Poverty and the Foundation of Economics

POVERTY AND THE FOUNDATION OF ECONOMICS

Published by David Coplin at Smashwords

Copyright 2011 David Coplin

Smashwords Edition, License Notes

This ebook is licensed for your personal enjoyment only. This ebook may not be resold or given away to other people. If you would like to share this book with another person, please purchase an additional copy for each recipient. If you're reading this book and did not purchase it, or it was not purchased for your use only, then please return to Smashwords.com and purchase your own copy. Thank you for respecting the hard work of this author.

TABLE OF CONTENTS

I. FOUNDATIONS

I-1 - Introduction

I-2 – Summary

I-3 - Approach

I-4 - The True Nature of Economics

I-5 - The Foundation of Economics

I-6 - The Effects of Economic Systems

I-7 - The Myth of Scarcity

I-8 - Proper Focus On Goods And Services

I-9 - Beginning To Understand Money

I-10 - Thoughts about Friedman and Other Things

I-11 - Here Is How Economic Systems Work

I-12 - Monetary Policy and The Western Credit System

I-13 - Foundation Recap and Current Problems

II - THE ALTERNATIVE

II-1 - Service Sector Basics

II-2 - Business and Service Sector Recap

II-3 - Investment Funding Of Any Plan

II-4 - Enterprise Plans

II-5 - Enterprise Plan Ranking

II-6 - Enterprise Plan Tracking and Evaluation

II-7 - Enterprise Plan Partials (Improvements)

II-8 - Alternative Effects and Eliminating Taxation

II-9 - Service Sector Measurements

II-10 - Government Policy and Military Deployment

II-11 - Market Mechanisms That Determine Income Levels

II-12 - The Training/Education Piece

II-13 - Religion and Retirement

II-14 – Can Bits And Pieces Be Implemented?

III. FINAL THOUGHTS

BIBLIOGRAPHY

I. FOUNDATIONS

I-1 - Introduction

I believe this book is an effort in futility but I am forced to write it because I have been so wrong so many times about so many things that I am unable to depend on the judgments of my mind. I am forced to look deeper and wonder if perhaps I am wrong yet again; and that the solution to poverty will, indeed, be implemented by society. I just watched a short segment on Denmark where the difference between the richest and the poorest is not that great (at least not that great by the ridiculous standard we set in the USA), where they actually pay people who are getting certain types of education, make affordable child care available to everyone as well as affordable adequate medical care. So I guess it is possible for small groups of people around the globe to make a serious dent in poverty. Perhaps I'm jaded because I was raised in the USA where we embrace and encourage poverty in so many ways.

I'm indebted to my best friend, Thomas Schmitt, whose comments as proofreader, editor, and overall cynic have resulted in significant changes to this alternative :-) The reader will find numerous comments by Thomas in unidentified quote marks throughout this work and my responses to them immediately following.

Poverty will not be eliminated by giving or sharing existing resources (Denmark being the exception that proves the rule :-) as all such efforts in the past have attempted and all current efforts attempt to do. Poverty could be eliminated in this way but it is not possible for most of us to do this because of our inherent nature.

I-2 - Summary

Poverty can be eliminated by

1) Giving up the western credit system as the primary mechanism of economic growth and adopting a revised/alternative monetary policy (it will seem radical at first) that supports an enterprise plan market and a service sector as described later

2) Replacing investment credit with an enterprise plan market that is focused on resource allocation instead of on money supply games and allowing this enterprise plan market to drive a business sector based on profit and a service sector based on need/use instead of on profit or income level

3) Restructuring our educational system as part of the service sector by paying individuals who are obtaining skills starting as soon as first grade

4) Eliminating taxation and copyright protection

In order to implement 1) thru 4) above, a majority of the population will have to vote to adopt the revised/alternative monetary policy, revoke all copyright laws, and eliminate taxation by electing representatives who will support the legislation required for that implementation or by passing constitutional amendments that will accomplish the same thing. I'm not holding my breath :-)

The remainder of this book explains how these things will work/function but before these explanations will make any sense the reader must understand the true nature of money. And since that is probably going to be difficult I've decided to start from ground zero with some very basic economic propositions that are going to sound crazy at first. But not to worry, things will get crazier; at least that is the way these ideas sounded to me when they first entered my mind.

