When government is good

We usually think of government as people.  That immediately has us thinking of all the uncertainties that come when some people make decisions for other people.  We much prefer to make decisions for ourselves.  This, I think, is the great appeal that a “free” market has to us.  However, good government is not people; good government is good standards.  Let me give you two examples that are beyond dispute, clocks and calendars.

Clocks govern us constantly, that is, all the time.  It is difficult to imagine living without time.  We could not do it.  The earth has a natural time clock because it rotates.  We say the sun rises, but it is the earth rotating to the east that makes the sun appear to rise.  The sun courses across the sky as the earth continues to rotate to the east then sets for night fall.  Clocks are simply devices that we have invented and calibrated to follow the sun.  That’s good government.

The same is true of calendars.  They follow the earth’s orbit around the sun.  We know when spring, summer, fall, and winter start and end,  Farmers plant by the calendar, we work and have holidays and vacations by the calendar,  That’s good government.

Where we are failing to govern well is with money.  Money is floating around in ambiguity, uncertainty.  We defend ourselves by wanting more money.  No matter how much money a person has, whether it is a little or a lot, people want more.  This causes other people to have less, so we expect a “government” of the people and by the people to make corrections for the people.  It just isn’t working.  Why not?  Too many decisions to make.  Every decision made makes more decisions necessary.  The evidence is a tax code that is thousands of pages. 

We are hearing proposals from candidates for office for a “flat” tax, for a tax of 999, to tax the rich, to give tax breaks to “small business,” to employers, the list goes on and on.  We do not need more and more rules.  We need a standard.  That standard is the one we already use – time. 

Let us make an Hour of work our standard of money and of a fair wage.  People can always negotiate more or less – just like we negotiate when to have meetings, when to start and stop work, and when to have holidays and vacations.  Time Money will govern well and make more government “of the people, by the people, and for the people” less necessary!  Time money will guide each and every one of us to make good wage and price decisions.

If you like the idea of timing money, send me your mailing address and I will send you examples of what that money could look like so you can pass it out among your family and friends.

What money does not say that it used to say.

An 1896 $2 note said, “This certifies that there have been deposited in the Treasury of the United States Two silver dollars payable to the bearer on demand.”  That was when money was a warehouse receipt.  Some thing was in a warehouse, in this case the Treasury of the United States, and the bearer could get that thing, in this case two silver dollars, by presenting the note at a bank. 

We do not need nor should we want silver backing our money.  The actual backing of our money is what workers produce in goods and services.  Our money now says nothing about this actual backing.  It should.  So we need money to say the equivalent of what it said in 1896 but in correct terms, something like this:

“This note certifies that One hour’s worth of goods or services have been produced for which the bearer is entitled to be paid the equivalent on demand.” 

That statement would make it clear that money is how we share the work and share the wealth.

What money should say but does not.

The clue to what money should say but does not is that it has on it both “Federal Reserve Note” and “The United States of America.” 

It should say, “This noted is printed by the U.S. Bureau of Printing and Engraving in Washington, D. C., is then sold to the privately owned Federal Reserve System of banks for the cost of printing, then borrowed back by the United States Federal government and its citizens who will then pay interest on the loan forever.”

Why does it not say this on the money?  If it did, we would know how wrong is that arrangement and we would demand it be changed immediately.  If the government can borrow money that it prints, it can pay it into circulation and have it be debt-free and interest-free forever.  Selling the money for the cost of printing, about 6 cents per bill whether it is one dollar or 100 dollars, makes the banks ever richer and the rest of us burdened by an ever larger total public and private debt. We bailed out the banks when we should have bailed ourselves out. 

More on what money should say but does not in my next blog.

What does money say when money talks?

I see three things that money says printed on it. 

