The role of taxes

As I write this the American government has been battered by some wealthy people who with the debt ceiling had a tool to force changes in the law that suit them.  Not sure how this particular battle will run out, but feel it is likely there will be future battles.

 With the Americans the discussion had been focused on cutting expenses and making the poor work to earn their welfare.  Assistance to the poor is to be cut.  All sorts of regulations were burdensome.  It is true you should not spend more than you take in.  There are painful results if individuals attempt to do it, but there are also consequences for governments.  One consequence might be inflation.  High interest rates.  Bankruptcy may seem impossible, but governments have faced that, just not the exceptional United States (so far).  Corruptions has overtaken some governments when the government can't provide services.

One part largely missing from the conversations is taxes.  Politicians treat taxes as almost a dirty word, to be avoided for fear of losing votes and the support of wealthy donations. Cutting taxes and bragging about it are normal.  Obviously most voters react negatively to increased taxes.

The Republicans have proven themselves to be hypocrites and working for the benefit of the wealthy.  A major cause of the increase in deficit came from the Trump administration's major tax reduction.  One proposal they rejected was to increase the number of tax collecting experts.  The one department that actually pays for itself and coincidentally mitigates inequality.  The subject of taxes is easily dismissed.

Progressive taxes are an attempt to be fair, but are resented by the very wealthy who have managed to reduce their high rates but still not enough.  In theory everyone pays at the same rate. When you earn more you pay more, but at established rates.  The wealthy also resent restrictions on their income.

Some commentators suggested that the poor could vote to get their way.  In truth there are attempts to bribe them and most politicians are careful not to increase their taxes.  The wealthy know they can swing the poor to their side; by appealing to their prejudices.

One sensible philosophy was provided by John Maynard Keynes who proposed in times of prosperity to build up surpluses and in times of need to use the surplus.  The wealthy feel rather than building up surpluses it is better to reduce their taxes.  

In a smaller simpler civilization the people had more real control.  As civilization became more complex, power becomes unequal and exploitation is normal-- check http://www.therealjohndavidson.com/2014/07/selected.html

A more rational plan to solve the many problems of Americans would include taxes.  Taxes are the price for civilization.  The government is not the source of all problems and in fact has been and certainly can be an engine for progress. Uneducated voters are easily manipulated. 

Even the wealthy overlook that they get infrastructure, a legal system, military protection, an educated labor force, and sometimes protection from pandemics.etc.

An earlier blog:  http://www.therealjohndavidson.com/2021/05/taxation-necessary-tool-for.html

Another blog:  http://www.therealjohndavidson.com/2012/07/price-of-civilization-book-review.html

Another perspective:  http://www.therealjohndavidson.com/2015/04/tax-collectors-dirty-job-frowned-upon.html  

Also following the Toronto Mayoral election where there seem to be all sorts spending programs proposed with any taxes ridiculed.  Olivia Chow is attacked for proposing increased taxes for one segment.  Rational people understand there is a cost to pretty much everything and fairness is the best way to win co-operation. 

Slouching Towards Utopia

 J. Bradford DeLong is a economics historian trying to explain how society got to its present stage.  After looking at events and statistics he concluded that our real wealth growth revolves around 1870 to 2010.  He makes a strong case.  There was lots happening before 1870.  We went from hunter gatherers, to manufacturers, developed a variety of complex cultures.  As a civilization we did make progress, but the author points the average person in terms of wealth, income, nutrition, longevity made only marginal progress.  However by 1870 many events have piled on top of one another and the average person does gain a share in an increase of global wealth.  Technology developed in fits and starts, but the population grew faster than wealth until 1870.

Slouching refers to the fact that much progress is diverted away from the idea of utopia.  Global wealth grows, but is not fairly distributed.

 Robert Malthus espoused the theory that mankind would breed so fast that we would annihilate ourselves with overpopulation.  In practicatl terms he noted that although mankind discovered or developed things that made human lives better our uncontrolled desires assured that there would be a diminishing amount of resources to sustain us.  Up until about 1870 that was true.  The Industrial Revolution started in England about 1770 and did boost the living standards of the rich and was part of the leadup to the greatest global economic growth period labeled the longest century.

A number of factors combined to lift more of mankind above sustenance.  Innovations in many fields were not only reinforcing one another, but research laboratories were assuring more innovations.  The  world was globalizing on many fronts including trans Atlantic transportation and underwater cable connections  Immigration and trade increased dramatically.   

Education was recognized at least in America and the British Empire as critical and suffrage gradually occurred around the world.  There was resistance, partly fueled by a misused Darwinian concept of "survival of the fittest" that seemed to justify increasing inequality.  Slavery had been reduced in Britain and America, but acceptance had a long way to go.  

