Berlin, a drag on German economy.

As somebody who has wanted for decades to visit Berlin and has not, I found a report in “Economist” (2/Dec/17) on the city's dysfunction surprising. Berlin makes wealthy Germany more poor. I Suspect the reasons are even more complex and interesting than those cited in the article. But the fact is interesting of itself:  “Astonishingly for a capital city, Berlin makes Germany poorer. Without it, Germany’s GDP per person would be 0.2% higher. By comparison, if Britain lost London, its GDP per person would be 11.1% lower; France without Paris would be 14.8% poorer. “Berlin’s economic weakness is unique among European capitals”, says Matthias Diermeier of the Cologne Institute for Economic Research.” https://www.economist.com/news/europe/21731837-unlike-other-capitals-germanys-drain-rest-country-why-berlin-so

Germany, now less expensive?

I posted this to Facebook, May 5, 2016.
.


It seemed to me on our recent trip to Europe that "stuff", mostly what we bought to eat and drink, seemed inexpensive--a 21st century 1st for me. The narrower exchange rate didn't capture the change. My neighbor lead me to the "Big Mac" index of Economist magazine (smarter people than I take it seriously). Indeed, It tells me I paid almost 20% less than I should (with correct exchange rate.)

Helicopter Money

I knew, when I worked my way through "Komivesian" economics, that my theory that money could pay for itself if well invested--that taxes and loans were not required to make such investment--the idea could not be unique--just hidden. Well, I've found it in the


Apparently the discussion has been around among economists at least since Keynes, but I had not stumbled across it. Now, with interest rates near zero limiting what central banks can accomplish with monetary policy, and governments dominated by debt aversion, helicopter money rises above the horizon--at least my own ignorance horizon. With so much that should be done to improve and advance infrastructure around the world and governments reluctance to tax or to borrow at near-zero cost, helicopter money hovers ready to fan the flame of good investment. 

Read this, for example, by Simon Wren-Lewis.


You can read much more, of course, right here of my views on the marvelous invention that is money. The word "helicopter" can be dropped, will be dropped as when we realize that it just reflects a hesitation to believe money can do what it does do. We need only accept money for the magical tool that it is.

" it’s a very good time to build and repair infrastructure: "

From http://www.moneyandbanking.com/
" ... financial markets are telling us that it’s a very good time to build and repair infrastructure: real (inflation-adjusted) interest rates have fallen so low that it has become exceptionally cheap to finance the improvement and repair of neglected roads, bridges, transport hubs, and public utilities. Yet, in the United States, we are doing less public investment than ever: net government investment has fallen to what is probably a record low.     .. .    "
Net Government Investment as a percentage of Net Domestic Product (annual data), 1959-2014
Source: FRED. Note: Net domestic product is GDP less depreciation. 
Source: FRED. Note: Net domestic product is GDP less depreciation.

Finance is not Econcomics: Fundamental Differences






.


it pays to know much about both if you remember this:
...
Finance is not Econcomics



Economics have, Economics has always existed in human society.

Economics encompasses the dynamics in which wealth is created, maintained and lost by human endeavor; and also includes the theory and practice built on understanding these dynamics. It is kin to ecology which encompasses the broader dynamics of wealth and diversity in the biosphere.
  • While its laws and theories apply where there are money and other instruments of finance, economics is not dependent upon them.
  • It exists even if we are ignorant of its existence--in the same sense that physics existed before humankind recognized it and gave it a name.
  • Failure to act in accordance with the laws of economics is unfortunate, even tragic, but rarely immoral.


Finance is a conscious creation of humankind.

Finance emerged in societies where money or money-like tokens came to be exchanged as if they were real wealth. These tokens have little or no intrinsic value. A euro, a corporate stock certificate, an I.O.U are virtually worthless pieces of paper unless their possessor knows they can be exchanged for a chunk of society’s wealth. Even to stamp them from a precious metal is a curious waste of time and energy unless they can be exchanged for something more valuable. Finance encompasses the dynamics, institutions, customs and rules that describe and control such exchanges.While finance cannot escape the laws of economics in the long run, it can violate them in the short run because it is an imperfect human construct.
  • Like our legal systems, finance exists only if we are aware of its existence and if we have a pact with others to behave according to a set of its rules
  • Finance will fail society where its rules and instruments are poorly constructed and managed; where there is immoral, criminal, pact-defying bad faith; and when its dynamics violate underlying laws of economics.

