Reciprocal System #559 "The Road to Permanent Prosperity" ch16-Foreign Trade B [Thomas Newsome]

Transcript

all right how's it going everyone and welcome to my channel this is an educational Channel we try to take a look at theories of everything ancient and modern and uh try to figure out how to use these things in our own lives to uh help us out with our Paradigm shifting our Awakening to 5D Consciousness our formation of a holistic worldview and uh today is our 559th video that we've done on the reciprocal system of theory and this is a theory reciprocal system from dwey B Larson an American engineer who lived in the 20th century he died back in 1990 left behind a lot of great books on physics and chemistry and astrophysics and uh a book on metaphysics uh including psychology religion philosophy biology and he also wrote two books on economics we're looking at one of those books today called the road to permanent Prosperity all of these books are based on one Theory uh that Larson elaborates uh through a process of deduction and um Larson is one of the few scientists to try to construct his cosmology on motion universe is not made out of matter universe is not made out of energy universe is composed entirely of one component motion existing in three dimensions in discrete units and with two reciprocal aspects space and time so in LaRon system the universe is made out of motion and motion is the relationship between space and time which is a reciprocal relationship you can see that in speed I was running at 10 m per hour 10 miles of space in one hour of time space over time is speed but Larson applies this to all of our 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 electric charge is a form of motion and they're all expressible uh with a fraction with space or time as the numerator time or space as the denominator but space and time can have multiple exponents so you can have you know like acceleration is space over time to the second power or force is time over space to the second power matter is is time to the 3 over space to the thir pressure is time over space to the fourth and so on and so forth now when Larson refers to motion he's primarily referring to a more generic kind of motion that he calls scalar motion this is a motion that has a magnitude but has no specific Direction you can Envision a scalar motion using a balloon and if you put dots on the balloon and then you blow up the balloon all of the dots will be moving away from each other every dot will be moving away from every other dot meaning that they are not moving in any specific Direction every dot is moving in basically every direction but no specific Direction only in or out in would be the contraction of that balloon um and those are the two forms of two primary forms of motion en Lars and system the outward motion he calls it the progression and when that is at exactly one unit of space per one unit of time that is what he calls the progression of the natural reference system and that is a motion that is always occurring at all locations I'm the presentent Eternal and that is the source of everything in this universe and that source is only harnessed by reversing it and turning it into that inward motion of the balloon which is gravity and uh that is where we can uh get matter manifested now um when Larsson applies these um you know these ideas to economics he ends up um kind of using production and consumption as his two reciprocal aspects and uh he has an economic motion uh that um he has a flowchart that he shows how the economic mechanism Works uh he dispenses with many ideas about um sociological economics uh economics B bent on policy politics uh and states that you you know it has to First comply with the laws of science just like if you were building a house um you know it has to um comply with the laws of physics and then you can start worrying about the policy stuff later and um Larsson arrives at a number of different principles which he says are mathematically exact and um yeah so uh we are in the middle of chapter 16 of this book on foreign trade um so if you want to go back to the beginning of the book um go back about five or six weeks also if you'd like to get a more uh detailed uh description of the reciprocal system itself watch one of my first 474 videos on this topic on this channel but right now we're going to get into um the end of uh chapter 16 here on foreign trade conversely we find that an excess of imports reduces the domestic price level irrespective of whether the Imports replace domestic production or are in addition to their uh in addition there to if the Imports replace Dom domestic Goods the total volume of goods entering the domestic markets remains constant at V whereas the diversion of a portion of the money purchasing power stream to pay for the Imports cuts the money available for use in the domestic markets from B to CB where C is fractional the market equation in this case is CB over V equals CP B remember is purchasing power or buying power V is volume p is price C is a fraction if domestic production is maintained at the original level the money purchasing power in the domestic Market remains at B but the total volume of goods entering these markets increases to EV because of the Imports and we have B over EV equals p over e in either case prices drop and the consumers get more goods for their money this is another result of the basic principle that only Goods can pay for goods imports and exports are incomplete transactions and each remains incomplete until it is counterbalanced by a transaction of the opposite kind thus the consumers in an exporting country are temporarily subsidizing the consumers in the importing country here we meet one of the strange paradoxes of modern economic life the country which has an excess of imports is for the time being living partly at the expense of the exporting countries presumably Goods will have to be exported at some later date to settle the accounts but in modern