From: merritt@macro.bu.edu (Sean Merritt)
Newsgroups: alt.politics.libertarian
Subject: Re: Ayn Rand(What yo gonna do?)
Date: 17 Dec 92 16:50:25 GMT
	<MERRITT.92Dec10114101@macro.bu.edu>
	<1992Dec14.234418.15471@samba.oit.unc.edu>
Organization: Boston University Physics Department
In-reply-to: bolden@beta.math.unc.edu's message of 14 Dec 92 23:44:18 GMT

In article <1992Dec14.234418.15471@samba.oit.unc.edu> bolden@beta.math.unc.edu (Jeffrey Bolden) writes:




   >
   >%In article <1992Dec9.210711.27796@samba.oit.unc.edu> bolden@beta.math.unc.edu (Jeffrey Bolden) writes:
   >wrote about my comments.
   > >  In article <MERRITT.92Dec9125458@macro.bu.edu> merritt@macro.bu.edu (Sean Merritt) writes:
   >   >
   >   >bolden is %
   >   >%In article <1992Dec8.231709.5708@samba.oit.unc.edu> bolden@beta.math.unc.edu (Jeffrey Bolden) writes:
   >   >my previous comments are >
   >  
   >{some non-realted stuff deleted}
   >
   >   >
   >   >%	   Not really.  Lets look at what actually happens with MITT.  The
   >   >%   Japanesse taxpayer and consumers subsideses Japanesse goods, so as to
   >   >%   decrease their price in dollars, ie. the Japanesse taxpayer is subsidizing
   >   >%   your standard of living.
   >   >	
   >   >Correct and one wonders how long the Japanese taxpayer will be willing
   >   >to do so? How strong is their affinity for self-sacrifice?
   >   >
   >   >%   Now if that weren't enough, what does Japan get in exchange for
   >   >%   their goods?  Dollars.  What can they do with these dollars?  Buy
   >   >%  American goods.  So in other words, it is important not to forget that
   >   >%   currency is really just an abstracted bartering system, not some economic
   >   >%   object in and of itself.
   >   >	
   >   >True but you neglect the "dollars-for-deucthmarks" mania that is
   >   >currently under way. They can always convert, say go long on DM's
   >   >espscially if they felt that the dollar would sink lower.
   >   >
   >%	   True, but that's just a delay of buying goods.  Then the Japanesse
   >%   have deucthmarks, and someone else (say the Germans) have dollars that
   >%  they have to buy American goods with.  Until someone buys American goods
   >%  those dollars are just little green pieces of paper that mean nothing.
   >
   >What I'm getting at is this: The dollar wasn't always the currency
   >of choice and it need not remain so. The DM or the Yen could
   >very well replace it. The dollar could very well end up like the
   >British pound and the US like England.
   >

%   By "the currency of choice" what exactly do you mean.  The currency that
%   most people trade in presumably.  I don't know enough economics to know
%   whether the dollar being "the currency of choice" is good or bad for the
%   US.  Probably no real effect.  If I'm wrong in assuming that's what you
%   mean, please explain.

This is exactly what I mean. 
Let's look at Russia today. They have been missing(paying late) for
their grain on a regular basis as of late. They do not pay in rubles,
who wants rubles? So you are correct they must pay in dollars for
US goods. Now they sell 3 submarines to the Iranians. They don't
want Iranian money, they don't want rubles they get paid in dollars
which the Iranians have. Infact the entire world will accept dollars
to get paid. At the present we have many things the world wants to buy.
If we don't people will have dollars that are substantially less value.
By the Bolden reasoning, we can say "thank's" for all cool the stuff we
traded you for those worthless pieces of paper. International
Corporations will write the loss off(possibly over decades) 
and slow down their trade with America. 

Sooner or later it will catch up with us. 
 
The dollar declines in value, we have to work harder to get DM's and
Yen to really pay for all that cool stuff. If we don't have the
cash in the correct currency people won't trade with us.
Your choices , since you let your manufactiring base be eroded,
are to sell ores and timber. Like Russia is doing now. No
value added just raw materials.

An interesting historical fact is that one way historians mark the
decline of the Roman Empire is by the shrinking silver content
in denarius.

