The economics Page

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The Third Front is perhaps the least easy to deal with and yet the most crucial of all. It is the most ignored by conventional parties because it is the least understood. The Theological Front is as full of conflict and confusion as the Economic Front however, most people grasp the idea of a war between Good and Evil. We do not need to write pages of carefully knit arguments to illustrate a conflict between what is good and what is harmful. But in economics the line between good and evil appears less well defined and discussions regarding good and evil inappropriate within the context of a free market.

The Third Front centers on the issue of freeloading and how to eliminate it. Finding a solution to liberalism and its free loading is the silver bullet that eliminates unemployment, debt, poverty, pollution, taxation and waste of all kinds. These things are not natural events, they are not the consequences of some natural law, they are human generated events, created by a system or systems that to some degree reward greed. 

Normally job creation is considered the responsibility of businesses and governments. If one understands how the economy works, it is obvious that job creation is a task for the community as a whole. If we leave the process up to any other group than the community as a whole the process is likely to demonstrate weaknesses in some area.

Job creation projects work best when they include the producers of assets. It is easy to notice the worker and the consumer are generally the same person.

Consumers create jobs by making use of the goods and services provided to them by their other identity, the worker. Businesses and governments can and do make goods and services available, but it is the consumer spending his or her money made as a worker that creates the Demand that decide what jobs are needed. If we think about the process, it is easy to see consumers create jobs based on what is important to them. 

What is a job but me needing you to help me. What is an economy but others who need me to help them and you? 

No matter what anyone tells you an economy is just people helping one another.

To create jobs means we find new ways of helping one another. The most direct way to do this is by means of an Exchange.

No one works globally or buys globally; we work and buy in a very limited area and this area is generally a local community. A local community’s wants and needs, is more efficiently provided by a local market.

To create jobs a group of people who want to help one another sets up a way to measure the value of jobs done. The value of a job is measured by a voucher issued on the equity of the market. The market being the total value of all the jobs done in the local economy.

Equity is simply wealth or capital. If 100 persons donate $100.00 each, then the available capital is $100 x 100 = $10,000.00. If $30,000.00 of goods and services are donated as well, an additional $30,000.00 in equity or $40,000.00 in capital is available.

Preferred shares are units that measure the value within a community. Preferred shares can be issued in units that are multiples of each in the same way conventional currencies are issued. 

Any costs we pay that we did not create is a social cost. Social costs are such things as unemployment, poverty, debt, inflation, taxation, pollution, business cycles and all those things that transfer costs from one agent that created the cost onto society and future generations.

It may appear to be smart to avoid paying costs one creates. The free market suggests this gives an advantage. The hunter that can access a kill made by another hunter save himself a lot of calories and risk; at least potentially.

But how do we do the accounting?

A business that closes and lays off 3000 workers may have no choice within the present economic system. However, the choices that led up to the firings need not have had anything to do with the community that is now burdened with the costs of the 3000 unemployed persons.

The business that shuts down and lays-off 700 employees may feel similarly pressured though the owner may well decide to move operations to China or some other site. The owner reaps the reward of cheaper labour and an open market to his goods. It is the best of both worlds for the manufacturer. But the company is not paying the full costs of the move as the costs created by the lay offs are off the books.

The same holds true when a manufacturing establishment pollutes a stream. The costs of the chemicals are a cost of the company. If these chemicals are disposed of in a safe way this is an additional cost. If the chemicals are dumped in a river then the company avoids the cost of their disposal. This is a cost that is externalized onto the wider community. Perhaps the community loses a fishery or even human life’s due to the pollution. But it is costs that the company may be able to avoid paying.

These kinds of situations are not uncommon, and the state must exercise a great deal of oversight at considerable cost to prevent companies and individuals from doing what may make sense from an individual perspective but not from the perspective of a state that usually must cover any costs avoided by the private sector.

