to Full Employment which we may look at at a certain point here also on this channel the finding that the difference between the free market wage level and whatever minimum wage is established by law adds to the price level in the Goods Market points the way um let's try this sentence again the finding that the difference between the free market wage level and whatever minimum wage is established by law adds to the price level in the goods markets points the way to a more efficient way of handling the situation as matters now stand it is generally believed that the employers have to stand the cost of the higher wage and public approval of such measures is relativ easy to get if someone else pays the bill but our analysis shows that there is no someone else and the consumers that is the general public have to stand the additional cost in one way or another under these circumstances there are distinct advantages in a direct subsidy wages of the substandard workers can be allowed to find their equilibrium level in the labor markets and whatever adjustment the community desires to make can be accomplished by an additional payment from public funds this would leave the post leave the cost to the general public just where it now stands while it would avoid the unemployment and loss of productivity that result from the existing way of dealing with the minimum wage problem of course it may be more difficult to get public approval of minimum wages or other redistribution measures when the taxpayers understand that they have to pay the bill but by this time the nation should be mature enough to face its problems openly rather than having to conceal the facts in in order to gain public acceptance of social policies the cost of such policies cannot be unloaded onto business enterprises or anyone else they have to be borne by the general public if that public in their capacity as taxpayers refuse to pay the costs are automatically assessed against them in their capacity as consumers the minimum wage P example illustrates the point applicable throughout the economy that if some adjustment of the market value of Labor in favor of the less productive workers is considered advisable it is far more efficient to make the adjustment after the economic system has done its work rather than to introduce arbitrary modifications into the operation of the system by so doing the Ben benefits of the high productivity of the freely operating economic system are retained without in any way restricting the community control over the ultimate distribution of the products the methods of making these final stage adjustments are taxation which decreases the net proceeds to the individuals that are fected and subsidies which increase the net proceeds these are familiar Fe features of all modern economies thus the suggestion that social objectives should be attained by adjustments of the results of the market system rather than by arbitrary actions intended to cause that system to produce different results does not introduce anything new into the economic situation it merely takes more advantage of one of the economic tools that is already in widespread use much of the criticism of the individual Enterprise economies capitalist economies to their detractors is focused on what the critics regard as inequities in the product distribution accomplished by market forces as expressed by Hy Bruner and thoro quote the market system was thus the cause of unrest insecurity and individual suffering just as it was also the source of progress opportunity and F fulfillment in this contest between the cost and benefits of economic freedom lies a theme that is still still a crucial issue for capitalism end quote what these and other critics failed to take into consideration is that no economic system automatically accomplishes what they or any other critical think uh observers regard as an equitable distribution of the products of economic activity in all cases there has to be an arbitrary adjustment for this purpose the difference is that in an or authoritarian type of economic system the adjustment is applied mainly to the operating elements of the mechanism wages prices currency controls Etc while in a market system it is applied mainly after the economic mechanism has completed its work any modification of the results that would be produced by free operation of the markets that can be accomplished in one of these ways can also be accomplished in the other manner thus the contest between the costs and benefits of economic freedom cited cited by H Brunner and thorough is non-existent it is not necessary to sacrifice any of the advantages of efficient operation any benefits for individuals of the public at large that can be secured by authoritarian modification of the operation of the economic system can be obtained just as easily by adjustments made after the system has done its work it follows that any final results in the way of distribution of the products of the economy that can be attained ained under any other economic system can also be attained by a market system such as the American individual enterprise system with a much greater degree of efficiency the only disadvantage if it is one is that since the last stage adjustments are out in the open where they can be seen for what they are the public may not be as ready to accept them as they are to adopt a program in which the incidence of the cost is concealed many individuals who are quick to support the idea that the big corporations should be required to pay their employees a living wage will not be quite so quick to give their approval when they understand that any difference between that legal wage and the free market value of an individual Services has to come out of the pockets of the general public much of the support that economists have given to authoritarian economic systems has been based on their lack of confidence in the ability of the public to arrive at Social socially desirable answers to economic questions quote every unwise choice on the part of consumers brings about the production of some useless or or even injurious commodity says one textbook the authors contend that we should produce quote only the most desirable kinds of goods as judged by the ideals of our most enlightened thinkers end quote the question as to who are these enlightened thinkers is one on which a consensus will not be easy to achieve however the merits of the arguments in favor of authoritarian control of this nature are a matter of opinion and they no longer have much support outside the mark Marxist economies it is not likely therefore that they will ever have much appeal to the American consumers accustomed as they are to demanding and receiving the kind of products that they are willing to buy the consent of the public will also be required if any change from the existing indirect wage subsidies to direct subsidies is to be made and this will not be easily obtained however it would probably be acceptable as one component of a fullscale economic program of the kind recommended in the road to full employment okay that is the end of chapter 20 economic controls and uh just to let you know Larson was writing this I don't know uh the actual publication date of this book in the uh on the website uh the reciprocal system website it says 2008 uh Larson died in 1990 um so I'm not sure um when Larson wrote it I guess it was I think it was published while he was still alive um and I believe that the road to Full Employment came out in 1976 so I believe it was after 1976 and before 1990 it's pretty much all but lson was able to tell that uh you know the public is not really uh American public is not really that keen on being told by enlightened authorities or whatever uh what should be produced by their economy only the desirable Goods uh this is the kind of stuff that's going on now and um this the kind of stuff that's being resisted now so that's interesting now tomorrow we're going to get into chapter 21 called from Theory to practice so thanks for tuning in today and uh stay tuned for that chapter tomorrow have a great day