81 AD value raised to 91 % from 82%
98 AD value raised to 93%
117 AD value lowered to 87%
138 AD value lowered to 75%
165 AD value lowered to 68%
193 AD value lowered to 50%
222 AD value lowered to 35%
238 AD value lowered to 28%
260 AD runaway inflation makes the denarius worthless. Trade is
paralyzed. People are reduced to barter. Large land owners
buy more cheap land.
271 AD value is .02% down from .5%
301 AD Emperor Deocletian imposes the worlds first "price freezes"
       on all goods and services. Noncompliance in the western
       part of the emmpire makes the policy fail.
305 AD Rich land owners dominate the Roman Empire. They don't
       pay the "crushing" taxes because as "senators" they
    are exempt. Labor and property are valued in the "iugum"
    or unit wheat production. The first IRS comes into 
    being land owners recruit legions to collect taxes.
324 AD Emperor Constantine introduces a new coinage
       backed by plundered treasure. Tax refrom helps
       bring a return of prosperity.
395 AD The Roman Empire Splits. They have had to fight wars
       in every part of the Empire. Barbarians (Franks,Vandals,
       and Goths) have risen to the highest ranks both
    Roman armies. Still the hoards begin to take their
    toll.
410 AD Rome is sacked by Huns.
430 AD Vandals annex North Africa.
433 AD Attila becomes leader of the Huns.
436 AD Last Roman legions leave Briton.
439 AD Carthage falls to Vandals. In North Africa the Vandals
       establish a granary and dominate the other nations
       dependent on N.A. food staples.
451 AD Visigoths join forces with Romans to combat Attila's Huns.
455 AD Rome is sacked by Vandals. "Vandal" becomes term
       for wanton detroyer. Barter economy replaces organized
       trade.

Is the dollars position a good or bad thing for America? Not sure.
Is the declining value of the dollar a bad thing. For my lifetime
perhaps not. In the long run, I think yes.
 
   >%	   Which reminds of the other argument about buying companies.... 
   >%   Same propblem, the Japanesse buy an American company and the company makes
   >%   dollars for them.  Until they trade in those dollars, their simply
   >%   investing their original goods in our ecomomy.
   >
   >They also use dollars to buy/build factories in Asia. Far more capital
   >is being invested in Asia by Japan than the US. As these markets emerge
   >the Japanese can effectivle launder their greenbacks.
   >

>   Same argument as above with the dollars for Duetchmarks fear.
>   1)  The Japanesse are hiring US companies to build the factories in Asia
>   (that's an American product).
They hire no US companies to build in Vietnam. I'm not sure what you
mean here. My point is the stick the Vietnamese with greenbacks. The 
Vietnamese will soon only want to paid in Yen.


>   2)  The Japanesse are just trading dollars with someone else who will have
>   to buy US goods with those dollars.

Or take a loss. Someone gets stuck with worthless paper sooner or
later.

   >   >%   So what actually happens is that Japan can attack any industry it
   >   >%   wants very effectivly, but only at the cost of making every industry
   >   >%   unprofitable.  They are overcoming this handicap by driving their standard
   >   >%   of living through the floor.  A good way to think of it is this.  If
   >   >%   America still controlled Japan, and forced the whole country to work 70
   >   > 
   >   >The standard of living is quite high. The purchasing power of the
   >   >consumer is lower.
   >   >
   >%	   What is the difference between being rich when everything is
   >%   expensive, and being poor when everything is cheap?
   >
   >Will everything remain cheap? Being poor and everything being expensive
   >is ceratinly a unwelcomed situation. We can not continue to loose/
   >be pushed of of markets here or abroad. I'm not saying we need to
   >use the Japanese techniques to compete. BUT we need to become a hell
   >of lot more competitive. We certainly need to take a longer term
   >veiw about investment. 
   >
   >btw:
   >If I'm not mistaken the average Japanese work week has been shrotened
   >recently.
   >
   >   >%  hr. weeks, a have the aweful standard of living they now do; wouldn't
   >   >%this
   >   >%   be the height of colonial expliotation.  The fact of the matter is that
   >   >%   Japan's economy is wholly artificial, and not dangerous.
   >   >
   >   >It may be a bubble economy but not dangerous? 
   >
   >%	   Yes not dangerous, free trade can never hurt an economy.
   >   
   >Free equitable trade yes.
   >

%   Howabout inequitable trade.  If both of us trade, we both think what were
%   getting is better than what were trading.  Both of "gain".  There simply
%   is no such thing as inequitable trade in any real sense.

A country who is trading in technological goods with high value
added content is in a superior position to one that trades
raw material for those high-tech goods.