The state covers the overage of the private sector because the private sector and the state have a symbiotic relationship. The state legitimizes the private sector such as it is and cannot abandon them when they incur costs they cannot sustain as it would require us all to re-think this system. The right and left to a large extent feed off of each other. No one wants to admit they are part of the problem. It is always the other person who needs fixing. For 6000 years we have been fighting to fix the blame elsewhere, it is what fuels the left/right debate.

Most people prefer a degree of laxness. They do not want to be in an environment governed by implacable rules. Even if they obey the rules they want the freedom to be able to fudge obedience now and then, the sense that they could beat the odds if the choose. 

Dictatorships are viewed by most as oppressive systems they would as soon die opposing as live under. But, what is it we are actually opposing? Do we oppose the rule of law, do we oppose the idea of morality or the concept of doing what is right? The bible is a book that demands we do the right thing, is this not dictatorial? What about a system in we all have to pay the costs we create? Is this unjust? We seem to think so. We want to have the freedom to throw cigarette butts out the car window even through this may case forest fires. We want to be able to speed despite the people killed because we, unlike them, know what we are doing and can handle a car travelling at high speeds.

We want laws against theft for other people because we know some people are just criminals and need to be controlled, but we reject too much policing for ourselves because we understand the spirit of the law and know when taking things is not that big of a deal.

There are a lot of reasons to be nervous about being dictated to by human beings, but we ought to be honored to be dictated to by God. We ought to want to be dictated to by moral principles. There ought to be a strong desire to be dictated to by reason and logic. Too often it seems as if we get caught up in the moment and just want to let the experience dictate our response.

Social costs are costs we create that we do not cover and often cannot cover. Murder is one of those costs which cannot be paid for not even with our own death. That level of harm cannot be reversed or compensated for.

But we do not want to be dictated to by justice. We want a system that is more forgiving and tolerant than the one described in Scripture. We do not want to live up to that high a standard.

Capitalism gives us a free market in which we buy what we want according to the price of the product. It is to our benefit if the price of the produce does not equate its cost of production. We benefit, or we feel we do.

If the production process pollutes a stream and society cleans this up, we still get the cheaper product and only a small percentage of the clean up costs. We feel we come out ahead. But we are getting a small percentage of all the social costs created. Does it help to pay 10% of $100.00 tend times or one flat charge of $100.00? The point is in this present system we have no idea of the extent of the social costs. Pollution, unemployment, debt, poverty and crime are all social costs, and all require we pay towards their reduction. We have no idea what the totals are nor what the costs would have been had these social costs been applied to the source that created them.

If producing a newspaper pollutes a stream, why ought not the full costs be applied to the newspaper? Why ought society to pay for the pollution in lost amenities and clean up costs? If the paper cannot survive when the full costs of production are applied to the product then by the principles of the free market ought the newspaper to be in business? If the cost of having some products available is to have society subsidize the product ought not society to own the production facility outright? If society ends up paying the costs of production, then by rights society ought to own the facility that is creating the costs.

This is not a suggestion the state rather than an agent ought to own the productive assets, or capital. State ownership does not prevent the formation of social costs in fact just the opposite.

If the system does not contain all costs then the system must expand to embrace all those who pay the costs, that is all stakeholders need to be included in the cost-creating activity. Exchanges bring all stakeholders to the table. All costs are by this means kept within the productive process and the products and services produced carry a price that reflects their true cost of production. Exchanges eliminate social costs.

Free Trade

The nation is not supposed to be run as a service of the state. A profitable economy is not the first priority of the state because governments are not the reason why the nation exists. The nation is God's gift to us. Many otherwise reasonable people and politicians who ought to know better have been misled by Free Trade rhetoric. If you do not agree with open border immigration do not side with those who advocate open border trade. A nation must always have the option of shutting down its borders for the sake of national security and national benefit. Some things ought not to enter our property; our lands or our culture. We ought always to have the right of choice and the power to say, no!

A community ought not be against imports, but the true cost of the import has to be established. If a business sheds 3000 persons and imports what it used to produce the cost of the entire policy has to be added to the price of the import. The company in fact has to pay the cost of resettling these displaced workers or the savings for the community is from the position of the community, illusory.

