Re: The Only Way to Solve the Economic Crisis in Russia

["chang" <chang@xxxxxxxxxxxxxxxxxxxxxxxx>]

At Friday, January 01, 1999 12:24 AM, Bill wrote:
>
>Could you PLEASE stop posting Microsoft MimeOLE-encoded
>documents to PKT?  Please configure your mailer to send plain-ol'
>e-mail.
>
>
>Bill
>

So I post them to pkt list again.

(1) The Only Way to Solve the Economic Crisis in Russia
<http://www.geocities.com/~juchang/only.html>

This is my response to Ariel Reinheimer's "Re: How to Solve the Economic
Crisis in Russia?" in the lbo-talk mailing list.

Dear Ariel Reinheimer,
Boris Kagarlitsky wrote:
>      Mr. Hiatt doesn't know or pretends not to know that the Russian
> population before 1991 had a very
>      high level of education. That was our main asset and our chance to
> grow, assimilating modern
>      technologies. It is Russia that is now "exporting" its specialists
> to the US, not the other way round.
>      The people we "imported" from America were exactly those arrogant
> IMF advisors who new nothing
>      about Russia and, as it turned out, knew very little about the real
> workings of financial markets, but
>      who were willing to teach the Russian "barbarians" about
> everything.

I have read your message with a heavy heart, and I really sympathize
with the Russian people in their sufferings. The advisors of IMF should,
I thik, offer an apology to the Russian people as they know nothing
about the theory of economics.

I am ready to tell the Russian people how to eliminate the economic
crisis in Russia, though those arrogant IMF advisors were not willing to
teach the Russian people about every thing. In my opinion, the only way
to solve this crisis in Russia is to allow the badly-managed and
salary-defaulting companies to go bankrupt and the workers be out of job, to
issue relief funds to the unemployed, and to encourage and help them to seek
for new jobs.

At the beginning of this century, numberless crises once took place in
the USA and West-European countries. Their governments are achieved
great successes on solving their crises every time they make for use of
the above-mentioned solutions. And they have kept utilizing this
solutions up till now. It is because they have been doing so to
eliminate economic crises, their economy is universally acknowledged as
the strongest in the world.

The Russian government should make it clear to its people that this is
the only way to eliminate their crisis. I hope from the bottom of my
heart that the Russian people will follow these advice of mine and put
it into practice as soon as possible.

(2) Corrections of Keynesianism
<http://www.geocities.com/~juchang/keynescaa.html>

Keith Goldson, a Belize student, asked me some questions about Keynes'
solution to unemployment. Please read the following e-mail dialogue and pay
attention to my answers to these questions. I'd like to discuss Keith
Goldson's questions with those interested in them. I'm really eager to know
if anybody has any other more convincing answers to Keith Goldson's
questions. Do you think keynes' interpretation of solution to unemployment
is practicable? And don't you think Keynesianism is out of date and my
corrections of keynesianism are reasonable and feasible? Thanks.
----------------------------------------------------------------------------
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(1) message of Keith Goldson
Subject: help...
Date: Sat, 18 Apr 1998 17:27:27 -0500
From: mossiah@xxxxxxx (Greta Mossiah)
To: chang@xxxxxxxxxxxxxxxxxxxxxxxx
Hey I am new to the Drecon list and saw your earlier posting. The list
dosen't seem to be active and I really need help so I am hoping that you
might be able to help me.

Anyways, I am in my last semester at Saint John's Junior College here in the
Caribbean country of Belize which ends on May 4th and I have a big term
paper due for my major, Economics. Thats why I am asking you (if you are
educated in economics to please help with the following i.e. give me your
opinion or inform as to which websites I can find information on, or give me
the e-mail address of someone I can ask. I will need to cite over 10
sources--and in Belize we ain't got that kinda info

Here is the question:

Keynes's Solution to unemployment was higher public spending which would add
to incomes and through the multiplier process lead to more jobs.
a) Explain how Keynes' solution is supposed to work.
b) Are there any other solutions to the problem of unemployment.
P.S. I would really appreciate ANY feedback that I get.

