Supposin': A World of Abundance

Supposin’ we were to design an economic model based on abundance rather than on scarcity, insufficiency, and lack. What if our new trilogy sounded more like:abundance, choice, and accomplishment? What if we applied our laser focus of intelligence, creativity, and energy on inventing and discovering a world of abundance? What would you imagine that new paradigm would look like?

In 1960, when I was a freshman in college, Dr. Maxwell Maltz published his book,Psycho-Cybernetics, A New Way to get more Living out of Life. He claimed that imagination sets the goal picture that activates and guides our automatic achievement mechanism. You may live your life in a world that does not seem perfect, but the doors of opportunity are not all shut and the new frontiers are not all closed. That strongly held imagination, he felt, can essentially determine what we become, because we begin to take courage to bet on our ideas, calculate the risks, and act on our visions and dreams.

When I first read Maxwell Maltz, I responded by thinking, well sure, how else would anything come about, unless someone would first have an idea, then would become convinced of its possibility, and then would risk what it took to see the idea or dream come to pass? Were that not the case, we would never have heard of pendulum clocks, steam engines, cameras, zippers, Velcro, or peanut butter.

But the scary part of the ordeal is that the person involved ultimately determines what is imagined. You can imagine good things, beautiful things, and things of discovery and abundance, or you can allow yourself to imagine bad things, sad things, and things of scarcity and shortage. Then it is natural to set into motion actions of fulfillment that are consistent with your image.

If you believe all is lack, insufficiency, and shortage, the tendency will be to hoard, covet, and redistribute what someone else has for your own advantage. That kind of focus squelches invention and positive discovery and encourages greed, entitlement, and selfish expansionism. It is a closed economy, a zero sum game, and the person must strategize to take his fair share of what presently exists.

I have come to believe that the doctrine of shortage promotes bondage. The doctrine of abundance promotes freedom. One of the weaknesses of the economic model created by Marx, Engels, Lenin, and Trotsky, was that they saw the wealth of the Czars as a thing . . . a pile of stuff. They figured that if they could get their hands on it they, as the politburo, would be able to distribute it according to their dictates and all would live happily ever after. There was nothing included of growth, investment, positive incentive, rewards, enterprise, discovery, or multiplication of production for sustainability. It never dawned on them that production was wealth and income paid the bills.

Years later, when the pile of stuff –the Czar’s wealth– was all gone there was only one option feasible for sustainability: they continued to become what they had thought about all the time. They resorted to military expansionism where they raped and pillaged their neighbors, like Central Asia, and took their stuff to continue to pay the bills.

Another idea Maxwell Maltz talked about was how our own strongly held self image and imagination will essentially determine what we become. I recall how that line of reasoning struck a note of truth with me, because our dad used to caution his three creative boys by telling us, “be alert, because you will ultimately become what you think about all day long.”

In our home as boys, we were never allowed to say “I can’t.” The shortage thing was not an option. If we used that line as an excuse for not doing what we were told, we were given the opportunity to go no farther with what we were doing until we had gone through the exercise of figuring out ten ways, instead of one way, to make it happen. I remember my brother Bill walking through the house with his shoe flapping. Our dad instructed him to tie his canvas tennis shoe so that the tongue wasn’t flapping and his shoe would stay on properly.

Bill made the mistake of saying he couldn’t because he had lost the long shoe string. Thereupon, the two of them sat down and figured out ten different ways to bind up the shoe to keep the tongue from flapping. They solved the problem by using string, wire, bailing twine, an old piece of electric extension cord, and six other ways to tie the shoe. Then our dad would always end up such a session by telling us that it would be far easier on us if we would simply find one good method to take care of the shortage in the first place, rather that needing to go through the experience of finding out how to solve the problem ten different ways after saying “I can’t.”

I became an ardent believer that our imagination will ultimately determine who we are and what we become. Insufficiency can become a self-fulfilling prophesy.

Next Week: Abundance, Choice, and Accomplishment

(Research ideas from Dr. Jackson’s new writing project on Cultural Economics) 

© Dr. James W. Jackson  

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Supposin': What If?

My research for the Cultural Economics writing project has forced me to do a lot of focused thinking. In the last thirty weekly postings I have tried to faithfully present the principles of traditional economics.

