The Language Paradox

 There is a phenomenon that is known as "The Resource Curse" or, "The Paradox Of Plenty" There is an article about it on http://www.wikipedia.org/ . This refers to the likelihood that average people in a country that is rich in natural resources are actually worse off than those in a country without such resources.

The reason for this contradiction is human nature. Riches breed corruption and there will likely be people who seek to get the wealth from the natural resources for themselves. Such riches also mean that they may be used by an unpopular government to try to keep itself in power. If a country can get by on income from resources, it may negelect proper development of education and industry.

Today, I would like to ad a similar paradox that I have observed. This paradox involves the language that is spoken in a country. At first glance, it would seem that any country would be better off if it used a language that was widely spoken in the outside world. But surprisingly, this is often not the case.

My economic philosophy is that there is no real substitute for actually making things, in other words manufacturing. But this is also a difficult economic route. It is easier to build an economy based on trade or finance. However, this is never as stable as an economy based primarily on manufacturing. For details, you can review "The Production Tier" on the world and economics blog, http://www.markmeekeconomics.blogspot.com/ .

Let's consider the English language. It would seem to be a tremendous advantage for a country to speak English so as to make it easier to trade with other countries. But that is the problem, it makes it too easy. Britain, the land where the Industrial Revolution began, now has an economy based more on finance than anything. This is made possible by it having spread it's language across the globe.

If there was one thing that I could change about the economy of my native Britain, it would be that it would go back to manufacturing. An economy based on moving paper and electrons around can never be as stable as one that actually makes things that are needed and will sell. There is still a significant level of manufacturing in English-speaking North America, but that is mainly because of distance to other manufacturing sources overseas.

India speaks English and that has made it possible for the country to become the knowledge center for the world that it is now. Everything from computer programming to tech support to customer service can be done over the wires from India at much more economical prices. Legions of English-speaking doctors are making India also a center for medical treatment for western countries. It is less expensive to fly to India to have an operation than to have it at home.

China has no such advantage. Relatively few people speak one of the major dialects of Chinese, who are not Chinese. This left the country little choice except to turn to manufacturing, and it has ended up better off than it would have been otherwise. The same pattern applies to Japan.

Basically, developed countries which do not speak a widespread language are forced to turn to manufacturing because the language barrier makes it more difficult to build an economy based on trade or finance. This is the more difficult route, but the country usually ends up better off in the long-term. Probably the four best examples of this are Germany, China, Japan and, South Korea.

A national economy based on natural resources is vulnerable to commodity price swings. Tourism is an excellent source of income, except that it is so fickle. Greece has one of the most difficult of languages, and might have been in this category also. But it also has an abundance of sun and history that was relied upon as a source of income. The European countries that are in the most economic trouble now are the ones that were most dependent on tourism. The Netherlands would also seem a candidate for the language-manufacturing economic route, and this has become true to a great extent, but the Dutch early became skilled in global trade as well.

The Inverse Geographic Prosperity Principle

When looking at a map of North America, we can actually get a good estimate of the prosperity of large cities simply by evaluating the size of the city and the geographic reasoning behind it's location.

As the continent was being settled, it was fairly predictible where cities would form. The site of New York City is not only a very good location for a harbor (harbour), but also has a plentiful supply of fresh water from the Hudson River. Cape Cod forms an ideal natural harbour (harbor), and it is perfectly logical that a city like Boston would grow up there. If we sail up the St. Lawrence River until we encounter the obstacle of the Lachine Rapids, we find an easily defensible island with a hill in the river and it should come as no surprise that it formed a natural site for Montreal.

When pioneers settled the west, they could go no further than the Pacific Ocean and a city would form where they stopped that is today called Los Angeles. Further north, along the same coast, there was an ideal harbor (harbour) and another city grew there, San Francisco. A similar scenario applies further north, with Seattle, Vancouver and, Victoria. Those pioneers would be delayed as they crossed the plains and encountered the Rocky Mountains, and there we have Denver.

Settlers would also go as far south into Florida that they could go, and there we find Miami. A lake forms an ideal waterway, and since Lake Michigan extends far into America's agricultural heartland we might expect to find a city like Chicago at it's end. Lake Erie was another natural waterway, and Buffalo and Toledo grew at it's opposite ends. In a similar way, we find Hamilton at the western end of Lake Ontario.

Inland, we would expect to see cities roughly evenly-spaced across the hinterland, such as Columbus and Indianapolis, and a series of cities along a river like the Mississippi. Where America's largest river meets the sea, we would logically find a city, and there we have New Orleans. Where two rivers meet, we might expect to find a city like Pittsburgh.

However, I notice that prosperity is another factor. The Inverse Geographic Prosperity Principle is that when the size of a large city exceeds the geographic logic of it's location, the difference can be explained by the prosperity of the city.

The city that first made me think of this is Toronto. The geographic reasoning is simply not there for such a large city to be located where it is. The Toronto Islands, just off the shore in Lake Ontario, form a harbour (harbor), but the city's basic industry is banking and the harbor (harbour) is much less significant than that of Hamilton, to the west. So, the only possible explanation for such a big city to be located on the northern shore of Lake Ontario, without the geographic foundation of the continent's other big cities, is that Toronto is a very prosperous place. Prosperity brings growth as well as does geographical logic.

Atlanta is another city that has grown out of proportion to the geographic logic for it's existence. Atlanta, which is not on the coast, makes sense as a hub city in the hinterland, sorrounded by smaller cities, towns and, farms, but it has clearly grown well beyond what we would expect such a hinterland city to be and this can only be explained by prosperity.

What about deserts? For a city to grow in the desert, it must be prosperous. There cannot be a big and poor city in the middle of the desert. The only thing that can bring about a city, where geography would seem to dictate that there really shouldn't be a city, is prosperity.

Thus, we can say that the population of a city, at least in North America or other freely settled domains, is equal to the geographic logic for it's existence plus it's prosperity.

The Logic Of America's State Lines

Has anyone ever noticed that there seems to be a purpose to the layout of the boundaries between American states, particularly in the northeastern part of the country? The purpose was to discourage separatism in America's early days, and the state lanes are a form of gerrymandering intended to make separatism as difficult as possible.

Here is a map link: www.maps.google.com .

The country is divided into fifty states for ease of administration. Logic tells us that each such unit would encompass one large city, with the sorrounding smaller cities, towns and, hinterland. Georgia appears as such a state, revolving around Atlanta. Indiana is another, centered around Indianapolis.

But so many state lines seem to be purposely illogical. If a state is too efficient of a geographical and economic unit, it's people might one day get the feeling that they would be better off as an independent country. There are several U.S. states that could possibly be viable small countries, or in fact were once independent countries, such as Florida, Texas, California and, Hawaii. But these are all outside the northeastern part of the country.

The nation's largest city is New York City. It is nowhere near the center of it's home state, as are Atlanta and Indianapolis. It is down in the far southeastern corner of New York State. Not only that, but it's metropolitan area extends well into two other states, New Jersey and Connecticut. If this seems utterly illogical, consider how effectively this arrangement would have discouraged separatism in any of these states.

New Jersey is a very urban state. But much of it's urban areas are extensions of two cities in other states, New York in the northeast and Philadelphia in the southwest. Once again, this would make separatism very difficult to achieve.

All of the New England states; Maine, New Hampshire, Vermont, Massachusetts, Rhode Island and, Connecticut, are simply to small to be independent countries and would at least have to join with one another to form a separate country. The same applies to Delaware, which calls itself "The First State".

America's major experience with separatism was, of course, the Civil War of 1861-65. Looking at a map, we see that this war could just as easily been called "The Appalachian War". The natural barrier formed by the mountains and ridges of the Appalachians must have been a prominent factor in leading the Confederate states, starting with South Carolina, to secede from the union. The significance of the Appalachians as a barrier in bringing about the separation can be seen in the case of West Virginia. After the State of Virgina had joined the Confederate cause, West Virginia split from the rest of Virginia, along the line of the Appalachians, because it's people wanted to remain in the union.

The influence of the Appalachians on the war can also be seen in the direction of the initial offensive of the Confederacy. Although the Confederacy extended well west of the Appalachians, to include Texas, it's military priority was to advance northward into Pennsylvania towards Gettysburg. The obvious reason was to liberate all of the territory south and east of the Appalachians to form the new country.

I believe that America's early planners had tried to reckon with the possibility that the Appalachians could possibly bring about separatist feelings on it's opposite sides. Virginia was a large, and seemingly unwieldy, state that spanned the Appalachians before West Virginia broke away.

What about Pennsylvania? It spans the Appalachians both from north to south, and from east to west. There is a mountainous barrier between the cities of Philadelphia and Pittsburgh that must have been difficult to cross in the early days of the country. But this was intended to help neutralize the Appalachians as a natural barrier in possibly bringing about separatism.