Keith Goldson
"4-ever in-depth

*Home mailto:mossiah@xxxxxxx
*School mailto:user24@xxxxxxxxxx

(3) message of mine
Subject: Re: help...
Date: Sun, 19 Apr 1998 15:10:08 +0800
From: "chang" chang@xxxxxxxxxxxxxxxxxxxxxxxx
To: mossiah@xxxxxxx
Keith Goldson,

Hi, I am sending you the answer to your questions. It is part of my articles
that I post earlier to the Drecon list. If you agree, I can also send you
the whole articles by e-mail.

Answer to your questions:

1. <http://www.geocities.com/~juchang/letteraa.html#argument> But my
argument on "social demands for commodities would come to saturation" is put
in quite a different way. Its inference is so clear that anybody can
understand it easily. I think that Keynes' assertion on economic policy is
really quite effective in solving unemployment, but I can expound his
assertion with my own argument, too. Page 211 of "Concise History of
Bourgeois Political Economy" compiled by Yin Bo-cheng and Shi Shi-jun and
checked by Song Cheng-xian reads, "In order to stimulate consumption, Keynes
asserted that the state should direct average people's consumption trend,
encouraging all the member of the whole society to consume as much as
possible. He alleged that it should be greatly applauded, rather than blamed
that the exploiting classes enlarge their parasitic consumption, even
leading to over-extravagance and squander. The reason is that the more
people consume, the more effective demands are enlarged, and the more
prosperity of society can be advanced." More consumption and squander can
certainly raise the saturation point of social demands for commodities;
therefore, over-production won't be liable to happen, and unemployment won't
be liable to happen, too. But the argument that squander can promote social
prosperity is undoubtedly incorrect. Page 211 also reads, "He even publicly
advo-cates that the government can load some old bottles with bank notes,
and then buries them into abandoned mines to a proper depth, and afterwards
lends out concessions of the mines to private enterprises, and thus, with
the bank notes discovered, the problem of unemployment will be no more". The
argument he advocates means that, when people are idle with nothing to do,
the government should offer them money and find some things for them to do.
Since people have got things to do, there isn't any unemployment. Page 211
also reads, "He even clamours that construction of pyramids, occurrence of
earthquake and warfare, and other natural calamities and man-made
misfortunes can all increase wealth, and, in his opinion, these are all
effective means of eradicating unemployment and economic crises". Warfare
and earthquake ruin wealth and cause casualties, and, at the same time, they
can raise the saturation point of social demands for commodities. So they,
in this sense, can get rid of unemployment. But I'd rather choose
unemployment than warfare and earthquake. In addition to the construction of
pyramids, the government's enlarging expenditure and investing greatly in
public works are also ways to solve unemployment. Through these ways, the
government offers money and finds things for people to do. When the
government is short of money, it can obtain loans from its central bank,
which thus creates inflation.

2. <http://www.geocities.com/~juchang/letteraa.html#sum> To sum up, the best
way I suggest to solve unemployment is: first, let
labourer find jobs for themselves, and let the funds and labour force flow
freely. When labourer really can't find jobs themselves, the government
comes forward, and offers money and finds jobs for them. Finally, the daily
working time for every labourer can be cut down so as to solve unemployment.

3. <http://www.geocities.com/~juchang/secondaa.html#All> All in all, the
development process of commodity production appears in
the form of spiral, i.e. a spiral model of economy growth:
(1) Farming----development of farming productive force and labour
productivity----unemployment of farmers----creation of new
products----enlargement of gross social demands (A+new
products)----development of industry and commerce so as to lead to the
solution of unemployment.
(2) Radio invented----enlargement of gross social demands
(A+radio)----enlargement of radio production so as to cause the solution of
unemployment----radio supply greater than demand and workers out of
jobs----creation of recorders (a new product invented).
(3) Recorder invented----enlargement of gross social
demands( A+recorder )----enlargement of recorder production and unemployment
solved----recorder supply greater than demand and workers out of
jobs----creation of TV sets ( a new product invented ).
(4) TV set invented----enlargement of gross social demands ( A+TV
set )----enlargement of TV set production and unem-ployment solved----TV set
supply greater than demand and workers out of work----creation of a new
product.......

4. <http://www.geocities.com/~juchang/letteraa.html#Since> Since there is
unemployment, there should be a way to get rid of it. The
way I suggest to solve unemployment is very simple. To put it bluntly, when
farmers are out of jobs, just let them engage in industry and commerce. When
the production of A type radios is saturated and overabundant, just let them
engage in production of B type radios, and when B type radios are
over-produced, just let them engage in production of recorders, and what is
followed would be the production of planes¡¢cannons and vehicles, which is
also a very good method. If the above-said things are all excessive, then
the only way out is to let them build pyramids and expressways. When the
expressways are saturated, they might be made to develop the outer space. If
we do this way, the problem of unemployment might be solved. The above is,
just as I said, the development of social economy, i.e. the so called model
of economic growth.