===============================
===============================
If this leaves you in a quandary, I refer you to a poem:

.

.

TED talk by Ridley: "Ideas Have Sex"




No, I do not believe “technology solves everything.”


Rather, I marvel at how intangible and tangible knowledge accumulate with each solution through each generation, and how I need not be best practitioner with any part of that knowledge to be among people who respectfully value what I do.


I marvel at truth found in the pencil and in David Ricardo.


.


Please Watch and Listen to


Matt Ridley as he explains how "Ideas Have Sex"


http://www.ted.com/talks/matt_ridley_when_ideas_have_sex.html





Then, if you have a few more minutes,


click on "Knowledge" among the topic links in the right column.


.

Komivesian Economics Reinforced: November 11, 2011



In Paul Krugman's excellent New York Times piece titled "Legends of the Fail" (November 11, 2011) I find reinforcement for two fundamental ideas in Komivesian Economics', Plum Local IV.
.
(1) We do, indeed,  handicap poor countries when we make them borrow in somebody else's currency. 
.
 "What has happened, it turns out, is that by going on the euro, Spain and Italy in effect reduced themselves to the status of third-world countries that have to borrow in someone else’s currency, with all the loss of flexibility that implies."
.
(2) Money is a magic invention that makes it easier for a country to invest well in itself and its citizens. 
Komivesian Economics: This idea appears throughout Plum Local IV, but it starts with "A Better Money Legend" and a mythical country saving itself through the near-miracle of money.
.
"... since euro-area countries can’t print money even in an emergency, they’re subject to funding disruptions in a way that nations that kept their own currencies aren’t — and the result is what you see right now. America, which borrows in dollars, doesn’t have that problem."

Balance Our Federal Budget in One-easy Step



Balance Our Federal Budget
in One-easy Step
. .

But Please Do Not Try This

By Bob Komives

The Tea Party and the Obama party can force a balanced federal budget with one step. (Well, it would take two quick votes and one signature.) They must simply decree that the federal government of U.S. America will abandon the dollar and do all its business with the Euro. Or, if that zone won't have us, with the Yen then--or, the Pound Sterling, or the Norwegian Krone. If we abandon our sovereign currency we have no choice but balance our national budget! Ask Greece; ask Ireland; ask Spain; ask California.

Yes, California, one of the biggest economies in the world, it must come begging for help  to the dollar-zone (the states united in America) when it suffers a devastating earthquake or wild fire. Why?

It's About Investment, Dammit!





It's About Investment, Dammit!
. .
Reason Four
Why Today's Balanced Budget Discussions Are Ridiculous


..

By Bob Komives




but first
let me give you Reason 4a
Or, I should say, let Paul Krugman give you Reason 4a. He points to facts that march boldly but unrecognized through the daily news. They show why austerity-now does not work, and worse, causes countries to fail. In other words, my words, why today's balanced budget discussions with their emphasis on not-spending rather than investment are at best ridiculous and and at worst devastatingly harmful.


-----------------------------------------------------------------------------------------------------------------
now my somewhat poetic approach


Partners in Economic Development




Where is the evidence
          that scarcity models work?
Where is the evidence     
          that doing the right thing costs too much
          that doing the wrong thing is affordable
          that nations who follow these models become rich?


Wealth is our preoccupation
          --not our invention.
We do not create economic development
          --we are its partner.
Economic development is an organized invasion
          --life invades the universe.
Let us strive to be knowledgeable partner
          --practice stewardship and equity
          --learn
          --share what we learn
          --organize ourselves to foster the biosphere.


Yes,
we must know that wealth can disappear
          --species, ecosystems, languages and cultures become extinct.
We must guard against the disappearance of life itself
          --for only in life does this sphere know to be wealthy.
Prevent the destruction of our species
          --for we can learn as we survive our poor judgment.
Stop exploiting one another
          --together we partake of more wealth more quickly.
Guard against the natural and man-brought disaster
          --that destroys knowledge
          --leaving machines that no one can use
          --books no one can read
          --science no one can remember.