New York State is apparently one of the most illogical geopolitical entities in existence. But that is the whole point. The Adirondack Mountains and the wide Hudson Valley, which could definitely lead the people on opposite sides to feel as if maybe they should be separate countries, are both neutralized as such barriers by being contained within one state.

This pattern is not to be seen in western states. As the country expanded westward, it clearly gained confidence that such deterrence of separatism was no longer necessary. A landlocked state is much less viable as an independent country. Even so we see that the great barrier of the west, the Rocky Mountains, are not permitted to serve as a barrier between states. Colorado, for example, spans the Rockies in a way similar to that of the Appalachians in Pennsylvania.

The boundaries between Canadian provinces do not seem to incorporate any deterrence to separatism at all. If Quebec was in America, it would surely have been gerrymandered into making separatism very unlikely.

A Celebration Of My Native England

I would just like to have a celebration of my native England. Following is a few things that England has contributed to the world. This is by no means a complete list, and does not include the rest of Britain; Scotland, Wales and, Northern Ireland. Neither does it include contributions by those of English extraction who were born in other countries. Also, I recognize that many other countries have made great contributions to progress as well. I encourage readers to read more about any of the entries on http://www.wikipedia.org/ .

If any language could be described as the language of the world, it would certainly be English. It has the broad span that enables it to readily adopt new words, as described in the posting "The Story Of The English Language".

HSBC is the world's second-largest bank and second-largest public company in the world. Almost certainly, more money flows through London's financial district than anywhere else in the world. The last I saw, the British pound was worth more than any other currency in the world (although that is not entirely a good thing).

William Shakespeare is considered to have been the greatest writer ever, in any language, and his themes can be found all over modern television.

The Titanic is the most famous ship in history, even if it is for the wrong reason.

The BBC is easily the world's number one news service, partly because it is offered in so many languages. 

Norman Baden Powell started the International Boy Scouts.

The only comet that most people can think of by name is Halley's Comet, discovered by Sir Edmund Halley.

In 1808, John Dalton published "A New System Of Chemical Philosophy". This was the start of modern chemistry, without which the world as we know it would be impossible.

In 1825, Michael Faraday discovered benzene, which is the vital starting point for much of organic chemistry.

Hydrogen is the most prominent element in the universe, and was found by Henry Cavendish. The oxygen that we need to live was found by Joseph Priestley. Nitrogen was found by Daniel Rutherford.

Matches were invented by chemist John Walker.

When it comes to atoms, England really shines. Electrons were discovered by J.J. Thomson and neutrons by James Chadwick. Henry Moseley introduced the idea of atomic numbers. Ernest Rutherford discovered protons and the concept of radioactive half-life. (Rutherford was born in New Zealand but his parents were British, and he later became British).

Louis Essen invented the atomic clock.

Francis Crick, along with American James Watson, was the first to work out the molecular structure of DNA.

Galileo was the first to use a telescope to look at celestial bodies. But it suffered from chromatic aberration until John Dollond invented the achromatic lens. A telescope based on lenses is limited in size because the lens can only be supported by it's edges. Sir Isaac Newton got the idea of replacing the lens with a concave mirror, and today all of the largest optical telescopes in the world are based on mirrors.

It was Sir Isaac Newton who founded modern physics with his laws of motion and development of calculus. He was the first to define gravity and began our understanding of light by breaking it down into it's component colours (colors) with a prism.

Henry Fox Talbot did as much as anyone to get photography started.

William Sturgeon invented the electromagnet and the electric motor, without which the modern world would be unimaginable. Neither would the modern world be imaginable without Charles Parson's steam turbine. 

There has rarely been a scientist like Michael Faraday, all modern electrical theory and equipment began with him.

From my native Gloucestershire came Charles Wheatstone who, with William Cooke, was the inventor of the telegraph. This was the first step in modern communications.

Modern electronics began with vacuum tubes. These were invented by John Ambrose Fleming and include the cathode ray tubes that were used in televisions and computers until recently.

The U.S. recognizes Thomas Edison as the inventor of the light bulb, but Britain credits it's own Joseph Swan.

Radar came about because of the work of Sir Edward Appleton. Sir Frank Whittle invented the jet engine. Christopher Cockerell invented the hovercraft. The first practical vertical take off and landing plane was the Harrier. The only successful supersonic passenger transport is the Concorde, and the plane that got modern jet passenger aviation started was the Dehavilland Comet. It was actually Frederick Lanchester who developed the airfoil theory that makes flight possible.

John Harrison developed the marine chronometer. This was a very accurate clock which could be used at sea because it was not based on a pendulum. A pendulum was considered as unreliable at sea because it's timing might be affected by the pitching and rolling of the ship in rough water. This brought about our modern system of latitude and longitude. It was easy enough to take a reading of latitude, just measure the angular altitude of the north star over a flat horizon. Longitude was much more difficult. But this clock could be set to Greenwich Mean Time and carried on the ship. Local solar time could be measured with a sundial, and the difference between the two revealed the longitude of the ship.

William Oughtred invented the slide rule, around which all of modern engineering depended until electronic calculators came along.

Charles Babbage is considered as the "father of the computer", with his mechanical computers. George Boole developed the Boolean Algebra, upon which computer science is based. Alan Turing was the first to introduce a programmable calculator. Tim Berners-Lee invented the world wide web, without which you would not be reading this.

The Industrial Revolution was certainly the beginning of the modern world, it began in Manchester. Thomas Newcomen's development of the steam engine got it underway.

Henry Bessemer developed a way of mass-producing steel, without which the modern world would be unimaginable. Harry Brearley later introduced stainless steel.

Josiah Wedgwood revolutionized the mass production of pottery.

Can you imagine the world without trains? The brothers George and Robert Stephenson and Richard Trevithick got railroads started. Maglev trains were invented by Eric Laithwaite. The world's first metal bridge was the "Iron Bridge" across the Severn River, which downstream passes the area where I was born. London had the first modern subway system, and arguably the greatest feat of engineering is the Chunnel. 

Oliver Joseph Lodge invented spark plugs, and also did a lot to contribute to the development of radio. The battle tank, around which modern land warfare revolves, was first used by Britain. John Starley produced the world's first commercially successful bicycle.

The modern idea of freedom began with the Magna Charta and the political concept of right and left began when members of the British Parliament would sit to either the right or the left of the aisle, depending on their political views.

Edwin Budding, from my native Gloucestershire, invented the lawnmower.

Also in Gloucestershire was a country doctor named Edward Jenner, who happened to notice that people who worked around cows never seemed to get smallpox. This observation was the beginning of vaccines and the modern science of immunology. Today, there is a statue of Dr. Jenner in Gloucester Cathedral. 

Joseph Lister developed antiseptics, which must have saved hundreds of millions of lives. Modern supermarkets would not be possible without the use of "tin cans", soft steel coated with tin, to hold food. They were invented by Peter Durand.

The next time you put on your clothes remember James Hargreaves, inventor of the spinning jenny, John Kay, inventor of the flying shuttle and, William Henry Perkin, inventor of the first synthetic dye.

Luke Howard identified the three basic types of cloud in the sky.

I feel that this heritage is something that I have to live up to.

The Complexity Theory Of Production And Economics

This is another insight regarding the complexity that I have described in detail on the patterns and complexity blog.

The pre-industrial economic systems, from traditional markets to feudalism, were simple in comparison to the economic systems of today. Yet, there were advantages to the economics of those days. There were shortages then, but the shortages tended to be real shortages caused by factors such as war and drought. In the economy of today, there are not only real shortages but also artificial shortages caused by glitches in the more-complex economics.

When the Industrial Revolution came along, and humans acquired the ability to manufacture and mass-produce goods, the economics had to change. The new economic reality was actually much more difficult to handle. The truth is that, to this day, the economics have never really caught up with our ability to mass-produce goods. The most difficult aspect of industrialization and mass production is settling on the economics necessary to handle it.

My theory here is that the economy to handle mass production must be considered as part of the manufacturing process. The trouble is losing sight of, or not being fully aware of, the complex big-picture economics that industrialization has made necessary. The incredible truth is that, several centuries after the Industrial Revolution, economics still has not reached a new equilibrium.

Mass production means that most of what is produced cannot be sold locally, and so must be sold "over the horizon". The result is all of the controversy and competition between different economic systems, such as Capitalism, Socialism and, Communism. All of this is the result of industrialization and the ongoing effort to find the best economic system to manage it.

The most obvious peril that came with industrialization is the pollution and environmental degradation. But it also vastly increased the potential for wealth disparity. As material and technical progress increased, we eventually got to the point where we can change the world faster than we can adapt to the changes that we have made in the world, a facet of what I have termed "The Commoner Syndrome".

