Clean Slate Economics

I've recently flicked through Erik S Reinerts excellent new book, "How Rich Countries Got Rich, and Why Poor Countries Stay Poor". In it, Reinert asserts the importance of basing economic theories on real observations, not purely on idealistic theory as has been published before.



Here is an excerpt and following that are a few notes I made while flicking through:

pg7: "Antonio Serra. 17th Century economist, sought to explain why his hometown of Naples remained so poor in spite of its bountiful natural resources, while Venice, precariously built on swamp, was at the very centre of the worlds economy. The key, he argues, was that the Venetians, barred from cultivating the land like the Neapolitans, had been forced to rely on their industry to make a living, harnessing the increasing returns to scale offered by manufacturing activites. In Serra's view, the key to economic development was to have a large number of different economic activites, all subject to the falling costs of increasing returns. Paradoxically, being resource-poor could be a key to becoming wealthy."

The economic policies that wealthy nations have actually practiced amounts to something like: 'Protectionism early until specialization develops, then free trade later'

"Emulate others successes" - Reinert identifies this philosophy as the principal mechanism to develop specialization and market competitiveness.

"Once it had been observed that throwing resources at problems during wartime produced inventions & innovations, this mechanism could be replicated in times of peace."

The economic conditions and policies of Japan during the 20th century is cited as a good example of the above principals in action.

"Don't do as the English tell you to do, Do as the English did!" - Since before industrialization, English economists have preached policies based on mainstream ideas of free-market ideals, but these were never actually practiced.

"Don't do as the Americans tell you to do, Do as the Americans did!" - Reinerts advice to developing nations. Even as free-market participation is preached abroad, America, even today to a large degree, still practices protectionism.

'We are given bread from the baker, not thru kindness on his behalf, but from his desire to make money' - Perhaps it would be beneficial if these basic principals of capitalism could be practised at an early age; at school as well as in the home, so as to bestow economic wisdom later in life.

I think I have a method to evaluate different economic systems. There are 4 criteria.

The first two determine if the system is successfull or not.

1. Incentive

Does the market provide ample incentive for people to work as much as possible?

2. Good distribution

Are goods and services available at equlibrium levels, and are equally obtainable everywhere?

The second two determine if this is economic system con better people's lives.

3. Common welfare

Does this system support or encourage the welfare and equality of all?

4. Technology

does this economic system tend towards a high level of technology development?

Using these 4 criteria, capitalism scores a 3 total, because the companies could care less about our welfare, and because of economic disturbances. Overall, it is a successful system, but not a very beneficial one.

Socialism scores a 1.25 because it can have a high technology yield (USSR), but everything else is exceedingly low. It is a malevolent failure.


Any ideas for a system to score a perfect 4? It should be at least compatible with capitalism to encourage foreign investment.

Remember that the economic system will often have a more direct affect on people than the political system.

Which capitalist system are you evaluating when you consider it a 3.25?
For example capitalism in Scandinavia compared to America could be consider night and day in terms of social welfare but it's the same economic system just under different political direction.
Between specific companies the difference can be even greater, some see themselves having an explicit moral purpose, others not so much.
In a word diversity. a capitalist system encourages diversity, and diversity is strength.
There was a documentary film release a few years ago called corporation which entertainingly developed a thesis that a corporation, if it were a person, would be a sociopath. But all it actually proved was that the American political system was deeply flawed, because every example was of an American company playing the game as the rules are set out in America. The point being if you don't like how the game is played all you have to do is change the rules a little, you don't need to invent a whole new game.
As an aside I rather think you need a "Are people happy?" criteria on your list.

I meant that to be a part of general welfare. And I used the american version of Capitalism. Anyone from other countries, feel free to rate that version.

It seems to me that merely changing the structure of a corporation could allow capitalism to score a 4.

So if for the sake of argument we've decided we're keeping the game but just changing the rules ( to push an analogy i should have dropped), we're left with the taxing question of what sort of economic governance produces both successful and responsible corporate culture. Big government versus small government, regulated versus deregulated, the man against the machine.
To start from the American system what clearly is a cancer in the system is the close symbiosis between business and government where massive lobby groups on behalf of business sectors are not only permitted but expected, where legislation legislating a sector is allowed to be written by those it seeks to regulate, where the branches of government are cowed under political leadership in thrall to those interests government should be watching over.
Now it is perfectly fair to say that this is the state of affairs that American revolution sought to provide, and it produces economically successful results but it can't be fair to say that that's a particularly healthy form of democracy or government, nor can it seem to effectively protect the social and environmental concerns of the majority of its citizens.