Ju-chang He
SHENZHEN CHINA

(4) message of Keith Goldson
Subject: Re: help...
Date: Sun, 19 Apr 1998 10:08:13 -0500
From: mossiah@xxxxxxx (Greta Mossiah)
To: "chang" chang@xxxxxxxxxxxxxxxxxxxxxxxx


I would appreciate if you would send the whole article.
thanks
Goldson

(5) message of mine
Subject: Re: help...
Date: Mon, 20 Apr 1998 19:08:11 +0800
From: "chang" chang@xxxxxxxxxxxxxxxxxxxxxxxx
To: mossiah@xxxxxxx
(I sent all of my articles to Keith Goldson by e-mail.)

Ju-chang He
SHENZHEN CHINA

(6) message of Keith Goldson
Subject: Re: help...
Date: Sun, 19 Apr 1998 10:30:49 -0500
From: mossiah@xxxxxxx (Greta Mossiah)
To: "chang" chang@xxxxxxxxxxxxxxxxxxxxxxxx
Thanks,

Umm could you just elaborate a little on how a rise in government
expenditure and a rise in income by way of the multiplier effect can solve
unemployment. That part has me a little puzzled. How can the multiplier
effect lead to more jobs.

(7) message of mine
Subject: Re: help...
Date: Mon, 20 Apr 1998 19:07:36 +0800
From: "chang" chang@xxxxxxxxxxxxxxxxxxxxxxxx
To: "Greta Mossiah" mossiah@xxxxxxx

This is the explanation of Keynes's,
<http://www.geocities.com/~juchang/letteraa.html#From Li> From Li Yi-ning's
"Concise West Economics", I read Keynes' three basic
psychological laws, with which he explains effective demand insufficiency,
and uses this effective demand insufficiency to explain unemployment.
Keynes' explanation may be such a deep theory that ordinary people can't
easily understand.

<http://www.geocities.com/~juchang/thirdaa.html> This is the explanation of
mine. It also is part of my articles.
In the last period of the second stage, the speed of creation of new
products couldn't solve the problem of unemployment, which thus produced the


need to introduce the policy of state intervention and state regulation so
as to further enlarge the gross social demand. But how did state at that
time carry on intervention and regulation so as to enlarge the gross social
demand? For example, a state needs to build an expressway; then the state's
gross social demand enlarge to A+expressway. But the investment in
construction of an expressway is great, and also it is not profit-making,
but the welfare type; so it's impossible to rely on private investment for
such construction, and the only possible way is to rely on the investment of
the government. Then where is the money for the government investment? It's
all the same impossible that money would come from taxation. Therefore, the
only way is that the government borrows money from its central bank. The
government for this reason sells bonds to its central bank and gets back a
checkbook from it. Suppose the money is a billion Yuan, and then the
government deposits it in the commercial bank, directly making investment in
the construction of the expressway, which is soon under construction. As a
result, the unemployment of the state's workers will decrease or die out
with the construction of the expressway. But the one billion Yuan borrowed
from its central bank becomes the financing deficits of the government,
which increases the social currency volume of the country, causing
inflation. The government needn't repay and is unable to repay this one
billion Yuan (suppose one billion Yuan is one billion USA dollars according
to the exchange rate). After the completion of the expressway, workers will
face unemployment again, and the problem of unemployment will need solving
again. Certainly, construction of a second expressway could be put into
consideration after the completion of the first one.
That is to say, the investment in construction of an expressway will gives
rise to government expenditure which can solve unemployment.

Ju-chang He
SHENZHEN CHINA

(8) message of mine
Subject: Re: help...
Date: Sat, 25 Apr 1998 17:10:30 +0800
From: "chang" chang@xxxxxxxxxxxxxxxxxxxxxxxx
To: "Greta Mossiah" mossiah@xxxxxxx
Hi,

To confirm the receipt of articles on socioeconomic problems I sent to you,
please send me a e-mail. You understand the answer to your questions, don't
you? I'd like to know your comment on my articles. Thank you.