But one of the most important perils of industrial era economics is the addition of artificial shortages because the economics is not working well. Artificial shortages are those that do not really need to happen, except for the inefficiency of the economics. The classic example is a family struggling to keep and old car going, when they really need a new one. Meanwhile, the new car dealership down the road is letting go of the staff because few people can afford to buy new cars.

The best that we can do with the complex new economics is to find a comfortable balance between the conflicting forces. Capitalism suffers from that precarious balance between production and consumption that crashes or goes into recession on a regular basis, while Communism does not provide enough incentive and has issues with corruption. Many who have lived in Communist countries can say that the way to be sure of getting what you need is to be related to the one of the local party officials.

Capitalism provides incentive, but at the same time allows those with the advantages to set the system up to suit themselves. If workers are paid too much money, it gets inflation started, if they are not paid enough it brings about cutbacks in production and gets a recessionary spiral started.

There is an unfortunate tendency for people to believe that either the buyer or the seller in an economic transaction is somehow more important than the other. The economic right could be called the seller or "supply-side" believers, while the left is the "demand side". One thing that seems certain, at this point, is that economic extremes do not work and a mature economy is one that I define as having gone through a reaction in both directions, left and right, so that it positions near the center.

The thing that must be realized when considering post-industrial economic systems is that the workers must ultimately be able to buy the goods that they are working to produce. In a Capitalist economy, if workers are not being paid enough, a cutback in overall production will be necessary because some goods will remain unsold. This is because the cutbacks will mean that some workers will be let go, meaning that workers will have even less buying power. This brings about an artificial shortage, because there would not have needed to the any cutback in production except that the economics brought it about. It was not a real shortage caused by war or drought.

As I have explained on a number of occasions, this is what happened in 1929. The techniques of assembly line mass production had been perfected, and a plethora of new products rolled out of factories from cars to radios. But workers were not being paid enough to be able to afford the products that they were producing, and the goods were just piling up in warehouses. Factories began cutting back on production, meaning that workers had even less money, and it spiralled into a devastating crash.

Any cutback in production threatens to get such a spiral started in a capitalist economy, such as when the economy grows too fast. In the old pre-industrial economy, if supply increased or demand decreased, goods would still be sold but at a lower price, or a craftsman would switch to making something else. A factory, in contrast, cannot just go to making something else and is slow to react to the market, except by the unfortunate cutbacks in production that can get a destructive spiral started.

On the other hand, an inflationary spiral will get underway in a capitalist economy if workers are being paid too much relative to production. Nothing could be more economically destructive than giving all workers a pay raise, without a corresponding increase in production. Inflation can bring about a recession, which is one of our artificial shortages in the post-industrial economy, because it erodes buying power.

The real trouble is, of course, that in a large-scale post-industrial economy there is not the continuous price adjustment by haggling. The adjustment to an imbalance must come from another direction-the cutbacks in production that get the recessionary spiral started. Yet another economic peril is the large-scale credit that mass production has brought about. When too many people cannot pay back loans, it starts a destructive domino effect as with mortgages in 2008.

The theory of credit is simple enough. If you just go out and buy what you need on credit, the companies that made or grew what you bought will earn more money because of what you spent. The workers in those companies will then have more money to go out and buy what they need so that the workers in the companies that made those goods will then have more money to go out and buy things. Ultimately, it will get back to the company that you work for so that you will end up getting back the money that you spent, and will be able to pay your credit bill.

The trouble is that the glitches of economics get in the way of this otherwise sound credit theory. The trouble with economics ultimately lies with human beings. The wealth structures of various economic systems are vastly different and there are clashing vested interests. Communism works wonders for ants and bees but humans, at least outside of small dedicated groups, find it very difficult to always put forth their best effort unless they will directly benefit from it, as opposed to the economy as a whole.

The Industrial Revolution centered on machines, but that required the supporting economy to also function as well as a machine to get the most efficiency. When building a machine, we can put the parts together and can quickly see whether it works and can readily see ways to improve it. The economics must be part of the mechanism too, it is more nebulous so that it takes much longer to sort out what works the best.

Here then is The Complexity Theory Of Production And Economics: The economy supporting produced goods must be equal in complexity to the processes producing those goods, and is indeed part of the process. This is because the more complex the processes of production, the more it can be varied in order to produce a wide variety of goods. This wider variety of goods then brings about the need for a more complex economy to distribute those goods. But this makes it much more difficult to set up the required economics with the same efficiency as the machines because economics is much less tangible and more prone to conflicting opinions.

British Heritage In Niagara Falls, NY

The original name of Niagara Falls was Manchester. Because of all the industry that came to Niagara Falls for the water and electric power, the city was named after the English city where the Industrial Revolution began.

The name was changed because of the war of 1812, but nearby Amherst, NY was named after a British general and that name did not get changed. General Jeffrey Amherst did not get along with the native Indians in the area. So, he was eventually recalled and replaced with Thomas Gage, who understood the Indians better and for whom Gage Park in Hamilton is named.

During the time of slavery in the U.S., Canada was still British territory and Niagara Falls was where so many crossed into freedom. Slavery was absolutely illegal in British territory. Any worker could leave a job at any time and workers could bargain over such things as wages and working hours. There was education and employment facilities at St. Catharines and Owen Sound, and Harriet Tubman owned a home in St. Catharines during this time.

A British engineer named Thomas Evershed seems to have been the first to suggest using the water power at Niagara to generate electricity. He teamed with a local mill owner named Charles Gaskill, for whom the school on Hyde Park Boulevard is named. Unfortunately, the two were better at coming up with ideas than they were at securing funding for those ideas but this was the beginning of electricity generation at Niagara.

A settlement was started some distance upstream from the falls at what was to be the location of a water intake for the generation of power. The settlement came to be known as Evershed, and can be seen today in the older homes on 56th Street and nearby streets off Buffalo Avenue. There was once a school at Stephenson Avenue and 57th Street called Evershed. As Niagara Falls expanded eastward, and merged with what was then the separate town of LaSalle, Evershed was incorporated in also.

The first man to go over Niagara Falls in a barrel was Bobby Leach, of England, although it is true that a woman preceded him. Charles Stevens was a barber from Bristol, who went over the falls in a barrel but did not survive. Matthew Webb, who had crossed the English Channel, was the first to swim the lower rapids but did not survive the whirlpool. Arthur Midleigh was a visitor from England at Niagara Falls. He was unimpressed when told about the Niagara Daredevils and boasted that he would row a rowboat right across the brink of the falls before going back to England and, well, he never did make it back to England.

I have no interest in such stunts, but I feel that I have met the British tradition of encountering Niagara Falls by making the discoveries in the natural history of the area as descibed in the Niagara natural history blog. Today, Hyde Park in Niagara Falls can be seen as a model of Hyde Park in London, except that there is Gill Creek in place of the Serpentine and the Long Water. The hills adjacent to the Prime Outlet Mall are sculpted in such a way as to make visitors feel that they are on a visit to highland Britain.

Archeological Representation

I have developed the concept that, if a society is abandoned or destroyed, and then investigated by archeologists far in the future, the more technically advanced the society was the more distorted will be it's archeological representation.

The abandoned civilization will be exposed to nature. So it makes sense that the closer to nature it was, the more primitive, the less distorted will be it's archeological representation. The more primitive society will be the more accurately preserved, while the more advanced will have the most distortion.

It is actually prehistoric people that left the most accurate representation of their daily lives. People progressed from living in natural shelters, such as the proverbial cave, to structures made of stone and then to wood. But each is more vulnerable to the ravages of time than the one before it. Writing surfaces progressed from clay tablets to a form of paper called papyrus. But this distorted the archeological representation because clay can last far longer than papyrus.

The same can be said of writing itself. The progression from hieroglyphics to cunieform (use wedge-shaped symbols inscripted with a reed on clay tablets) to alphabets made possible the storing of far more information. But each is more difficult for an archeologist far in the future to piece together than the one before. The most primitive writing is hieroglyphics, the use of picture-like symbols, but that would also be by far the easiest to decipher for anyone who was initially unfamiliar with it.

If our societies were left as they are now and examined by archeologists, say two thousand years from now, how accurately could they piece together our way of life? The first things to be found would be that which is bulky and resistant to the elements. They would find plentiful foundations of buildings, roads, and the hulks of vehicles, trucks, trains, planes and, ships. They would also find machines, tools, coins and, millions of plastic bottles. They would find road and business signs, although few would be at all readable. Coins would be found, but probably no paper money. There would be remains of electrical wires everywhere.

But there would be no trace of any electronic or computerized records. All computer data and programs would be completely lost. Even if some stored computer data could somehow be found, maybe optical storage such as DVDs, the byte coding would be irrecoverable simply because it is so far removed from the way things are done in nature.

