From: degroff@tricorder.IntelliCorp.COM (Les Degroff)
Subject: risks to social contract and production was IncreasesSocial Security
Date: Thu, 9 Apr 1992 19:44:23 GMT

In article <1992Apr5.233621.16763@yang.earlham.edu>, allens@yang.earlham.edu (Allen Smith) writes:
|> In article <1992Apr2.135513.10890@zip.eecs.umich.edu>, jwh@citi.umich.edu (Jim Howe) writes:
|> > In article <92092.210117DGS4@psuvm.psu.edu>, <DGS4@psuvm.psu.edu> writes:
|> > |> In article <rdippold.702159004@cancun>, rdippold@cancun.qualcomm.com (Ron
|> > |> and poor people (and/or old and young people).  That's known as the
|> > |> multiplier effect and yes it does "create money out of nowhere"
|> > |> (Mystifying, ain't it ?)|> > 
|> > Money is most definitely *not* created out of nowhere.  Somehow
|> > Keynes had this idea that saving was bad for the national economy
|> > and that consumer spending was better.  He was, of course, wrong.
|> > Saving provides money for investment in plant and human resources,
|> > which allows businesses to create products for people to consume.
|> > Without the capital provided by savings, businesses would find it
|> > difficult to expand production to meet the additional consumer
|> > demand.  I suggest that the next time you visit the big building
|> > with the books, that you check out the numerous books that refute
|> > Keynes theory.
|> > 
|> was bad all the time- just when there was enough saving already and nobody 
|> was spending money, thus encouraging businesses to expand with the saved 
|> cash. There's a proper balance (between inflation and unemployment). Of 
|> course, stagflation has caused some problems with that theory, as has the 
|> US being in recessions despite a large amount of consumer spending.
When goverment is 40% plus of economy, is over spending its revenue by 20%
and shifts its spending by a few percent, what do you expect. 
|> suspect much of the reason is that companies, etc. tend to look too much 
|> to the short-term; to the next quarterly report. If, for instance, 
|> corporate bonuses for short-term profits were taxed more and those for 
|> long-term profits were taxed less, matters might be better.
|> 	-Allen
  Seems to me that the whole discussion focused on "money", "banks"
and "transaction may be missing more fundamental questions, questions
that watching only that level cant answer, which are what are the
effects on "wealth" creating production.   I am sure we have all heard
the jokes about the wheeler dealers trapped on a desert island... selling
the coconut or sand back and forth...both had millions of dollars in assets 
but it was still a few coconuts and some sand!
  Multipliers, transfers esp intergenerational ones like social (in) security
 and investements all with mixtures of "pseudo inflactionary effect", 
"actual net NEW production" and other incidental changes.  If you put
your eye on "production" you see that the situation is very confused,
confounded by technology shifts, regulations, environmental issues and
other government issues.  Two major risks loom in the future with
social security (and medicaid and other primarily intergenerational transfers.
First, taxation and tranfer systems at some level will (are?) cause 
significant damage to the fundamentals of producing real goods. 
Second, as structured now, Promises are being made that may not be
feasible to keep in the future.  Promises to those paying social 
security, promises to those buying government bonds.  There is
no difficulty to contemplating the problem of "promises are cheap,
actual production is a lot of work".  
   Keynesians and others had historical experience that financial resources
funneled to "investments" increase the base line production (and surplus 
available for consumption) and that demand pulled on the production
and surplus, but then having that in hand, they ignored the efficiency
and coupling between "investment" and "production" as if it was
infailable and certain.  I have a little sand, tax it in kind so
a retired person can eat it!!! Les DeGroff
ps, there was nice short post (sorry forgot poster_) this week 
point out that under inflation and high interest rates even without
taxes there are close in limits to how far business can rationally
plan, it is a "multiple limit" system, besides taxes, you need
interest rate and inflation control to develop longer planning 
cycles!
Xref: sparky alt.individualism:2392 talk.politics.misc:17780