Several European powers colonized huge parts of the world, Africa, Asia, Central and South America.  One country that escaped colonial efforts was Japan because they were able to initially resist contact with the outside world, but developed literacy and urbanization by adopting many westernizing methods.   They were able to send selected citizens to study in Europe or America.

An example of nationalization was the Boer War.  South Africa had a huge settlement of Dutch people.  They ran up against British ambitions and a war resulted in 1899.  Britain sent 250,000 military people and had so many prisoners they set up what came to be known as "concentration camps."  With a lot of brutal tactics the Brits won with the strong support of the British voters.  As a young boy I came across a book in our family home lauding the British effort in the Boer War.

Nationalism was on the rise.  When the heir to the Austrian Hapsburg throne was assassinated it was an effort to remove Serbia and Croatia from the grasp of the Austrian Hapsburg Empire.  It untangled alliances involving England, France, Russia, Romania and Germany resulting in World War I.  Otto von Bismarck was quoted "It is not by speeches and debates that the great issues of the day will be decided, but by blood and iron."

Despite Woodrow Wilson proposing the League of Nations, the American reaction to the war was isolationism.  The Republicans forced the U.S. to withdraw from the League of Nations.  Heavy restrictions were imposed for immigration.  

John Maynard Keynes felt it was a big mistake to make Germany suffer which in turn was a grievance latched onto by Adolf Hitler.  

The Roaring Twenties ended with the start of one of the most serious global Depression.  Lots of action laying with the gold standard and interest rates.  Ironically Adolf Hitler understood better than Americans the importance of full employment and they came out of the troubled times better.  

Japan had become an industrial power, but were dependent on oil.  America blocked them from getting oil and the resentment led to Pearl Harbor.  After the brutality of WWII, the U.S. took on the role of a hegemon for the rest of the world.  Hegemon refers to a leadership role due to dominance.

United States, to placate returning military offered a GI bill that amongst others things encouraged  them to seek further education which not only raised standards, but gave the labor market time to sort itself out.  The Marshall plan helped to restore Europe to previous status.  President Eisenhower pushed for a greatly expanded highway system.

As racial minorities and females rose in stature there was resentment.  In 1964 the Civil Rights Act solidified rights.  Quoting the author, "Productivity depends on the division of labor...if you invite more people into your tent, your division can be finer and more productive".  Admittedly not everyone saw it that way.

From the 1990"s the Global South increased their real income faster than the Global North.  Information technology spurted ahead starting from the 1980's.  Another  factor was containerization meaning goods could be transported for lower income areas to areas of high consumption. 

In 2008 the world suffered a significant recession.  The author admitted he was wrong in his prescription (he actually started this book just before this new crisis and changed his outlook), but added most of the world did not handle it properly.  One exception was the Chinese who adopted the principle that the priority (remember Hitler) was to have full employment.  

Now we come to 2010, the author's designated end of the long century.  The world is going in different directions.  One alarming trend is the relative ignoring of climate change which will have life changing global impact.  Donald Trump was an indicator of a new economy.  He took advantage of people's natural desire to blame someone for their personal dissatisfaction.  His main policies were tax cuts and deregulation to support the already very rich.  The author thought that cruelty was also part of his legacy.  And he bungled the Covid crisis that negatively affected billions of us.  Not to mention stirring up a number of divisions of Americans.

One of those memorable passages for me was when the author paraphrased Abraham Lincoln.  "You only had the right to eat what you had earned by the work of your hands.  That was part of your rights to life, liberty and the pursuit of happiness.  To keep others from taking the bread that you had earned was the point of government.  Moreover, any such government was legitimate only through your consent." 

The author seems to be an admirer of John Maynard Keynes, suggesting his wisdom should have and still should be paid attention to.    http://www.therealjohndavidson.com/2012/04/book-on-john-maynard-keynes.htm

There is much to ponder in this heavy book well worth reading to better understand how the world got this way.  We are still only "slouching towards utopia".  The average global inhabitant is much better off than they were in 1870, but there is still serious inequality.  Some have more freedom, but there are still a lot of restrictions limiting the enjoyment of most of the world.  I would like to close with a quote from John Maynard Keynes who felt the most permanent problem is "how to live wisely and agreeably and well."

The Ministry for the Future

 Most people accept that climate change is real, but a significant minority doesn't believe it and others resist any efforts to fix it.  Science fiction can bring out horrible scenes that hopefully will frighten more people into action and also suggest how we might deal with the disaster.  

 Published in 2020 "The Ministry for the Future" does indeed give a reason to be more scared than ever. The initial thrust is something we are dealing with now:  i.e. that despite lots of plans have been made the problem is actually getting worse.   Kim Stanley Robinson is a best selling award winning author who was named "Hero of the Environment" by Time magazine in 2008.