1) It says “This note is legal tender for all debts, public and private.”  This means that anyone who puts something up for sale must accept the money.  If the seller refuses to accept the money, a court of law would find the item as belonging to the buyer.  The seller would forfeit the item for refusing to accept the money.  This statement also says implicitly that the government has the sovereign right to make the money legal tender. You see this power implied by most of the other words on the U.S. dollar bill which constitutes the second thing I see money saying.

2) The dollar bill says that the money is issued by the United States of America.  It repeats this authority with the picture of George Washington, signatures by the Treasurer and Secretary of the Treasury of the United States, pictures of the Great Seal of the United States on the back of the dollar bill.

3) It also says when and where it was issued (The dollar I have says it was issued by the Federal Reserve Bank of Boston as part of the 2006 series) and it says that this particular bill is number A 82297357D.

These three things all together say that this particular dollar bill is a genuine one and must be accepted because the United States government requires it to be accepted.

The legal nature of the dollar is pretty much ignored by economists as far as I know.  They like to say that money is accepted because people have confidence in it.  This neglect reflects a general anti-government bias.  Free market neo-liberal economists like to think that the economy would run fine if government just stayed out of the way.  Not so.  Government sanction is essential to the acceptance of money.

Perhaps more interesting is what the dollar bill does not say.  That will be my next blog.

The Next Great Revolution

Great Revolutions are those that increase our ability to communicate and cooperate.  They include the invention of writing, the printing press, the metric system, the telephone, television, and the Internet. 

The next Great Revolution will be the adoption of an Hour of Work as the money unit.  Already it is spreading among local currencies, for example, Ithaca Hours, the Portland, Maine Hour Exchange and similar Time exchanges. 

I met a young woman last night in St. Louis who told me she had worked successfully in getting such an exchange in Madison, Wisconsin.

It is spreading and with your help it will spread more. 

Wedding Time and Money is a natural next step in the evolution of democracy.  What we have now is political democracy, which we know is cumbersome and frustrating.  Rules passed by a majority are not necessarily good rules.

Hour Money will decentralize decisions by empowering each of us to make wise economic decisions on our own just like the metric system does with all other measurements. 

I would love to send you Hour Money examples to pass out where you are.  It’s planting seeds – you never know where they will take root and blossom – we know they will never blossom if they are never planted.  All I need is your mailing address.  I usually send out packets of 60.  They are a little smaller than a dollar bill.

Share the work, share the wealth.

There is a basic human truth in this simple statement; share the work, share the wealth.  It is a truth that needs repeating as often as we can appropriately say it.  We have today a system that has made the opposite the disorder of the day; get others to do the work and hoard the wealth.  For this reason, I have made “Share the work, share the work” a highlight of the 'Hour Money’ I pass out.  This past Sunday I did so in St. Louis and a friend is doing it in New York at the Occupy Wall Street protests.  I would love to send you copies to pass out wherever you can, particularly at protests near you.  Just email your address and the number you want. rblain@siue.edu

A Small Change

Gross Domestic Product (GDP) is defined in an economics textbook as:

“A measure of the value of all the goods and services newly produced in an economy during a specified period of time” John Taylor, 2007, Economics. Fifth Edition, Houghton Mifflin, New York.

The small change, see if you notice it.

“A measure of the price of all the goods and services newly produced in an economy during a specified period of time” John Taylor, 2007, Economics. Fifth Edition, Houghton Mifflin, New York.

The best way to tell what something is is how it is measured.  GDP is measured by adding the prices of all goods and services.  It is in fact the total price.   GDP measures the price of what we produce, not its value.  Don’t let anyone tell you it represents value.  That is one of the misconceptions we are having to deal with these days.

The U.S. Gross Domestic Price this year is $14,000,000,000,000.  That is a huge price we are paying.  When we think it means value, it sounds great to want it to grow.  We hear people on TV saying we need to increase GDP.  That is the last thing we should want.  $14 trillion produced in one year!  That has to be enough,  It’s not the size of GDP that we need to focus on; it is the content of what we are producing.  What is included in that $14 trillion?  That’s what I would like to know.

