3. CAPITAL CHOICE: PRODUCTION OR INFLATIONARY INCOME

With economic problems skyrocketing, many people are convinced that more capitalism is the solution. Only more capitalism, goes the reasoning, can correct years of business over-regulation by government. Unfortunately, a crucial distinction between two forms of capitalism is lacking. Using private capital for the pursuit of inflationary profits has an extremely different effect on economic problems than if production returns are pursued. A simple contrast of the two is the farmer who, on speculation, buys several pianos expecting high price increases rather than replacing his aging equipment with modern implements.

In seeking income from expected inflationary price rises, the farmer forgoes production profits for inflationary returns. This happened in Germany during the 1920's, and, ironically, many of the farmers couldn't even play pianos. Other examples would be the frugal citizens or pension managers who speculate in gold rather than using savings to fund the production of lower priced goods and services. Failure to realize this distinction means that the reader, along with the politicians and traditional economists, is ignoring a crucial capitalistic choice that will be increasingly harmful to all.

The words producer, produce, and production should be conservatively used in accord with the literal meaning of the semantic roots: forward (pro) leading (duce). The terms derived from produce should be used only when the described action is forward leading. Otherwise, semantic slippage will occur in the description of an imbalanced economy, and the solutions will be as elusive as a greased pig on a hot summer day. The simplest solution to semantic slippage is to use existing words in their literal meaning and to coin new words when needed rather than to warp old words.

Goods and services are products in the fullest sense of the word only if they result in a forward state of being. The nature of what constitutes "forward being" is inherently abstract, though some concrete extremes can be given to contrast actions that result in for ward versus backward being. For instance, if a hungry man on a small deserted island spent his time catching fish, he would be producing a product; the food would result in a forward state of being for him, for without it he would die. Oppositely, if this starving soul spent his time combing the beaches for the latest issues of Time magazine floating in a bottle instead of food, his misplaced priorities would result in his eventual demise, a state backwards relative to living.

This example shows how products are relative to the conditions and needs of involved people. For a nation, the standards of forward versus backward should be developed through a democratic process in which the needs of the people are represented.

Unneeded goods and services are not real products, for they divert resources from production that would take the individual and his world forward, e.g., video arcade machines when educational institutions lack computers, sophisticated and expensive weapons when educational institutions lack competent graduates. A lot of human activity is not productive despite the manufacture of goods or services because the activity is unneeded, e.g., the busywork of most government makeshift employment programs. Because these activities divert resources from producing a better standard of living, they effectively reduce life. Because its roots translates back (re-) leading (duce), the various forms of reduce are the antitheses of the counterparts in produce, e.g., reduction, reducer and reductive.

Only persons who provide goods and services that take both them selves and others forward are truly deserving of being called producers. Unconservative use of producer may result in support for "backsliders" that exert necrotic leadership in goods and services. Very obviously, a thief is not a producer, for he steals, wastes and consumes; his activity returns society to a lower level of goods and services. His income cannot be called production profits; more correctly, he is a recipient of inflationary returns.

A broker selling freshly issued stock from a corporation so as to expand a plant would more than likely be a producer. However, if the broker concentrated on hustling speculation on old, stale stocks, he would not be producer. The former participates in the generation of production profits while the latter derives inflationary returns.

A stale stock is a stock traded by anyone other than the issuing corporation; stale stock transactions do not put a single cent into production; rather, these transactions divert cash from production. Stale stock transactions are counterproductive by virtue of negatively affecting the production of additional, needed goods and services. Stale stock transactions retard production rather than stimulate for ward growth. People who offer the service of handling stale stocks are not forward leaders and should not be called producers.

The sale of fresh stocks by a corporation will more likely capitalize new production than the resale of old stale stocks between speculators. Logically, capitalism describes the sale of fresh stocks while decapitalism represents the transaction of stale stocks which diverts resources from production. Since the fire has faded from the new issues market, and the rate of stock transaction has been increasing with prophesies of a 100 million shares per day, what should Wall Street activity be called: capitalistic or decapitalistic?,

If one compares the dollar volume of stale stock transactions to the value of new issues, one can mathematically claim that less than 5% of the activity on Wall Street capitalizes new production. Indirectly, more than 95% of the so-called capitalistic activity decapitalizes production. This pseudo capitalism continues because a distinction is not made between the symbols and substance of capital. Thus, symbol manipulators are able to convey capitalistic activity when the effect is the opposite. For instance, given the ratio of stale to fresh stocks, production is misused when a brokerage head officer says, "Everyone in the business is desperate for production" while referring to stock commissions. The actions of brokers brings about reduction, not production; they are reducers, not producers.