The story starts with a killer heat wave in India.  This marks a breaking point for some.  Words are no longer enough.  A small group believes if someone doesn't live up to their word they should be assassinated.  They don't stop there, but also target high users of carbon, for example airplanes, but not battery powered ones are blown up as an effective way to cut air travel.  The Indian government decides to defy regulations and seed clouds to induce rain and it works.

Some scary scenarios are painted.  Coastal cities are covered with water.  Insurance premiums would be too high and the government too indebted for the economy to survive.  Fires and floods limited food production.  Refugees seek protection from the weather causing more turmoil.

We soon encounter an executive with the Ministry for the Future.  The agency was designed to focus on future generations that are not catered to with the current generation.  One of her focuses is on finances, but she soon finds that bankers are more interested in protecting currencies.  Worsening inequality exacerbates conflicts.  Refugees were rapidly increasing and reaching the size of mid sized countries.

In 1944 at Breton Woods John Maynard Keynes made a proposal to avoid developing countries from becoming too debt ridden and to make for a balance between the rich and poor.  Americans preferred that their currency become the global standard.  Read more about this most under appreciated man:  http://www.therealjohndavidson.com/2012/04/book-on-john-maynard-keynes.html

One bright idea was a carbon coin which could only be earned by proven carbon sequestration or reducing carbon impacts.  At first bankers resisted the idea, but money is worthless if there is not civilization to back it up or products to buy.  Eventually it caught on and some took advantage with the author suggesting Saudi Arabia might agree to cut off oil production in return for a huge amount of carbon coins.  As one of the obstacles was the control of currency this opened up more possibilities.

Forestation was a key tool as were activities at the polar extremes and in the oceans.  The world birth rate had been declining for decades and that helped as well.

The author explores many political situations and scientific effort. including geo engineering.  Predicting political trends is dangerous and since publication there has been the Russian invasion of Ukraine.  But generally he has a good understanding of political dynamics.  It is possible that the climate crisis could lead to more peace and equality as in order to overcome it a great deal of co-operation is required, otherwise a total breakdown is our future.

Science fiction can be a useful tool to project the future.  Even if you are an ardent activist this book will open your mind.  If you are not an activist you will be motivated to do more.  Below are some earlier blogs that dealt with climate change and science fiction.

http://www.therealjohndavidson.com/2011/09/2030-not-that-far-away.html

http://www.therealjohndavidson.com/2011/09/conversion-can-sneak-up-on-you-too.html

http://www.therealjohndavidson.com/2011/07/great-disruption-is-it-really-on.html

THE VALUE OF EVERYTHING

 Price and Value seem almost like synonyms.  Mariana Mazzucato feels there have been distortions that are not in our best interests.   Spotted her on Steve Paikin with a new book.  Previously learned of her first book on the same show:  http://www.therealjohndavidson.com/2015/07/the-entreprenurial-state.html

What the market determines is the price of any commodity is generally considered its value.  Mariana feels this is not always reliable.  As she points out once value was thought to be the time and effort required to produce an object, but as markets are imperfect prices and wages are often set by the powerful and paid by the weak.

There is a lot more meat in the book than I can convey in a short post, but below are some random thoughts gleaned.

Gold was considered value and that anything could be valued by how much gold could be exchanged.  Spain brought back huge amounts of gold stolen from the New World, but in reality did not make Spain more productive.

Conservatives feel government is an impediment to business, perhaps because they are focused on profits more than the environment they help create.  Productivity has increased since the 1960's in industrial countries, but the standard of living for most has not improved as much. 

Financialization has crept into our economy, not only through expansion of financial institutions, but also by the productive sector.   For example Ford in the 2000's made more money from selling loans to buy cars than from selling the actual cars.  

Another practice that distorts value is the practice of buying back shares which in effect increase price of shares, but without putting money into production.  Too often other stakeholders, such as employees, municipalities and taxpayers receive at best secondary consideration, even though they are crucial to the economy.

John Maynard Keynes is one who understood that the government is the spender of last resort.  He advocated for more spending (even it means borrowing) during economic down times, while in "normal" times to accumulate surpluses for the inevitable downturns.  More information on his thinking:  http://www.therealjohndavidson.com/2012/04/book-on-john-maynard-keynes.html

One sobering thought: if you find something free online, you are not the customer, you are the product.  A closing thought from the author: "The question of growth must thus focus less on the rate of growth and more on its direction."

The thinking expressed in this book should be of concern to everyone concerned about the future.  What do you value?

TRUMP PERSONIFIES SHORT TERM THINKING

Trump is not the only one guilty of short term thinking.  For instance I have indulged in it too often.  Furthermore pretty much all of you have occasionally exercised short term thinking.

When we get up in the morning most of us have a routine which is a good way to start the day, but sometimes it gets interrupted and our first thought is how to get back to what we were expecting.  A lot of our day is to get through to the next expected thing.