So much of modern communications relies on such prearranged codes, including the tones that represent dialed numbers on landline phones and the lines on the screens of cathode ray tubes. This would be forever lost in two thousand years. All writing on paper, movies on reels and music, including vinyl records and magnetic tapes, would be irrecoverably lost. Not only that, but the fact that it is our era that is engaging in large scale archeology of ancient civilizations means that knowledge of those civilizations would be largely lost also, because the sites will not be left for future archeologists.

The City Of Five Towns

I find it interesting how the city of Niagara Falls, Canada relates to the urbanization that is going on across the world. The city of Niagara Falls on the Canadian side is considered as just that, a city. But a close look at it reveals that it can also be looked at as five towns that are close together. The city, like many others, were put together from what had once been separate towns. But in this city, the divisions between the towns are still clearly seen.

Here is a map link: www.maps.google.com

 The one of the five towns that would be most familiar to tourists is the one centered around Clifton Hill. To the west of that is another town, centered around Main Street/Portage Road at the intersection of Lundy's Lane. There is a clear division between these two towns in the field with the electric pylons along Ferry Ave.

The town around Clifton Hill was originally named Clifton. The one around Main Street / Portage Road was Drummondville.

To the north of the Clifton Hill area, there is another town centered around Queen Street. This was once the town of Elgin. The division between this town and Clifton Hill is the highway known as Route 420, including Newman Hill and Roberts Street. In the north end of the city is yet another town in the Stamford area, centered around the intersection of Thorold Stone Road and Drummond/Portage Road. This is divided from the Queen Street area by the hydraulic canal and train tracks around where Stanley Avenue meets Thorold Stone Road.

Finally, there is the area in the north of the city along the river centered around Buttrey and Ferguson Streets. This is separated from Queen Street by the train tracks along Bridge Street. It was originally known as Silvertown because of the silver refining industry there.

This reminds me of the painting of a vase that can be looked at as either the vase or the profile of a person, depending on how you look at it. If a group of travel writers were sent to Niagara Falls, who did not know the language and could not read the signs, some might see it as a city and others might see it as five towns. 

With regard to urbanization this gives us the idea that, while there are many more people living in cities, not all of them actually moved to the city. Rather, those who did move to the city brought about it's expansion so that it incorporated what were once separate towns. In the majority of the area of Niagara Falls, Canada, we can see how the main streets form neat squares or rectangles with each other. This is because they were once farm roads, until the city spread and incorporated the area and the once separate towns came closer together.

The Land Of The Frontier

The United States of America can be described in one word. That word is "frontier".

First of all, there is the name itself. I live in an area that has been nowhere near the western frontier for centuries. Yet, not far away there is an avenue called Frontier. There is a phone company, bowling lanes, a school and, a fire department, all named Frontier. In the phone book of our mid-sized city, there is at least a dozen businesses named Frontier.

The days of the western frontier have made a great imprint on American culture, everything from cowboy hats to western movies. Many went west in those days with the hope of "striking it rich" by finding gold. The gold mines are gone now, but Las Vegas has taken their place. Moving out west, or at least spending some time there, is still an American rite of passage.

America is all about the frontier. It is the frontier that gives the country it's sense of purpose. When one frontier closes, America looks for another one to take it's place.

The worst times for America come when it doesn't have a frontier. Before the western frontier was declared closed in 1890, a man who was out of a job could simply head west and start over. There was land for the taking and plenty of work.

The country didn't really adapt well to the closing of the frontier. This would have been an ideal time to join other western countries in implementing a program of social benefits, to be sure that everyone had enough money to live on. The result was the 1929 economic crash. It happened because workers were not being paid enough to be able to buy the products that the factories that they were working for were producing. Factories began cutting back on production, meaning that workers had even less money to buy manufactured products, and it spiralled into a devastating crash.

The same pattern can be seen in warfare. America has always been more comfortable with conventional wars centered around a front line, such as the world wars, as opposed to unconventional wars without a front line, most notably the Vietnam War. The reason is that the front line in a war is actually a frontier, and America is all about frontiers.

America was the world leader in the early development of aircraft. Why? Because the sky was a new frontier, and America is made for frontiers. We were just going upward instead of westward. The same can be said about America's pioneering of skyscrapers.

For the past century, or so, one branch of science that has really revolved around America is astronomy. Much of the modern view of the universe was developed at the Mount Wilson and Palomar astronomical observatories in California, and later at the Keck Telescopes in Hawaii. Should this surprise us, considering that space is a frontier? The latest step has been the Hubble Space telescope.

When people developed the ability to actually send spacecraft and to travel in space, Russia was a very capable space power that put the first satellite and the first human in space. But space is a frontier, and frontiers are America's game. At the time of this writing only Americans have ever been to the moon, not counting unmanned spacecraft.

Is it really a surprise that the internet was developed in America, before spreading to the rest of the world? Remember that cyberspace is a frontier, and frontiers are what America is all about.

The Story Of The English Language

The reason that the English language is suitable to be the global language that it is today is that it has such a wide "span" of words, in comparison with most other languages. This makes it easy for foreign words to be readily adapted into English.

To understand how this came about, we must go far back into history. English is basically a northern European, or Germanic, language. The structure of the language is similar to that of German, Dutch, Danish, Norwegian and, Swedish. A close correspondence can be seen between many English words and their counterparts in German, for example. There is I and Ich, water and wasser, house and haus, Friday and Freitag.

But the English language underwent a special event that transformed it by greatly broadening it's span of words and sounds. There are two basic language groups in western Europe, the Germanic languages in the north and the Romance languages around the Mediterranean area. Romance languages include Italian, Spanish, Portuguese, French, Catalan (spoken in the area around Barcelona) and, Romanian. What is now England turned out to be the frontier where the two would meet.

England was originally a part of the Roman Empire. But it is one of the few areas of Roman occupation in Europe that did not end up speaking a Latin-based Romance language. England was later settled by Anglo-Saxons, from what is now Germany, and also Danes and Vikings. This was the beginning of English as a northern European language.

The critical event in shaping the language that we have today was, in my view, the landing of a group of Vikings, known as Normans, in what is now Normandy on the north coast of France. The Normans established a kingdom and adopted the French language. Later they crossed the English Channel, into what is now England, and brought their language with them.

English remained a northern European language in it's structure. But the mixing in of the Normans, and their language, introduced a flood of French words. This would make English almost as much a Romance language as a northern European one. In many cases, new words from French would displace the older Germanic words. As one example, English uses the French "place" instead of a variation of the German "stadt".

You may wonder what real difference this makes, whether we say "place" or "stadt". But it is this influx of new words from a foreign language group that gave English the very wide span that it has today, and this is what gives it the adaptability to be a global language. It readily adapts words from all over the world, just as it once did French words from the Normans.

Most of the new words were changed in pronounciation, or spelling, or both. The French language itself had earlier undergone a similar process. French is classified as a Romance language, descended from the Latin of the Romans and related to Spanish, Portuguese and, Italian. But the Celts were very prominent in France and a lot of their words were absorbed into the language.

This is a fairly common occurence, a language being spread by conquest but then being changed by absorption of local words. Mexican Spanish differs from that of Spain because of the inclusion of so many native Indian words.

I spent a few days keeping a list of all the words I coult think of that seemed to be of French origin or influence. So many of the words that we use everyday have a very French appearance, even though these words may not be used any more, or were never used, in French: active, avenue, beautiful, boutique, bureau, carousel, cataract, chandelier, change, complete, dentist, depot, economy, enroute, envelope, equal, finish, force, glorious, individual, office, origin, palisade, persevere, pharmacy, entreat, precise, provide, route, sequence, service, severe, spontaneous, tour, treasure, unique, venue.

Some French words are still pronounced the same in English, such as depot and debut. Others have has their endings anglicized from -ie to -y, such as economie to economy, -eur to -or, -aire to -ary, such as documentaire to documentary and, -ique to-ic, such as electronique to electronic. The common -aux and -eux endings in French are rarely seen in English.

French words are often formed from a "mix-and match" selection of prefixes and suffixes. A good example is the word "constellation", an arrangement of stars. The word "stellar" means something to do with stars. The prefix con- means "put together", as in construction. The suffix -tion means "a manifestation of something" so that a constellation is a manifestation of an arranging of stars.

The French language is, like English, not always as precise as this. Induction and capacitance are two French words for related concepts in electronics. But one uses the -tion suffix and the other uses the -ance suffix.

Intend and extend are also French words that seem as if they should be opposites. But the two apparently related words actually have nothing to do with each other, to intend is to plan something and to extend is to lengthen something.

The most common French influence on English is probably the -tion, or -ion, ending. It simply means a manifestation of something. The list is nearly endless: addition, communication, compensation, conclusion, concussion, conduction, confirmation, construction, contraption, deception, definition, destruction, division, edification, edition, education, induction, information, institution, instruction, introduction, nation, obstruction, occupation, pension, perfection, position, probation, provision, subtraction, vacation, validation, vibration, vision, vocation.

