Exploding An Economy



My reform:

Jobs are barter for all the goods and services in the economy. The worker is identified by an employer (employment card issued by the employing firm which is common procedure, now).

The problem is that the term scarcity means there is no infinite supply of a commodity. Rationing problem solution is that the producer rations the products according to production and demand. Presently, that method of rationing is often used by stores announcing, “Limit X per customer”. The producer will be able to determine this by assessing shortages from limits of production.



THE WHOLE ECONOMY WILL BE MOBILIZED TO SATISFY THE CUSTOMERS’ DEMANDS.

This is a sketch explaining the expected economic results of these reforms and possible solutions to problems. With this system, even the poorest economies would have explosive growth due to releasing the logjam of the limits of money rationing. The cost is economic, limited by resources available and opportunity cost. This system isn't the most efficient and would cause some shortages. So, this system is to change economic rationing so that, up to the limits of supply from the limits of production, worker will be able to acquire what they want, when they want. Workers will use a 'blank check, check card', will clearly show what, how much, should be produced, normative economics.

The effects are exploded demand, and the markets will demand explosive production increases, exploding employment, and explode material and human wealth. High market demand will create market supply through this revised market system. This system will clearly show what should be produced, a normative economist dream!

Behaviors assumed:

  1. Greed

  2. Aggregate demand won't meet supply (scarcity).

  3. Tremendous quantity demanded causes shortages.

  4. Shortages create entrepreneurial opportunities.

  5. Entrepreneurial opportunities create jobs.

  6. Demand creates supply.

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1.1 The following is a sketch or crude design for an economy using the described system.

2.1 What are the economic effects assuming greed behavior? Due to people having the option to acquire what they want and as much as they want, demand would explode. Firms (including government agencies) would expand creating jobs to meet demand of their goods and services. Soon there would be so many job positions to be filled that there would be a worker shortages. The nation that adopts this system would become a worker's bonanza. To fill these shortages, immigrants would be desperately needed and with such prosperity they would be eager to come. Due to the high demand for certain goods and services, there would be shortages of them. The business of business is to meet the demand of customers. This system will clearly show what should be produced, a normative economist dream!

2.2 This structure would please the Socialists, since government could provide all the services that 'should be done' (normative economics) merely limited by staffing.

2.3 This structure would please those who believe in the 'free market'. Entreprenuership would be almost unlimited. Failed enterprises would have no personal penalty. Market forces govern the economy. The whole economy will be mobilized to satisfy the customers’ demands.

3.1 A proposal to run this economy is a Card system, showing entitlement. There may be a need for different classes of cards: possibly class cards ' A', 'B', and 'C'. Workers would get the 'B' card. The 'B' card would be for anything that is not considered a capital good (see 13.1). Currency would be used for buying imports and by those without or don't need a card; currency would still be present in this system but would play a more limited role.

3.2.1 How much should a worker work in this system? It is in the best interest of all that all work as much as possible, however, for some more productive jobs, this wouldn't be fair. In production, minimum production quotas for each worker or team may be used. So some jobs may only require 25 hours a week whereas others may require 50 hours a week to insure fairness. Therefore, someone may need to work at two or three different places of employment to get the 'B' card. Also labor unions may contribute to solve this problem.

3.2.2 However, a change will occur as this system is more widely used. As envisioned, the trade for the card (job) will be leisure time (versus work time). This will create a market based on how many hours a week are required for the job (card). Popular jobs would need to increase week work hours required for the card, whereas unpopular jobs require less week work hours for the card. Market forces could rule on this issue. Labor unions may contribute to solve this problem to set standards for required work hours.

3.2.3 Some highly paid industries are a burden to the economy like litigation and medical fields and this drain will be reduced.

3.2.4 The mechanism is counter-intuitive to instill fairness. The more workers want the same job (surplus workers) increase the number of hours of work required. The more a firm wants a worker (worker shortage), the less hours of work required.

3.3 A solution for the disabled would be issued card by government to live. For example, this could be an 'A' card. The 'A' card is for acquiring minimum needs like food, clothing, rent, utilities, i. e. the minimum needs for living. The poor would be initially issued a short term 'A' card but there should be creation of enough jobs to provide for them (see 2.1). All these may be issued a different class of card to provide for needs with limited access to durable goods.

4.1 Education would technically be free but a student must support himself or herself. This could be done by each student be an employee of a firm, including a college or university. I would predict an explosion of enrollment, for a student's job would be "paid" to learn. What a culture! There would be a tremendous opportunity for the advancement of knowledge and human wealth.

5.1 What are some of the other effects on the culture? In the present system major endeavors are limited by costs but in this system, idealistically, there would be no such thing as monetary cost. The only cost is acquiring resources. So, we could have an explosion in the arts: sculptures, paintings, music, literature, people who create these works can be recognized and shared with all. We could also have an explosion in the sciences and engineering: a piloted mission to Pluto if we so chose to employ the resources. We could give better protection to the environment since some systems are too expensive to incorporate. Just imagine what could be done without the limiting factor of money!

5.2 With the "blank check, check card" system, the question of having enough money is eliminated. Money is a major issue argued with married couples. Many divorces happen over money. Many non-married people worry about money. A majority of bankruptcies occur due to health care bills that were life-saving and ruined people financially. With this system, worries are eliminated. The mental health and physical health problem associated with the worry about money, is cured.

6.1 Currency is used to buy imported goods and services. When a good or service is made and uses an imported good or service, the costs are passed on to the consumer by making the price of the item the cost of the imported good or service. In this case a consumer must use currency. They wouldn't be able to acquire this item using only the card.

6.2 A firm could trade domestic goods (exported) for other goods (imports) from other countries that don’t us this system. This is an envisioned export/import business.