When it comes to things like getting married, getting a job, living a long healthy life, saving up for something more costly than our pay cheque, dealing with an unco-operative foreign nations, or global crises it pays to give some forethought to the matter and generally the more consistent we are in these efforts the more successful are the results.  On a national scale when there are serious problems all eyes and ears go to the leader.  Leaders do all sorts of things that we don't know and don't care about, but when it comes to life and death or our financial survival we look for guidance from our leaders.

The Covid-19 pandemic is one example.  It took quite awhile for Trump to recognize it as a national threat and the first we heard were efforts to dismiss and later to blame others.  We learn he had unpacked some of the preparations made by Obama.  Other nations identified it as a threat and took steps to deal with it.  Trump fairly soon identified it as a threat to his re-election, particularly when it effected job statistics and the stock market, his measures of success.  His focus has been on how to minimize the danger.  One recurring theme was that tests only made the situation worse by revealing more cases.  Other nations realized they needed to get a grip on the real facts before deciding on a course of action.  Instead of taking a tough stance and setting an example Trump continues to downplay the health dangers.

Lately Trump has come to realize that schools serve as a sort of baby sitter that allows parents to work without worry.  That is true.  But it is more complicated.  Although youngsters are apparently not as vulnerable as healthy adults, they are vulnerable and some are dying plus they are also carriers to those more susceptible.  Their teachers, school janitors, school bus drivers, etc are more vulnerable, but are necessary for children to get the full learning experience.  Parents are protective of their children and would need to be reassured that the danger is manageable, but Trump belittles many guidelines.  Parents are afraid for themselves.

Other leaders intuitively understand that the solution to the problems of the economy has to take a back seat to controlling the virus.  A long term strategy is to listen to experts, keep measuring results and set a good example.  Leaders who fail in this should be kept away from power.

This crisis is only one example, but as one of life and death it will not be ignored by all rational people.  Unfortunately it mirrors other examples.

Tax cuts are a short term action.  Of course everyone likes a little more money in their pocket and it has been constantly promoted that the wealthy are job creators.  First many wealthy people are not big job creators and put their money in safe places such as government bonds which their taxes would have minimized the need for.  Others calculate how they can optimize their profits such as more automation, company buybacks, more dividends and giving themselves raises.

Two impacts are important.  First the deficit grows meaning the government has to borrow more money and pay interest.  Second and related is they have less money to pay for programs and it is all too often programs that benefit the poor, but everyone loses a bit and the government has less flexibility for emergencies.

John Maynard Keynes had the idea that when times were good, the government should maintain taxes and let a surplus develop.  Taxes helped to curb inflation and encourage innovation.  When things inevitably turned down, it was a good time to cut taxes so that consumers would be encouraged to spend more.  Trump and his Republicans ignored that in a short term desire for personal gain.

Climate change is another area for long term thinking.  A short term strategy employed by those in power is to optimize profits from fossil fuels.  A long term strategy would require re structuring and inconvenience for many.  But if not done the long term result would be disastrous.  It is one of those things where the expenses for necessary changes increases exponentially the longer they are ignored.

Along the same line is pollution control.  Pollution cleanup should be paid for by the ones who create it, but such cleanup would raise prices or cut profits.  De-regulation is a regular promise of Republicans, but in most cases they really want to do away with protections.  The real costs of pollution include life threatening disease.

Racist immigration policies may make some of his base happy, but there are long term consequences.  To others, not necessarily racists he is appealing to their fears of terrorism.  Americans, like most modern industrial economies are not replacing themselves and so with an aging population there are fewer people to perform taken for granted services.  Plus there are many jobs considered undignified.  At the other end technology experts are coming from Third World Countries.  If a door is closed people look for alternatives.  Canada has been one of the beneficiaries, but there are others.

When the inadequacies of short term solutions become more obvious hopefully there is still time to plan long term.

The real scary thing is the only way a short term thinking candidate could get elected (disregarding the Electoral College and the Mueller Report) was by getting the support of other short term thinkers.  The irony is short term thinking hurts everyone.  We all do it, but first we need to recognize it and make a conscious effort to think long term.  The more long term thinkers the world has the better chance we will all survive.  Even if the majority of us are short term thinkers we benefit from long term thinking leaders.  I fervently hope voters take a long term viewpoint before the November election.

the photo is from an installation by Edwin Dam and Veronica De Nogales at Hamilton Harbour.

"Growing Pains" as seen by Gwynne Dyer

There are a lot of relevant examples of his points, but "Growing Pains" boils down to the main problem in the world is inequality and a possible solution is a Universal Basic Income."  This is very similar to a speaking session held at the Hamilton Public Library in 2017 at about the same time he was working on the
 book:  http://www.therealjohndavidson.com/2017/04/gwynne-dyer.html

A focus was on Donald Trump who Gwynne sees like the canary in the coal mine.  How did this happen?  Where should we go from here?