The same action by two different people may have opposite effects on humanity, in which case, one would be a producer while the other would be the opposite. For instance, consider two speech-givers, one teaches first-aid while the other preaches racial hate. The first speaker provides a product that will take the audience forward from the necrotic effects of untreated injuries or illnesses. The results of the other speaker returns society to a lower state of civility and increases the likelihood of time-wasting injuries.

Restricting the use of produce to its literal roots will elicit less debate than the issue of who decides what is and isn't "forward leading." For instance, some people would argue that racial discrimination is productive, for it will take society forward to a racially "pure" state. Similarly, a price-gouger might argue that he was a producer because his income, derived from inflationary returns, took his lifestyle forward. Stockbrokers think that they are productive as does Baseball player Reggie Jackson, who justifies his big income because of his "production." Without establishing the essence of "forward leading", the call for a distinction between production profits and inflationary returns will be lost in a debate over different value systems on what is a productive act.

The best value system will be the one in which all other value systems can be transposed, that is, a general set of values that encompasses and surpasses the less general systems. For example, the physics of Einstein is better than the Newtonian system of explaining physical reality, for the former not only explains the latter but also reconciles contradictions. Similarly, the best economic system will the one that agrees with lesser systems while explaining more of human activity. What is needed is a quantitative measurement whereby the "forward leading" essence of a human action can be determined. The measurement is time.

The creation of time should be the measurement by which a person is judged a producer. Goods and services can be assessed a measurement of time based on whether they promote or necrose human survival. In the case of the above speakers, the first-aid speech increased the likelihood that time would be saved from injuries and illnesses; the speech had a positive time content. Oppositely, the racist's speech had a negative time content.

Milk has a similar duality. A gallon of milk can give life to a human being for a period of time; its nutritious value represents units of survival time for humanity. As a rule, the value of the milk and the dairy farmer are synonymous to the degree that the milk can extend human time. The modern American dairy farmer is not always a producer in the sense of extending human time through milking cows. Like the thief, the dairy farmer could possibly waste time and thereby lead his world backwards.

Today, many dairymen are over-milking their excessively large herds because of government subsidies. A lot of this milk is being stored in vast refrigerated caverns at the rate of 45 million pounds a week. Much of the stored milk ends up deteriorating and being of no use to leading humanity forward, thus, the dairymen are not producers in regards to the wasted milk. The milk has no positive time content because it is not giving time to humanity. While the farmer's wealth may go forward, their actions return production to a lower level than what it might be were it not for their wasting milk, money and time. They might as well have poured the milk down the drain or killed their cows.

Similar to unneeded goods are redundant services which involve tolerance of new forms of existing services that waste time and money. One area of redundant services is the financial advise for retirement- -such as Keogh Plans, IRA's and All-Savers--when the previous forms of retirement security would have worked if properly supported and regulated. For instance, if people's savings for retirement had been consistently lent for production rather than speculation, the price of products would be falling so that the buying power of savings would appreciate over the years.

Because of counterproductive loans, rising prices due to short ages have devastated savings and forced people to seek retirement alternatives. But, how secure are these alternatives since the same mentality that could not save the existing services played a major role in concocting the redundancies?

As a result of the new plans, Social Security and many pension plans will go broke as human intelligence is diverted to the new redundancies. Similarly, the proposal by Ronald Reagan to fund private schools as a way of allowing parents to improve their children's education will not be a productive plan, for human resources will be divided so that less time-saving education will occur overall. These activities, like unneeded milk, continue because of government sup ports.

Union officials are a form of redundant service, for the worker must go through one bureaucracy in order to address the problems in another one. This particular redundancy has become so unwieldy that members are increasingly suing their unions for unfairly representing their disputes with management.