Together, we have thought about enterprise, production of goods and services, the concept of money, and who controls the money system. We have investigated banking and its fractional reserve system, and the Federal Reserve System with its control of the money supply. We have discovered the cause of inflation and how we monetize the Federal Debt. We have even looked at the cycles of business recessions and the phenomenon of serious economic depressions. Following our discussions about Keynesian economics, we continued by studying the trilogy of scarcity, choice, and cost and the tragedy of zero sum economic thinking.

I am very eager to get into discussing the idea of how every occurrence of major transformation in this old world takes place at the intersection of culture and economics. We will be taking a look at the ideas of land, labor, capital, and the entrepreneur in relationship to traditions, institutions, families, and individuals. That is at the very heart of cultural economics. But wait a minute. Before we go there, I feel compelled to take a bit of a bird walk to share some things I have been seriously considering lately. And I would like to discuss some of them before we move on.

You will notice at the bottom of all my recent postings it says Research ideas from Dr. Jackson’s new writing project on Cultural Economics. I have been able to freely share concepts and traditions with my reader-friends, fully realizing that some of the issues will never make it into the new book. They may simply add to the collection of paragraphs that end up on the floor of the editing room. But being able to send up trial balloons of ideas into the atmosphere of reason and discussion is pretty stimulating.

C.S. Lewis used to walk about ten miles a day while he was teaching at Oxford University. He used that time to contemplate, dream, and imagine. Suppose there were a world like Narnia.

Suppose it had animals in it. Suppose God wanted to redeem that world as he has ours. Then suppose he had his Son take on an earthly form such as a lion and enter this other world as He did ours.

C.S. Lewis used to refer to his mental “what if” propositions as Supposals. For example, using animals like a lion that would talk, and a witch, and kids entering into another world through the doors of a wardrobe, would be a Supposal. 

Lately, I have been doing some Supposin’ of my own. As a worldwide observer, I can see how the traditional views of the cultures, economies, and behaviors of the present inhabitants of earth have set into motion some very sad consequences. In our previous discussion we talked about how the unquestioning acceptance of thescarcity, choice, and cost trilogy has promoted the expectation of absolute insufficiency, lack, and scarcity of everything. In my opinion, that acceptance has led to fallacious conclusions regarding reality.

Supposin’ . . . what if? What if that premise of insufficiency, lack, and scarcity was not factual or true? What if it was wrong- headed thinking? How would that affect our lives and the lives of our friends? How would that affect our communities and nations? How would that influence the phenomenon of poverty in the world? What if we changed our very paradigm and based our economic model on the concept ofabundance and not shortage?

Supposin’ that instead of spending all our time choosing between alternatives that presume our resources to be either hopelessly limited or gone, we would use our intelligence, creativity, and energy inventing and discovering the world of abundance.

Europeans began using a black shiny rock called coal as energy to cook their food, warm their houses, and produce steam after Marco Polo brought a sample back with him from China. When I was a small boy, my mom used to read me the story about young John D. Rockefeller and how he went to his neighboring state of Pennsylvania in order to check out a new industrial discovery that was called oil. While inspecting a field where the oil had surfaced and had formed a sticky black pond, it was necessary for John and his partner to cross a rickety wooden plank bridge. Half way across, the plank broke and John plummeted into the oily slush below. Covered from head to foot, he scrambled to solid ground. “I see,” said John’s partner, “that you have plunged into this oil business head over heels.” John D. Rockefeller not only established an oil refinery near there, but went on to discover and invent uses for oil, and eventually became president of the Standard Oil Company and, at that time, the wealthiest man in the world.

Who said you could burn coal in the first place? Who said you could use oil as energy? Who knows what great discovery or invention is just around the corner that could change our world as we know it today? Only one thing is known for certain: if we so completely buy into the notion of shortage, depletion, and zero sum behavior, so that we fail to pursue the universe of possibility and opportunity, then we will by default become the ultimate losers.

I am looking forward to sharing in the next few weekly postings some ideas about shortage vs. abundance. I would welcome your ideas and insights, and you can help me by contacting me at press@winstoncrown.com. Who can tell, perhaps all of those paragraphs may not end up on the floor of the editing room after all.