After looking at many details he concludes Trump, better than anyone captured the frustration of many Americans.  He didn't address the real problems, but understood the anger.  As it happens he did not need to mobilize a majority, but tack on the disaffected to the regular Republican voters and even then needed help from the Electoral College and Russians.

Of all the major industrial nations United States has the greatest degree of inequality. They are also the only one of this group not to have a national health plan.  Like all nations they have been increasing automation which is a major factor in inequality as while productivity has increased the gains have been distributed to the already wealthy. 

Brexit and U.S election were at least partially decided by fears of immigration.  Dyer points out those areas with the greatest percentage of immigrants voted to stay in the EU or to the Democrats whereas those with the least percentage of immigrants feared it the most and voted to leave the EU or voted for the Republicans.

Another area of global concern was North Korea and Iran's involvement with nuclear weapons.  Gwynne who has a military background maintains that neither country is a threat to America, but each is concerned with their neighbors. Iran borders a nuclear nation, Pakistan and also with Iraq who at one time also had a nuclear weapons program.  They also fear Saudi Arabia and the United States.  North Korea is concerned by China and more directly American involvement in South Korea.  Gwynne feels both nations realize if they initiated a nuclear attack they would be obliterated. 

No solution that ignores human nature would be effective.  Dyer consulted with Franz de Waal, a famous specialist in primates.  They are studying primate behavior and noting that all primates, excluding humans are inequal, authoritarian and prone to violence.  In some ways not a lot different than modern man.  However it seems likely that hunter-gatherers, who predated organized agriculture were grouped in numbers between 100 to 200 with everyone knowing everyone.  It is believed that they were able to be equalitarian.  Ambitious members were held in check limiting their power to specific expertise.

As with dozens of books I have read the big change comes with the development of agriculture  For the first time humans gathered in thousands and even up to millions.  There was no check on ambitions and men (not likely women) were able to develop a hierarchy which means inequality got started.

What helped democracy develop in western nations was improved communications with an early breakthrough was with the Gutenberg printing press.  Ideas were no longer exclusively coming from the top, but spread more evenly.  In the United States they achieved the highest rate of literacy.  Thomas Paine published in 1776 a pamphlet, "Common Sense" which sold 120,000 copies within 3 months and likely read by at least a million people with a total population of about 2.4 million.

After WWII the Keynesian economic model worked well allowing the economy to be increase while decreasing inequality.  In the 1970's under the leadership of Ronald Reagan the economic models shifted to Friedrich Hayek and Milton Friedman with a concern about inflation.  Productivity gain profits also started to shift to the top10%.

When we get to the 2016 election, Trump was not the only one to attract attention to frustrated voters, but Bernie Sanders was not successful in the Democratic primaries.  Previously most of the time the winning candidate would get most of the votes of their rivals, but in this case many Sanders supporters in the rust belt states of Wisconsin, Michigan and Pennsylvania chose Trump instead of Hillary helping with the margin of the Trump victory.  It is also estimated that Trump got free $5 billion worth of coverage by being newsworthy.  

The Universal Basic Income is a possible solution.  One of the problems with a basic income program or  other welfare measures is  they convey stigmatization.  Those receiving income feel humiliation and in truth the rest of us tend to look down on them.   Make it universal with billionaires also receiving it makes it more acceptable and easier to administer.  For those who have other income it may well raise them to higher tax bracket and that would help pay for it, even without raising tax rates.   Studies with limited examples have demonstrated there is minimal reduction in willingness to work.

Gwynne also discusses the possible loss of meaning that comes from not working.  He points out that many people do not work right now and have found activities to fill in the missing work time.  He acknowledges that some of them might be drinking more beer and/or watching more television.   In the past society has accepted leisure activities of the rich, but not so for the poor.  Our attitudes towards leisure may take time to change, but Gwynne feels there will be improvements over time.

There can be adjustments to allow for cost of living in different geographic areas, disabilities, children, etc.  Gwynne recognizes that the idea might not work but it needs to be tested and if found insufficient, alternatives need to be found.

Automation will ensure a very high unemployment rate which will result in either a major redistribution of income or a revolution.  High unemployment also means consumption will decrease further economic stress.

Gwynne Dyer writes about important matters in an easy to understand format including a few laughs along the way.  One quote from the author:  "History is not cyclical.  There is such a thing as progress."  If you are not fortunate enough to have access to one of the over 100 newspapers with Gwynne's twice weekly column you can catch up at his web site:  http://www.gwynnedyer.com

"A World of Three Zeros" a plan for a better world

We in the rich part of the world don't usually seek advice from poorer parts of the world, but Mohammad Yunnus, the Nobel Peace prize winner from Bangladesh has good credentials.   To some he might seem naive, but in fact he has operated under very difficult circumstances and accomplished what some feel are miracles.