Yes,
we must know that within abundance there is scarcity,
yet within simplistic, dogmatic models of scarcity lie falsehoods.
Within these falsehoods lie too many lessons in fiscal irresponsibility:
          Do not provide for the welfare of the many
          --because resources for the few are scarce.
          Do not clean and protect scarce resources
          --because, well, our resources are scarce.


Yes,
we must know that between the cataclysms
          (brought by meteor, plate, and super volcano)
          life prospers
          abundance patiently overwhelms scarcities
          abundant biosphere enables civilization.
Within biosphere and civilization lie truths.
Within these truths lie our lessons in fiscal responsibility:
          Well-being requires investment.
          Good investment nourishes and improves life.
          Poor investment risks disaster.


There is no evidence
          that doing the right thing costs too much,
          that doing the wrong thing is affordable?


Evident, indeed, is knowledge of abundance
embedded by life into biosphere and civilization.


As better we know this
as better we become
          partners in economic development.



-----------------------(c) 2011 Bob Komives-----------------------------

... the word "tax" is not always bad. ...





... the word "tax" is not always bad.


I suggest you read this opionion piece in the Fort Collins Coloradoan of March 9, 2011
.
.
.
They are the words of John Knezovich who calls himself a moderate Republican.
I'm not sure if John would agree, but I would call this well-written essay a plea for sanity and responsibility. Nearing the end of his plea Knezovich says simply this:

.
Most urgently, Republicans need to grasp that the word "tax" is not always bad. There are many governmental programs and services which benefit all of society. Where would we be without public safety, roads, schools, libraries, hospitals and social services?


 .
Yes, taxes are integral to civilization, and I dare say: "civility."
Thanks, John. I want to spread your word; then we can fight well over the details!






Capture Broadly





Capture Broadly
Bob Komives
::


Headnote: Solidarity is but
 conscious expression
of inter-dependence
for inter-prosperity.


Capture broadly--
   as leaf captures sun,
      mill captures wind,
         and gatherer gathers grain.
Distribute deeply--
   as leaf sends oxygen,
      mill delivers flour,
         and parent feeds child
            that teacher educates.
Recirculate densely--
   as we bake for our miller,
      who rewards our harvester,
         who buries our excess
               to reward the roots
                  who will feed new leaves.
                     to nourish grains of life.
 



Footnote: Community is but
 subconscious expression
of inter-dependence
for inter-prosperity.





Bob Komives :: Fort Collins © 2007 :: Capture Broadly ::0703
-------------------------------------------
co-posted on Komivesian Poetics

To Meet a Union Teacher



To Meet a Union Teacher


To meet thousands of hard-nosed people of business,

meet Wisconsin's farmers

and its small-town entrepreneurs.



To meet a union teacher, 

let farmer or entrepreneur

introduce you to spouse or child.

Law of Anklets and Chain



Law of Anklets and Chain




Everywhere on earth
(Wisconsin included)
Government is unsainted.
Unions are unsainted.

    business,
    industry,
    marketplace and mall,
    friends and neighbors,
    poets, pagans, priests and preachers,
    farmers, foresters and fishers,
    up-staters,
    down-staters,
    high rollers and good waiters,
    Peter, Paula, Grace and Paul:

Unsainted.

With anklets aplenty but only one chain,
to hell with one
is to hell with us all.


-----------------------(c) 2011 Bob Komives-----------------------------

Planet Money and the Invention of Money






Thursday, January 20, 2011
Yesterday I sent a second of two emails to Planet Money giving my thoughts and applause to their presentation on the Invention of Money on NPR's This American Life: Sunday, January 7.  I highly recommend you listen to it and contemplate how it changes or adds to your view of money. I admire how articulate and concise they are in describing money's strangely magical qualities. They dwell on the truth that money is trust, a powerful and apt description. Alas, I regret that this may be the first time that the word trust appears in this blog. Thanks, Planet Money. Otherwise, I find support in their words--and much food for further thought. Listen, then read my response:

Constitution as Implied versus Constitution as Written







Constitution as Implied versus Constitution as Written
. .
Reason Two
Why Today's Balanced Budget Discussions Are Ridiculous
..
A response to a Cal Thomas holiday column in which I found no holiday spirit.