This analysis of producer does more than call for semantic honesty: it requires an acceptance that each action adds or subtracts from humanity's survivability; we are producers or reducers of our existence in each action. The measurement of each action can be assessed in time, for all goods or services add to or subtract from humanity's existence. Restated, using a widely abused cliche, "If you're not part of the solution, then you're part of the problem."

Each human action is a service or disservice to this world. These actions can be quantified as to how much time is added to humanity's survivability. For example, much human time was lost as a result of polio until a cure was found. The vaccine was a product because it took humanity forward by eliminating the loss of time that the handicapped, crippled or dead suffered from polio. But, if everyone decided to spend their days growing vaccine that was no longer necessary, the vaccine would no longer be a product; its manufacture would be wasting time that could be devoted to other problems that waste time, e.g., cancer. This vaccine analysis is a restatement of the milk problem.

Basically, most goods and services are products up to the point where they are in excessive supply. Resources are wasted on them which are diverted from areas of human activity that could be more productive with the resources. For instance, America has an over- supply of overpaid sports athletes, yet the government continues to provide tax-exemptions which allow sports team owners to pay inflated prices to the athletes, e.g., Dave Winfield of the Yankees receiving more than $2 million a year.

The high monetary incentives to do nothing more than hit, shoot or kick a ball has a deleterious effect upon the willingness to solve the basic problems of our deteriorating water, sewage, education and transportation systems. Can colleges be responsive to the economic and social problems when the students with the highest expected income are the athletes and when the highest paid faculty is the sports director, e.g., the million-dollar college coach. Today, the saturated sports system does not provide a product to humanity, for it stimulates people to ignore basic needs. If it were scaled back to where it provided entertainment rather than being a cancerous distortion of human resources, it would once again be productive.

Time is the commodity of life; its creation or conservation takes life forward. Most of the long-established value systems can be restated in terms of saving or promoting human time; the commandments that one should not steal or kill proscribe retarding or necrosing of time. The use of a value system based in time provides the structure for determining the "forward leading" essence in any human act, and more. (And it provides a unification of morality to economics through currency, a symbol of time).

The building blocks that compose the food chain can be more productively understood when viewed as a chain of time. Similarly, various human services are parts in this chain of time which add or subtract time to human survival. A major reason for shifting one's economic analysis to a basis of time is the central role of currency in an economy which derived from the expression "I'll pay you what your time is currently worth." When people are paid more than what their time is productively worth, they are engaged in unnecessary actions and are recipients of inflationary returns. Their income is inflated relative to their productive worth, which wastefully returns society to a lowered standard of living. They consume more time than they create.

The duty of the top economic policy makers is to balance human activity so as to maximize the production of time for the economy as a whole. By fostering a rising tide of time, everyone goes upward and forward like all ships, big and small, on an ocean tide. They should not allow activity that benefits a few while returning the majority to a lower level of existence. A lower level of existence*, timistically defined, is an increase in time-wasting problems which can consist of price-gouging, forced unemployment, overtaxation, and violence.

The adoption of an economic model based on time provides a common thread by which to measure human activity. The chain of time extends from the subatomic to world government. However, despite the concreteness and simplicity of a timistic model*, many will not use it because it seems too global or too abstract. Yet, it should be used in determining what kind of goods and services should be tolerated, that is, time-creation should be used in judging whether an activity is productive. If the action does not increase time for humanity, then the person is surviving by draining time from other people's productive activity--cancer! Politicians should not cater to activities that are counterproductive to the whole; they should not drain the rivers of commerce so that a few can be privileged with personal ponds--capitalism for a fewer few.

While time might be the measurement whereby the forward leading essence can be determined, the process for agreeing on the productiveness of goods and services requires a democratic process. Other than divine intervention, there is no better way for determining the relative needs of a people than to divide them up so as to deter mine their needs. Because of its abstractness, the "forward leading" activity for a people can be best achieved through a consensus process in which the statistical average of the people's opinions is regarded as best representing what will take them forward. A policy-making process that does not promote self-determination of a people's needs will have unfulfilled needs as well as unneeded goods and services.

