ECONOMICS "ONE OH! ONE!"
John Q. Pridger
They tell us we have never had it so good. Indeed, we are not only a land of conspicuous "over" consumption, but a land of conspicuous waste. Our brand of capitalism is based on both – over-consumption and spectacular waste. We have become an over-fed, over-entertained, and under-educated people focused on personal material gratification.
Yes, modern capitalism is continuing to deliver the goods – and we're supposed to believe that when the rest of humanity has become just as "modern," affluent, and wasteful as we are, we'll have a global Utopia.
But there are some serious problems that even the economically challenged are beginning to see. On our way to a one world Utopia we are not only destroying our own nation, but insisting that the rest of the world follow suit.
Modern politicians, aided and abetted by university trained economists, have managed to destroy the greatest economy in the history of nation states. The false prosperity Americans enjoy today is an exceedingly dangerous prosperity, purchased on credit at incalculable future cost. We live on a combination of stored social capital and debt. The storehouse of accumulated social and economic capital is running low as the debt continues to rise at an increasing rate. Wall Street has prospered, but the people are indebted, their future mortgaged to the hilt and beyond.
Additionally, nations like India and China are beginning to compete for global resources in a serious way. The prices of key natural resources, such as oil and steel, and such things as cement and other building materials, are already going through the roof – and there is no end or remedy in sight. Over-consumption and waste, on the level we have set by example, will eventually lead to a serious crises.
The national leadership, under the advisement of economists on corporate payrolls, trained in universities funded by giant corporations and large foundations founded on mature fortunes, have actively abandoned the very core elements of "economics." In the complexities of their "dismal science" they have forgotten two simple truths. (1) That all "real" wealth comes from the soil, complements of nature and human "labor" and, (2) Real income is the product of "price times production." The E=Mc2 of economics is I=PXP, that is...
INCOME = PRODUCTION X PRICE
This simple formula, of which Charles Walters reminds us in his book UNFORGIVEN... the American Economic System SOLD for Debt and War..., is so simple that even an elementary school student could comprehend, has become an alien concept to the astute politicians and economic gurus presently running the national store.
Americans have been seduced by a national "cheap price" policy made possible by free trade and the ability of "American" corporations to disconnect from American labor and tap into the lowest available labor markets. This seduction can only lead to economic ruin, and the chicken are coming home to roost even now.
Both the WAGES of labor and PROFITS of capital, (i.e., all money denominated wealth), of course, are components of INCOME. PRODUCTION is the result of work, and both workers and capital are paid from the resulting INCOME.
Naturally, if INCOME falls short, because either PRODUCTION or PRICE are under-represented in the equation, somebody is going to be short-changed.
If American production is accomplished by "others, elsewhere," (like Mexico or China), the disconnect between producer and consumer renders the above formula inoperative. When production is accomplished elsewhere, income also accrues to "others, elsewhere." When prices are kept low, incomes will also have to be kept low, and slave labor becomes desirable – because the capitalists are not going to forego their profit.
Prices, of course, will never be so low that capital does not make a handsome profit. In the case of our present free trade, the stockholder and corporate executives are held to be the rightful recipients of the profit facilitated by cheap labor elsewhere.
When credit and debt are substituted for wealth, a false sense of prosperity is made possible, and business can expand even as the wages of labor decline.
The European capitalists long ago devised a way to control labor by controlling wages. The United States fell into lockstep with European (principally English) capitalists. and wages are best controlled by controlling money and credit.
PRODUCTION X PRICE = INCOME. This economic truth is so obvious that an any attempt at explanation would seem an insult to the intelligence of the reader. The farmer's income is contingent on his labor and getting a fair price for his produce. The merchant's income is contingent on getting a fair price for the goods he buys for resale. The factory owner's income is contingent on getting a fair price for what his workers produce. And the workers' income is contingent on being paid a fair wage by his employer.
Everybody needs what the farmer produces, and everybody needs what factories produce. And everybody must have enough income in order to purchased the food, clothing, shelter, and manufactured goods they need. Within a "national" or regional system, where production, price, and income are in balance an "economic system" naturally grows and the markets tend to be self-regulating. But when borders are open to trade from economically disparate areas, the natural economic metabolism breaks down.
John Q. Pridger