Re: Palestinian Economic Proposal

[Warren Mosler <mosler@xxxxxxxx>]

Sven R Larson wrote:

> The Mosler plan for Palestine is an intriguing idea that I heard of for
> the first time at last year's PK conference in Knoxville. It is a bold
> attempt to bring economic theory out in the streets, something we
> economists are not always very good at (our offices are perhaps too
> comfortable...). Therefore I think this plan deserves serious attention;
> my contribution is, to start with, a bit of criticism.
>
> Let me focus on a critical part of the plan, described under the
> "Enforcement" headline. Quote:
> "The driving force behind the Mosler Plan is the requirement that
> residence owners submit PARs to the PA. This requirement is only as good
> as the enforcement process. If the PARs are not paid, the PA must have
> the right to sell the property and thereby attempt to collect the
> delinquent payments. The PA need not even know who the owner is."
>
> In a monetary tax payment system, if someone fails to pay taxes they can
> be forced by court order (or debt collection or similar structure) to
> give up part of their money income in the future.

That of course would require additional institutional structure.


> The PAR system
> excludes that possibility by definition.

The 'possibility' is not exculded, simply not recommended.
(more below)

> Wouldn't it instead be a good
> idea to look at how, e.g., the Baltic countries established their own
> currencies, or how the Checz Republic and Slovakia separated? Even the
> secession of Iceland from Denmark or the emergence of Slovenia might
> suggest alternative strategies.

I was looking to begin with a process that minimized real compliance costs
and did not discourage transactions.



>
>
> Quote:
> "This may seem harsh, but in practice the requirement is rather modest.
> Remember, public service work is always available, and any property
> owner need only work four hours per week for the PA to receive the
> needed PARs.  Anyone unwilling to do at least that much for his
> community should receive little sympathy."
>
> This isn't working. Try come as an American to the Palestine people and
> tell them this - it's not going to work. In many countries across the
> Islamic world work-free income is an accomplishment worth admiring; some
> people in the Palestine territories come from these cultures and regard
> the ability to liberate one self from the hardships of everyday work as
> a true strength. This doesn't count for all Palestinians, as their
> backgrounds are very different, but the share who have this cultural
> heritage may very well be large enough to bring your plan into real
> trouble.
>

Could be.  But I haven't heard that yet from my contacts.  They think an
appeal to 'National Service' as the means of turning the community into
a nice place to live is attractive.

>
> I could also add all my critique of the ELR idea, which I have presented
> on this list before. Very briefly: a state that is ready to force people
> to work (at gunpoint or at cashpoint) is a system where recessions bring
> intolerance out as a social poison. It is also a system where
> productivity, creativity and ingenuity are restrained, sometimes
> severely, as countless examples from the 20th century can tell. You do
> need to explain in more detail - much more detail - how your plan is
> going to avoid all those social and economic distortions.

OK, but the entire 'plan' differs from what we have now only in that the
govt. offers a national service job to anyone who wants one.  Are you
claiming
that is worse than the current state of affairs???


>
>
> Quote:
> "It is also expected that the PA would establish a policy for
> exceptions. For example, there could be exemptions for poor people that
> are disabled, aged, or suffering some other hardship."
>
> You are going to implement this in one of the world's most fragile
> societies. Your system is designed so that it can unite people around a
> common cause and thereby help creating stable, durable social
> institutions. But it is also designed in a way that may aggravate fight
> over scarce resources - in this case, the individual's time - in a very
> poor society,

With high levels of unemployment, is 'time' really a scarce resource?
This plan directs what is currently 'idle time' to national service.

> and do so with a list of exceptions that isn't more
> specified than this. You need to get back to the drawing table and
> address these tricky, unquantifiable issues that aren't found in
> textbooks, statistical databases, economic models or anywhere else
> except out in the streets of the society you're focusing on.
>

The idea is for them to take care of the 'exceptions' themselves.  I don't
think they need me or anyone else for that!

>
> I do like the initiative and wish for this plan to bring positive
> development to Palestine. Therefore, I really hope all the problems can
> be straightened out so the plan doesn't fail before it has had a chance
> to prove what it's worth.
>
> May Keynes be with you,
>

Thanks!

w

>
> /srl
>
> --
> Sven R Larson
> PhD; Assistant professor of economics
> Department of Social Sciences, Bldg. 22.2
> Roskilde University
> Pb 260
> DK-4000 Roskilde, Denmark
> Phone: (+45) 4674 2910

--
Warren Mosler
Director of Economic Analysis
III Finance

http://www.warrenmosler.com