So, now, not only separation of church and state, but separation of corporation and state?

And I agree completely, lkm. Do you think that your corporatocracy would be more or less prone to this effect?

I suggest a new type of gov't, which I will also post in the CS gov't thread:

There is an elected legislature, which can only decide what the issues are, by a 3/5 vote. This then goes to a comittee of intellectualls, which are brought from public universities, as part of their services. they have 1-6 months to determine a preliminary solution. This then goes back to the legislature, who only need to give it a 40% approval rating before it is sent to the people. The people can vote on their computers, which will be an assumed right, and no more than ~1 bill per day shouldn't be unbearable.

The legislature may contain representatives, mostly elected, but some entered by corporations. Lobbying, or advertising for or against any bill commercially, will be illegal.


What I see as the current problem with democracy is that it hasn't changed much since plato.

As to a corporacracy, how it acts with respect to other businesses is one of the more interesting questions. Broadly I would expect the relationship to resemble the one between Microsoft and third party software developers for windows.
Microsoft provides the operating system, or the platform if you like, basic functionality and usability, and third parties supply the applications to populate the diverse ecosystem of what it is possible to do done on it. As long as they follow the guide lines of the SDK the application can do what ever they wants. And then of course there are some programs that are so fundamental that they are provided by both the operating system and third party developers.
To try and put an end to this tortuous analogy, for a corporacracy health and education would be equivalent to say windows media player and Internet explorer, both provided by the state and the private sector.
Microsoft can be accused of many things but being in thrall to third party developers is not one I think.
As to giving everybody a vote on everything, I think this addressed in another thread with regard to the fundamental problem with giving the ignorant equal say to the well informed.

I would like to suggest an alternate form of economy, although in some respects it is capitalism. Some ways, I suppose, it is different.

Basically, the amount of power generated in the CSCS is recorded, and divided evenly, percent to percent, per person in the CS. The important part is that everyone is given a certain amount of watts. Thus the amount of joules they are given is determined by their average amount of watts times the time in seconds that they live.

This amount of watts could be, for example, sold to the surrounding nations for resourses. Presumably all of the other capital in the CSCS would be divided up, so everyone would get an equal share of land, although a certain (reasonably large) percentage of the land would be left as ecological support. Although maybe in retrospect dividing up the land like that would not be conducive to good growth in a city.

Currency would be joules, or (kilo)watt hours. A person would presumably use their extra energy (that not required to run their household appliances) would be used in robotic manufactures/other things. Hopefully this would create a nation composed wholly of a more or less even mix of white and blue collar workers with basically nobody outside of those two groups.

Who produces the the power, and why?

Redsand11j wrote:

I think I have a method to evaluate different economic systems. There are 4 criteria.

The first two determine if the system is successfull or not.

1. Incentive

Does the market provide ample incentive for people to work as much as possible?

2. Good distribution

Are goods and services available at equlibrium levels, and are equally obtainable everywhere?

The second two determine if this is economic system con better people's lives.

3. Common welfare

Does this system support or encourage the welfare and equality of all?

4. Technology

does this economic system tend towards a high level of technology development?

"Using these 4 criteria, capitalism scores a 3 total, because the companies could care less about our welfare, and because of economic disturbances. Overall, it is a successful system, but not a very beneficial one.

Socialism scores a 1.25 because it can have a high technology yield (USSR), but everything else is exceedingly low. It is a malevolent failure.


Any ideas for a system to score a perfect 4? It should be at least compatible with capitalism to encourage foreign investment.

Remember that the economic system will often have a more direct affect on people than the political system"

I like what you have said here, Redsand. By itself communism fell short but it addressed the one shortcoming that capitalism has: common welfare There are no incentives and no goods distribution, but the intention at least was there to address the common welfare, but it was at the EXPENSE of incentive and goods distribution . The answer would be to combine the two into socialism as practiced in Europe. Although there are many issues that need to be addressed to optimize the system, European socialism has the best potential to score a "4"

I agree. We just need to think of a new name for it so no-one is scared. How about Seggrism- Seggr being old norse for companion. Do you think it has a bad reference to segregation?

I kind of want to amend, or at least clarify this a little: The first 2 categories were meant to be, basically, supply and demand. 1 is more or less 'how productive are workers and companies". 2 is basically "How well/efficiently is this productivity used". 3 & 4 are clear enough already.

And I think any Europeans around here could greatly enlighten us as to how European Seggrism works.