practice the ultimate payments are often substantially reduced by inflation or some International agreement from this one would naturally expect that an import excess would be highly popular but the fact is that all nations fight tooth and nail to increase their exports and impose all manner of restrictions on Imports the explanation for this contradictory behavior is that as long as the true cause of inflation and deflation is not recognized and the cyclical movements of business are allowed to continue unchecked exports contribute an inflationary effect and Imports a deflationary effect on the domestic economy as can be seen from the equations just presented money inflation is prop popular in business circles since it has a favorable effect on profits there is usually some grumbling about the High Cost of Living from the consumers who have to pay the higher prices but this is offset to a large degree by the increase in employment that accompanies money inflation deflation on the contrary is unpopular with everyone the businessman finds it difficult to maintain a profitable operation or even to continue operating at all while the consumers even though they have the benefit of lower prices are continually faced in their capacity as workers with the um Menace of unemployment or reduced wages as long as the domestic economy remains uncontrolled it can therefore be expected that exports will continue to be promoted and imports restricted but the attempt to maintain a continuing excess of exports over Imports a favorable balance of trade is in itself a costly mistake it gains nothing and creates problems of payment or debt repudiation that will cause trouble sooner or later in reality there is no favorable balance of trade in either direction any balance whatever is unfavorable from some standpoint the only favorable condition the only one that can persist indefinitely with full justice to all participants is an equilibrium between exports and imports what should be done is to take care of employment and the other domestic problems that are now entangled with the foreign trade situation by the means appropriate to each of them and then deal with foreign trade problems on their own merits as indicated in the foregoing discussion foreign trade is a money Reservoir so far as its effect on the circulating Purchasing Power Stream is concerned government borrowing from foreign sources is also a reservoir withdrawal the net amount of the foreign transactions is therefore one of the components of the total Reservoir inflow or outflow the qual the quantity that must be counterbalanced in order to stabilize the economy one of the prolific sources of economic controversy in many countries including the United States is the extent to which some or all domestic Industries should be protected against foreign competition by means of tariffs quotas or other devices in the United States the principal AR argument for protection originally offered was that infant Industries need uh to be shielded until they are strong enough to hold their own in the World Market this has gradually been replaced by the argument that the relatively High wage rates in the United States cannot be maintained unless there is some protection against competition from low wage foreign products the opposing view is that the protective measures would simply invite retaliation by foreign countries with the eventual result of stifling what would otherwise be a mutually profitable exchange of goods in analyzing this wage protection argument we again need to take note of principle two that only Goods can pay for goods if foreigners sell us certain Goods valued at X dollar the only way in which they can receive payment for these Goods is to buy X doll worth of us Goods or other assets at us prices thus the loss of employment um at us wages uh at us wages in the industries affected by the Imports is counterbalanced by an equal gain of employment at us wages in the exporting countries it follows that the relative wage levels in the United States and foreign countries have no detrimental effect on employment if the self-balancing features of the international trade system are allowed to operate Unfortunately they have not been allowed to operate in recent years the United States has followed fiscal and monetary policies that have greatly favored Imports over exports with the consequent adverse effect on employment the acute problem that exists at the time these words are being written is primarily due to the heavy borrowing from foreign countries that has been undertaken to finance the large budget deficits this money that our nation is borrowing is money that would otherwise have to be used for the purchase of us Goods unless the foreign holders of our currency are willing to accept more of it and just pile it up in their vaults for future use which is unlikely in view of the large amounts of that currency that they already possess there is no way in which they can use the proceeds of their exports to us than by us Goods or other assets thus every billion dollars that we borrow from foreign sources reduces foreign purchases in the United States by $1 billion we are being told that in order to regain the export Market we must improve our competitive position produce better products more efficiently there may be some truth in this assertion but this is not our primary problem the result of losing business to competitors is a decrease in the volume of trade our problem is not a lack of volume but a lack but a large unbalance between exports and imports this is a money problem due to excessive borrowing of course some of of the money now being borrowed from foreign sources had it been available for purchases would have been invested in American business enterprises or in real estate but internal economic conditions in the foreign countries limit the amount that can be applied to investment The Lion Share would have gone toward keeping exports in line with Imports in soaking up the exchange balances