Then there is the French -ment ending: basement, confinement, escarpment, employment, government, ointment, parliament, replacement, retirement, treatment. This -ment ending is somewhat more focused than the -tion ending, and usually means a place or thing or method that does something. A government is that which governs and a basement is that which acts as a base.

Then there is the -age ending: adage, advantage, beverage, encourage, entourage, language, mortgage, village and, voyage. The -age ending is similar in meaning to -ment. An entourage, for example, is those that are all around one.

The -ance ending falls into the same pattern of something that does something: capacitance, distance, entrance, finance, insurance, renaissance, resistance, resonance.

Notice that these various endings are of the same pattern as common French verbs. There are the verbs in French ending with -er, those ending with -re, and those ending with -ir.

Some French words in English end with -ant: brilliant, enchant, important, infant, restaurant, servant.

Other end with -ate: estate, exaggerate, illuminate. There is altitude, attitude and, gratitude. There is lovable, portable and, soluble. There is also interest and modest. There is defense and offense, content and patent and patient, frontier and cavalier, mortician and politician.

Even if some of these are not French words, they still show the tremendous influence of the patterns in French on English and how it gave it the wide span of the global language that it is today.

Then there is the prefixes, or beginnings of words, from French.

The in- prefix is often seen: incomplete, influence, information, inspection, institution, instruction, insurance, interest. The prefix inter- means between, such as intermission or international.

Examples of the con- prefix are: conduction, confinement, congruent, consolidate, continuation, control, construction.

There is the ex- prefix: exaggerate, exchange, exhibition, explain.

Then there is the French en- prefix: enchant, encourage, enlighten.

The de- prefix means to undo something. Decode means to undo a code. Perception is to see something, deception is to prevent from seeing something. But there is also deficient, definition and, deliver.

The dis- prefix is similar in meaning: discontinue, discourage, disengage.

Re- is generally the opposite of de-: reconnaissance, renaissance, replace, report, request, reverse.

There is pro-: produce, pronounce, provide.

Com- means to put together: combination, compare, compensation, compile.

Pre- means before: precede, prefer, previous.

Even though cars were developed long after the time of the Normans, the subject of cars is especially loaded with French words: alternator, automobile, carburetor, chassis, chauffeur, coupe, exhaust, garage, gasoline, limousine, lubrication, sedan, transmission.

Now, you can see how much the French language has influenced English. It is the grafting of all of these French and French-influenced words onto the northern European structure of English that has given it the broad span that makes it suitable to be the global language that it is today.

Recessions Made Really Simple

One word with which we are all unfortunately familiar is "recession". In a free market economy, a recession is a significant decrease in business activity over a period of time. But stop and think for a minute, if the population and production capacity are continuously increasing, why should there ever be a recession unless there is some kind of natural disaster or other calamity? We should always be at maximum possible productivity so why do recessions seem to just come along periodically?

Today, I would like to introduce my economic theory to explain recession in a new way.

HOW MARKET FORCES BRING ABOUT RECESSIONS

As we know, a country prints money for the purpose of financial transactions because barter would be too cumbersome. The supply of money in a country is exactly equal in value to all of the goods and services produced by that country that can be exchanged for money. The money supply is thus a mirror image of the value of the production.

My economic theory revolves around the idea of the pathway along which the economy moves. On one side of the pathway is inflation and on the other side is recession. When we mint more money without a corresponding increase in the production of goods and services, it inevitably brings down the value of each unit of currency since the money supply must be a mirror image of the goods and services produced. The free market automatically corrects and the resulting decrease in value of the currency is known as inflation.

Inflation can be caused by natural factors such as drought or raw material shortages but I define inflation as a tax when it is caused by the overprinting of money because it gives the government more money to spend but the consumers pay for it not by direct payment of taxes but by higher prices for consumer goods caused by the overprinting.

Inflation is not good. It hinders lending and investment by eroding away the returns. If someone invests money at 6% interest but there is 4% inflation, their return is only 2%. Inflation causes consumers to focus on essentials so that companies making and marketing less-essential goods struggle or may go out of business. Inflation can lead to recession by hundering spending.

If the economy strays too far to the other side of the path, the result is recession not resulting from inflation. In my view, although recession is often portrayed as an unfortunate event that comes along once in a while, it is, in fact, a natural part of the way the economy is set up. We are familiar with the fundamental law of supply and demand that underlies a free market economy, prices increase when demand is high relative to supply and decrease when supply is high relative to demand. In my theory, we have the economy set up so that periodic rescessions come about by the same law of supply and demand.

In reality, a recession is an absurd situation in which workers produce goods and services but when they go to market, they cannot afford to buy the goods and services that they have produced. This means that production of those goods and services must be cut back since it makes no sense to produce goods and service that will not sell. That means that some of the workers must be laid off (made redundant) so that the workers as a whole have even less money to buy goods and services. That means that production must be curtailed further, and so on. This is a truly absurd and non-sensical situation yet it is what happens every few years.

A recession can be caused by any change in production, either an increase or decrease. If it is a decrease in production caused by drought or other calamity, we will call that a "real recession". But if it is actually an increase in production that leads to recession, it is because the wages of workers did not keep pace with production, leaving unsold goods and services and making necessary an absurd cutback in production. We will call this an "artificial recession" and it is the kind of recession that I think we can eradicate altogether.

When production increases with the same number of workers, that should make goods cheaper relative to wages. But business owners are naturally reluctant to raise wages or lower prices. In not doing so, they set the stage for recession. According the the law of supply and demand, prices should decrease or wages increase when production increases. When this is naturally resisted by business owners, a correction has to happen. Unfortunately, the correction comes in the form of a recession for the simple reason that it makes no sense to produce goods and service unless someone is going to buy them.

If wages and prices are balanced but there is a sudden increase in productivity, it will leave goods and services unsold. Business owners would naturally prefer to lay off workers rather than lower prices much and this feeds the recession. The market "tries" to strike a balance so that wages and prices are kept in equilibrium, but when this is resisted the correction must come from another direction, an absurd and artificial cutback in production, in other words a recession.

Thus I divide recessions into two categories, those brought about primarily by inflation and those brought about by the failure of the wage/price ratio to keep pace with production and so leaving goods and services unsold. Once a recession gets started, news feeds the downward spiral, people read that there is a recession and so hold back on hiring and spending and thus feeding the recession. Inflation and wages operate in a similar spiral that kills lending and investment.

In my theory, the reason behind the absurd and non-sensical artificial cutback in production that is a recession is the fact that our economy is not actually a true marketplace, even though we tend to think it is. A true marketplace involves haggling and negotiating over prices when a purchase is made. These traditional types of market continue in many places today. Rather than setting prices, buyer and seller haggle, or negotiate, the price. Even if there are price tags on goods, they are negotiable.

In such a traditional market, wages are not set either. Day labor (labour) is the rule. Workers and employers meet in the marketplace each morning, spend a few minutes negotiating the wages of a day's work and then are off to the task.

Our sacrosanct law of supply and demand originated in such traditional marketplaces. The reason that our free enterprise economy is not actually a true market is that the daily haggling does not take place. Wages and prices are set and are changed only reluctantly. Eventually, necessary corrections are made, but by then the recession spiral is already underway.

A haggling merchant would lower prices if demand were low that day. Day laborers (labourers) would make sure that their wages for a day's work will be enough for living expenses. This would self-correct the market and there would be no such thing as an artificial recession.

Our recessions happen because business owners today begin cutting back on production if they have to lower prices much. When production increases, they are reluctant to allow a corresponding increase in the wages that are necessary, on the whole, to purchase the goods and services. This resistance to the natural market forces means that the correction to maintain a balance must come from another direction, a cutback in production called a recession.

WEALTH DISTRIBUTION RELATIVE TO PRODUCTION

In my previous writings on economics, I have stated that the economy becomes "unbalanced". What I mean by this is the distribution of wealth among the wealthy and the non-wealthy relative to production. Most wealthy people make their money by selling to non-wealthy people. The vast majority of products and services are produced for sale primarily to the non-wealthy.

Since the money supply must be a mirror image of the goods and services produced, this means that there must be a correction if the distribution of wealth among the wealthy and the non-wealthy does not match the proportions of goods and services produced for purchase by each segment of the population. This correction will come in the form of a recession to eliminate the production of goods that will not find a buyer.

Most goods and services are what we will call "per person" goods. Their sale is in general proportion to the population, largely regardless of wealth. Such goods include cars, refrigerators, computers and, clothes. An average family may have one car, one refrigerator and, one computer. If they were to get rich so that their income was a hundred times as much, they will no doubt spend more. But they will probably not buy a hundred cars, a hundred refrigerators and, a hundred computers.