_____

With regards to my proposed economic system, power generation would be nationalized. This might be a good idea anyway, since it will most likely be nuclear. The large tracts of land necessary for solar power also lend themselves to government use.

The one thing I forgot to do was to rate my proposed economic system (Open to names)

Well let's see- Category 1: Production of goods and services- I think it will be reasonably efficient. For as many things as possible, it wants to employ robots, since human power will be used on more important things. Also, whatever you make you keep, The government might just take x% of total energy output. Economies of scale come into play, so I'll give it a 0.9 .

Category 2: Usage of products: Should be reasonable efficient as well, since each person will create what is useful to them. I give it a 1.

Category 3: Since the division of capital is equal to begin with, and stays that way, I think it will do reasonably well here. Give it a .8 since the focus is not totally on welfare.

Category 4: In this system, I would put technology development in the hands of the government. So while technically not part of the economy, Technology will be developed reasonably well. I point you to NASA and the US military for examples. Say .8 as well.

That totals 3.5, .5 higher than capitalism (Laissez Faire), with the issues spread out and around so that no one area is truly left out. Of course, I could have been harder on capitalism, give it something more in the 2.8-2.85 area, but for comparison a 3 is good enough.

Why would Technology be developed by the governement? Since the governement doesn't seem to be that good at it, I;d give your system a .4 to a .5 for that. Being able to manufacture essentially goods like clothes, cookers, etc robotically (something we are fast approaching) and quite possibly non-essential goods like iPhones, will leave humans free to develop technology and culture. So, taking that into account, I'd give your system a 1 for technology, boosting it's score nearer to 4.

Tom Kalfbus wrote:

Communism only works with robots doing all the work

well, I point you to NASA and the US military with regards to technological developement. This is where clean slate thinking would come in, harnessing the extra time of the people, and the resources of the government towards a system where technological advancement is phenomenal.

In this one rare, possibly unitary statement, I agree with him. Communism as practices so far needs robotic labor to work.

NASA. Technological development. Are you seriously suggesting that those go together? I point you to the DC-X and X-33.

The US military develops technology well. Due to the need to stay ahead of everyone else. Why do you think the US Navy is funding Polywell, instead of the Depertment of Energy?

NoMoreLies, to answer your question as to why the government should develop new technologies.

There are several reason for why a government should develop technologies beside the original reason for developing that technology.

Let take the Kennedy Moon Mission program as a reason for developing technologies other than just for going to the moon to accomplish Kennedy stated goal for going to the Moon.

Other reasons for developing that technology other than the stated reason for developing that technology are.

1. Having to develop new physical principle that you did not originally know give more understanding of how the Universe function and give you more mastery of this Universe.

2. New technologies that are more efficient, increase the productive capability of the work force to produce more goods and services per hour. Example, the American Farmer in 1776 was about 1 1/2 million farmers out of a total population of 3 million people inside the United States. Today we need between 2 to 3 million farmers for 300 million people and that was because of new technology being funneled back into mechanizing those farms vs hand tilling it.

3. New technologies generate new industries if that new technology is plowed back into the physical economy. The moon mission returned 14 dollars for every dollar spent on going to the moon in technological spin off and new industries inside the United States. We developed new allows and micro switches that are used in wheel chairs today and the list goes on.

4. Other side benefits, it motivated children to get an education so they could get into these NASA project in future space development activities. That how the United States got most of it current engineers, it was a direct result of the Apollo program.

5. It united the American people in a good way and made us feel good about ourselves.

These moon mission were a good thing for the American People to be a part of as vs the Viet Nam war that was also going on at the same time.

It is also in the US Constitution that we should promote technology also.

Larry,

Larry, I'm curious as to where that is stated in the Constitution.

To Locksley,

The way that it stated in the Constitution is:

Article 1 Section 8 states.

To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries:

It is on this statement in the US Constitution that I make the claim that they intended for the United States to develop new technologies. Ben Franklin and many of the other people who were part of the American Revolution and later the creation of the US Constitutional Federal Republic were steep in Classical Sciences and not the so called modern day sciences that most of use were trained with.

There is two aspects of Classical Science and they are:

1. Classical Science is base on Classical Music toned at 256 C or the human voice ranges or musical scale. Kepler used both Platonic Solids and the Classical Music Scale toned at 256 C for his modal of this solar system. So they understood some of the arts or music that could lead to new discoveries.

2. It pacifically state invention in this section of the constitution. as a result of new science or some discovery being made in the science field. He has a right to receive the benefits of his new invention or discovery for a certain time frame of time.

Larry,