that are needed to finance purchases of us Goods we are not only imposing a huge debt burden on future Generations but are also destroying existing American Industries and depriving our working population of employment the ordinary citizen can hardly be expected to understand this cause and effect sequence some economists do but many others are prevented from doing so because they have lost sight of the fact that the basic e economic process is an exchange of goods for goods and have accepted the concept of an automatic or autonomous demand this is a graphic example of the need for and the importance of the kind of a factual analysis of economic processes that is here being accomplished by the application of scientific methods one of the reasons why the loss of export business due to Diversion of foreign buying power to deficit financing has had such a serious effect on American industry is that this new problem has been superimposed on some long-term trends that have been increasingly significant in recent years in earlier days the United States was far enough ahead of the rest of the world technologically to be the only satis Factory source of many specialized items and American Goods in general had worldwide acceptance as highquality products more recently there has been a diffusion of this technological knowledge among many nations and the monopolistic position of the United States has largely disappeared as a result some of the features of the domestic economy that have a bearing on foreign trade have assumed an importance that they did not have in the era when American Technology was well ahead of the field under present conditions the most significant item of this kind is the existence of large wage differentials between our domestic Industries the existing wage structure in the United States is not a product of the forces operating within the economic system it is an arbitrary and highly unbalanced result of application of coercion and political pressure by the participating groups the existence of this unbalance opens the door to exploitation by Foreign producers they are able to sell their products at or near the prices prevailing in the high wage Industries such as Automobiles and steel and buy at the prices of the low wage industries profiting by the price differential it follows that under a free trade policy the high wage Industries will continue to have difficulty competing with foreign producers since at least some countries will maintain more balanced wage structures allowing this situation to continue is certainly not in the National interest thus the real issue is not between protectionism and free trade but between protectionism and reform of the wage structure the choice between these Alternatives is a matter of opinion and judgment as such it is beyond the scope of economic science it is interesting to note however that Japan and some of the European nations have taken steps in the direction of control of wages as reported by galb this quote has been their socially better answer to the wage price dynamic and the resulting inflation end quote the unbalanced wage structure has had a devastating effect on some of the industries that have to buy their equipment and supplies at the high wage prices and sell their products at the low wage prices the farmers problems are the most visible effects of this kind but the maladjustment is widespread to the effect that this situation has has been officially recognized the usual method of dealing with it is to provide subsidies coupled with restrictions on production all at the taxpayers expense this is a political problem not a problem of economic science and like most political problems it has no specific answer but it should be noted that the analysis of economic fundamentals in the preceding Pages shows that when we sub idiz the status quo we are not actually subsidizing the farmers they are in their present unfavorable situation only because of the unbalanced wage scale what we are doing is subsidizing the high wages of the more favored Industries whether or not such a subsidy is advisable is a political question not an e economic question but in any event the economic facts bearing on this matter should be recognized our finding that the real cause of the loss of employment in automotive Manu manufacturing and other high wage industries by reason of foreign competition is not primarily due to the trade policies that the foreign Nations and their manufacturers have followed but to our own highly unbalanced wage structure and our policy of living on power money illustrates an important feature of international economic relations that is that most of our problems in the foreign trade area are products of our own actions or failure to act if we have our own Affairs in order we cannot be seriously hurt by any commercial action of a foreign country any country that sells us Goods at less than normal prices is doing us good not harm any country that asks an exorbitant price for its product simply does not sell us anything in dealing with third parties we may be undersold either on price or on quality but if so we have no one to blame but ourselves and our losses cannot be serious in any event it is possible that some foreign Nation might take an economic action that would inflict what we cons would consider an unfair loss on some individual producer or industry but as long as such actions have no adverse effects on the economy as a whole we should be able to work out some means of compensating the individual um losers in some instances it may be considered advisable as a matter of national policy not to rely on foreign sources for certain kinds of goods and even though our government may wish to encourage foreign trade in general it may impose tariffs or import restrictions to prevent or reduce the importation of these Goods economists generally recognize that such restrictive policies are costly to the nation that adopts them but since they are put into effect for specific