| Subject: | RE: [socialcredit] Re: Question regarding A + B | | Date: | Thursday, August 14, 2008 21:13:20 (+0000) | | From: | John G Rawson <johngrawson @.......com>
|
| In reply to: | Message 5492 (written by William Hugh McGunnigle) |
Are we not making something very simple into something too complicated?
Douglas demonstrated, not hypothesised, but physically accounted, a "gap" between purchasing power and prices in industries.
He never claimed there was a permanent "gap" in the total economy, pointing out that it could be "filled" by new money issued in respect of industrial growth or manufacture of non-consumer goods, paticularly armaments. While he may not have stated it, he never claimed it could not be "overfilled", resulting in genuine demand-pull inflation.
He did demonstrate a tendency towards a "gap" in the total economy if these mitigating factors were not present. A corollary is that, in the absence of excessive demand, any inflation would have to be of the cost-push type.
He never attempted to quantify the "gap" and I'm sure he believed this could not be done without an accurate national balance sheet drawn up to assess the situation and predict as closely as possible what new money the economy needed.
I do know that the Movement here has from time to time been brought into ridicule by irresponsible members claiming the ability to promise benefits out of this world because they have assumed there is a permanent large "gap". I'm sure we have not been alone in this problem.
As we have not been alone in the pursuit at length of "what causes it", which is a dead end superfluous to observed data showing that it exists. While it may be interesting, you don't have to know the chemical composition of petrol or precisely how it reacts with oxygen to tune a motor.
Regards.
John R.
> From: wmcgunn@maxnet.co.nz
> To: socialcredit@elistas.com
> Date: Thu, 14 Aug 2008 23:47:26 +1200
> Subject: Re: [socialcredit] Re: Question regarding A + B
>
> hi Bill
> Your argument accounts for something that has become something of a
> dogma in NZ. It is called the "Trickle down theory" basically it stated that
> if the top income earners are given big tax relief they will spend that
> extra income in a way that will create further employment in the consumer
> industry thereby allowing others to share in their prosperity by providing
> them with an income through meaningful work.i.e. the new affluence "trickles
> down" from the more affluent to the less affluent. I have still to see this
> actually take place. The reality always seeems to be that this extra income
> is "salted away" by purchasing real estate or simply placed in "high return
> Investments" usually money lending organisations. What you have stated seems
> to confirm this. I certainly have no argument with you on that score,it
> appears to be the way it operated in NZ.
> regards
> Bill McGunnigle
> ----- Original Message -----
> From: <william_b_ryan@yahoo.com>
> To: <socialcredit@elistas.com>
> Sent: Tuesday, March 18, 2008 8:15 AM
> Subject: [socialcredit] Re: Question regarding A + B
>
>
> > Joe, the question that I put is one of the arguments
> > against A + B. I do have an answer (based on
> > increasing account balances held by firms as opposed
> > to final consumers that are expensed against sales
> > through time) but I wanted to read other perspectives,
> > which you and Martin have graciously supplied. As to
> > being an argument against A + B, you know that the
> > Kelsonians (or "Binarians") propose the "full payout"
> > of profits in dividends, and the broadening or
> > spreading of capital ownership, which is a kind of
> > "propensity to consume" argument. They start from the
> > premise that something like eighty percent of
> > production is from capital not labor. But because
> > capital is so narrowly owned, the argument goes, the
> > owners of capital could not possibly spend the
> > totality of prospective dividend income on consumption
> > if it were fully paid out in dividends. In other
> > words, the owners of narrowly distributed capital have
> > a very low "propensity to consume" from dividend
> > income, so the solution to the "gap" between "prices"
> > and "purchasing power" is to broadly disperse capital
> > ownership through financial gimmicks like the ESOP,
> > thereby broadly distributing dividend income to those
> > with a higher "propensity to consume." The Kelsonian
> > proposal is riddled with fallacies, as I have
> > demonstrated in several years of discussion on the now
> > defunct Ownership list.
> > -
> >
> > "Maybe I'm way off base in trying to follow what
> > you're saying here, Bill, but it seems to me that
> > there still would be a 'gap'. Doesn't the product
> > actually have to sell before there is any profit
> > booked that could subsequently be distributed as
> > dividends?"
