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Path: utzoo!watmath!clyde!ratex!mck
From: mck@ratex.UUCP (Daniel Kian Mc Kiernan)
Newsgroups: net.politics.theory
Subject: Redistribution of Wealth & the Economy -- Reply to Sevener
Message-ID: <887@ratex.UUCP>
Date: Mon, 18-Feb-85 20:35:10 EST
Article-I.D.: ratex.887
Posted: Mon Feb 18 20:35:10 1985
Date-Received: Thu, 21-Feb-85 06:35:52 EST
Organization: TMP Kennels
Lines: 43


Tim Sevener writes:
>It *is* possible that the rich can be better off by redistributing some of
>their income to those less well-off.  This can happen if people no longer
>have enough money to buy the goods produced by the factories and means of
>production owned by the rich.

If the rich can be made better off by letting someone else spend their
money, why don't the rich make themselves better off by buying stuff from
themselves?  And -- hell -- since rich is a relative concept, why can't I
make myself better off by paying myself for goods and services?

>                               This was the case during the Great Depression:
>the nation was only using about 70% of its industrial capacity because
>the new mass-production industries could produce more than people could
>afford to buy.

People can afford to buy anything if the prices is low enough.  Capacity
was idle because some of it was misdirected in the first place (the
money-supply expansion of the 20s artificially lowered interest rates,
causing inappropriate lengthenings of the structures of production) so that
costs would exceed price, and because government intervention held costs up
and benefits down in other industries.

>The same phenomenon was illustrated with the success of the Marshall Plan.
>The U.S. provided the allies with money to rebuild- in the process they
>needed and were able to buy more American goods.

And if this money had been left in the hands of Americans, they would have
been able to buy more American goods.  The Marshall Plan may have
benefitted Europeans, but its over-all effect on the American economy was
negative; it subsidized exports with a corresponding cost to production for
domestic consumption.

>[...T]he punitive measures adopted by the Allies after WW I [...]
>[...]          were bad for the overall European economy and also fostered
>the rise of Hitler.

No argument, but the choice is not simply one of punish or subsidize; a
third option is to keep hands off.

                                        Back later,
                                        DKMcK