Theodore Schultz macroeconomics as modern/future economics

Step TWO in understanding economics -- as it was and as it evolved.

The initial stage of modern society began with the first farmer -- one individual who could produce enough for themselves and ten others.  The number ten was the ideal based on the idea that an individual male would marry and, on average, have as many as nine children.  Since reproduction is a process which constricts the minimum time between children to roughly 16 months, to produce nine children would require a minimum of 138 months from the initial conception of the first child until the birth of the ninth -- so assume 12-years.

Twelve years is puberty and early cultural adulthood -- the Romeo and Juliet age of romance and marriage which remains the age of consent in many cultures.  It would, therefore, be the age when a female would be married off, or a male would be expected to be productive enough to be self-sustaining.  The adulthood ceremony -- in Hebrew the Bar Mitzvah -- is age 13, and so falls before the birth of the tenth child would be born.

Now we introduce Government -- that is, a leadership which is a coordinator of activities of importance to the community, tribe, clan, or other groups of individuals who identify as an extended family, or mutually dependent social unit.

Military groups began as thieves -- nomadic bands of individuals who had no basis for production of crops, or fixed territorial claims for hunting.  These groups would raid tribal groups, steal their production or goods, possibly -- as in the Exodus story -- kill all the men, and take all the women of reproductive age as mates.  Or, as military, would simply kill, rob and rape then leave the territory and seek out a new target for their aggression.

This form of a tribal military organization was then responded to by the formation of a defense force which would then become a different form of territorial-thief whose goal was the expansion of borders.

There is a common need to [protect and nurture one's own.   This is the basis of charity and is also a role of Government.  Individuals can assist individuals on a relatively random basis.  But to ensure that all individuals who are in need are cared for requires a system created expressly for that purpose -- this is either the "religious leader" or the government -- both might effectively be the same. 

Ultimately, one tenth of all production was needed to ensure that there were ample funds for defense and charity.  Charity being the proper maintenance of the elderly, sick, orphaned, or injured.  By its nature, a government is a service and so  is effectively more productive -- if conducted without discrimination or arbitrary restrictions on  who can benefit from their services.  Each level of restriction introduces levels of inefficiency which then reduce the ability to respond to need and raise the cost of any response.

As we move away from farms into factories and then on to service economies, the age of independence and productivity increases.  Where a 13-year-old could, without question, farm or handle sheep and cattle, without the need for education,  as employment required education the age of independence increased.

At the dawn of the industrial age, there was a transition based on apprenticeship -- and that allowed for child labor and only minimal education.   But that soon changed and child labor gave way to extended education -- six years of education yielded to the need for 12 years.  Now the twelve has become 16-years and is moving in the direction of 18-20 years.  The age of independence is rising -- though not as rapidly as the  number of years of education.  Human Physiology is such that it demands reproduction between 18 and 45, with the ideal age for a woman to have her first child being prior to age 30.  Therefore there is a growing overlap between female education and childbearing.  There is also a graying area in the definition of productivity.   As efficiencies increase, unemployment will become a problem, unless the definition of a workweek is changed and fewer hours yield the same pay. 

But, we'll get to that.

For now,  take a look at the Federal Budget -- MILITARY as THIEVES ... 57% of the Budget.  Ike Eisenhower warned of the Military Industrial Complex and the damage it would do.
Why does America spend more than half its budget on the ability to kill people?
Why does it spend more than the next 5 to 7 Nations combined?
Why has it bgun a conflict that has lasted since 9/11, and killed tens of thousands wiothout achieving anything?
Could it be the goal is to destroy the American economy?  

  

Divine Microeconomics -- or economics explains Homosexuals

While Evangelicals and Conservative enjoy demonstrating their gross ignorance, bigotry, and outright stupidity, it is not necessary for those who want to understand to do so.  As much as the ignorant might protest the idea, the Bible is  a guide to economics [as well as Health, Social Wellbeing, and the basics of creation].

The Economics of a Pastoral Community divided labor into two classic Hunter-gatherer groups: Male and Female.  The men travel and hunt, the women care for the home and gather that which propagates and grows naturally.  Anyone who does a search will find that there are a lot of verses on debt forgiveness and the various obligations of creditors and debtors.  But to understand their roles, we need to first understand the role of Homosexuality in mammals -- specifically in human economic culture.

Consider this simple illustration.  If we have a Biblical era field, it produces a specific amount of food based upon the labor of an individual.  The more individuals farming, the more land can be farmed, and the more product produced.  A certain amount of all production MUST go to meet the personal needs of those farming; if they have families, the family needs must also be met. 

By definition, homosexual males do not reproduce, and so have no families.  If the mate with another male, BOTH males work the fields and so meet their own needs while doubling the surplus.  If you have workers, servants or slaves, once again the surplus produced increases -- providing the fields are productive enough to cover the number of workers; that means there is a balance between the size of the field and the idea number of worker.  Single males -- gay or straight -- put the least burden on the product produced and, therefore, create the most surplus.  This we see in the chart, which assumes one individual produces eleven units, consuming one, and yielding ten units of surplus for sale or to be distributed to those engaged in other activities.  