Next Week: Supposin’ a world of abundance

(Research ideas from Dr. Jackson’s new writing project on Cultural Economics) 

© Dr. James W. Jackson  

Permissions granted by Winston-Crown Publishing House

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Cultural Econ.: The Weakness of the Trilogy

We just finished discussing the economic trilogy of scarcity, choice and cost. Resources are considered scarce when they have at least two alternative uses. Something is scarce because we can figure out more uses for an item than there are items. Our wants and desires are limitless, but resources are limited. Ultimately, we must make choices. And the costs of those choices are the forgoing of the next highest alternatives. When we say yes to one alternative, we say no to the other. That is the cost we experience. It is a lost opportunity cost that may or may not have anything to do with dollar amounts on price tags or bar codes. It has, however, everything to do with life.

There would be no such thing as the study of economics as we know it were it not for the trilogy of scarcity, choice, and cost. Economics is a discipline that recognizes and assumes the ultimate proposition that basically everything is scarce and we need formal mechanisms to help us make our choices by more clearly recognizing and accepting the lost opportunity costs incurred.

The trilogy of scarcity, choice and cost is the bedrock premise of economics as we know it.

Individuals are exposed to the basic principles of economics from the cradle. Mommy is the supplier of food; baby is the demander or consumer. Baby, however, is the supplier of peace and quiet and mommy is the demander of peace and quiet. Each learns quickly the terms of the barter. The young child even learns early on that price is the ratio of product values, and that credit for future favors can be purchased in the present and used later.

The scarcity, choice and cost situation pops up very early. “Do you want mommy to continue to rock you?” Baby nods yes . . . “then, stop crying.” “Do you want mommy to put you in your bed?” Baby emphatically shakes head no . . . “then, stop crying.” At a later stage mommy sets out two outfits of clothing on the bed and says, “Today, you get to choose which outfit you want to wear.” “Which toy do you want to take with us in the car?” “Do you want to go to the store with mommy or stay at home with grandma?”

Later on, we teach our kids how to play such games as Monopoly. A little later yet, someone else teaches our kids how to play poker. The games are based on scarcity, choice, and cost. There are only so many houses, so many hotels, and only so much money with the Monopoly game. There are only so many cards and so many options in Poker. One person wins . . . at the expense of the other.

Both games include a striking similarity: . . one player ends up with “more” only as another player ends up with “less.” They are “zero sum games.” The only way one can gain is at the expense of someone else. It is like an apple pie: if one person eats more another person gets less.

Over the years our culture has bought into the economic concept of scarcity, choice,and cost to such a degree that it has become an axiomatic factor of life. There is only so much and there is nothing more. We really have accepted that we live in a closed economy. If you have something it is because someone else does not. You took it away from someone else or you wouldn’t have more.

Throughout the years of being involved in the world of business and economics, and even in my writings about the subjects, there has repeatedly been a subtle gnawing in my subconscious that something was not fitting together correctly. Just because you can deal with the issue of scarcity, choice, and cost, doesn’t necessarily mean that there is no more available than we have chosen to see and utilize.

All scientific thought involves simplification of reality. The real world is far too complex for even the most sophisticated computers to handle, to say nothing of the human mind. So, scientists resort to using models instead. Models use simplified assumptions about some aspect of the real world. Those models, however, are always based on assumed conditions that are simpler than those of the real world, assumptions that are necessarily false. A model of the real world cannot be the real world. The trilogy of scarcity, choice, and cost is a wonderful mechanism to be used for what it was designed. But its assumptions are not veritable reality.

The study of economics as a formal discipline is relatively new. Adam Smith wrote An Inquiry into the Nature and Causes of the Wealth of Nations in 1776, the same year our nation was founded. That’s pretty recent for a disciplinary science. But economic models and handy tools, like production possibility curves and other two dimensional graphs based on scarcity, choice, and cost, have been so helpful that, in my opinion, we have slipped over the edge in our thinking to believe that everything must fit the scarcity model. That is both sad and dangerous. Just because the rooster crows before the dawn does not mean the rooster wakes up the sun.