The alternative I'm presenting here does not require that anybody take care of anybody. This alternative is based on the proposition that most people are capable of providing for themselves if they are given the opportunity to do so. The only people who are not capable of doing so are recovering from recent surgery, completely deranged, or have made the decision to refuse normal work for whatever reason. While the number of such people in the world is not zero, it in no way encompasses nor even remotely approaches the current population of poor in the world. And as a side note, I do not include in this group those who have found ways to live by their wits instead of normal work.

I-3 - Approach

The title of this book sets up the approach I intend to take, POVERTY AND THE FOUNDATION OF ECONOMICS. All the definitions of poverty of which I'm aware require and are based on objective material measurements, as good science requires. However, I'm taking a different tack. I do not believe poverty has a quantitative definition in the sense of a scale from wealthy to poor. That type of definition does have relevance but not as a measure of poverty; it's relevance is what it reveals about the way we, you and I and everyone else, think.

In our distorted view of reality wealthy people are winners and poor people are losers and the winners and losers we define by income level. For the purpose of this book poverty is not defined by income level or any other quantitative measure; it is simply defined as the denial of the legitimate opportunity to contribute whatever you have to contribute to your economic system and, therefore, the denial of an equitable share of that system's goods and services. Just because an individual's income is below a certain level does not make them poor if they have a legitimate opportunity to make their contribution to their economic system and share in that system's goods and services but choose not to exercise that opportunity. An individual is poor only when they are denied the opportunity to participate equitably in their economic system. This denial is never the fault of the individual; it is and always has been the fault of the economic system itself. We all choose (and therefore create) the economic system that we support and, therefore, we all create the poverty that it generates.

Poverty, like everything else in economics, is something that we create. And I am not the only person to have made this observation. I was watching yet another remake of A Christmas Carol and noticed the two Children of Man at the feet of the Ghost of Christmas Present, Ignorance and Want. As far as I am concerned this is an artful way of saying that we create poverty. However, Dickens' answer to the problem of Want (i.e. poverty) is the traditional one of encouraging the haves to share with the have-nots; something I believe any rational person will have to conclude has never worked to successfully address the problem and probably never will. And this pushes me back to the foundation of economics.

I-4 - The True Nature of Economics

A clear understanding (foundation) of the true nature of economics is required here. And this pushes me back to the hierarchy of science. Economics is correctly classified in this hierarchy as a soft science which means it does not have the same type of foundation as the hard sciences. The hair-brained ideas that come up in any science can, in the hard sciences, be measured against the shared objective reality we call the real world. And this fact alone allows those hair brained ideas to be identified for what they are, baloney.

In the soft sciences that standard of measurement is human behavior, behavior that has been and is the stuff of fiction, non-fiction, history, anthropology...you get the idea. There is no real shared objective reality against which we can establish a standard of measurement in the soft sciences. Hair brained ideas (perhaps like ones you will find in this book :-) can continue to be proposed as truth until the cows come home (which is to say forever) because there is no sure way to prove or disprove any of them beyond the age-old method of do you believe this or not and then adding up those in favor and those against.

And while this makes progress in the soft sciences nearly impossible (I say nearly because scientist working in this arena have come up with some truly inspired ways of getting at what is really in our hearts and minds), it does allow people like myself (namely any yahoo off the street) to propose economic ideas with the same validity as real economists. This is the reason artists and writers have been and continue to be legitimate sources of insight into human behavior even though they are neither real nor even qualified scientists of human behavior.