In America today 99% of the population, let's call them the "lower 99" owns only about 55% of the wealth. This is because the super-rich 1% own 45% of the wealth. The problem with this is that at least 80% of the goods and services produced by the economy are generally per-person goods and services. We expect the lower 99 to buy about 80% of the economic production but we only give them 55% of the wealth.

This is because the wealthy business owners have naturally tried to keep as much wealth as possible for themselves. This is not to blame them, making money is the whole rationale behind going into business. But if the money supply is a mirror image of the goods and serviced produced, 55% of the money cannot buy 80% of the goods and services. A correction has to come from somewhere and you know what it is, it's called a recession.

The flow of money between the wealthy and non-wealthy is the lifeblood of the economy. To the non-wealthy in the form of wages and to the wealthy in the form of prices. It is when this flow is hindered at any point that recession will result. It can be hindered by either the money supply to production ratio resulting in an inflation-induced recession or the production to wage/price ration resulting in a non-inflation-induced recession, when more money goes to the wealthy than comes back to the non-wealthy.

The last thing I want to do is to eliminate the wealthy or destroy incentive in any way but we must balance the production of the economy with those we expect to purchase what portion of the production. If the lower 99 are expected to purchase 80% of the goods and services that are produced, they must have 80% of the wealth or there will be the inevitable recession or maybe a crash. Increases in production must be balanced by corresponding increases in wages or some goods and services will remain unsold.

This is what we could refer to as "demand side economics", the wealth distribution must balance with the proportion of goods and services produced primarily for each segment of the population in terms of wealth.

You might say that "The market will sort all of this out". That is absolutely right, but unfortunately it does so in the form of a recession or maybe an all-out crash, which is what we are trying to eliminate from our economic future. Our recessions are brought about every few years by the law of supply and demand because we ignore this wealth distribution/production balance.

There is a reason that this is not more obvious: credit. It is possible to keep the economy running with the imbalance that I have just described and that is to get people living beyond their means by way of credit. This pervasive dependence on credit is a symptom of this economic imbalance just as are collection agencies. If there were no such thing as credit, this imbalance would be immediately obvious. Credit hides and delays the correction of the wealth distribution/production imbalance but this only means it will be more severe when it does come.

SUMMARY OF RECESSIONS

To summarize, the law of supply and demand arose from traditional marketplaces with haggling over prices and the wages for labor (larbour) on a daily basis. In our modern economy, the same principles do apply but the setting of wages and prices and changing tham only reluctantly means that ours is not as true of a market. The traditional market corrects daily so that there will be no such thing as an artificial recession, but since our economy resists wage and price changes, the correction comes from another direction in the form of recession.

This lack of daily correction by haggling and negotiating means that we must pay attention to another rule besides that of supply and demand because this does not take into account that the wealthy will naturally try to keep as much of the wealth for themselves as they can. This additional rule to avoid artificial recession is that the wealth distribution among the wealthy and the non-wealthy must match the proportion of goods and services that are produced primarily for purchase for each segment of the population in terms of wealth.

In the economy of today, some goods are produced for sale to the wealthy but this comes nowhere near matching the proportion of wealth that they get. The only way to bridge the gap and keep the economy going is by means of credit but this only delays the inevitably correction brought about by the market forces, which unfortunately comes in the form of a recession.

A basic flaw of capitalism is that workers are unable to buy all of the goods and services that they have produced while at work. This is because in a business-friendly environment, the wealthy tend to take as much of the wealth as they can for themselves. This leaves goods and services unsold because wages do not keep up with increases in productivity. The result is an artificial cutback in production, which we refer to as a recession.

Business owners resist raising wages as fast as production increases and would rather cut back on production if they must lower prices much due to decreased demand. This resistance is in contradiction to the forces of supply and demand so the correction comes from another direction, that of a cutback in production to balance the production with the supply of money available to buy the goods and services that have been produced which need not have occurred. The recession often has it's official beginning with a drop in the stock market but this drop always results from some underlying flaw in the economy.

There is so much that simply does not make sense about our economic system as it is. Wages simply do not keep pace with production because business owners naturally want to keep as much profit for themselves as they can. But this hinders the operation of the entire system because it leaves goods and services unsold and results in a needless cutback in production because it does not make sense to produce goods and services for which there will not be a buyer.

How many times do we have a family trying to keep an old car running that has outlived it's useful life because they cannot afford a new car while down the street a car dealership is laying off workers because sales are so slow? It does not make sense and the underlying cause is the lag of wages in keeping pace with production.

MANIPULATION OF INCOME TAXES AND THE MONEY SUPPLY

The truth is that if all business owners in the economy were forced to give employees a 50% pay raise they would, as a whole, get the money back because then shoppers would have 50% more money to spend. Such a tactic would eliminate large amounts of goods and services remaining unsold but business owners would likely raise prices due to increased demand and the tactic would just result in inflation if the increase in wages was not matched by an increase in production.

Another possible way to get more money into the hands of wage-earners to buy unsold goods and services resulting from an increase in production would be to link wages paid out and taxes for business owners. That is, if business owners would agree to give their employees pay raises, they would have their tax rate lowered. But such a system would be laborious and difficult for the government to verify.

Today, I would like to introduce my idea to prevent recessions by balancing the goods and services produced with the money available to buy them. It can be done without requiring business owners to give raises or any other process that is complex and difficult to verify.

There are two other variables in the economic equation that are readily under the control of the government, the money supply and the income tax on wage-earners. My plan is for the government to manipulate these two variables to keep the balance between goods and services produced and the money available to buy them.

Suppose, for example, that over the past year productivity of those goods and services that are usually bought by the average person has increased 7% but the wages of the people who are expected to buy these goods and services has increased only 2%. That could lead to a potential recession except for the use of credit, which as I pointed out is also a symptom of a seriously unbalanced economy. Under my plan in this situation, the government would increase the money supply by 5% and use the extra money to lower the income taxes on everyone earning a paycheck.

Workers would bring home enough extra money to balance the increase in productivity to buy essentially all of the goods and services that had been produced without their employers giving them raises. Business owners could produce and sell as much as they could as long as there was demand for it and government would bring in more tax revenue from business while not losing anything in lower income tax rates from wage-earners. The mints destroy used bills in incinerators and print new money to replace it so it can control the money supply at will.

Can you imagine what it would be like if we put together a balance sheet and income statement for the economy as a whole as accountants do for businesses? It would be horrendous. Only about 15% of workers actually producing any wealth, as I pointed out on this blog in the posting "The Extreme Inefficiency Of Wealth Production", poor coordination between wages and production that was covered up by extensive and unsustainable use of credit. No doubt the managers of such an enterprise would be shown the door immediately.

The Federal Reserve Bank in the U.S. manipulates the Prime Interest Rate, raising it to control inflation or lowering it to fend off recession. Why not maintain the balance between production and wages by manipulating the money supply and income taxes? The balance would not have to be perfect, keeping the gap between production and wages to within 1% or so should be acceptable and make recession just a word in history books.

VISCOSITY IN ECONOMICS

Here is another way of looking at my economic model.

Have you ever wondered why, as a society, we cannot just "do all that we can do"? For example, there is no shortage of building supplies so why can we not build a nice house for everybody? Instead, many people are living in sub-standard housing while builders do not have all the work that they could handle. This is due, plainly and simply, to the innate inefficiency in our economic system.

Today, I would like to discuss what I call "viscosity" in economic terms. Viscosity means the resistance to flow of a liquid. Oil has more resistance to flow than water and so oil is more viscous than water. Viscosity is a term that we usually associate with the oil in a car engine rather than with economics, but I will explain what I mean.

The basis of the concept is simple. It is any unmatched change in the productivity of an economic system that invites a recession as a correction. Suppose, keeping all other factors the same, there is an increase in the productivity of goods and services in the economy. This may sound like good news, but really it isn't. If, in a balanced economy, there is an increase in production while wages remain the same it will mean that there will be goods and services that remain unsold because there is not enough money earned as wages to buy them.

Since the vast majority of goods are produced for the average person to buy, business owners will begin considering cutbacks in production since it makes no sense to produce goods and services that will not sell. The result is that all too familiar word: recession. This just means an artificial cutback in production. Because this means laying off workers, who then have less money to spend on the goods and services that the economy produces, the recession forms a downward spiral.

This artificial cutback in production that we term a recession does not occur in traditional market places where haggling is done rather than fixing prices. That type of market has a fluidity that our modern marketplace lacks because any change in production or availability of goods is automatically corrected for in the haggling over prices.

In our modern market place, business owners strive to increase production but are reluctant to lower prices or to increase wages. Naturally, they want to maximize (maximise) profit because that is the reason they went into business in the first place. So, they decide to cut back on production when they find that they are producing goods or services that are remaining unsold and this feeds the recession spiral.