7.1 This section will define domestic product. . A domestic product, on the other hand, is a good or service that is produced within the framework of this economic system. An import is a product that is acquired from a locality that is not operating within the framework of this reform. Presently in this market system of money rationing, money is a store of value and is the medium of trade, including between currencies. Then we use the money to purchase wants and needs.

8.1 If percentage of imports is a major chunk of G. D. P., the system would not show as much benefits. This is because the demand for goods and services would be on the imports and only to a lesser degree on domestic products. Consumers would probably be angry because they would have to pay for the imported part at unacceptable prices for products that they frequently use.

9.1 At the same time, import businesses will provide domestic business opportunities. Why pay $1.00 for a product or service when you could get it "free". If or when capital equipment is not available, import.

10.1 Acquiring currency from exports may cause a problem: "perverted mercantilism", defined as producing a good or service only for export, forsaking domestic demand. A solution may be to require firms to reasonably work at meeting domestic demand. "Reasonably" could be hard to define.

11.1 Rationing. Shortages could bring about a black market of those items. For items that have some shortages, producer firm may ration. In this scenario, demand would outstrip supply. Stores can ration, as they ration now, and set limits for customers. Another solution is 'Rental' or 'Leasing' firms. Rental firms would acquire the goods and customers would rent or borrow an item. Such good could be jewelry, cars, airplanes, boats, and other goods that require extensive resources for production or have severely limited supply. Another solution could be a lottery.

11.2 If workers are not available, increases of productivity would essential to cause demand to create supply.

12.1 Would there eventually be a recession in this economy? Unlikely, but if there was one, it would lessen the workweek and give more leisure time. Imagine a 15 to 20 hour workweek!

13.1 How would you start a company under this system? One of the first steps is to make out a detailed plan and submit to an agency that would verify intent to form a business. This is instead of submitting to 'venture capitalists' as is done now. A suggestion is that this operation to come under a 'Commerce Department' for that locality. The agency would review the plan and, if approved, the agency would order the capital goods (large aircraft for an airline, machinery, tooling, etc.) for the intended company. Prices would be assigned for those without a card and by keeping records of movement or "sales" would indicate level of activity.

13.2 Firms must report level of activity, which would be like a reporting on a tax return. On this level of activity form, a firm would report how much the service was used or how many of the items were "sold" or moved and the employment requirements and capital utilization. This will be done to insure the efficiency of the economy by ensuring efficient uses of resources.

13.3 In operating a business, goods and services must move; it would be a detriment to the economy for inefficient firms to operate. This is where a control agency may be needed. Under-expanded firms should expand to reach optimum supplying level. Overexpanded firms must liquidate unused resources. Firm with no or trivial demand for a good or service must liquidate because a firm could still exist in this system without business activity.

13.4 How could a business exist without activity? Workers aren't needed to work and still keep the card. So a worker would still be considered "employed" but not engage in productive activity. This must not be tolerated.

13.5 A government agency could shut the business down or, a workers revolt could shut down an unproductive firm. Just as corporations are presently required to issue quarterly reports, the firms in this economy could be required to issue a production and 'sales' reports. After the production and 'sales' report is issued, other businesses may not honor the workers' company card for acquiring goods and service. Of course, this must not be arbitrary, and there must be guidelines for this. This will, naturally, force the worker to find work elsewhere among the abundant employment opportunities and be force to be more productive for the economy. And the unproductive firm will evaporate.

14.1 There might be a domino effect of nations adopting this system. The nations that are dependent on exports to the nation that chooses this system will have such a drop in exports that the other nations may be forced to use this system. In doing so, all nations that adopt will be one economic unit become being able to work together to benefit each other. This would be due to each region taking full advantage of "comparative advantage".

15.1 Return to present free market system possible but a devastating recession would be predicted to follow. The reason for this is because consumers would hoard products and when the economy returns to money rationing system, there would be little demand for products.

16.1 With no money required to operate services, the size of government services would not be constrained in size except by getting workers and acquisition of support materials. In other words, whether serving the customer by a private or public agency, the origin is irrelevant.

17.1 What happens to credit? A solution may be to give creditors priority on goods and services acquired or produced. Acquiring goods and trade could pay foreign government debt for debt.

17.2 Currency value would rise due to less currency going out, less on world markets which causes it to move up. As currency's value moves up, exports will become more expensive and fall off. This would cause economic autarchy.

17.3 There could be a "pseudo" tax: the government would have priority on acquiring goods and services. There might be taxes derived from net profit from revenue from export and non-card holders but this could be very small and thus, nearly eliminated.

18.1 The incentive to work:

18.2 The entrepreneur's incentive to start a business:

18.3 However, there will be no incentive to work harder or work more.

18.4 For this system to work, people must be in the work force as soon as possible. It would only be fair to support a child to certain age and maybe ease them into the work force by have them work part-time during teen years.

18.5 Incompetence and not doing jobs well will result in low company morale, and destruction of the firm thus, loss of job. Therefore, quality and reliability of goods and services must be high. Another reason that domestic products must be of high quality and reliability is that resources are better employed in production than in maintenance. Low quality and reliability means opportunity and the company that produces the low quality product will be edged out by competition. Also, workers in this system are working for the firm, their country, and other workers and other workers works for you. High quality work is in the best interest of the worker and all other citizens & low quality is intolerable.

19.1 Firms that receive revenue must disperse it with all those involved with production and sale of a product. It would be unfair to acquire an item then sell out of system and get all the money without paying suppliers. This would be very much like theft and should be treated as such.

20.1 People who reach retiring age just retire from the last company they worked for and keep the company card. Those with money may retire anytime but without card.

21.1 The economy using this system will eventually focus on the basic question of economics, "How will we best meet the desires of the people for maximum satisfaction using scarce resources?"

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