Human behavior is a quagmire of chaos and confusion the likes of which has no rival. We strive for truth on the one hand and lie our (add an appropriate expletive here) off with the other. We give of our hard earned resources to help care for humanity with one hand and unleash havoc and destruction on our enemies with the other. We are the best definition of good and evil of which I'm aware. And to anyone who really endeavors to make sense of human behavior I say right-on brother or sister. You are in good company, the company of artists of every ilk, all of whom have, in their own way, shown us who we are. And you are in the company of serial killers and torturers.

Out of this chaos and confusion economics focuses its attention on a seemingly small, miniscule really, aspect of human behavior, buying and selling, something we do everyday almost without thinking about it. But as I will show, nothing about human behavior is small or miniscule. In fact, I believe that whatever or wherever we start, when it comes to human behavior we will always find ourselves coming back to basic principles that we hold to be true; and by we I mean anyone who makes statements about human behavior. Something we all do, right? Take poverty, for example. To say that some measure of material resource defines what poverty is belies what we all know to be true, the impact of poverty on hearts and minds (on our sense of well-being), not to mention the social problems that we all associate with poverty, or the fact that some people are perfectly happy living below the poverty line. Whatever we say about poverty will always flow from what we believe to be the true definition of poverty; which is why I have stated my definition up front, allowing the reader to take issue with it immediately if that be their wish.

And I also need to get out on the table some things about myself that might explain where some of my ideas originate. I have a deep seated mistrust of people in general, so deep that I'm not really sure where it begins or where it ends. And I probably have some serious self-esteem issues or perhaps the mental disability of a serial killer because I find it hard to believe that my parents actually missed me when I dropped out of sight years ago; a situation my wife took immediate steps to correct when we were first together. She just says I'm crazy :-) Now I'm not saying that will explain some of the more obnoxious views presented here, but in the hands of a skilled practitioner such information could be used to discredit some or all of my conclusions so I think it needs to be out there on the table. We are after all discussing a field of activity that primarily takes place between our ears; so any and all attitudes and points of view are germane here.

I-5 - The Foundation of Economics

So what does all this have to do with the foundation of economics? While traditional economics has focused on the results of the buying and selling behavior, the number of single family homes, the number of cars, the number of airplanes, the quantity (or quality) of services provided, the factors effecting price, etc, etc, etc, I chose to ask the question, what animates the transaction (buying and selling) itself? Is there a primary motivation involved in that transaction or are there several motivations, all of which are roughly equal in importance?

For me, the answer to this question, these questions, is the foundation of economics; not the results of the buying and selling transactions as traditional economics holds but the human motivations involved in all such transactions which I believe in conjunction with the economic system we choose pre-determines the result. For me there is only one primary motivation involved and it applies equally to buyer and seller; understanding that motivation begins with the tried and true TO GET THE BEST DEAL FOR ONESELF. If you are a buyer that means getting the product or service for free if possible. If you are a seller that means getting everything the buyer owns if possible. In fact, if you are a seller, you don't care whether the buyer owns it or not as long as it is negotiable and won't be taken back at some later point. And I claim that this best deal idea applies to all such transactions in the past, as well as, I suspect, all such transactions in the future.

While this may seem obvious to the most casual observer of human behavior, its implications are far reaching and impact nearly every form of human behavior because there are very few transactions of any type that occur between human beings that can not be viewed as buying and selling. And this is just another in a long list of ways that we can view human behavior; which is why I say no matter where we start, when it comes to human behavior, we always come back to what we consider to be basic principles.

Now if this seems like a remake of Adam Smith's individual pursuit of self-interest that can possibly result in a benefit to the society as a whole, you would be right except for the fact that I don't stop here. This is not yet the primary economic motivation but it's moving in the right direction.

What type of individuals are we who enter into these buying and selling transactions? Is our drive to get the best deal for ourselves conditioned by anything more primary? To answer these last two questions I must draw on two separate religious traditions, Native American and Christian. Seven Arrows teaches that there is only one thing that we share in common (that is, in exactly the same way), and that is our aloneness. And the Bible teaches us that we are all evil. At least that is my interpretation of Jesus' comment in Mt 7:11. I don't think Jesus is