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From: nrh@inmet.UUCP
Newsgroups: talk.politics.misc
Subject: Re: Unemployment shifting
Message-ID: <117200155@inmet>
Date: Wed, 24-Sep-86 04:10:00 EDT
Article-I.D.: inmet.117200155
Posted: Wed Sep 24 04:10:00 1986
Date-Received: Sat, 11-Oct-86 07:21:00 EDT
References: <15678@ucbvax.BERKELEY.EDU>
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Nf-From: inmet.UUCP!nrh    Sep 24 04:10:00 1986


Oh please!  Wingate: RUN -- do not walk -- to an economics text.

>/* Written  1:41 am  Sep 14, 1986 by mangoe@umcp-cs.UUCP in inmet:talk.pol.misc */
>David Olson writes:
>
>>Since government produces no wealth of its own, what wealth it has comes
>>from the private sector via taxes.
>
>This is false reasoning.  If we are measuring wealth in terms of money,
>deficit governments certainly spend moeny which they didn't collect in taxes.

I think it was Richard Carnes who said that to measure wealth in units
of money was not to measure it at all.  In a certain sense, you can't
measure wealth in terms of money -- you measure money in terms of
wealth.

Were you correct, Charles, the US government could have done an 
unlimited amount of stuff simply by running the printing 
presses.  It could, for example, make wealthy every man, woman,
and child on Earth -- and at a trivial cost! In fact, at ZERO cost,
because you would print money to buy the printing presses and paper
you need to print more money and so...

But let's examine this little cornucopia, which I doubt even Charles
believes can really be used in this way...

If I say "a villa in France", you get a picture of wealth.  If I 
say "10,000 lira", you may draw a blank unless you find what that
quantity will buy.  

Inflationary governments certainly spend "money" -- but that doesn't 
mean they've created "wealth".  Charles has not responded to Olson's
point at all, really

>...
>But suppose the government simply prints a 1 unit bill?  Obviously, wealth
>then *does* get created out of thin air.  This really doesn't seem to me to
>be a valid way of looking at the problem.

No -- wealth just got TAXED out of the people who held dollars and was
delivered almost intact to the first person the government gives the
bill to.  The taxing mechanism is subtle, but it works.
It's even a little indirect to really be a taxing mechanism.  If people
kept their accounts in gold ounces (or some such) the machinations
of governments wouldn't affect them this way -- as we shall see...

>
>>Unemployment was shifted from one person to another.
>
>I do not think so.  No new taxes were raised to pay for these projects after
>all.

Oh?  What about the loss of wealth experienced by those who owned bills
at the time of printing?  THEIR wealth is now worth much less.

To see why this is so, consider a limit case.  Acting as the government,
you give me a salary, measured in dollars, to two civil servants.

One buys gold bars with his money, the other holds onto it by
stuffing it into a mattress.  There are 10^12 dollars extant at the 
time of payment.

Now, to pay for a war, you print another 10^20 dollars, doing nothing
else.  Supply of dollars goes up -- but the amount of wealth reflected
by the dollars has not changed (perhaps it has even gone down because
of the war).  You will find, as those in old Germany,  Rome,
and France, that suddenly the civil servant who kept his dollars
is now MUCH worse off (all other things equal) than the one who
bought gold.

In "The Penniless Billionaires", Max Shapiro recounts the story of a 
widow who, unexpectedly kept from administering the money that would
have kept her comfortable for the rest of her life, found on her return
that the face value of the money was no longer sufficient to buy a 
postage stamp.

Now go find an economics teacher, Charles -- please!