Re: "After Economics, What?"

["John Gelles" <jjgelles@xxxxxxxx>]

            "[There is] the tendency of economists to ignore
             social infrastructure such as private property laws,
             limited liability and the spirit of capitalism."

                From "After Economics, What?" by Amitai Etzioni
                June 24, 1999, posted by Harry Veeder today


            The Etzioni critique, like so many others, seems to
            be truth, itself, writ large. But we find in it so general
            an approach to "what is to be done", that it fails as
            a prescription.

            We remember that the government contract as a
            means to procure the real necessities of war, when
            there was no money other than such contracts with
            which to act, proved up to the job. It procured the
            necessities and yielded full employment and full
            prosperity within the physical limits of all the
            allied democratic economies.

            After the war, and after the concept of spending,
            within the power of the physical economy to respond,
            was killed by Congress and the central bank, we
            returned to consumption, not government contracts,
            as the strategic economic tool to get ahead. This was
            a mistake waiting to be corrected.

            The worst feature of "consumerism" is not
            consumption by the rich. It is the imposition of
            taxation as a constraint on government contracts.
            If we had waited for taxes to pay for the war,
            we would all be under fascism today.

            The argument Etzioni and possibly Veeder fail
            to include, is the one that will eliminate taxes
            against the overwhelming majority of the voters.
            Only when these voters can be appealed to, will
            the government programs to perfect the
            environment, infrastructure, educational system,
            health care system, etc., be given a chance.

            Get rid of taxes on government hating voters
            and stop inflation with voluntary savings, (held
            in inflation protected accounts guaranteed by
            the credit of the issuer of currency -- the USA.)
            This can return us to the prosperity of 1944, with
            the arsenal of peace and war prevention taking
            its place as successor to the arsenal of democracy
            for war.

            Summers and Clinton are arguing for ending
            deficits and debt, yet retaining tax revenues as the
            measure of need. They say we will run out of
            money for medicare if we lower taxes now. What
            about doctors, bandages and pills. If we can
            produce the real ingredients of medicare how
            can we run out of money for them?

            The Democrats, Republicans, Reform party,
            PKT, Etzioni, and all but a handful of people
            agree -- government spending cannot exceed
            tax revenues. But this is patently false.
            Government spending is constrained by inflation
            NOT taxes. Inflation can be pevented better by
            saving and supply than by taxes and interest.
            And only supply can create the real ingredients
            of prosperity. Saving then becomes the control
            on inflation.

            The "private property" law referred to above
            is, of course, also key to the problem of
            prosperity. If private property law were to be
            used to attempt hoarding of goods in short
            supply while government was attempting to
            prevent inflation, the law would have to
            take such goods.
                        If limited liability corporations
            abused the public interest, they would have to
            be made accpountable under law.
                        To the degree Etzioni emphasized
            ad hoc legislative approaches to need, he is
            right.
                        Protection from tyranny would then
            depend on due process procedures,
            separation of powers, etc.

            Tax reform alone is not a full solution. But
            it is the essential element liberals leave out.
            It is the one conservatives hold on to. It is
            the lever we need to replace Reaganism
            with the economics that financed the war.

              John Gelles   jjgelles@xxxxxxxx
                                  http://www.1944.org
                                  http://www.rain.org/~jjgelles/