​Exchanges allow communities to determine the true cost of imports. Free Trade is not a viable option. It leads to the loss of national security and the loss of the people control of their communities and economies. Free Trade is not socially neutral. Ensure your party and political candidate restricts all imports to those that are specifically beneficial to the local economy. Support Ethical Trade by promoting the use of Exchanges.

Globalism  

Globalism is the phenomenon of multinational corporations taking power from the nation state with the assistance of liberal governments to create international markets. Globalism is the new face of fascism. It is pursued through Free Trade, and Inter-governmental agencies that gradually supersede and marginalize the state. The EU and UN are prime examples of the kind of organizations globalists support, (using your tax dollars).

Globalism is the natural outgrowth of liberalism and a natural consequence of formulating and prioritizing social agendas by the state. The U.N. is the ultimate expression of the liberal belief that the end justifies the means.

Exchanges systematically strip power from the center and use these resources to build the church. In building the church is power returned to those who have a vested interest in maintaining the nation state; the people of God.

Globalism is of necessity socially nihilistic, it is destructive of the social structure. It plays one group off against the other as it consolidates world power in the hands of a global elite.

Businesses exist because they are useful and because the people who start them want to be useful. Getting involved in business is the best way to feel useful. Being in a business of your own gives our life more meaning. 

An Exchange is a business package usable by anyone, anywhere. The Exchange model makes it possible for anyone, anywhere, to start a business. An Exchanges only needs people to work. Two or three people are the minimum number of persons an Exchange needs to start a business. The more people the better the Exchange program works up to a point. Ten or fifteen people are a good number but more than this and people no longer are able to form relationships with everyone in the group.

Starting a business is about forming relationship. A business is not about capital or making a profit. These are lies created by Satan to lead believers astray. The number of persons we can connect with at one time cannot be exceeded. This means no more than twenty persons should be part of the same Exchange. If the group grows lager than this, it separates into two groups. Each person picks who he or she will associate with in the new daughter cells, but the division ought to be roughly equal.

There are several different scenarios on how Exchanges can be formed. These are mocked up in the section on Exchanges. This material will not be duplicated here. What is to be stressed here is the simplicity of the set up. Exchanges are about forming relationships. The Exchange model is designed to encourage members to help members. The focus of an Exchange is strictly internal. Think of what is being created as a social network or tribe. What an Exchange does is stop freeloading and by this means an Exchange enhances the relationship experience. Exchange based relationships remove the risk that limits business formation and success.

In a normal business set up capital is accumulated and invested. Capital in a conventional business is always at risk of being lost. This is why it is risky to set up a business the conventional way. The Exchange business plan overcomes the problem of starting a business. We promise that anyone anywhere can start a business using the Exchange model.

The issues with starting a business are the same ones raised when the production of social goods is discussed. People claim businesses are not able to provide social goods, when it fact everything of value created in society has been provided by businesses.

Governments do not build roads, nor do they create the resources to build roads. Governments take assets needed to get roads and other public works built and commit them to a project they want to see built. 

In this same sense capitalists do not start businesses, nor do they create the resources needed to start a business. Capitalists amass the capital that allows them to transfer existing resources to a location where the business will be started. It is always a community or part thereof, that starts a business. Capitalists take the credit but lets see one start a business without the existence of a community.

All that is needed to build a road or start a business is to have the resources that exist transferred to the proper location to build a road or start a business.

So, for sake of argument lets assume xyz have between them the resources (r) to start business B. 

They could take these resources to a particular location, but that is not a business, all they would have is resources piled in the same general location.

Capital is not the crucial issue. This is where capitalists have misled generations of people. The key to starting a business is the same key that creates an economy or enables it to exist. All that is needed to do anything is people. More specifically we need organization. If we have people and they are organized everything that is possibly becomes possible.

To understand the key to starting a business we need to look at a situation in which businesses do not exist. Such environments have lasted thousands of years without anyone starting a business. Capitalists are very frustrated by this. Most of them think economic development is a mystical knowledge hidden from most men.

Think of a primitive culture, a tribal society in which every man builds his tools and weapons and the woman all make their families clothes and farms to grow the family food.