In summary, the manufacture of needed goods or services constitutes production and involves production profits. If the goods or services are unneeded or redundant, then they are not products, and the income derived from them is inflationary returns. When someone receives income from manufacturing unneeded goods or services then they are being paid an inflated price, probably subsidized by either political actions or public ignorance. The aforementioned milk glut is an example of political subsidies while the speculative precious metal bubble of the early 1980's was funded by people ignoring the inevitable bust.

Inflationary returns are not production profits for a number of reasons. Behind every dollar of production profit is an additional, needed goods or services that people can use in survival. For instance, food is a product up to the point that people are no longer hungry; and the income up to that point is production profit. Production profits would no longer describe the income if food were manufactured in excess of demand, e.g., dairy supports. The income from the excessive, unneeded milk are inflationary returns.

Behind each dollar of inflationary return, however, is the handling of old products, the transaction of unneeded goods or services, or the price-gouging of people. Some inflationary returns are acquired, for example, by using one's wealth to speculate on old stocks, sow bellies, and politicians' ears for inflated income. Inflationary returns invariably come from the opposite of production, specifically, the effective reduction or destruction of production, e.g., the excessive money given to dairy farmers could be rebuilding schools and cities.

In summary, the manufacture of needed goods or services constitutes production and involves production profits. If the goods or services are unneeded or redundant, then they are not products, and the income derived from them is inflationary returns. When someone receives income from manufacturing unneeded good or services then they are being paid an inflated price, probably subsidized either by political actions or public ignorance. The aforementioned milk glut is an example of political subsidies while the speculative precious metal bubble of the early 1980's was funded by people ignoring the inevitable bust.

Inflationary returns are not production profits for a number of reasons. Behind every dollar of production profit is additional, needed goods or services that people can use in survival. For instance, food is a product up to the point that people are no longer hungry and the income up to that point is production profit. Production profits would no longer describe the income if food were manufactured in excess of demand, e.g., dairy supports. The income from the excessive, unneeded milk are inflationary returns.

Behind each dollar of inflationary return, however, is the handling of old products, the transaction of unneeded goods or services, or the price-gouging of people. Some inflationary returns are acquired, for example, by using one's wealth to speculate on old stocks, sow bellies, and politicians' ears for inflated income. Inflationary returns invariably come from the opposite of production, specifically, the effective reduction or destruction of production, e.g., the excessive money given to dairy farmers could be rebuilding schools and cities.

A very obvious example of the counterproductive nature of inflationary returns was John D. Rockefeller acquiring control of competitors rather than investing in more efficient production of oil. By establishing the Standard Oil Trust, which allowed monopolistic price-gouging through inflated charges, Rockefeller was a recipient of inflationary returns.

A similar situation exists today in which the oil companies have used their windfall income from price deregulation to buy other companies rather than to compete through new and more efficient production. On a smaller scale, when the average person buys an old product (gold or diamonds) or old production (stale stocks rather than fresh issues), they are pursuing inflationary returns through counterproductive speculation. Every wasted dollar is a dollar diverted from improving production, thus, speculative dollars are counterproductive.

The word "profit" should be restricted to capitalistic income derived from production. "Profit" means advance or progression, and is akin to product. New products and new production advance the progress of a people and a civilization. On the other hand, "returns" best characterize the nature of inflationary income. Inflationary income marks and affects a return to a lower level of production and civilization.

Both inflationary returns and production profits are pursued under the banner of free-market capitalism, and people have a capitalistic choice between the two. In choosing between the two, consider this: No society or civilization was ever built on or maintained by inflationary returns. The reason for this is a matter of common sense: no society goes forward through the effective reduction and destruction of production.

Every dollar of inflationary income is a loss of more than the dollar of production profits. Each inflationary dollar is the loss of the products which underlie production profits. When it comes to the products behind inflationary returns, less than nothing is the backing of inflationary gains, for these personal gains are derived from reducing total production. A dollar of inflationary return symbolizes less production.

There is one exception to the rule that inflationary gains have no production backing. The exception is a common product intended to facilitate production: money. Money is a scribbled-on paper product that ends up being over-produced in countries where inflationary returns are permitted to reduce general production. In America, the politicians recurringly turn to the money presses to spur the economy during recessions of production, while, if one looks, the businesses pursing inflationary income are thriving, e.g., banks, financiers, oil and insurance.

