A Study in New Economic Policy by Ellis S. Cooper

Copyright 1996 by E. S. Cooper, P.O. Box 257, Alderpoint, CA 95511 (707)926-5414
email: ecooper@asis.com - Also by Ellis Cooper, The Lug Nut Tale

A Study in New Economic Policy

Ellis Cooper

Reversing the Economic and Social Deterioration of the Country


E. S. Cooper

It is generally assumed that the oversight of business by the Federal Government should be fairly straight-forward and able to follow the general laws of economics---supply and demand, price to money supply relationships, etc.,---and that the unlimited number of supposedly trained personnel readily available should, under proper leadership, be able to steer a logical course down through the years. With the thrashing-about of the presidential candidates in evidence in the election of 1992-3 however, and now again in the 1996 campaigning, with each candidate promoting a partially-formulated course of action almost diametrically opposed to that of the others and with no agreement between any two of them as to the causes for the existing stagnation and confusion of the time, it would be difficult to say that a means of correction had been all that well defined by the candidates or their advisors, or for that matter by the general population, even now.

President-elect Clinton himself conceded that "we, as a nation, are working harder for less pay than we were ten years ago". At the same time, we were and still are over-drawing on our national bank account to the extent of some two to three hundred billion dollars a year for additional support. It is clear then that, on balance, we are not working efficiently enough collectively toward supplying the country's needs and that something is being overlooked.

"Jobs, Jobs, Jobs", ex-president Bush almost plaintively called for. He didn't specify productive jobs, just 'jobs'. His problem, as specified, did not have as elusive an answer as he, and apparently his advisers, seemed to feel. He could have had his 'jobs' for all of the estimated nine million plus unemployed at the time by putting them to work, at wages, alternately digging holes in the sand and filling them up on the Nevada Desert. BIG PROBLEM! Being totally non-productive, these workers would have to be fed, housed, and clothed, and obtain their other needs and amenities, by other productive workers. There are 'jobs' and there are productive jobs, and thereby hangs a tale.

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The basic concept of societal living involves a division of work; a thrust toward a good living for all by each worker producing his/her distinct contribution toward the whole and receiving payment appropriate to its importance, thereby having the right and privilege of purchasing, via our medium of exchange, (actually bartering for), the goods and services he/she requires or desires. More and more we now find jobs of the shovel-and-pothole type. More and more workers that receive payment--wages--for ostensibly contributing to the whole, contribute nothing and have to be carried by the producers, those with productive jobs not 'jobs'. Since this results in a shortage of production to supply the full requirements of the population efficiently, there is accordingly an increase in the need for all adult members of a household to supplement its income, thereby creating a hardship and lower living standards for all. The resulting strain on the living standards of the whole society also creates a strong opposition to the necessary taxes such that government services at all branches are now underfunded and operating at sub-standard levels.

Where might one find the "shovel-and-pothole" workers; the non-producers? There are countless numbers of them. As a first example of a miscellaneous but representative assortment of them one should consider the enormous expenditure of labor and time in living at wide-scattered locations and traveling to and from the source of income each morning and night. How much better to have compact living-working units. This would eliminate most of the many non-productive hours now spent on the road and this time, along with the vehicle fuel, maintenance, replacement, and insurance costs has to be incorporated in wages, thus increasing the cost and price of the product involved. This has to be reflected in a lower living standard for both the traveling worker and the general population, and of course indirectly in an increase in the national deficit. The city 'suburbs' as we know them today must become outmoded except as communities of the retired.

The tax structure, as another unfortunate example, uses a huge number of "pot-hole diggers". There could not be devised a more cumbersome, complex, taxing system than the Internal Revenue Service, made more cumbersome and complex periodically by the Ways and Means Committee in attempting a cure for any imaginable problem that comes up. Indeed, with an increasing seriousness of the economic deterioration, all members of the various governmental bodies have become more vocal and active in trying vainly to concoct a tax-structure solution, most especially presidential campaigners. This fundamentally results in a separate and distinct format for each taxpayer with thoasands of pages of tax lows, and it creates a tremendous volume of non-productive labor, thus accentuating the negative impact. It should be kept in mind that a tax is

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a payment to the government for services received. These services are best represented by the benefits of the goods and services purchased at either government or business levels and thus best covered by sales taxes to the ultimate consumer; not by a value-added tax or the currently-mentioned flat tax. Compare the time and complexity of labor involved in the present income tax system, where the mentally-traumatic and misguided effort is to pay as little as possible, with the ease and simplicity of collection of a sales tax where the appropriate tax is paid without paperwork by the consumer who personally benefits and then is forgotten; some items, such as home-prepared foods, and perhaps work clothes, could be excluded and luxury or frivolous entertainment items could be more heavily taxed at several levels. Business taxes are especially pernicious since the bookkeeping can become extremely complex, and since these charges are inevitably passed on to the ultimate consumer and become a substantial portion of the retail price, the common charge of "regressive and inappropriate" for sales taxes is totally invalidated, especially when taken along with the previously mentioned classification levels.