By Bob Komives, December 24,  2010



The holiday season, for many, is a time when we treat our neighbors of different political persuasion as, well, neighbors. It is nice to foster peace for a few days so that in the new year we can come out fighting without killing each other. Here it is December 24, 2010; as hard as I try, in my today's newspaper I can't ignore a column by Cal Thomas . He writes not a single phrase in the holiday spirit. Rather, he lambastes his version of "liberal Democrats" and his version of "'moderate' GOP senators" who would compromise with the liberals. In the classic of first definitions, it appears he does not like that these two groups managed a rare occasion to have intercourse. In my ample spirit of holiday charity I smiled and momentarily ignored Thomas’s lack of same. After all, his opinion was already a few days old by the time my newspaper chose to publish it. I could imagine that by the time I read this, he was indeed feeling more charitable toward those who refuse to listen to him. Unfortunately, I read on. He quotes Senator Tom Coburn of Oklahoma as saying, 
"We are water-boarding the next generation with debt." 
Gruesome image, but perhaps Coburn too spoke before getting into the holiday spirit. Perhaps he had already asked for and received holiday forgiveness from his open-hearted constituents.
.
Then I came to the reason why I write. Further on, Cal Thomas chooses to imply that his hatred of federal debt is in sacred agreement with the Constitution:
"Early next month, 108 new members of Congress will take the oath of office and swear to uphold the Constitution. The question is: which Constitution? Will it be the one written by the Founders, which has sustained us for two centuries? Or, will it be the one that is being ripped to shreds by activist courts and out-of-control legislators who have concluded that grand document means only what they and the judges decide it means? In families that overspend and are weighed down with debt, there often comes a ‘we can’t go on like this’ epiphany followed by a decision to reduce spending and be content with less. Not so with our government." 
Notice, while he implies that debt and unbalanced budgets defy the Constitution, he does not directly say so. Perhaps he assumes that the ignorant reader will extract that meaning without his having to lie. In a later posting, I will take up the absurdity of comparing national budgets with family budgets, but for now I only wish to point out why Cal Thomas knows he had to use patriotic innuendo in order to avoid a lie. He knows that the Constitution repeatedly supports and even mandates federal debt. 

Sovereignty versus the Zealots for Ignore-ance . .



Sovereignty versus the Zealots for Ignore-ance
. .
Reason One
Why Today's Balanced Budget Discussions Are Ridiculous
..
The core value of money
the reason why this clever invention has survived the ages:


money enables wise national governments to operate
on budgets that look unbalanced when scrutinized by bean counters.

By Bob Komives
. .
The only way to force bean counting to a balanced federal budget in the United States of America is to give up the dollar and fund our national government with euros, yen, pesos, diamonds, Honda motorcycles, !beans!, or some other item the federal government does not produce.

1. A Faint Road



Plum Local IV ::: Part I

Economics of Abundance
=== chapters 1 - 35 ===
=== look to right column for direct links to chapters ===








1. A Faint Road
Bob Komives
::


I found a faint road through a vast field
where genius, fool, and charlatan must ply.
As hard as the road is to follow,
harder still is to know who am I.
On The Art Of Synthesis

I am a wealthy pattern in my young, abundant biosphere. I am a thread in the net of life that threatens to encircle the universe. I seek a science to incorporate both the elusive abundance that builds what I have and the apparent scarcity that every day shows me what I have not. Through a vast field I follow a faint road along which I see landscapes that are impenetrable to traditional machinery of national and international finance. I see a distant village of mainstream economics barred from these exciting landscapes by its own walls and by the militant forces of pseudo-economics that interpose quaint, mirage-landscapes for mainstream society to fancy. In the same light that bathes the backs of those who once argued for a flat earth, I see proud, hoping, and helpless faces of those who argue for this week's popular economics —balance-the-national-budget-or-die. I see victim and perpetrator of quaint fancy.

Perhaps one fancy can replace another. Perhaps I can point through patches of scarcity in a field of abundance to a faint road that you will fancy to explore. I last set forth my fancy in Plum Local III, draft 4: For Love of Wealth and Biosphere; an Essay on the Economics of Abundance. What you read here is Plum Local IV. It has just enough editing and format changes to deserve a new title. For better or worse, content has changed little.