purposes the issue in each case is whether the benefits obtained are sufficient to justify the cost such questions will not be considered here as they involve mainly non-factual issues and are therefore outside the scope of economic science international trade is beneficial to all countries which take part in it and consequently we are serving our own best interests as well as contributing to the welfare of the rest of the world if we gain a better understanding of the true economic relationships and arrive at a realization of the desirability of removing the artificial obstacles that have been placed in the way of free trade between nations but we should not exaggerate its importance foreign trade is not essential to our economy in the case of a large and self-sufficient economy such as that of the United States even a complete elimination of all International transactions would have very little effect after the initial dislocations were ironed out there are it is true some items which we use but do not produce and it would be necessary to find domestic sources of such items or find acceptable substitutes but these problems could be met without any serious difficulty just as we met the rubber shortage during World War II the oft repeated statement that we must have foreign markets is pure rubbish to put this statement into its proper perspective we need only consider what would happen if the rest of the world suddenly ceased to exist would we Face a dire catastrophy certainly not we would have a few annoyances until we became adjusted to substitutes for such items as coffee and bananas but in general life would go on just about the same as before if we set our own house in order stabilizing the economy to eliminate booms and depressions and maximizing employment by appropriate measures of the kind discussed in his other book my other book The Road to Full Employment the other effect of foreign trade on our economy will be that we will gain the amount of difference in value between our exports and imports this is an appreciable amount to be sure and we would not want to sacrifice it unnecessarily but it is not of sufficient consequence to be allowed to stand in the way of Peaceable and friendly relations with foreign countries the whole issue of international economic competition is sorely in need of a thorough reexamination we are constantly being exhorted to take actions that will make our products more competitive and disputes over trade issues are a familiar feature of the political landscape as brought out in the preceding paragraphs the remedy for any irregularities that may exist in bilateral trade lies in correcting the economically unsound practices in our domestic economy that are leaving openings for foreign uh producers to exploit we do not necessarily have to to abandon these practices but if we decide that we want to continue a policy that affects foreign trade the highly unbalanced wage scales for instance then we should apply appropriate countermeasures to our own operations rather than expecting the foreign Nations to solve our problems when the problems of bilateral trade are thus smoothed out the remaining trade issues will be those involv involving competition in selling to third parties the prevailing concern about this situation is actually a relic of earlier days when the political organization of society was very different from what it is today some small independent political units city states such as Venice for example adopted trade as their primary activity and competed with each other for the available foreign business just as rival firms due today under these conditions it was indeed necessary to be competitive but as nations of the modern type emerged foreign trade has decreased in importance relative to economic activity as a whole and since only a fraction of that trade is subject to third- party competition the strong emphasis on being competitive is no longer warranted if we adjust our economic Poli policy to get the best results from the domestic economy our foreign trade will not suffer much if any in any event the vulnerable portion of that trade is too small in proportion to our total economic activity to be a serious concern recognition of these facts will remove a major cause of international friction and thus make a significant contribution to the cause of International Peace and Amity one important result will be to eliminate any excuse for interfering with the internal economic Affairs of another country all to often as matters now stand a nation that has been following a sound economic policy is subjected to pressure to modify that policy for the benefit of other nations that are having difficulties because of their own actions for instance as these words are being written West Germany and Japan are being urged by the United States to expand demand to ease some of the US's problems these are problems which have Arisen mainly because the United States has been following its own bad advice the remedies are in our own hands we should not expect foreign Nations to bail us out of our troubles this is not an exceptional case it is an example of a general situation the results that we obtain from our economy depend on the nature of our economic policies not to any significant extent on the actions of foreign countries except in so far as they take advantage of openings that we have created for them once this is generally understood there should be no obstacle Le to peace in international trade relations even though rival firms will continue maneuvering for Advantage as KES once said if Nations can learn to provide themselves with full employment by their domestic policy there need be no important economic forces calculated to set the interest of one country against that of its neighbors okay that is the end of chapter 16 on foreign trade and um chapter 17 is called the dollar abroad and uh we will uh dig into uh chapter 17 starting tomorrow meanwhile thanks for tuning in today and have a great