No family needs any other family. There will be some trade, some sharing, some support as in times of war. But there is no economy as we know it and no businesses. 

The reason for this is easy to see. Why would you buy a bow from me when it looks exactly like the bow you made for yourself? Why would my wife buy yam from you when it is the same yam as my wife grows in her own plots of land?

The key to an economy is specialization. Until I see that your bow is superior to mine and your wife sees the yams grown by my wife as preferable to her own, there can be no basis on which to trade.

Still, would it not make sense to specialize regardless? Would it not make sense for one person to grow yam and another to grow banana? Would it not make sense to have one man build bows and arrows while others hunted? But to have this level of specialization there needs to be trust. You and the tribe need to know my hunting value equals the value of the arrows you provide. The yam farmer needs to know the value of the yam he or she farms, equals the value of the bananas, the banana grower produces. Tribes who cannot satisfy this basic dilemma, never develop markets.

Money is a measure of value. Currency was created to give us a way to quantify value in the same way we quantify length and weight. These are totally arbitrary units and totally conceptual, but they give us a way to quantify what is otherwise a subjective estimation.

Being sophisticated persons, individuals in a modern economy understand the merits of specialization and the idea of quantified value. Despite this we are only marginally better at setting up businesses.

When a capitalist amasses capital and concentrates it in a single location, he arranges capital in such a way that it forces specialization. There are only so many machines, so many tools, so many spots on the production line and so on. There are also people who know what the end product looks like and how to divide the work into discrete units.

But what of three to fifteen average individuals who all have different skills and interests? How do they set up a business? Unless a random group can set up a business, anywhere at anytime, we cannot say we have solved the problem.

Under capitalism capital is accumulated to fashion a business that will target a group who the entrepreneur believes has need of the goods or services he or she provides. There is a lot of risk because it is easy to be wrong. Most businesses do not last five years and a good many of the remainder fail within ten years due to owner burnout. The demands on a person who starts a new business is too much for most people to endure for long periods of time, especially when and if the dreams of immediate wealth are not manifested.

But given ten persons who are only related in the most casual of ways how do they create a business?

The error the world has made is thinking businesses consist of capital. As was mentioned above, the key ingredient is specialization. All of us are unique. Specialization is built in humanity. We are created as job creating organisms. That is our purpose.

When the bible says we are to do works of faith this is tantamount to saying we need to specialize and therefore create businesses or expand existing businesses. In another sense we are to create value. The formation of a business really is just a matter of creating a works-based value creating activity. All this requires is people. Value is added by transforming an asset into a format that makes it more useful to someone else. In capitalism this is under the authority of one person.   The Bible uses a more continuous and decentralized process for stating a business, but calls the product a church we call it an Exchange.

Three people decide to start a business. We call the business an Exchange. Exchanges are not just a business but markets also. The business does not focus on external clients but on internal transactions. Exchanges are akin to a business that exists to make life better for its workers.

This may seem irrational at first. A business that cannot get beyond selling to family and friends, rarely last beyond the first few months. How can a business survive selling to itself?

But we are looking at business as a way to sell goods and services and this is the wrong way to look at business formation. A business is a relationship forming activity.

To understand why the Exchange model is superior to anything that exists at present we need to understand the nature of specialization and how specialization generates wealth.

A transaction is an exchange between two producers, each producer is a specialist and the exchange takes advantage of the special skills of each participant in the transaction.

We have already noted that two identical producers have no need for each other and no foundation on which to transact business. It is the realization of the uniqueness of each of us that enables transactions to occur. Think of this. It is because God made us unique individuals that we are able to participate in an economy. Indeed, if one thinks of it, the fact that we are unique means we are failing to make use of the situation if we do not start a business. Those not involved in business never reach their full potential.

This being said what is our purpose but to help one another in our own unique way. What is the best way to do this but within the context of a business? The bible calls this a church because it is not what the world normally thinks a business is. Exchanges are not what the world thinks a business is but it is not what the world has been calling a church either. Regardless what label one wishes to put on the way humans help one another, we do exist to help one another, and this help is best done within a business environment. We work best within a business because it is as a business that we produce value in a measurable or quantifiable way.