It becomes very easy to presume that the reason we have an abundance of poor people in the world is because we have a few other people who have grabbed a huge portion of the pie and left everyone else without. The assumption that everything is based on the concept of a closed economy, where all resources are deficient or depleted, will tend to promote the idea of a zero sum economy. That is a circular trap. That is a scary weakness.

If we allow the convenience of the neat model of, scarcity, choice, and cost to persuade us that the zero sum economic concept is true, then our later decisions will be adversely skewed. No longer will we employ creativity and imagination to discover new and additional resources for our problem solving, but, rather, spend all our efforts on trying to make do with only the limited resources with which we are familiar.

We will fall into the trap of thinking that all the gas, oil, and energy resources are owned and controlled by dubious charlatans in the Middle East, and one day in the future we will simply be without those resources. We will start trying to figure the cost to be experienced when the scarcity finally catches up with us, rather than becoming motivated and excited about the world’s largest deposits of potential energy actually having been deposited in basins bordering North Dakota. Or better yet, perhaps a whole new and different concept for energy is just around the corner of being discovered. If we live within the world of scarcity, choice, and cost alone, it will surely become a self-fulfilling prophecy and everything, indeed, will become truly scarce.

The net result of scarcity is poverty. The net result of poverty is dependency.

After traveling in over 150 countries of the world and observing the cultures and economies, I have come to believe that the problem of scarcity can be overcome and the cycle of poverty can be broken. One effective strategy has been the phenomenon of microcredit. In 2006, The Nobel Peace Prize went to Muhammad Yunus for his work providing microcredit to the poor.

The idea germinated in Bangladesh in 1976 with the Garmeen Bank delivering small loans at low interest rates to rural poor. The program became a popular tool for economic development throughout the third world, and sparked a revolution in micro-entrepreneurship. The newly created enterprises generated employment, and the efforts began to create and grow new and real wealth. Today seventy-five percent of all microcredit recipients worldwide are women who are now given a chance to establish a sustainable means of income. Growing the enterprises increases disposable income. That leads to more economic growth and development. The results of the model are just exactly opposite of the zero sum economic idea.

The new business owners of the micro enterprises don’t have more because someone else in the village has less. Others in the village, in fact, also end up with more. Everyone starts to become “better off.” What a glorious experience it is to see the power of debilitating poverty being reversed, and people who have been held down by governments and tradition being given an opportunity to become part of the solution rather than the problem.

The economic trilogy of scarcity, choice, and cost is a wonderful mechanism as long as its use is not allowed to slide into zero sum economic thinking.

Next Week: Supposin’ . . . What if?

(Research ideas from Dr. Jackson’s new writing project on Cultural Economics)

© Dr. James W. Jackson  

Permissions granted by Winston-Crown Publishing House

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Cultural Econ.: Cost

The simple, little economic trilogy of scarcity, choice, and cost may well be one of the most useful concept gadgets in your tool bag of decision making. Keep the tool handy and use it a lot.

One of the most interesting aspects of our present consumer culture is our fixation with the printed price tag. What does this item cost? Or, this week we are rolling back all the prices, or, the cost of this item is reduced until Friday. The cost to be considered in the purchase of a product or service is presented to be on the bar code or price tag. But the money you tender to the cashier may not be the cost at all. The retailer, however, has even narrowed the logic of your decision to purchase down to the common denominator of do I have enough money to buy this?

In your lifetime the culture has even erased the criterion of whether you have enough money or not in your pocket to make the purchase by supplying you with a convenient piece of plastic that nullifies the logic and allows you to make the purchase, regardless. You walk away with your purchase fully confident that you did the really smart thing because you simply could not have lived without the item another day at that irresistible price. I actually know folks who will drive all the way across town to purchase their gasoline if the price is one cent per gallon cheaper than the competition. They spend three dollars to get across town to save twenty-four cents at the pump. What was the real cost?

I remember listening to a reporter’s interview with one of the early astronauts. The reporter’s question was, how do you feel, sitting in a spacecraft that has been built by the cheapest bidder? Our thinking regarding price tags or bids sometimes does not consider the real cost.