Yunnus was educated in Bangladesh and the United States becoming  a teacher and at one point saw the need of poor women in rural Bangladesh.  Using his resources he started loaning small amounts of money with no collateral.  He established the Grameen Bank in 1983 and it has been replicated in over 100 countries  Surprisingly the rate of re-payment was over 97%.  It turned around local economies and over time got global attention.

Capitalism is worshipped by many people, but if we are honest it has problems.  Under its frame it is inevitable that despite all efforts to restrain it, it leads to income inequality.  It is not hard to see why when you consider that rich people tend to set the rules, a process you can witness with the United States Congress.  It is true that in general most people are better off than people of a century ago, but the gains have been very uneven and many would argue not as closely linked to merit as would be ideal.  Yunnus doesn't think the problem is so much distribution as underlying premises.

One of the academic foundations of capitalism is "The Wealth of Nations" by Adam Smith, written in 1776.  It rationalizes capitalism declaring it is only by catering to the will of what people want that gives us the beauty of free market business.  Not noted as much is another book by the same Adam Smith, "The Theory of Moral Sentiments."  Yunnus quotes Smith, "How selfish soever man may be supposed there are evidence some principles in his nature which interest him in the fortunes of others and render them happiness necessary to him though he derives nothing from it, except the pleasure of seeing it."  Self interest is too often interpreted to mean profit or selfishness, but could be expanded to include our long term collective happiness.

The three zeros that form the author's goal are zero poverty, zero unemployment and zero net carbon emissions.  Might seem the goals are in conflict, the author maintains they reinforce one another.

Social business is defined as meeting a need, developing sustainability, but not great profits.  Sustainability is necessary and Yunnus discusses some examples of how has worked.  One project was Haiti Forest to remedy the great need for forestation.  Money was brought in by the Clinton foundation and Branson Virgin Unite, but is generating benefits through jobs and an improved environment.  They plant one million trees per year.

Another project was in Colombia and involved McCain noted for potatoes in Canada.  One concern was the number of potatoes that were misshapen and ended up being wasted.  Researchers looked for ways to turn these ugly vegetables into something useful  One solution was to use them for soup.

Good governance is essential.  One function Yunnus feels is credible elections.  Criteria should be set up and might be enforced by the United Nations.  Some nations have already sought the services of groups such as the one started by Jimmy Carter that give their election greater acceptance.

Corruption is identified as a critical obstacle.  Yunnus posits that transparency engineered with technology is one tool and another is education.  I think both ideas have merit, but corruption is very basic to humans.  A movie has dealt with the inevitably of corruption and also one hero's solution. You might want to explore the notion: http://www.therealjohndavidson.com/2017/02/madaari-open-movie-about-government.html

Yunnus feels the future will be shaped by today's youth, many of whom reject both capitalism and socialism.  They are better educated, diverse and globally connected.  The poor will have to be involved.  Almost always they are at the end of technological developments

The purpose of life on this planet is not merely to survive, but live in it with grace, beauty and happiness.  It is up to us to make it happen.  We ca create a new civilization based not on greed, button the full range of human values.  Let's begin to-day."

John Maynard Keynes once said that the only purpose (of economics) is so that people could live "wisely, agreeably and well." He didn't restrict that to the rich, but felt income inequality was part of the problem. One of his most famous quotes is "..in the long run we are all dead."  Read more about Keyes at: http://www.therealjohndavidson.com/2012/04/book-on-john-maynard-keynes.html

To me an economic system has to be based on human nature and human aspirations.

Ayn Rand is often thought of as the high priestess of selfishness, but she did make one point I agree with which is that we should think long term more than short term of our interests.  Unfortunately I don't believe she thought about it in enough depth.   http://www.therealjohndavidson.com/2012/08/some-thoughts-on-ayn-rand.html

I do recommend the book. There are lots of ideas and experiences to ponder.   If such ideas are not examined and discussed there is little hope for humankind.

The Entreprenurial State

It has become common to believe that the government should keep its hands off business and job creators.  This idea is amplified by the right wing.  It is very true that individuals have intelligently, persistently, luckily and perhaps above all courageously brought civilization forward in an economic sense.  Real innovation is often against the status quo.  It also is true that when people band together they can accomplish more things.

There will always be a delicate balance between individuals and the collectivity.  It is true that we are all pressurized by our peers not to step too far out of line.  Status quo is comforting for many people.

I first saw Mariana Mazzucato on TVO's The Agenda with Steve Paikin.  Her comments stood in stark contrast to what I consider blow-hard opinions.  The blow-hards are basically self righteous individuals who have achieved success or visualized it, as separate from government.  They overlook their good fortune and the support they received from many quarters including government.