:: Bob Komives, Fort Collins © 2006 :: Plum Local IV :: 1. A Faint Road ::
With attribution these words may be freely shared, but permission
is required if quoted in an item for sale or rent

::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::

2. Everybody Knows



Everybody Knows

Bob Komives
::

In 1990 and 1991, when the United States of America lead other countries in a war to evict the forces of Iraq from Kuwait, many advocates of balanced national budgets knew it was time to abandon that principle in order to wage war. I heard nobody ask, "If debt for war is good, can debt for peace and public welfare be bad?"

A war rages in the Middle East
—costly by measures more important than money.
We so readily
suspend our fantasy of a balanced budget
so that we may fight a harsh war,
only to again impose our fantasy,
with harsh futility,
during brief interludes of peace.

Oh, the insidious fantasy!
Never apologize for expenditures
if they do not exceed taxes.
That is, if government recalls from us
at least as much money as it spends,
it can boast:
" We ruined the country
and much of the rest of the biosphere,
but we never ran an unbalanced budget."
Let us remember
that war is the age-old medicine
to counter peacetime fantasies.
For failing to make good investments in peace
we are as likely as ever
to
fall
into
internal and external
conflict
that will lead us again to war.

from: A War Rages

Things are not as they should be. The cold-war dichotomy between communism and capitalism has blurred. It should now be easier to study the complementary relationships between socialism and marketplace, and between peace and investment. Yet, in the years since the war in Kuwait such discussions seem less frequent, or, at least, less noticed.

Also in 1991, leaders in the United States of America were in a panic over their failing banks. Those who had long advocated smaller, decentralized government were sure it was time for larger, more centralized banks. They now have them. I see irony in this past and problems in this future.

One panic replaces another. In 1996 everybody knew that the big problem in the USA was budget balancing --provided we increase military expenditures and decrease both our taxes on the wealthy and our assistance to the poor. In early 1998 the problem seemed to be what to do with a projected budget surplus if we do not wage war with Iraq. Yesterday and today everybody knows that, when convenient, national taxes must balance expenses.

Once upon a time, everybody knew
the earth is flat.
Common sense confirmed it.
Common politicians ratified it.
The best scientists of the day spoke doubts.
Since everybody knew,
nobody listened.

from: Everybody Knew
:: Bob Komives, Fort Collins © 2006 :: Plum Local IV :: 2. Everybody Knows ::
With attribution these words may be freely shared, but permission
is required if quoted in an item for sale or rent

::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::


3. Plum Local



Plum Local

Bob Komives
::

I had my first course in economics in college. I forgot most of it, except for the fascinating way that banks create money as they lend out most of the money that we deposit with them, then receive most of it back again in new deposits, and then lend most of this magically expanding cash out again, and on, and on. We see that bad banks fail, and we know that even good banks make bad loans.

Why only blame
—if our banks create money—
why only blame our government for inflation?

||

I turned my studies to art and architecture. Along the way I discovered a maverick named R. Buckminster Fuller. He stood among other heroes such as Louis Sullivan and Frank Lloyd Wright in describing the unity of design and nature.

Can projects designed
following principles of our biosphere
ever be too ugly,
ever be too expensive?

||

I got married, and we went to the Peace Corps near the Pacific Coast in Guatemala. I saw discrepancy between strategies for national economic development and realities of community development.

I had to ask
" Does it make sense
—for our poverty, our sickness, our exploitation—
that our cure
cannot come
with our economic development,
but only after?"

||

We moved to Little Rock Arkansas where I tried my hand at city planning in the Model Cities program. This was 1969, a time of large investment in troubled cities. Our successes were real but modest.

Is it not strange?
Even during prosperous times
since our era of generosity,
they say,
we cannot afford to budget for success.

Since Our Era Of Generosity

I went back to school to get my professional planning degree. There I discovered economics, learning its many applications to local public policy. It was elegant; it was beautiful. The curves conveyed information to me in ways that no other medium ever had.