The role of the homosexual (or single individual) is to produce the surplus units necessary to enable others to fulfill their role -- invent means to enhance society, hunt for food, or defend those who hunt and gather.

When we deal with a female, a lesbian, their only role is to reproduce or care for children.  A bisexual woman would be bisexual to allow  her to engage in reproduction, while still engaging in the gender or sexual role she was designed for.  In a harem, the lesbian serves a multitude of  very necessary purposes -- with the added advantage that she need not be serviced by the male unless she wishes to reproduce, or is needed for reproduction.

If we think about male bisexuality -- first promiscuous behavior risks the spread of disease between males and then their bisexuality spreads it to a female, who could spread it to a child.  Thinking through all the ramifications the risk of female-to-female is minor when compared to the benefits derived within a harem -- where one male if infected, would spread the disease to all his wives.

But we need to deal with the economics of a heterosexual couple, and for that, we can loot to the next illustration.

Once again, we assume eleven units of production for every for each male.  In this case, a married male with the historically traditional family of a wife and six  surviving children.  The surplus is meager -- one unit.  If the couple has only four children, they are three times as wealthy; if they have only two surviving -- which is the number needed to replace themselves and keep the population at a constant level -- they are seven times as wealthy as they were with six children, and will two units wealthier when their children leave home and start their own productive units. 

  

It doesn't matter if we are discussing farm output, manufactured commodities, or services -- there is an established productivity and it must conform to the demand or go to waste.   If the produce from a farm has no market, it would pay the farmer to have slaves or servants sufficient to consume the surplus.  It is only when there is a product demand that the balance between slave/servants and their productivity must be addressed.  As society moved toward a service driven, or industrialized, economy, the logic (economic value) of slavery vanished.

Actually, to say that "the logic (economic value) of slavery vanished" could be, and should be, deemed inaccurate.  The logic of agricultural slavery vanished but was reintroduced (in a modified form) in the commercial and manufacturing segment of the economy.  This was then  augmented by enhanced farm productivity -- in the Bible, we see it as the commandment to leave the fields fallow every 7-years -- allowing them to recharge and keep or sustain their productivity.  The addition of irrigation, and various changes in design, as well as crop rotation, further augmented productivity.  But it wasn't until the 20th-century that America developed the ability to produce four times the 19th-century yield per acre, and this allowed fields to be "warehoused" for future use -- or the least productive fields top be converted to other, more modern and more practical use.

This brings us to the issue of Aggregate Demand [AD] which is defined as " the total demand for final goods and services in an economy at a given time.  It specifies the amounts of goods and services that will be purchased at all possible price levels."   In our illustration, it becomes the balance point in the sale of output as defined between production and waste.  In a Laffer Curve presentation, it defines the point in taxation where investment gains are offset by taxes to the point where the risk of investment losses makes investment illogical and people simply spend their surplus capital of luxury items (as opposed to making  further investments whose returns, risks & taxation, would yield nothing).  

In modern society, can be revealed, in macroeconomic terms, by five statements describing actions which have the seemingly illogical effect of boosting AD:

1. Artificial attempts to force wages higher will boost employment.

2. Extended unemployment benefits—paying people not to work—creates more employment.

3. Proper government spending creates situations which reduce the budget deficit by facilitating growth.  

{ NOTE: some idiots assert a Keynesian model which allegedly argues that this is  impossible.  But the fact is, building Roads, Schools -- providing a first-rate education to all individuals -- police and fire protection, and to some degree rational levels of military spending , are government expenditures which the idiots make it a point to disregard in their arguments.  But without these services, and a degree of government oversight, economic growth is impossible.}

4. Aggregate Demand stimulates higher productivity.

{NOTE:   The Keynesian model, holds that it is employment, not productivity, which is enhanced by AD.  However, the farm model used above, and favored by Nobel Laurate economist Theodore Schultz, shows that first employment will increase to maximize existing productive potential, and then, for future growth, productivity will be increased -- hence Americ's farms producing four times as much per acre with an even greater reduction in farm labor employment.  The former farm labor component of the economy shifting to manufacturing and now to service sectors.}

5. Fiscal stimulus does not boost AD, rather it diverts capital to otherwise economically non-productive pursuits.  However, we have the problem of the Keynesian approach in which increased government consumption, transfers or reduced taxation increases the rate of growth of public debt without sufficient economic growth to produce a zero-sum return.

If the fiscal stimulus produces a road, or public transportation service that is necessary to render existing travel more efficient, such a stimulus serves a productivity benefit.  If the stimulus promotes higher efficiency or economic savings withing as necessary industry, it might be deemed worthwhile -- an example would be the use of wind and solar energy to augment additional needs which cannot be met by hydroelectric capacity, or which would allow production of electric closer to the point of use, and therefore eliminate wasteful transmission lines.

In all cases of fiscal stimulus, there MUST BE a provision for economic recovery of the stimulus funds directly from the stimulation investment.  That is, government MUST treat the stimulus as an investment with a clear return -- represented by some form of "mortgage" or economic participation in profit sharing which transcends any projected future tax revenues.