She links herself to John Maynard Keynes and Joseph Schumpeter.  Keynes is the one known for advocating increased government spending when the economy is depressed and Schumpeter is the one known for advocating innovation as the key to growth.  When times are tough private businesses curtail their spending including research leaving the government, if willing, to pick up the slack.  In good times Mariana finds that private business is really only interested in the short term.

Risk is a term used a lot, particularly to justify higher returns.  Another term Mariana likes to draw attention to is "uncertain."  There are many factors (including risks) that can be gauged as probabilities, but there are many other factors (unknown unknowns) that are not at all predictable.  These other factors can have a positive or negative impact on success, but in the field of basic research they can lead in new directions.

World War II provided an opportunity.  During the war scientists were gathered together to work on many military tasks perhaps culminating with the the Manhattan Project.  Working together and across disciplines they pointed the way to maintain military superiority.  After the war, groups developed to maintain competitive strength.  Defense Advanced Research Projects Agency known as  DARPA was one result.  Sputnik spurred even more research funds as the whole country felt threatened.  The Japanese were a few steps ahead regarding semi-conductor research and this was also a concern.

Their research provided the basic building blocks for iPhone, iPad, GPS, many pharmaceuticals, etc. etc.  After the expensive and risky steps had been taken some sharp people like Steve Jobs and many others were able to put products together that were commercially viable.  In fact most businesses and even venture funds shied away from expensive risky research, especially where they could not see a quick commercial application.

Today many see climate change as the number one priority.  Usually successful new technologies are disruptive to old technologies, i.e. creative destruction. The fossil fuel industry (oil, natural gas and coal) have had a long development (entrenchment) with large very significant sunk costs.  They have all the power to resist and the comfort of consumers on their side.

Bottom line:  do innovators give back to the community that supported them when it was needed?  Apple is used as an example--much of the basic research and development was done through government resources. But jobs go where they can be done cheapest and the company has developed strategies for minimizing taxes.  They are not unique.

A few conclusions.  The government can have a critical role in innovation and is in a position to take necessary risks on behalf of its citizens.  The government needs to recover some of its costs from developing innovations in part to continue its role in innovation.  Taxation is one way and even equity positions might be another.  The government above all needs to be recognized for its role.  Marianna makes many too often overlooked points and some useful suggestions.

I would add one more detail that the government provides towards innovation and that is education.  Some will point out innovators who dropped out of school and to be sure there are plenty to be found.   There are just as many innovators who were inspired by a teacher (in the formal system or outside).   To communicate their discoveries someone needs to read, write and understand, skills most often acquired in formal education.

The lion and the pussy cat on the cover were inspired by some words of John Maynard Keynes who was talking about animal spirits with regard to business.  The question is which animal represents business and which the state.

The Age of Oversupply

Today we are still toiling to survive after a financial crisis.  There have been many analyses and suggested solutions, but I believe most of them are based on outdated notions and are not sophisticated enough to really deal with the current reality.  Daniel Alpert opened my eyes to see the world in a different way, although the facts he uncovers are known to many.

Daniel Alpert has identified oversupply of labour and capital as the key ingredients of our current dilemma.  Never before have we had developing nations as creditors to so called developed nations.  One of the key causes is that huge companies in developed nations have increasingly been able to use cheap labour to produce their goods.  Developing nations such as China, India and Indonesia find themselves with more money than ever and still maintain a high savings rate.

The Keynes prescription for a lack of business activity and high unemployment is for the government to step in to help generate consumption.  A current problem is that if American (or Canadian) workers have money to spend much of it will go to foreign countries.  China and others are developing huge surpluses that end up being borrowed by developed nations.  This translates to cheap borrowing, lower wages and low inflation.

The conservative ideology on one hand preaches austerity and the liberals tend to favour pumping more money into workers hands.  In the United States extremist conservatives think the problem comes from the government being far too involved in the economy.  The author points out that in the past many government actions around the world have resulted in the economy moving forward for the benefit of all.  This crisis requires governments to co-ordinate around the globe for their long term mutual benefit.  It would be easy to over simplify his solutions, but most of them seem like common sense once you accept his basic premise.

Old ideologies aren't working and the pressures will make it more difficult.  Those who feel markets will work to rectify the situation might be partially right, but there are a few problems.  It will take too long and incur much suffering, some of which could lead to a revolution. Daniel Alpert has one of the best explanations I have encountered.  Get more information at http://www.economonitor.com/danalperts2cents/

How much is enough? by Robert Skidelsky and Edward Skidelsky

It is common enough to credit greed with all the troubles of the world.  But we all play a role as well as being victims of our own greed.  Most of us are not satisfied with what we have as there always seems to be something else we need for happiness, but the goal is always elusive.  Other people have pretty much everything we want and they still want more.

Originally read the book to think about my own individual situation and the author does have some relevant thoughts.  The author feels that happiness should not be the goal, but rather to have reasons to be happy, such as health, respect, friendship and leisure time.  Much of the focus is pointed towards society as a whole.  A big obstacle is the acceptance of inequality.