> > ------------------------------------------
> >
> > It depends very much on whether you're looking at the
> > situation from a "micro" or "macro" perspective. By
> > the rules of double-entry accounting you can only pay
> > dividends from accumulated profit rather than paid in
> > capital, so this implies a "before" or "after"
> > situation. But if you'll look at the diagram for the
> > creditary economy as a whole in quasi steady-state at
> > http://geocities.com/socredus/compendium/steady-state.gif
> > you'll see that the A curve, representing salaries,
> > wages and dividends leads the sales curve, so the
> > dividends curve presumably will be leading the sales
> > curve in reflux to dividends. This must surely be the
> > case if dividends have completely replaced salaries
> > and wages in a hypothetical fully automated economy
> > that is growing. This is because the behavior of a
> > continuous dynamic process differs from the behavior
> > of a discreet process that is an element of the
> > continuous dynamic process. For example, individuals
> > are born and die in their individual life cycles, but
> > the society as a whole is continuous, in that the
> > phenomena of being born and dying are occurring
> > simultaneously in the society as a whole. If the
> > population is increasing, the rate of births is
> > exceeding the rate of deaths at any point in time.
> > From the micro-economic sense, profit is a
> > relationship that is changing through time, and not a
> > quantifiably measurable thing. In the mathematical
> > sense of double-entry accounting, profit is a
> > measurement of the rate of change in sales in
> > comparison to the rate of change of investment. It is
> > an algorithm that estimates that changing ratio. Look
> > again at the diagram. The A + B curve appears to
> > "lead" the sales curve, but in reality the A + B curve
> > is very much a dependent variable of the sales curve,
> > because sales very much determine continued investment
> > by entrepreneurs. Social Credit proposes to augment
> > investment through the augmentation of sales through
> > accounting adjustment (the dividend and retail
> > discount), thereby preserving the sovereignty of the
> > final consumer.
> >
> >
> > ---------------original message-----------------
> >
> > (Bill Ryan wrote:-) I've described the "gap" between
> > "prices" and "purchasing power" as resulting from a
> > falling ratio of A to B in the ratio, A/A + B. But A
> > includes dividends as well as wages and salaries. As
> > wages are decreased with advancing technology and
> > organization, could not prices be decreased and
> > dividends increased from increasing profits such that
> > the ratio remains constant, and hence no "gap"?
> >
> > (Joe asks:-) Maybe I'm way off base in trying to
> > follow what you're saying here, Bill, but it seems to
> > me that there still would be a "gap". Doesn't the
> > product actually have to sell before there is any
> > profit booked that could subsequently be distributed
> > as dividends?
> >
> > If wages are decreased where is the effective demand
> > for the product going to come from? Would a consumer
> > be able to borrow based solely on the expectation he
> > could repay his spending through his share of future
> > dividends? Assuming, of course, that he holds any
> > shares in the first place in Companies that do pay
> > dividends.
> >
> > Even if prices are reduced too, aren't current wages
> > only a 'part' of prices, and wouldn't there still be
> > 'past' costs that have to be recovered in them? Would
> > the increase in volume be enough to cover those by
> > itself? Or wouldn't there still need to be an
> > augmentation to "A" not costed into prices in the
> > nature of a ND or CPD?
> >
> > Like I say, maybe I've got this all wrong.. If so,
> > perhaps you could take us through the whole accounting
> > process in a little more detail.
> >
> >
> >
> >
> > ____________________________________________________________________________________
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> > ---------------------------------------------------------------------
> > Some introductory materials to the discussion topic of this list are at
> > http://www.geocities.com/socredus/compendium
> > You're subscribed to this list with the email wmcgunn@maxnet.co.nz
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> >
>
>
> ---------------------------------------------------------------------
> Some introductory materials to the discussion topic of this list are at
> http://www.geocities.com/socredus/compendium
> You're subscribed to this list with the email johngrawson@hotmail.com
> For more information, visit http://www.eListas.com/list/socialcredit
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