   >>So we don't need to be tough in trade negotiations?
   >
   >%	   It would be helpful if Japan bought more Ameican goods.  But
   >%   frankly it really doesn't matter all that much.  Their going to have to
   >%   buy them eventually (see above).  Why get tough?  I'm happy that the
   >%   Japanesse taxpayer is subsidizing my standard of living, why aren't you.
   >
   >The main point here is they claim there isn't much they want to
   >buy from us. Infact in things like SuperComputers(especially
   >massively parallel) we offer them better products at cheaper
   >prices and the refuse to buy.
   >

%   Than there companies are being foolish and are suffering a competitive
%   disadvantage.  Too bad stupidity and nationalism mix to hurt their
%   economy.  

Because they will eventually make the computers themselves? I don't
think so. I call that a sound judgement. I cannot afford something now
so I wait until I can supply it myself.


   >Consumer buying power is stronger here than in Japan, but
   >clearly the American standard of living is less than it was,
   >and is in decline.
   >

%   Not true.  Individual income is up.  Family income is up (for families
%   that aren't divorced).  Household income is down (do to divorce).  Our
%   standard of living is going up.  Just look at a copy of any home magazine
%  from 30 years ago, or 20 years, or even 10 years ago.  

Sources please.

   >
   >   >We can ignore the fact that they are out-investing us in Asia?
   >   >(potentially the largest market in the world)
   >%	   I never said this.
   >
   >But your ignoring the fact that they are using the $ the took off
   >us to do it.
   >

   %Not at all.  See above.

   >   >I might add that that is another way they are using dollars,
   >   >which profit the US. They need not trade then for American goods
   >   >at all. Until such time that the value of the dollar is so
   >   >low that it is no longer accepted by foreign goverments. 
   >%	   If the dollar drops so low....  Then American goods become very,
   >%   very cheap for everyone in the world; and Japanesse goods very expensive. 
   >%   End of your Japan problem.
   >
   >What American goods will there be to buy if they continue to push us out
   >of the most lucrative markets? Again we could end up like England.
   >

%   Well if there are no US goods to buy than there being really stupid. 
%   Lets look at what you claim their doing.  Here they are working themselves to
%   death, to get dollars.  Then they take those dollars and invest them to
%   generate lots more dollars.  While at the same time their making those
%   dollars worthless.  Even if this were true, why would they want to do
%   this?  

How much debt has been written of in South and Central America? You
could always structure some type of debt-for-equity exchange. Then
the Japanese will own Yosemite. Sooner or later yes they will take
a loss. They will have to write it off. If it is too large
the world will be in the worst depression ever. 


   >   >
   >   >To say that they are not dangerous is to say they are not in competion
   >   >with us. This position is tantamount to sticking your head in the
   >   >sand.
   >   >
   >   >I still say we are dealing with a mixed economy that is
   >   >collectivist in nature and prizes altruism and self-sacrifice
   >   >as virtues. Further more I put forth that if Randians (or any
   >   >other philosophy) do not have how an answer for how we 
   >   >might constructively engage them that that philosophy
   >   >is bankrupt and even anti-survivalist. Ayn Rand wrote
   >   >against Communism and Facism in favor of Laissez Faire Capitalism
   >   >tempered with an enlightened self interest. She also like
   >   >to point out the follies of England and France under the
   >   >mixed economy model. Now however we have two track records;
   >   >Germany and Japan, which are succesful. We are in compettion
   >   >with these economies(Head to Head, if you like sorry
   >   >L.T.)
   >%	   These altruistic societies have less successful economies then
   >%   they would if they were capatilist.  From your standpoint of "compettion"
   >%   that should be a good thing.
   >
   >If we become a third-world country because of their tactics, the have
   >won. And we no longer will compete but spectate.
   >

%   How could they drive us to third world status, by driving our standard of
%   living through the roof?  There is no advantage to this strategy.  Besides
%   they are a very long way away from controling most or evan a good
%   percentage of US buisness.

Still what is the trend? I personally don't see my standard of
living going through the roof. I cannot afford the same
home my parents could. What are the tangibles of this skyrocketing
standard of living you speak of?


-sjm
--
Sean J. Merritt		         | "Every revolt is a cry of innocence    
Dept of Physics Boston University|  and an appeal to the essence of being."
merritt@macro.bu.edu             | Albert Camus, The Rebel
Newsgroups: alt.politics.libertarian