Thus, capitalism works against itself unless this can be corrected. The reverse is also true, maximum efficiency is like a peak that we can slip from to either side. if we pay workers the same when production decreases, we invite inflation and the recession that it can bring by sapping workers' buying power.

We can have a rightward recession by allowing the wealthy to take too much of the money for themselves. When this happens, it leaves workers without enough money to buy the goods and services that the economy expects them to buy since all of the money in circulation is a mirror image in value of all the goods and services that are produced. The result is goods and services remaining unsold and a cutback in production resulting in recession.

A leftward recession can result if the government spends too much money in relation to the goods and services that are produced. This causes inflation because this spending must "hitch a ride" on the goods and services that are produced and it drives up prices, meaning that workers can afford to buy less. Does anyone remember Britain's strike-inflation spiral of the late 1970s? In America, inflation reached 13% in 1979. We do not want this again.

It is clear then, that prosperity results not just from production but from "matched production". We want maximum production but workers must have enough money to buy all of the goods and services that are produced or it will only result in recession. Productivity is much more viscous, or changeable, than wages and prices so we lack the fluidity of a traditional haggling market place.

My plan is for the government to correct this viscosity imbalance by carefully manipulating two factors that it has control of. One is the currency supply and the other is income taxes. When there is an increase in productivity relative to wages, the government will increase the currency supply accordingly and use the extra money to lower income taxes so that workers will have all the money necessary to buy all the goods and services produces, leaving none unsold. This way, there is no reason that we cannot go on indefinitely increasing production and indeed "do all that we can do". Matched production is the key.

Deflation

We sometimes read of inflation as a threat to the health of our economy. But now there is the chance of a phenomenon that occurs much less often, that of deflation. This is, as the name imples, a drop in prices, the opposite of inflation. With such a sustained drop in prices, business owners are unable to make money and cut back on production.

Deflation was last seen on a large scale during the 1930s. The inevitable decline in our standard of living relative to the rest of the world unless the western countries develop enough new technology to balance the fact that so many goods and services can be produced more cost-effectively in the eastern countries. Deflation has the same economic effect as the increases in production relative to wages resulting in recessions that I described in "Recessions Made Really Simple" on this blog.

The way I see it, deflation is a symptom of exactly the same thing that causes recessions, consumers not being paid enough money to buy all the goods and services that have been produced. This means that the solution that I proposed in "Recessions Made Really Simple", manipulation by the government of the money supply and use of the extra money to lower income taxes on everyone earning a paycheck, can also be used to manage deflation, should it occur. It will get more money in the hands of consumers, without them actually being given raises, to increase demand.

Industry in the U.S. keeps closing and relocating offshore to produce goods that they expect to sell to consumers back home. But if industry keeps doing this, those consumers will not have enough money to buy those goods. The drop in home prices are deflation that is already underway. Home prices are dropping not because of a lack of demand for a place to live but because workers are not being paid enough money to buy the houses. When production increases, as it usually does, the government can help remedy this by increasing the money supply and using the extra money to lower income taxes.

Economic Collapse

Let's take a look at the growing financial catastrophe. (This was written in autumn 2008.) I find that there is an aspect of the collapse that is not being mentioned in the news. That aspect is the explosive growth of collection agencies in the U.S. during this decade.

We should have seen this collapse coming. What should it tell us when collection agencies, which buy bad debt at greatly reduced prices and call the debtor repeatedly demanding payment, are one of the greatest growth industries in the country? It should have told us that the economy is so unbalanced that the average person cannot afford to live.

The root cause of this collapse is millions of defaults on mortgages. About half the mortgages in the U.S. are bought by one of the two corporations created by the government to buy mortgages from banks and lending companies. These corporations are usually known by their nicknames based on acronyms, Fannie Mae and Freddie Mac. Mortgages are bundled into securities by the thousands and sold as bonds and other financial products. The idea behind this system is to get money to the lending institutions that can be loaned to other home buyers and thus increase home ownership in the country.

The trouble begins with the severe imbalance in the economy during this decade. The rich got richer at the expense of the average person. By one estimate, over 40% of the wealth in the U.S. is owned by the richest one percent of the population. Even though productivity in the U.S. has greatly increased in recent decades the wages of the average person, adjusted for inflation, have decreased.

So what happened is that while millionaires were becoming billionaires, the average person had great difficulty paying their mortgage. Since mortgage-backed securities are such an important part of the economy, this has brought the entire economic structure to the brink of collapse. The explosive growth of collection agencies since the beginning of this decade should have told us that this is coming. I wrote this in an email that circulated several years ago.

While the rich were getting richer, there were more and more articles about the "working poor", people who have jobs but must choose between paying the electric bill or buying food. Tens of thousands of people were working full time but living in homeless shelters because they could not afford to live on their wages. The basic agreement of civilization is that if a person works full time, that person will be able to afford to live. We have broken this agreement and now the result is this catastrophe.

The economic structure of society is shaped like a pyramid. It requires the spending of several hundred wage and salary earners and small business owners to support each millionaire in the economy. The upper reaches of the pyramid depends on the lower part for support, likewise the more money the average person has, the more secure the wealthy will be.

Suppose a ship is carrying a cargo of steel. The lower the center of gravity of a ship, the more stable it is, which is why ships carry ballast. Now suppose we take large amounts of the steel cargo and place it higher on the ship. It would make the ship more vulnerable to tipping. The economy operates in the same way and when it crashes, the wealthy at the top of the ship have the furthest to fall.

This is not the first time this has happened. In the 1920s, factories across America were booming. The trouble was that they were paying their workers as little as possible in order to maximize profits. This meant that there were not many people who could afford the array of mass-produced products that came off the assembly lines and they began piling up in warehouses. Factories began cutting back on production, meaning that workers had even less money to spend and, it spiraled into a devastating crash.

Why should there ever be a recession or depression? If our population and productivity are continually increasing, there should really never be a decrease in business activity. Recessions are caused by a lack of spending by the average person. When people are walking around with money in their pockets, there will never be a recession.

It is not so much that the average person is not earning money but that they are loaded down with so much that they have to buy to live. This can only be caused by the unfair and unequitable distribution of the nation's increasing wealth. There has been a greatly-increasing number of billionaires while so many average families are $50,000 or more in debt, not from buying luxuries but from spending on the basic necessities of life. Eventually, the entire economic structure becomes unsustainable.

The profit motive results in the short-term thinking that as long as people are making money, everything will all work out. Underlying this mortgage mess was the assumption that property values will keep on increasing forever, this caused developers to over-build, which then caused property values to plunge, according to the law of supply and demand.

Capitalism creates wealth but the whole structure is so fickle and precarious. The rating agencies such as Moodys and Standard and Poor have a great ability to influence the economy, their recently downgrades of AIG (American Insurance Group) and General Motors sent the market into a tailspin each time. Another factor that I have pointed out in another posting on this blog, "The Extreme Inefficiency Of Wealth Creation" is that only about 15% of the workers in the economy actually create any wealth when they go to work. "Wealth" is created too much by moving paper around instead of actually producing something.

One factor that we tend to gloss over if the effect that events such as this has on the entire world. America was booming in the 1920s and only a few intellectuals in the west even knew what Communism was. The Crash of 1929 changed all of that and Communism, which never should really have been a major world system, began to be seen as the way of the future. The crash devastated the economy of Germany worse than the U.S and out of the chaos arose the Nazis.

In the 1990s, America had not only a balanced budget but a surplus and managed to avoid the currency crisis that afflicted much of the rest of the world. But under this Republican administration, America is the source of the calamity that has now hit and is so in debt that if it suddenly had to repay all the money owed to Japan, China and, Britain the economy would certainly collapse. The one thing that is worse than taxing and spending is spending without taxing in order to get way into debt.

How does this system look to the world when we are trying to promote our style of democracy? It just looks like the wealthiest people create ever-more complex derivatives and other financial products to outsmart government regulators. Over-complex financial products were a factor in the 1929 crash as well.

The simplistic Republican idea of free-wheeling capitalism was what the country needed in it's early days of the frontier. People were needed to get out there and start farms, business and, industries to build the country. The book "The Wealth of Nations" by Adam Smith is the original foundation of Republican ideology, but it was written in the Eighteenth Century. Society is much more complex today and someone cannot just head out to the frontier and start over when there is an economic downturn.

But Republican ideology has not yet caught on and you may have noticed that the economic crashes of 1929, 1987 and now 2008 all came after an extended period of Republican presidential leadership. Republican capitalism today is certainly at the same point as Communism was during the 1980s. If there is one thing we should be thankful for it is that this crash happened before the election rather than after it.

The strength of the Republican Party was always in peripheral issues rather than the core issue of politics, which is economics. Republican economics was beneficial only in the early days of the country and later when the economy had gone too far leftward and there was a pressing need to cut excessive spending and curb inflation. Other than that, their economic performance is generally poor. Even on peripheral issues, they vociferously denied global warming for years and now that it is impossible to deny, they have switched to saying it will actually be a good thing for the world.