Ju-chang He
SHENZHEN CHINA

(9) message of Keith Goldson
Subject: Re: help...
Date: Sat, 25 Apr 1998 09:26:15 -0500
From: mossiah@xxxxxxx (Greta Mossiah)
To: "chang" chang@xxxxxxxxxxxxxxxxxxxxxxxx
Sorry I took so long to respond. I was away at school in Belize City and I
just arrived home. I am reading your article as of know and looking at the
graphs. I appreciate you sending it to me. I will try and send my comments
by Sunday since I go to school on Monday and don't return until Friday
night.

(10) message of Keith Goldson
Subject: Re: help...
Date: Sun, 26 Apr 1998 14:06:33 -0500
From: mossiah@xxxxxxx (Greta Mossiah)
To: "chang" chang@xxxxxxxxxxxxxxxxxxxxxxxx
I read your article and your solution sounded applicable in a developed
country. Personally, it would not work in Belize. I did however like your
interpretation of Keynes theory in that the gov't will have to keep on
spending. Personally, I believe that to solve unemployment, one can build
houses, cut social security payments among others.

Bye

(11) message of mine
Subject: Re: help...
Date: Mon, 27 Apr 1998 15:12:11 +0800
From: "chang" chang@xxxxxxxxxxxxxxxxxxxxxxxx
To: "Greta Mossiah" mossiah@xxxxxxx
Keith Goldson,

Keynes' theory include (1):Keynes' assertion on economic policy that a rise
in government expenditure and a rise in income by way of the multiplier
effect can solve unemployment. (2):Keynes' interpretation of Keynes'
assertion on economic policy. That is three basic psychological laws, with
which he explains effective demand insufficiency, and uses this effective
demand insufficiency to explain unemployment.

Keynes' assertion on economic policy is really quite effective in solving
unemployment. But keynes' interpretation of Keynes' assertion on economic
policy is not right, because there is nobody can understand his
interpretation. You can't. I can't, either. So your saying "I did however
like your interpretation of Keynes theory in that the gov't will have to
keep on spending." is not right. You should say "I did however like your
interpretation of Keynes' assertion on economic policy in that the gov't
will have to keep on spending."

You understand, don't you?

Ju-chang He
SHENZHEN CHINA

(12) message of Keith Goldson
Subject: Re: help...
Date: Mon, 27 Apr 1998 06:11:37 -0500
From: mossiah@xxxxxxx (Greta Mossiah)
To: "chang" chang@xxxxxxxxxxxxxxxxxxxxxxxx
Yeah I do! But you see in that paper that I was doing it was a paper from
the Cambridge 'A' level exam and they don't want you to analyze his and give
the pros and cons they just want you say how its going to work.

Thanks any way!

(13) message of Keith Goldson
Subject: Re: help...
Date: Mon, 27 Apr 1998 06:13:20 -0500
From: mossiah@xxxxxxx (Greta Mossiah)
To: "chang" chang@xxxxxxxxxxxxxxxxxxxxxxxx
Bye the way, whats it like living in China? What are you studying? or what
is your job? Want to know more about Belize? I can try and explicate why
your theory won't apply to Belize--if you want to.

(14) message of mine
Subject: Re: help...
Date: Mon, 27 Apr 1998 22:15:55 +0800
From: "chang" chang@xxxxxxxxxxxxxxxxxxxxxxxx
To: "Greta Mossiah" mossiah@xxxxxxx
I believe that my theory will work in China and all nations in the world. I
am interested in economics, so I wrote some articles about economics. I am
studying economics. I will be very glad if you can explicate why my theory
won't apply to Belize. I will be very glad to know more about Belize, too.

Ju-chang He
SHENZHEN CHINA
--------------------------------------------------------------------

I'd like to discuss Keith Goldson's questions with those interested in them.
I'm really eager to know if anybody has any other more convincing answers to
Keith Goldson's questions. Do you think keynes' interpretation of solution
to unemployment is practicable? And don't you think Keynesianism is out of
date and my corrections of keynesianism are reasonable and feasible? Thanks.

Sincerely,
Ju-chang He

SHENZHEN, P.R. CHINA
Welcome to visit My Home Page at
<http://www.geocities.com/WallStreet/Exchange/3058/>
or <http://www.geocities.com/~juchang/>