(Solving the problems of Deficit Spending and Poverty)
By: Thomas Lee Abshier, ND
Government has taken it upon itself to solve the problem of poverty by implementing various utopian solution such as wealth redistribution programs. The problem has not been solved, nor does it appear that following this track will ever lead to a solution. And, in the wake of this solution, we see an ever-increasing rise in government control and deficit spending.
Why is there poverty alongside unemployment and underutilized production capacity? How do we mobilize the nation, to increase production to meet our needs, and ultimately extend that prosperity to meet the needs of the world? Do we need higher taxes? Should we redistribute the wealth so there are none who are greater or lesser? Do we outlaw monopoly?
Increased taxation will not solve the problem of deficit spending if we continue to pursue providing a full service, socialistic, nanny state environment. It is always easier to consume than produce. Wants are unlimited, but production is always limited. There must be some method by which consumption is restrained, and men motivated to produce goods and services. Rewarding risk, thrift, and hard work have throughout the ages proven to be powerful motivators to produce and equitably limit consumption.
Some of the typical arguments against capitalism are that there are capitalists who are greedy and prospering off the backs of laborers who do all the work, while the capitalist benefits.
Actually, capitalism is the embodiment of a type of conservation law. What you work for you are authorized to consume. Without production, there is no utility to consume. Money is merely the medium by which people account for the relative value each has produced, thereby a rough balance between value production and consumption is naturally established.
There are several possible solutions to resolving the problem of government deficit spending:
1) Increase production: employ every able-bodied man, train every man to produce value, invest in the tools of production to reduce the human involvement in production, expand the availability of energy, focus the goals of production, and massive production to meet the needs, and eventually the wants, of the people.2) Reduce spending. Government should be restrained to its constitutionally authorized domains. Government has no place in regulating or administering retirement, healthcare, education, etcetera. All such issues should by the 10th Amendment be under the domain of the states, cities, businesses, and individuals.
The needs of the world are so great that it is inconceivable that there should be unemployment. What is that reason that the economic engine of the world has not mobilized to meet the needs that are so obviously present in the world? Why has government been so controlling of so many areas of life? Why has the government contracted such a large debt, and instituted policies that have caused American industrial capacity to relocate?
The conservative dogma is that if it is economically viable then capitalism will fund it. But, some projects are so large, the cost of doing them so great, and the payout so uncertain that the market has not laid out the capital needed to finance their completion.
There is no hard limit to the amount of debt a country/state, business, or person can incur before being considered insolvent. Rather, the actual limit is the level of belief of the creditors that the debt can be met. And the belief that debt can be repaid is dependent upon the perceived commitment of the debtor to meet the terms of contract for repayment.
The investing community is willing to take on the risk of the future viability of a financial product. Take, for example, the entire community of investors that play the indexes (e.g. the S&P, Dow, and NASDQ futures). There is no actual product being produced or represented by these investment vehicles, nevertheless, people put their money into them because there is the expectation of them rising or falling in value, and being able to make a profit by the movement. Thus, it may be possible to raise money for a large project if it has sufficient possibility for producing a payoff.
If the United States were to sell bonds to finance the installation of a hydrogen economy infrastructure, it would likely bring the nation to full employment. Once the infrastructure was installed, there would be a huge market for cars and industrial retrofit. The nation would be
We need to all be thinking of a solution together that will produce prosperity. Building an energy infrastructure gives nothing to the world, in fact, the world will be asked to invest in our bonds to support us while we build it. Does it produce a payoff? The answer is yes if we use the model of production, installation, and technology to install an energy infrastructure for the rest of the world.
In some way, we must repay the debt for installing our energy infrastructure. Producing, and giving to the world is an adequate repayment of the debt.
The problem is that no IPO or bond issue would be large enough to finance installing a hydrogen economy infrastructure. A natural gas, coal, oil shale economy is cheaper in terms of installed KW production. And, while the cost of the increment of production after installation, will be less, the cost of amortizing the loan, plus the cost of present production of a unit of energy will be much higher than installing a more conventional energy infrastructure. Thus, there must be some compelling reason to install a hydrogen economy infrastructure. 1) Pollution is a factor, even with the cleanest burning oil, there are effluents from auto exhaust and fixed power generation units, while hydrogen is totally non-polluting if it comes from hydrolyzing water. 2) The largest political tensions in the world have come over the issues of oil. 3) There are concerns about the availability of oil to power the needs of the world of the future. 4) Every nation’s economy could prosper if it had an adequate energy supply, laws favorable to business and industry, education that trained men to function in a technologically advanced nation.
In other words, we have to produce something of value for other nations. Investing in nations, building them up, and repaying the world with the return on investment as they become productive. All the world becomes prosperous, everyone is capable of producing enough to meet their own needs and the needs of others.
The sequence of building the economy of the world will be uneven and difficult to orchestrate. America is simply consuming too much from the rest of the world, and it is not giving enough back. The developed nations do not need our production since we only assemble products made from other countries. Thus, for us to be worthy of receiving the goods and services from the world that we consume, we must give back to the world. And, the best way for us to give back would be to build nations and bring them to the point of production super-sufficiency. If we borrow for the purpose of installing production capacity in the world, our government bonds will be highly rated since they will be backed by the productive capacity of the new national economies.
America is consuming huge amounts of the world’s wealth, but not giving back, and that is the problem. And, we are facing a generational change where the baby boomers will be drawing down healthcare and social security resources, which means we will be consuming more of the world’s resources. The world will not be happy about continuing to support that consumption of America if she does not give back to those who give to her.
We don’t want to produce our own cheap shoes, electronics, car parts, etc. Because it is cheaper to let other economies with low wages produce, while we assemble and consume and provide services to ourselves. The bottom line is that we are not giving to the world.
We can give the technology of how to establish businesses, production facilities, governmental agencies, communications, energy production, banking, law, and education. But it will only be valuable if it is righteous.
One example of a huge project that would require the installation of massive infrastructure, that would not produce a payoff for many years, would be the installation of the infrastructure for a hydrogen economy. problem is that the hydrogen economy would require so much new technology to be developed at the level of profitability compared to competing solutions, that the market is unwilling to bet on hydrogen being the clear winner. And, the market may be right. Possibly we should abandon forcing technology to the forefront by a governmental command. Possibly we should just let the market bet on the solution that it thinks will be the most profitable, and let the market dictate the direction of such grand utopian charity projections.