If you think this private health care system is the best, consider that America spends far more per person on health care than any other country but U.S. male life expectancy is not even in the top thirty in the world.

An unfortunate thing about politics is that campaigning in an election and running the country after being elected requires two very different sets of skills. One ideology or party may be better at gaining power than another but not as good at running the country once actually in power. Republicans have this in common with Communists, they are much better at gaining power than actually running a modern economy once in power. Republicans have a way of making people think they are not patriotic unless they are Republican, that an American is "supposed" to be a Republican, that free-wheeling capitalism is the "American way" even though no such thing is written in the constitution. The average person is the one who ultimately pays.

I am the last person who wants to stop enterprising people from making money. But when money equals power, those who have a lot of it tend to set things up to suit themselves. People making money tend to want to keep it that way and it becomes a roadblock to progress.

The roadblock to health care reform is the fact that the private insurers are making so much money. One reason that there is not enough money in the U.S. for a national health care system and other social programs that the other western countries have is that resources are in private hands. Many countries pay for most of their health care from income produced by natural resources. Private companies may manage the production of such resources but the resources themselves belong to the country.

A mixed economy can counterbalance the effects of capitalism. Many areas of the U.S. grow rich but do so only at the expense of places like Buffalo and Detroit. When many people leave a given area, the declining population that remains will have to pay higher taxes in order to support the infrastructure that was designed for a larger population and these taxes will encourage more people to leave and discourage business from moving in. Governement involvement in the economy can provide a counterbalance by investing in the many such left-behind areas.

I pointed out in my writing about a mild form of socialism for America "Power At The Center" in my book, "The Patterns Of New Ideas" that capitalism alone does a poor job of providing low-cost housing. This is because most developers would rather deal with commercial buildings or more expensive homes. Low-cost housing often has a long waiting list. People buy houses that maybe they could not afford simply because they must have a place to live. If there was abundant low-cost housing available or if the tremendous wealth produced in America was distributed more equitably, this collapse would not have happened.

It is frustrating to know what is happening but not being able to get the powers-that-be to listed, almost a year ago, I wrote in http://www.markmeekobs.blogspot.com/ that this mortgage crisis was in danger of becoming an economic collapse.

Economic Boom And Bust Cycles

Today, I would like to introduce more of my economic theory. Today's posting concerns the destructive boom and bust cycles that plague the economy. When I landed in the U.S. as a child, there was a large open field nearby and one of the first things I did was to look around that field. I found several pieces of wood that were of similar length and attempted to construct a tepee like one of the ones that I had seen on television.

Now, I consider such a tepee as an ideal model of a modern ecomomy. This type of structure consists of several lengths of wood placed upright with one end on the ground so that they meet and can be tied together at the top, forming a cone-shaped structure. Cloth or animal skins can be placed around the outside of the structure for warmth and protection from the wind and rain. When it comes time to move, the structure can be easily dismantled and transported to a new location.

INDEPENDENT AND DEPENDENT SECTORS OF THE ECONOMY

Now think of the different sectors of the economy today. There are what I will call the "independent sectors" and the "dependent sectors". The independent sectors of the economy revolve around basic necessities that we cannot do without and will always require. These are primarily food, clothing and, housing.

There are, as I see it, many more dependent sectors. There are the ones that are not as absolutely necessary to life as the dependent sectors. These include computers, communications, transportation, the military, education, government, finance, entertainment and, sports.

The purpose of this posting is to convey my explanation of the economic "bubbles" that grow and cause financial havoc when they inevitably burst. This is one of the great drawbacks of capitalism, it's perpetual boom and bust cycles. This explanation involves the same type of logic that I presented in the posting "Recessions Made Really Simple" on this blog.

The danger begins when one sector of the economy begins growing at a much faster rate than the other sectors. This is not always a bad thing as long as it is caused by genuine progress. The truth, however, is that artificial booms are usually driven by a mad rush of investors to what they perceive as the latest hot new thing.

We must remember that one sector of the economy, as a proportion of the economy, can only grow at the expense of the other sectors. When investors put more money into one of the sectors than is justified by genuine technical or social progress, we get a distortion in the economy that we commonly call a "bubble". When this happens, sooner or later it tends to burst.

An economy is most stable when all of it's primary sectors grow together, at least in proportion to genuine progress. Investors, anxious to get in on a quick money maker, do not take this big picture into account, with eventually catastrophic results. There has been more than one real estate bust caused by the concept that property values will go on rising forever without stopping to realize that for this to happen, workers in the other sectors of the economy that are the ones buying the properties would have to have their earnings increasing that the same rate that the property values are increasing.

This means that for property values to go on increasing indefinitely, the other sectors of the economy must also be increasing at a similar rate. If this is not happening, the workers in these other sectors will not have enough money to keep driving up property values and sooner or later, those values must return to realistic levels.

I want to introduce the concept that, while these destructive bubbles can occur in either the independent or the dependent sectors of the economy, they do so for different reasons. There will always be the economic sectors that produce and market the basic necessites like food, clothing and, housing. The most important factor limiting the growth of these sectors is the income of people as a whole.

Put simply, all people require food, clothing and, shelter. But if someone were to suddenly increase their income by a factor of three, they probably will not buy three homes, instead of one, three times as much clothes and, three times as much food. Rather, they will tend to buy similar amounts of these goods but of higher quality.

Thus, growth of the independent sectors of the economy will focus on quality, more than quantity, and the limiting factor of this growth is the income of workers in the other sectors of the economy. The independent sectors must exist because they represent basic necessities but are constrained from growing faster than the dependent sectors.

FUNDAMENTAL IMPORTANCE

To describe the inherent limits on growth in the dependent sectors of the economy, I would like to introduce a concept that seems vital to me. To avoid destructive bursting of bubbles in the future we must remember that the dependent sectors of the economy, which produce and market goods and services that are not absolutely necessary to life, have a certain "Fundamental Importance" to the economy as a whole.

When investors rush to a certain dependent sector of the economy, they risk pushing the money in that sector beyond that amount which is proportional to the sector's fundamental importance. This will inevitably result in a boom and the inevitable bursting of the resulting bubble.

There is no better example of this than the Dot Com Bust in 2000. Windows 95 did wonders for the computer sector and investment poured in throughout the late 90s. The trouble was that it was not matched by that sector's fundamental importance to the economy. Of course computers are here to stay, but we tried to push too far, too fast and the result was the bust.

ECONOMIC RULES OF FUNDAMENTAL IMPORTANCE

Here are my rules of logic concerning the fundamental importance of the dependent sectors of the economy. Destructive bubbles in the economy result when investment pouring into one of these sectors is out of proportion to it's fundamental importance.

Computers can do wonders. But we must not forget that the purpose of computers is to manage information. Therefore, the subjects which the computers manage information about must necessarily be considered as more important than the computers themselves. It would not make sense to build a sector of the economy to manage information about other sectors unless those other sectors were more important than the sector that was constructed to manage information about them. Thus, an economy with computers as it's most important sector makes no sense.

The communications sector relays information. But the sector that relays information about the other sectors must necessarily be considered as of less fundamental importance than the sectors that it relays information about. It does not make sense to build a sector of the economy to relay information about other sectors of the economy unless those other sectors are considered as fundamentally more important than the sector that relays information about them. Thus, an economy with communications as it's most important sector makes no sense.

The purpose of the transportation sector of the economy is to get us from Point A to Point B. This must mean that the fundamental importance of this sector must be less than those sectors whose activities take place at Point A and Point B. Thus, an economy with transportation as it's most important sector makes no sense.

The purpose of the financial sector of the economy is to extend credit to the other sectors. This means that it must necessarily be considered as less important than those other sectors and an economy with finance as it's most important sector makes no sense.

The purpose of the educational sector of the economy is to provide the knowledge and training necessary to the other sectors of the economy. Therefore, it must be considered as inherently of less fundamental importance than those other sectors and an economy in which education is the most important sector makes no sense.

The purpose of the health sector of the economy is to keep people healthy so that they can work efficiently in the other sectors of the economy. The purpose of the military, law enforcement and judicial sectors of the economy are to protect the people working in the other sectors of the economy. The purpose of the government sector of the economy is to administer the other sectors so that they can operate at the best efficiency. The purpose of the entertainment and sports sectors of the economy is to entertain people who work in the other sectors during their free time. Therefore, an economy with any of these sectors being considered as it's most important makes no sense.

You can see how the different sectors of the economy very must resemble several lengths of wood places together to stand upright. The stability of the structure would be compromised if one of the pieces were to grow disproportionally to the others. As long as the sectors grow together, there are practically no limits to growth. By keeping this in mind, we can avoid the destructive boom and bust cycles that have plagued the idea of free enterprise.