Another representative source of unnecessary great confusion and resulting totally non-productive labor has been the breaking up of our national telephone system on the stated grounds of 'creating competition'. We now find 'eleven hundred local telephone companies' interlocking with each other for toll charges and competing in advertising costs. All of these complications create high non-productive labor since they require vast paperwork and/or electronic systems to set up and maintain, thus lowering our standard of living and adding to the deficit.

At the time that television was first commercialized there was give and take on the particular electronic system to be used and the Federal Communications Commission settled on one that was accepted by all manufacturers. This standardization has made the choice of product by the consumer a matter of esthetics and price and was an important and efficient function of a government not really noted for foresight. Now we note that there is no standardization in the computer services, creating again a condition of confusion, duplication, and lost labor.

Dropping down to specific items of manufacture, it is to be noted that in almost every case each of the front wheels of a vehicle, and very often the rear two also, require a flexible brake fluid hose. There is no reason why these cannot be standardized. Instead, a mechanic must give the make, model, year, etc. of a vehicle to the parts house where the counter man must go to a six foot long parts file and then to a specific parts bin, all requiring a great deal of time and labor, where

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a box of standardized hoses could rather be convenient to the parts counter and sold at perhaps one tenth the price and time.

There is a very important long-term sociological consideration also. As medical knowledge increases and the life-span is lengthened there are a resulting larger number of older people. It is a continuing fact of life that the brain and body do deteriorate with age. In other words, after the prime of life we start to die. More and more, with advancing years the elderly require more care. Obviously, this care must come from younger workers and this detracts drastically from the productive labor bank. A radical change in thinking must take place such that the concept of eventual and even appropriate respectful and loving passing on must become ingrained in the population during the earlier years. At present we are living in a sociological Dark Ages, stripping away personal and perhaps family accumulations to turn over to the Medical and/or Legal Establishments to satisfy their frantic insistence on extending the sometimes severe trauma of the elderly ill and the unhappiness of loved ones to the uncontrollable last though he or she may be ready for the last deep sleep. Additionally, if the unfortunate victim, (and the elderly do become victims), tries to salvage his/her life savings by transference to others, the effort is countermanded by the IRS. It is for this reason and because of the equally pernicious complexity of the IRS as a taxing system that this bureaucratic bully must be shut down. It is equally important that the efforts of such humanitarians as Dr. Jack Kevorkian be totally supported.

Three of the basic human requirements, food, clothing, shelter, have limits that cannot logically be greatly exceeded as an overall population total although there will be variations on an individual basis. One other requirement, the non-productive but essential entertainment for relaxation, which should at present be restricted because of our inefficient productive practices, may easily be engaged in to excess. Those individuals who have an income more than sufficient to supply their three basic needs, and this is even now the preponderance, are engaging in purchased entertainment to an extent that cannot as yet be supported. The resulting cost in time, productive jobs, and resources going into this field have become progressively more wasteful since they create a relative scarcity of labor and materials, along with the higher costs, that are available for items of the three basic needs and this reflects to the detriment of those individuals at the lower end of the financial scale. While the general population is paying increasingly higher prices and spending more time for entertainment while we are still in a period of extreme inefficiency, (note the current excesses in baseball players' and late-night entertainers' salaries, at several million dollars

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a year), there is also a load being placed on this large segment to pay both the taxes necessary to support the under-privileged and those necessary to excessively maintain the deteriorating infrastructure caused by the opposition to those taxes.

Thus it can be seen that whether it is in matters of carelessly-assigned work efforts, (pot-hole digging?), over-indulgence in entertainment for relaxation that we cannot as yet support, or the financial costs of these policies of inefficiency, there is much that must be corrected to eliminate the present two to three hundred billion dollar annual load on our national bank account and this will require a backtracking over the course that we have pursued since the latter days of the industrial revolution as rapid technological advances produced a super-abundance of goods and services, some worthwhile, some frivolous, thus removing the physical constraints that held the man of the family to the simpler acquisition of the more basic needs.

Such examples of wasted time and labor are to be widely found in American life and do not, under examination, afford an exemplary display of good management on the parts of our federal and state governments or a presidential candidate shallowly calling for "jobs, jobs, jobs". I would submit that an important aid in correcting our continuing negative course would be to initiate a FEDERAL DEPARTMENT OF EFFICIENCY, amply funded and staffed and with high powers of enforcement but solely under the careful control, scrutiny, and responsibility at all times of our national manager, the president, who would succeed or fail on his merits. That office's primary duty would be to look into, analyze, and appropriately eliminate the many, many examples of this very serious and wide-ranging defect in our economic system. We may very well find that without the profligate waste of productive labor that we have been engaging in, our society may be able to revert to practices of previous days where the usual course of events in the adult community evolved to a husband that worked out, with the wife remaining at home to raise much more properly the quite-limited number of children that we should also be aiming for and in the comfortable life-style made possible by our present-day useful technological advances.