One weekend, I took a rest from my studies and read a book by R. Buckminster Fuller. I believe it was Operating Manual for Spaceship Earth. There, I encountered for the first time his elegant formulation of the fundamental law of economics:

Wealth is a function of energy and knowledge.

Absent was any mention of scarcity, supply, demand. This was the economics of abundance. Fuller's economics made every bit as much sense to me as the crisp logic of market economics.

Humankind developed
laws,
traditions,
and institutions
to deal with scarcity.
At any point
in time and space,
scarcity is specific.
It is real.

We live scarcity,
but we come to live
and to thrive
through abundance.

Please do not misunderstand me.
I believe in scarcity.
I have lived it and seen
both its pains
and its benefits.

Yet, abundance is as real as is scarcity
and is even more fundamental.

Without scarcity,
the economist cannot draw
supply curves
and demand curves.
But these curves cannot anticipate
mathematics,
art,
democracy,
communities,
back rubs,
interplanetary exploration,
civil rights,
the popsicle,
or the yo-yo.
Nor could they have anticipated
the brown trout,
the monarch butterfly,
or the horned toad.
Each is part of our biosphere.
Each is our wealth.
And wealth must be the stuff of economics.

Today,
if we choose to love our wealth and our biosphere
we seem unable to seek the best for one
without harming the other.
Today, also,
sages preach to us of the evils in our economy.
They tell us to be more moral,
to separate pretension from wealth.
Let us heed such sermons.

Yet, the moral sage does not free us
from the choice between two loves.
Neither sage nor economist can free us
unless we know
how wealth and biosphere are one—
how we live scarcity,
but come to live
and to thrive
through abundance.

We Come to Live and Thrive
I lay sandwiched between a straightforward explanation of supply-demand-utility and Fuller's statement that wealth is a function of knowledge and energy. I found myself in that muddled layer of confusion and witchcraft called macroeconomics —including gold flow, balance of payments, balance of trade, inflation, and the like. The economy uses the biosphere's model of abundance, while conventional economics uses a model of scarcity. Beneath scarcity lies a supportive abundance —a macro-abundance. Beneath microeconomics, which specializes in scarcity, should lie a supportive macroeconomics specializing in abundance.

Microeconomics covers those situations in which flow of wealth mimics a traditional marketplace. People buy; they sell; they trade. The demand for a product in relation to its supply sets the price. Economists do not. Buyers and sellers do so, acting upon their needs and desires. One day, two chickens are worth two yards of cloth. The next day, they may be worth three yards in the morning but only one after lunch. Marketplace economics explains well the dynamics in this true marketplace and in myriad public and private markets in which goods and services are bought and sold. It can explain how the price for cloth changes as well as how the weaver decides how much to produce. It cannot, however, go on to explain how cloth came into existence nor how chickens were domesticated.

From graduate school I launched my planning career. I went to the island of Martha's Vineyard where I worked for five years to protect its resources and foster sensitive development. I moved as a consultant to Colorado, worked for a while in the analysis of socioeconomic impact from energy development. I went on to typical land-use planning. The gulf between my professional work and my struggle with the theories of economics seemed unnecessary, but enormous.

The economics of abundance remained a closet hobby until 1980 when I pulled together some of my notes in a hand-printed, ten-page document called Plum Local. It began with my apology: "Pardon my boldness ." I wrote, "The valid world economics will show the tie between genetic and economic evolution," and "Taxes, Bah!! Let's phase them out Let's balance our budget by investing communally (politically) in the growth of knowledge for mankind." I sent one copy to R. Buckminster Fuller. When I received his encouraging one-sentence response I felt some comfort.

The four-page 2nd Plum Local of 1981 took my ideas further: "Taxation is role playing. Monetary return as we have in the national income tax system has no role to play. If there is a utopia it will be found in a humanistic management of instability."

Now, as then, I find it hard to put forth theories of economics that disagree with the teachings and preachings of intelligent people who are economists by profession. However, I would find it harder not to share ideas that help me find some sense and science among a potpourri of confusing theories and popular maxims.
:: Bob Komives, Fort Collins © 2006 :: Plum Local IV :: 3. Plum Local ::
With attribution these words may be freely shared, but permission
is required if quoted in an item for sale or rent

::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::