Monday, August 22, 2016

“A Look at the Future”, I: Star-Gazing?

Will Rogers once said all he knew was what he read in the papers.  We can’t help wondering how much more people would know today if they could say that much.

What brought up that little bit of cynicism was what we’ve been finding for years going through old newspaper files and comparing the results with what the history books say.  Often what is reported as current news is 180 degrees from what is recorded as past history.
Last week, while googling for contemporary information on monetary and fiscal policy following World War II, we came across a number of articles focusing on the recommendations of Dr. Harold G. Moulton, president of the Brookings Institution from 1928 until 1952.  Moulton had made something of a name for himself in the 1930s by proposing an alternative to the Keynesian New Deal.  Moulton’s ideas lacked only Louis Kelso’s insights on the need for expanded capital ownership and the need for capital credit insurance and reinsurance to replace traditional collateral to be fully compatible with the Just Third Way.
One of the articles was from the Pittsburgh Press of July 31, 1949.  Over the next couple of days, we’ll put up portions of the article with commentary.  Just keep in mind that this article is from nearly seventy years ago. . . .
It sounds a lot like star-gazing to say that the U.S. can support a population twice as large on a living standard eight times as high, within the next 100 years.
But that’s the appraisal of Dr. Harold G. Moulton, president of the Brookings Institution, in a study financed by the Falk Foundation of Pittsburgh.
Dr. Moulton is a sober economist whose views are listened to with respect.  Even so, his forecast of what the U.S. can do, with diligent work and sound policies, is startling.
Just today, we’re wrestling with problems that are microscopic by comparison with the vast economic machine that Dr. Moulton envisages.
How can we increase the purchasing power of our money?  Is labor entitled to a fourth-round pay increase?  Will prices go lower?  Is it going to be a recession or a depression?  And how many unemployed will we have?
These are the things we worry about today.
*          *          *
If you ask us, the things they were worrying about in 1949 sound remarkably like what we’re worrying about today.  Let’s put things in a little context, however, especially since we know what many of the words in the article mean, but we don’t know what they signify.
Take population, for example.  What does “twice as large” signify?  A quick check reveals that the population of the United States — all forty-eight states — was 152 million and change.  Today, the fifty states have a population of 324 million, a little more than twice that of 1949.
A better living standard for all.
Standard of living?  Many people (especially over the age of 67) claim that people today have a lower standard of living overall than the people of sixty-seven years ago.  Given the increasing wealth and income gap, unemployment, and a whole bunch of other factors with which readers of this blog should be familiar, it would be hard to argue otherwise.
Anyway, we’ll just say that, for the purposes of comparison, the standard of living of 1949 is directly comparable to that of 2016 — just for the sake of the argument.
Now, think about that for a moment.  According to Moulton, we should within the next thirty years or so be able to go from one to eight times the standard of living in 1949, or have the capacity to support a population of approximately (hold your breath) 2.4 billion at a 1949 standard of living.  Yes, billion: do the math.
Evil babies have been plotting to take over for centuries.
Put another way, and pro rating the increase, we should currently be enjoying a standard of living approximately a little over 500% better than that of 1949, or be able to support a population of about 2 billion at a 1949 standard of living — and, yes, there’s a LOT more empty space than you think in the U.S., and tremendous potential for massive increases in food production, especially with urban farming and other intensive production techniques.
Yes, food production.  It astonishes people to learn that food production has rarely been a problem.  The problem has almost always been getting the food from where it is produced, to where it is consumed.
Even during the Great Hunger in Ireland, 1846-1852, when millions of people emigrated or starved to death, reducing the population of Ireland by at least half, more than enough food was produced to feed everyone in the country and provide a surplus.  The problem was that most of the people owned nothing except their own labor.  They could neither produce food for themselves, nor produce something to trade for the food they needed.
Now, we’re not saying that we think that these figures are in any way accurate, just logical given Moulton’s parameters.  It does suggest, however, that a population merely double that of 1949 shouldn’t be having the economic troubles it’s having.
And what about the purchasing power of money, pay increases, recession, depression, price level, unemployment?  We’ll take a look at those tomorrow.

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