The course that must be followed to return to the logical thrust of the not-too-distant past will be slow and arduous. While the large majority of thinking people are uncertain and concerned about the downward direction in which these latter-

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day technological and political changes have taken us. We, as a nation and as a world of nations, are receiving far too much economic misinformation to be easily able to understand what has been happening.

As a first example, we are told by a professor of economics that "economic growth must be the foremost objective of state officials. Growth creates jobs, which are the ultimate source of all livelihood and well-being." This grouping of "sound bites", economic growth, growth, (presumably of the 'economic' type), and jobs, can be shown to be totally unrelated to the goal of human well-being. It has been previously brought out here that 'jobs' cannot, merely as a word concept, create 'livelihood and well-being'. The catastrophic floods that occurred in the mid-west in 1993 cannot, in any different sense than digging pot-holes in the sand, be hoped to improve the 'well-being' of the many, many workers who werel inevitably required to take on the rebuilding 'jobs' over time although they no doubt obtained a 'livelihood' through more government deficit payouts and insurance coverage, neither of which could be claimed by any stretch of logic to increase or improve, (take your choice), 'economic growth'. Neither can it be said that economic growth' created the 'jobs' in either of these two examples.

It would be well to determine here exactly what a 'job' really is. The rhetoric heard persistently from those who should be leading the course toward the ultimate 'livelihood and well-being' would imply strongly that 'jobs' are to be mined and treasured to the utmost as a national resource, such that efficiency is not a consideration to be striven for; 'less efficiency, more jobs, more livelihood and well-being'. On the contrary, the paragon of 'livelihood and well-being' would require that, to achieve this result most effectively 'jobs' almost by definition are a detraction and therefore should be carried out most efficiently such that they might be engaged in to a minimum. Certainly the commute to and from the work-place, while presently a significant portion of a job, can be extremely traumatic and produces nothing useful and it should be reduced or eliminated. It has been previously noted that each worker makes his or her contribution and is rewarded accordingly. This is not to imply that the worker is continually striving for more and more work but rather suggests again that the work, while a necessary part of societal living, should be accomplished as efficiently as possible to result in its being the least possible burden in time and function.

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The commute to work becomes, with its many ramifications, a vast creator of totally unwarranted and inexcusable labor and additionally a waste of our fuel resources. In addition to the obvious fuel and up-keep waste in the paid time involved by the traveling worker, adding to the price of the product or service being produced, the additional facilities and services being consumed must be considered. As the population continues to destructively increase, so does the volume of congested traffic on the road and maintenance and flow facilitation become more costly. Additionally, the congestion of traffic has become a serious cause of collisions and these are being reported more and more frequently by the radio traffic spotters; in the San Francisco area alone the occurrences are only minutes apart. The costs in dollars and eventual non-productive labor time thus have many factors in addition to the lost time and expense to the commuter; Highway Patrol time, insurance dollars and paperwork labor, very expensive car body repair work, road bed and bridge maintenance, injury and death costs, etc. In no respects can the many jobs involved here be touted as 'the ultimate source of all livelihood and well-being' to be 'mined and treasured'.

It is claimed by some that jobs can perform a useful function by simply putting money into circulation; (as perhaps by paid pothole digging?), and this has been brought up in the context of the mid-west flood repair work, which was suggested as a possible benefit to trade. This is of course a fallacy. It is an easy matter to increase or decrease the supply of currency in circulation and at first thought this may seem a convenient way to improve conditions; simply make money more readily available and everyone lives affluently. Thus the disastrous damage of the floods could, by this reasoning, become a benefit and in the minds of some, would become so. Obviously this cannot be. To place more dollars into circulation has the effect of decreasing their value since no additional goods or services are made available and, by the Laws of Supply and Demand, the prices of goods and services with more readily available dollars will rise to a new balance.

The concept of 'jobs' as a national resource has another facet in the frantic pressure to have other countries buy our products--the "global economy" as it is termed. This process involves the output of labor--jobs--on our part here at home to produce the goods and services to be sold abroad. But it has been shown that 'jobs' for their own sake, are not to be striven for; they are a detraction. At the same time, it has also been observed that an increase in dollars in circulation here resulting from the goods sales abroad will not benefit this country on American products; prices rise by Supply and Demand Laws; more dollars, same supply of products.

Click here for the second half of Ellis Cooper's Study in New Economic Policy.