Modern politicians do not see how they are legalizing the destruction of production under the cloak of free-market capitalism. They do not capitalistically distinguish between profit from production and returns from inflation. For them, there are no differences in bottom line dollars. Consequently, they are foolishly trying to fight inflation with inflation; they are legalizing inflation.

This lack of discrimination underlies their counterproductive stimulation of the "dollar" handling businesses--banks and stockbrokers. One part of Reaganomics was the tax reduction for the income from the sale of any stock, fresh or stale. Banks are so favored by the tax system that they actually have a negative rate of taxation. For politicians, lower taxes on de facto inflationary returns is viewed as the best course for rejuvenating the American Economy. This course is detrimental to production; it encourages productive people to turn to less productive enterprises because the tax advantages allow greater net income.

Free Market! America was built on a free-market of capitalistic enterprises competing for profit from production, not returns from inflation. Free Market? What an abused and misused phrase, especially when applied to the pursuit of inflationary income and when viewed within the value system of human time, not dollar greed. Inflationary returns result from the recession of production. Inflationary returns generate a loss of freedom for those unemployed as a result of inflation. They return people to a less free state of existence, and they index a return to a less problem-free existence. Quite oppositely, production profits increase the freedom from problems, for there are more needed goods and services.

Inflationary returns are the result of free competition at a gambling game of self-destructive, king-of-the-mountain musical chairs ... with the American production system as the casualty! Are inflationary returns really fair and free? Not if one looks at the loss of freedom that inflation generates.

In the sense of capitalism being activity that increases production per capita, there is no capitalistic choice between production profits and inflationary returns. The choice is between capitalism and decapitalism. Production profits are synonymous with capitalism while inflationary returns effect a decapitalizing of production and employment.

The human choice is between the returns from production-reduction or profit from production-expansion. Yes, Dr. Friedman, each person has the freedom to choose, but what is your value system? In the end, no one beats inflation if all are encouraged to engage in a free-for- all competition in pursuit of inflationary returns at the expense of production profits.

Recent laws have stimulated inflationary returns at the expense of production profits, e.g., unlimited interest on savings, precious metals as retirement investments, and lowered taxes on stock trans actions. As a result of these necrotic laws, will America produce enough for the American people? No! The profit on production investment is increasingly falling below inflationary income. When one considers the inflationary nature of the modern politicians' attempts to mitigate the effects of inflationary suffering, one must ask the tragic question: Has history ever seen such a well-organized rush to destroy a production system?

Beware Of Cliche Catchwords

When "pro-business" merely means pro-symbols of production, and not pro-production, then inflation, unemployment, taxation, and violence are inevitable.

Increased savings and "capital formation" are not the solutions if the brokers, bankers and money-marketeers channel the money into non-production businesses. Production and product shortages will increase, reflecting the "crowding out" of production by non-production businesses. Capital formation is not merely pooling stocks, bonds, or currency; true capital formation occurs when the scribbled- on papers that symbolize wealth and capital are used to form new jobs to utilize more caputs.

If more household heads are put out of work as a result of people concentrating their inspiration and perspiration on all the new financial wonders, no capital formation has occurred. Rather, "capital deformation" results. The economy will suffer production imbalances, shifts, recessions, and collapse. Do not confuse massive growth of scribbled-on paper products (sopps: stocks, bonds, currency, etc.) as being capital formation. If you do, you will see more symbols of production as the substance falters.

"Deregulation" is not the solution if the deregulation catalyzes a greater shift of available capital into pursuit of inflationary returns rather than of production profits; half-solutions are better than no solution if the original problem under regulation still exists.

"Supply-side" economics is no solution if the economic policies only promote increased "productivity" in non-production businesses so as to increase their record levels in symbols of wealth rather than the substance of production. Would your stomach rather have increased bank income or farmers' profits?

The banking deregulation of "interest rates" is no solution if the dollar return on a savings account exceeds the dollar profit of production investment, especially when the banks lend the money to commodity speculators who "crowd out" commodity producers.

Warning: Anyone found stealing lifehours will be forever banned from participation in and rewards of Better Democracy and Capitalism.

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