It does not matter who comes together with whom. We are all unique. We all have specialized skills and approaches. Any three people coming together to create a business is no more complicated than any other three people deciding to help each other in a formal way. We all help each other regardless. The unique element an Exchange adds is a way to make the action of helping someone, quantifiable.

Participants come together to help one another. This is a small step up from helping one another as the opportunity presents itself. Forming an Exchange simply moves what is ad hoc to what is more structured.

The important thing is the intent. Participants want to be useful, they want to add value. This is not a conventional business where the participants want to engage in a one-dimensional transaction in which money is received and a predetermined response given. Exchange operations are more akin to relationship building. The participants do not set out the terms of engagement. The one needing help reaches out to the others and if they can they help in the way they can, to the extent they are able. Unlike a purely friendship-based exchange the helpers get paid. This is where we need to understand the nature of money and how Exchanges are set up. 

Investors do not capitalize Positive Exchanges with the assets usually required to start a business. The first step is to create the relationships that serve as the foundation of a republic. The Exchange flows from these relationships. The Exchange can be registered as a not-for-profit charitable institution if this seems advisable to the members, but it is not strictly necessary.

A form of accounting is also created. This if a flexible option. The members could possibly use bills of domestic currency marked in such a way to denote these bills as units of account, to be used in the Exchange. This is not an option if the marking of domestic currency units is illegal. Cash cards, local currencies, IOU’s can all be used as a unit of account.

It is preferred if something with no market value is used.

The Exchange can be seeded by each participant being given a set amount of the unit of account so they can access whatever goods and services the Exchange offers. Alternatively, the members can earn their income.

For the purposes of this illustration we will call the unit of account a prefer. Prefers are preferred shares issued on the value of the assets belonging to the exchange.

Prefers are issued in multiples of itself in the same way domestic currency is. 

Prefers being issued on the value of the Exchange are always backed by the equity in the Exchange, so risk is eliminated for the members. In the set up we are discussing here no investments of tools or equipment were made so the Exchange has no assets on which to issue preferred shares. However, when x helps y this creates value for the Exchange. Let’s assume x has worked for one day at the agreed upon rate of 15 preferred shares an hour. For convenience prefers are issued at par with the domestic currency units.

X earns 8x15 prefers or P120.00. This gives the Exchange equity in the amount of 120 preferred shares. Each share being valued at P1.00.

The same holds true if goods were being produced. A corporation that builds cars creates equity as it produces cars for sale, thus the equity of the Exchange advances as goods and services are produced, giving the Exchange the value on which to issue currency to the producer.

A woman comes over and helps a neighbor. This is an informal business. Good neighbors have a relationship. They help one another. What is missing is a formal way to keep accounts. Starting an Exchange simply allows what has been going on since the dawn of time to continue to be done on a more formal basis.

Over time more people join the Exchange. When the Exchange gets unwieldy members split into two or more groups, each group is specialized in some way.

Because the model is relationship driven each person seeks to help in anyway, he or she can but at the same time the tendency will be to utilize the persons special skills. If one has the option one will ask a plumber to help with a plumbing job and a strong young man to help with labor intensive tasks. All of this is organic. Exchanges do not require a highly paid executive telling each person where to go and when.

It also stands to reason when an Exchange becomes over-sized those with similar skills will gravitate to the same Exchange. Over time the Exchange will develop structure organically. Plumbers will align with plumbers and trades with trades. Office workers will align according to their specialty and these will align with other white-collar workers. Ultimately the population will be organized at the macroeconomic level without the need for any kind of administrative oversight.

For the details please refer to the section on Exchanges.

The point of this short presentation is to demonstrate that a business is more about relationships than about profiteering and that an Exchange based on relationships can be established by anyone, anywhere and will grow and diversify simply because people are unique and naturally tend towards helping in specialized ways. Over time this will create more complex organizations consistent with a highly developed and sophisticated economy.