If, Then, Else

So, we've decided that an ailing economy is solved by producing jobs, and demand. This is achieved via government spending. So, given that this procedure works, what else must be true?

Firstly, that people in their latent state are not productive. IE, that rich people will not use their wealth in a progressive manner, and that poor people will become more productive once given a job. (The issue of poor people facing starvation or simple deprivation could easily be solved by immigration control and charity. It is assumed that we cannot afford charity for the entire world, so there must be limits to who can get this charity.) The jobs given to the poor are NOT currently productive. Producing a single job is far more expensive than giving a single person enough money to sustain a middle class living. IE, any job given to the poor must be judged as an investment, not a product.

So, this splits current economics into two questions- is 'idle' spending more effective than forced spending and does a person, after working for a certain period become an effective member of the economy? Current assumptions say that upon such a time as a person runs out of obvious beneficial activities to achieve he will enter into an idle state and cease partaking in useful activities. The answer to this syndrome is thence to force economic advantage gain for less useful activities visible to the government but not the economy. In theory these activities can be intuitively seen easily, but due to the lack of financing for those who would benefit, they are invisible to the economy. So, we must look then at the nature of the economy's vision- IE what makes an activity visible to the economy vs what hides such an activity. Simply, an economy repeatedly distributes money back to those who produce the greatest amounts of wealth. A miner gathers ore. The ore is sent to a refinery and eventually becomes steel. The steel is sent to a car factory. The Car worker trades his money for a house, that was built from wood gathered by a lumberjack supporting all the people up the line. Presumably the workers demand as much as they can get and thus each receives the maximum amount that a company can pay them and still make a profit (IE the wealth they produce is directly returned to the worker. Note that this doesn't really happen, because some people are better at fraud than others, so some workers make way more than they're worth through clever trickery, most of it legal. Of course the reverse is also true, and plenty of workers are screwed by clever companies. Such activity should however, be viewed merely as corruption, and should be stomped out where plausible.) Some people are not in the direct line of work, for instance, venture capitalists. However, they are in the same positions as the workers, in that the only way to start a car factory is for someone to judge that a car factory needs to be opened even though there is no proof, and for him to provide the capital. This is a very difficult job that only a few people can do, and those who do it well are provided large amounts of wealth due to their importance to the economy. From an economic perspective there is little difference between company/customer and employee/company. When A provides a service B responds by returning wealth.

So, what's curious is this- what happens when the worker at the car factory is replaced by a computer, and where thousands of factory workers used to be paid, instead a couple hundred engineers handle everything. The factory worker can no longer produce a surplus of wealth, and thus becomes invisible to the economy-(note also a equivalent scenario: that a lot of people move to cities creating a large demand for houses. For a period, any uneducated bum can be a valuable economic resource due to the necessity of houses and lack of alternatives. However, as the demand decreases the incentive to employ the bums disperses until such a time as it is no longer profitable.) IE the natural response of the economy is to kill him off. (remember that our objective is to improve the economy. Such issues as starving unemployed persons can be handled by charity instead of by handing out jobs.) It can be argued that the worker will simply learn a new skill and do something useful elsewhere, but this merely delays the issue. IE Given that the variables necessary for production change, the persona of the worker base must also change. Given that said variables shrink to a smaller field (for instance, those with a higher IQ, or greater amount of experience) people who were previously productive members of the economy will be dismissed from the economy.

By current economic standards, this method of dismissal is a disastrous inevitability of any unplanned market. This process creates depressions. What must be asked then, is what is a depression? As part of a natural business cycle, it is formed when people finish getting what they want. Once people can drive around for free, and everyone has a house the workers get fired and the companies go out of business. IE a depression does not involve the disappearance of wealth. Indeed, wealth is freed up during a depression. (note that yes investors will be screwed by a depression, but that's because they're not doing their job right. Investors are paid to tell us if a economic activity will be useful in the future, and if their predictions are wrong they will be fired.) So where does the money go?

Here is where the very rich come in. The money ceases to be in an active state and enters an idle state. Note that money, if not spent translates into deflated prices. IE no matter how rich you are, to be noted by the economy you must partake in economic activities. IE idle money is not money that is not spent. It is money that is translated into activities that produce no direct economic benefits. This can be classified into two fields- investments and luxuries. Investments are to be defined as anything that may, in the future give a profitable return. Luxuries are activities that in all probability will not return a profit. As such, the entirety of modern Keynesian economics henges on whether the money will be placed in investments superior to employing workers or if the money will be wasted on luxuries during a depression.

Or, another way of putting it is this- do the very rich become richer or poorer at the end of a business cycle? IE after the economy recovers, do the very rich also recover? If the very rich are reduced in wealth every cycle then it can be assumed that they spent their assets on luxuries or poor investments during the depression. If however, the rich become richer, then it can be assumed that they merely turned to more far sighted programs.

However, the business cycle has, throughout history, been increasing the economy. The nobility was in the 1500s-1700s extremely productive. They set up the industrial revolution. Simply put, business cycles are too frequent for a upper class to remain on top indefinitely without responding profitably too them. Upper class individuals with way more wealth than they need do not tend to fritter it away in parties. They either hold onto it (thus not getting in the way of the rest of the economy) or take extremely far sighted actions to increase their wealth. This is why they are so rich. IE, the problem addressed by current economics (a loss of demand, and thus no way to find useful ways to spend money.) is incorrect. What needs to be addressed is this- that the economy will not always find everyone in it useful, not even everyone who has been useful in the past. Rather than giving these people jobs, which provide the people only a small amount of money compared to how much is spent to produce the jobs, they should be given their wages without the work involved. Then the saved money can be turned to farsighted goals. (such as scientific research, or power plants that can produce cheaper electricity (note that demand for electricity can be fully met, but if the electricity can be produced cheaper, then people who could not previously afford any electricity will start buying whilst those who could afford what they really wanted can buy even more, even if all they do with it is leave the lights on while they're out. IE demand will scale to supply.)

One should ask, what makes these far sighted goals so bright that they outshine nearsighted goals? The answer is simply that they are more economically viable. There's no reason to continue turning trees into houses when no one will trade any resources for the house. However lesser demands, such as my demand for a quantum computer can still be addressed. It's not that these people stop providing products- it's that they start providing products that can't be immediately delivered. These include everything from free food and electricity to spaceflights. A depression starts when my demand for a quantum computer outstrips your demand for a bigger house. It's that simple. Competition for limited resources.

So we ask, do I have a right to a quantum computer when you still want a house? The answer there is this- that we are only different than other species because of our scientific progress. We are the only species that demands things that we can't get. A wolf never demands a gun, and thus is still stuck hunting with fangs. Sure, if a wolf pack hunkered down and started producing more advanced weapons, many wolves would suffer or even starve while the pack worked out its more effective weapon. However, do we really wish we had acted like the wolves way back when, or do we thank the sacrifices of our ancestors? That said, are we really so selfish, that we wish to stop here, reap the rewards and fuck the rest? Given, we shouldn't have to give everything to those in the future (if everyone did that, no-one would EVER actually get to enjoy their wealth.) but a few depressions here and there aren't so bad if it helps those who come later.