From: Forrest Bishop (forrestb@ix.netcom.com)
Date: Sat Aug 31 2002 - 19:55:47 MDT
----- Original Message -----
From: Max More <max@maxmore.com>
To: <extropians@extropy.org>
Cc: <max@maxmore.com>
Sent: Saturday, August 31, 2002 12:03 PM
Subject: Re: MEDIA: Globalism, end of Socialism causes of jobless recovery
> At 12:42 PM 8/30/2002 -0700, you wrote:
>
> >An article in todays IBD (Investors Business Daily) indicates we
> >are losing high-productivity jobs to overseas at a rate of 400,000
> >annually.
>
> Is that loss from current industries, or net?
>
> >Per capita income growth is under attack from two factors,
> >exporting high-productivity jobs and importing low-productivity
> >people.
These are some of the symptoms, not the causes, of the hollowing out of US industry. The current worldwide recession is the result
of this structural imbalance. ORO explains better than I can-
"The actual cause is "Triffin's dilemma", which was actually discovered at least 3 centuries ago, and possibly first formulated by
Sir Gresham, the Exchequer to Elisabeth some 450 years ago.
"The idea is simple, industry is destroyed at the source of money creation.
If you are in a country that has a wide variety of industries in the days of the gold standard, and there is a huge strike of gold,
with more reserves found every year, then money (gold) will be spent by the local owners, spent by the happy miners, taxed and spent
by the local government, and would cause an increase in money supply. Local prices would rise well above those in other countries,
as a result, the country's exporters will find local labor hired from under them and moving to work the mines or cater to the
spending of miners, the mine owners, and the government. The exporters, facing high costs and an attractive local market would stop
exporting. Next, import prices, being lower than local prices, would cause imports to flow in, displacing local production.
While artists, shop owners, and service providers might be getting very well paid by the mine owners and their laborers for local
services, lavish shows, and construction of megalo-houses, the industrial production of the country would decline and the
mechanically inclined local labor once employed in industry would have to convert to one of the booming industries of housing,
retailing, broking intermediaries, entertainment, scientific research, spiritual and psychological advice, medical service and
medications, and government service.
This will continue until the prices of goods abroad rise to be closer to the prices of goods in the gold producing country. When
this happens, the expansion of imports will stop, some imports will no longer be cheaper abroad than when locally produced, and then
local entertainers, salesmen, government workers, home builders, brokers etc. will have to find new employment in some of the old
mainstay industries that now have to be rebuilt from the ground up.
Dollars:
Now, instead of a mine being the source of money, lets look at the source for today's official international money, the dollar. How
and where is a dollar created? Dollars are created by issuing debt which is done by borrowing for the purpose of spending,
investment in capital and technology development, or speculation or it is done by "printing" of it by the monetary authority, the
Fed. Dollars abroad are not borrowed into existence directly, but leveraged in what is a "free banking" system which is prone to
liquidity problems when it expands more quickly than the supply of dollars from exports to the US (the creator of our "gold" in this
case), because there is no monetary authority to print dollars outside the US.
"Money is thus destined to flow out of the reserve currency issuing country, America. Aside from giving it away, the only other ways
of supplying money abroad is by lending it and spending it on foreign investments and imports (produced by the investments abroad).
"Imports are destined to flow the other way and to destroy the industrial economy by competition from imports, so long as dollars
are used to settle the most necessary trade (oil) by political fiat (an agreement between our creditors, us dollar producers, and
oil producers that have our troops sitting around their oil), and there is a need for more dollars abroad. The need for more dollars
abroad is a result of dollar debt incurred in the past by developing economies; both in their attempts to buy oil in the 70s, and in
their borrowing for capital investment in local and exporting industries in the later 70s and through 1994.
"When dollar exports overcome debt service costs to dollar debtors, the dollar will collapse as prices of imports grow to match US
prices, while import volumes drop and will start being replaced by local production...."
"During the 70s and early 80s, the "median American" lost 25% of his "real income". This round will be worse. With luck, it may fall
by 35%-40%, as production of import replacement capital and energy capital will hopefully grow by the time the process hits bottom."
http://www.usagold.com/hall/hallfame3.html#anchor203876
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> I find this extremely hard to believe. Productivity growth has increased
> over the last decade. Even after multiple revisions, this trend holds. How
> do you square that with the above claim?
The BLS and Fed productivity numbers (and the CPI, PPI, and GDP) are statistical fantasies. To see this, try to compute the
productivity gains in the telecom sector over the past decade. First, we have to define what that sector is, of course. Then, we
have to consider the $1 trillionish capital and finished goods blow-off of the past two years as part of the $ output of the
involved workers. Furthermore, the $ output has to be accounted in a $fiat-currency that is fluctuating all over the map, both in
foreign-exchange ratios and in domestic price-structures. Using the INX, we could (falsely) claim US productivity has dropped 12% so
far in 2002
We can say thing like "X number of workers produced Y number of cell phones on a line in year 1998 and Y+q in 1999", but this
cannot be analytically translated into a real $ market price. Nor can it account for the capital investment put into building the
cellphone assembly line that has now gone up in smoke.
> >This of course means the tax revenue from these jobs is lost
> >permanently.
There is a silver lining around every cloud.
Forrest
-- Forrest Bishop Chairman, Institute of Atomic-Scale Engineering www.iase.cc
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