I had read "A Book on John Maynard Keyes" by Robert Skildelsky explaining the famous economist.  Keynes underlying theme was that the only purpose of any economic system should be to improve the well being of mankind.  Of course the study of economics attracts those who want to know the secrets of getting more money.

The constant push towards more growth seems to cause all sorts of problems--the environment is stressed, inequality seems to increase, while some people work more hours than they want, others can't get enough work.  What makes this possible is mankind's insatiability.  Once our basic needs are taken care of we want something extra and nowadays our fantasies are coming to life.  Maslow's pyramid points to less materialistic goals which do drive some people in their search for meaning, but are not universal even among those who have all their physical needs met.

Before society could move towards the ideal of everyone enjoying life instead of pursuing money competitively we need a change in philosophy.  It would be normal to expect skepticism as those on top appear horrified with sharing their wealth.

One step is to increase taxes so that money can be redistributed, particularly to public service.  This of course would be resisted by those who would pay.  Some who have attained wealth understand that it comes from wage earners and that everyone benefits from pooling our resources into infrastructure. Unfortunately too many feel that only they deserve the highest standard of living possible.  Spreading the wealth can have the effect of growing the wealth, but also diminishing incentives.

The pressure to consume needs to be reduced in order to reduce the pressure to work.  If we didn't want to own a bigger house, a faster car, snappier clothes than our peers there would not be as much desire to work overtime or work hard for a promotion.  We compete for more glamorous vacations, best seats, etc.  It is not just that we want to have more, we want to have more than our neighbors.

Reducing the effect of advertising is a key remedy.  A lot of people make their living through advertising  (I am one) and their efforts often increase the growth of companies and institutions, providing jobs for others.

While I agree that business and advertising are aimed at getting you to buy things that you don't necessarily need, marketing actually starts at the other end by trying to find out what you would be willing to pay money for.  Basically advertising is a tool which can be used for a wide range of tasks including what might be considered noble ends.

The problem is we have to make a living and unless you have a great deal of (perhaps "enough"is a better word choice) money an individual has little power to change the system.  You don't necessarily have to be filthy rich in order to set your own priorities.  If you don't have all the needed resources to get something you have to either re-evaluate what you want or figure out how you are going to get the resources.

I understand the mission, but feel I am not much closer to an answer.  I have found that a lot of my stuff is not as valued as when bought.  Experiences are more valued as I age. There is a fear that the money will run out before I do, but want to enjoy life while I can and I do realize that money is only part of the solution.  How about you?

You can read more of Robert Skidelsky's views at http://www.skidelskyr.com/

A BOOK ON JOHN MAYNARD KEYNES

Economics can be awfully boring and I admit it was a struggle to get through "Keynes, the Return of The Master." I wanted to understand his message a little better and perhaps succeeded. You may not have heard of Keynes as in some circles he is very much out of favour. But after the Great Depression his ideas were heralded as the solutions to handle future depressions.

He is dismissed by conservative thinkers who now seem to have the bigger stage. Keynes is criticized as the guy who wants to increase spending during a depression or recession even to the point of a deficit. Those who think that is terrible (and some of them seem to be in control) say that it is far better to cut expenses. They overlook that his theory includes the idea that governments should run surpluses when times are good and then spend when it is needed for the very slow times that otherwise result in unemployment. In fact he thinks that running a surplus keeps growth from getting out of control when it could precipitate a crisis.

I discovered that underlying his mathematical and psychological thinking is a different kind of philosophy than one hears much of these days. The purpose of economics is not to make finances more efficient. Keynes feels that the only purpose is so that people could live "wisely, agreeably and well." He didn't restrict that to the rich, but felt income inequality was part of the problem. One of his most famous quotes is "..in the long run we are all dead."

As ordinary citizens we hear a lot about how important it is to protect the job creators, but in truth we are all job creators. Meeting our needs and wants is what gives someone else a purpose (and an income). We in turn use our talents and energies to meet other people's needs and wants. Governments are not the problem as was famously said by Ronald Reagan, but they can facilitate the solutions.

The author recounts history noting that governments swing from conservative to liberal and back to conservative. The problem is that society goes too far in one direction creating a crisis that causes a swing in the opposite direction. One of the problems comes from a political context. Rich people are at bottom interested in protecting and expanding their wealth and power. A philosophy that justifies what they want to do to benefit themselves is just another tool. With their wealth comes power that can be leveraged to attain their goals.

The author, Robert Skidelsky has written a lot of books on economics including a much more substantial book on John Maynard Keynes. This one is struggle enough, but it is fairly current covering events up to 2009. He recognizes that Keynes had his limitation, lived in a different era, but that his wisdom still shines and should be heeded.