Would Time Money reduce efficiency?

Mike responded to A-B-C Economics with this question and comment:

What effect does a system like this have on efficiency? In the of case Henry Ford, he brought the time to produce a car from months to hours. Lets say in simple terms 10 hours to produce a model T where previous methods took 100 hours. Under the capitalist system one could charge 50% less and society as a whole would benefit from cheaper transportation provided in a shorter time frame at a reduced cost. Just as the historic model points out. Under a pure time hour system would efficiency suffer where there would be little incentive to decrease your labor hours as that would be your only means of income?

The incentive to be efficient is to sell at a lower price than a competitor. Henry Ford could have done exactly the same thing with Time Money that he did with dollars. The difference would have been that the prices would have been expressed in Hours. So he might have advertised his car by stating the price as, for example, 10 Hours, compared to other cars priced at 100 Hours. He could have stated his price higher than its actual price. However, his competitors would have known how much more efficient they would have to be to beat his price.

The last sentence of Mike’s comment could also refer to a worker slowing down their work in order to receive a larger income.  That is a problem with dollars as well as Time Money.  The remedy is supervision.  An employer would continue to be responsible as now for checking an employee’s work every now and then to be sure they are actually working for their pay.  That supervision would probably decrease as the employer saw that the employee was doing a good job during their time at work. 

An employer could also pay a new employee less than an Hour for an hour of work, say 1/2 Hour, telling the employee that they will be paid full time when they have learned the job.  An employer could pay more and an employee could ask for more than full time based on productivity or other factors like overtime, say, time and a half or double time. 

The difference with Time Money is that the greater amounts would be more likely to stay within more reasonable boundaries than now.  CEOs would not be able to argue that they deserve 100 Hours per hour of work like they do now with dollars.  A CEO taking $1,000,000 per year is receiving $500 an hour.  One taking $100 million a year is receiving $50,000 per hour.  Put those numbers in Hours and we would see a big drop in how much people at the top can take and an increase in what everyone else can then be paid.

Thanks, Mike, for your question and comment.

How Rulers Rule

When you see the word “rulers” do you think it refers to people?  That is what most people probably think.  The same is true when we see the words “regulator” and “governor.”

People as rulers pose a serious problem; we can never be sure how they will interpret and apply the rules.  We can never even know what the rules will turn out to be as when we elect representatives to Congress or other governing bodies.  There is another meaning of “rulers” that works better.

That little stick we use to measure length is also a “ruler.”  We draw lines with it, but we do not call it a liner.  We call it a ruler because it decides the length of things wisely, efficiently and amicably.  We know the “rule” with certainty because we can see the ruler.  We can also watch or do the measuring ourselves to be sure of something’s length.

Another “ruler” we use every day is a clock.  When we want to know the time, we look at our watch.  It also rules accurately, efficiently and amicably to everyone’s satisfaction.  Not that we are always on time, but we know when we are early or late.

Time Money would rule like rulers and clocks because wages and prices would be governed by clocks.  As an employee, you would have much more accurate knowledge of how much you are being paid.  As a buyer, including as an employer, you would have much more accurate knowledge of how much you paying for something. 

A-B-C Economics

Person A gives person B money for work that B for A.      A –$$-> B

B passes the money on to person C for something that C is selling that B wants.  B –$$-> C

That’s A-B-C economics.

We say that B is paid when A gives B money, but B is not actually paid until B gives C the money for the product C gives B.  The product B gets from C is the pay for the work B did for A.

The problem with money today is that it does not state on it the value of the money, so A is not told how much money to give B, and C is not told how much money to charge B.  So they all must guestimate.

Everything is regulated by time, except money. People are paid by the hour but it does not say so on the money. ‘Hour’ on money will tell A, B and C (who represent all of us) the actual value of our money.

My time for your time is fair trade. It’s that simple.

What do you think?