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From: mangoe@umcp-cs.UUCP (Charley Wingate)
Newsgroups: talk.politics.misc
Subject: Re: Unemployment shifting
Message-ID: <3727@umcp-cs.UUCP>
Date: Tue, 7-Oct-86 00:48:36 EDT
Article-I.D.: umcp-cs.3727
Posted: Tue Oct  7 00:48:36 1986
Date-Received: Sat, 11-Oct-86 10:53:03 EDT
References: <15678@ucbvax.BERKELEY.EDU> <117200155@inmet>
Organization: University of Maryland, Dept. of Computer Sci.
Lines: 80

When is inmet going to fix its references line bug?


>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.

OK, no problem with this.

>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.  

OK, now let's get back to the original point.  Let us suppose that you think
that putting in some basic capital resources in those mountains would be a
good idea.  You decide to start with a dam to provide power.  Concrete and
the like will have to paid for, but labor is easy-- just run the printing
press.  So you now have some capital, some real wealth.  In what sense is it
stolen from anyone?


>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...

Of course it would, if the government owned a gold mine.

>>>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.

There seems to be an assumption here of automatic inflation.  If the problem
is that there is a chronic *shortage* of money to pay for the goods, then it
is hard to see how this is so, especially since wages (which are prices too)
are sticky.  (And if there weren't such a chronic shortage, there would be
no pressure for the government to "do something", after all.)

>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.

Of course, if the government starts minting lots of gold coins then this all
goes out the window.

And we are still stuck with the paradox of the last 40 years.  Inflation may
indeed be inevitable, but if so, it is better than the alternative.  And
lest I be mistaken for some hopeless deficit spender, let me remark that the
current situation is pretty absurd.  We have gotten to the point where the
current level of debt is not only making it hard to run the government, but
is probably starting to muck up the economy.

C. Wingate