In the discipline of economics, cost is viewed through a different set of glasses. Cost is not determined by how much money you spent or how many plastic swipes you transacted. Cost is inexorably linked to scarcity and choice. In fact, scarcity, choice, and cost are at the very heart of the study of economics. When a good or service is scarce it means that the choice of one alternative requires that the next highest alternative be given up. The very existence of alternative uses forces us to make choices. The opportunity cost of any choice is the value of the next best alternative that was lost or forgone in making that choice. The true cost of the alternative that you did not choose may or may not have anything to do with money as represented on a bar code or printed price tag.

It would be easy to give lots of illustrations of foregone opportunity cost: the university student who gives up four years of earned income and pays thousands and thousands of dollars to attend university classes he hopes will better his position for the balance of his life; the girl who gives up marrying her childhood sweetheart in lieu of a musical career in London; the farmer who decides to continue farming the old family acreage instead of selling the property to the big box store.

But I don’t have to go farther to find true-to-life examples than to consider some of my friends from the organization that I love so much: Project C.U.R.E. We have over 16,000 volunteers within the United States at our various warehouse operations and collection cities. Every one of those sixteen thousand individuals has a personal story of scarcity, choice, and cost. The stories are packed with drama and passion because they each represent personal desires and values. None has to come and volunteer. But they faithfully come by the scores . . . but at a cost. What was the value of the alternative that was lost when they decided to forego that next highest alternative and choose to volunteer their time and efforts for no money payment?

In 1999, an operating room nurse named Barb Youngberg came with another nurse friend to check out Project C.U.R.E. They had heard at a hospital staff meeting about the humanitarian organization that was functioning out of the huge Continental Airport hangers at the old Denver Stapleton airport. They were intrigued by what they saw and the idea that their efforts were saving lives all around the world. Barb and her friend made a decision to start sorting medical supplies one night a month for Project C.U.R.E.

As Project C.U.R.E. had to move around the city from one donated location to another, Barb followed and began donating more and more of her time. In 2005, she retired from her hospital job but kept volunteering. In 2007, the doctors discovered that Barb had congestive heart failure. To complicate the diagnostic procedures, they found she was allergic to the dye required for the tests. She knew exactly what the surgery entailed because she had scrubbed down and assisted in many such surgeries in the past.

Just hours after the successful diagnosis, the doctors performed open heart surgery that also included the insertion of a pacemaker. As she lay in the recovery room and then spent two and a half weeks in rehabilitation, she knew she had to make a huge decision. She was now realizing that the years of life she had left were a very scarce commodity. What would she do with those years? She had to make a decision. Would she take it easy on some leisure cruises, or relax and stay around home . . . or what?

Barb made her decision. Just as soon as she was able, she returned to Project C.U.R.E. She had decided to give the best of her life for the rest of her life helping other people be better off. Project C.U.R.E. had just moved into its permanent location near Park Meadows, in Centennial. Barb volunteered to take over the entire bio-med tech area and build it into an efficient and successful department. She already possessed the knowledge of the various pieces of equipment. Over the years of her career she had accumulated the valuable experience of working with the medical machines and pieces of technical equipment. Those were her talents. Now she could manage the inventory and lots of other people to help her build and run a successful department.

When the pieces of bio-med-tech equipment, like x-ray machines, defibrillators, e.k.g. machines, ultrasound machines, or anesthesia machines arrive on Project C.U.R.E.’s docks, Barb Youngberg knows exactly what to do to get those valuable, life-saving items ready to be shipped to the targeted hospitals and clinics in over 130 different countries working with Project C.U.R.E. around the world.

Utilizing the economic trilogy of scarcity, choice, and cost can help us make better decisions throughout our lives. In Barb Youngberg’s case, realizing she faced the scarcity of years, and knowing she had to make a choice, she gave up the options of cruises and leisure in lieu of helping to save countless lives of kids and adults around the world. We salute her for her nearly fourteen years of voluntary service at Project C.U.R.E. and her determination to make good choices.

Next Week: A weakness of the economic trilogy

(Research ideas from Dr. Jackson’s new writing project on Cultural Economics)

© Dr. James W. Jackson  

Permissions granted by Winston-Crown Publishing House

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Cultural Econ.: Choice

So, what is the solution to the predicament of having limited resources in this old world, but having absolutely unlimited needs and wants? Even in this present culture of extreme expectation, and the generational mentality of unbelievable entitlement, you don’t always get everything you want. It seems that there will always be far more uses for a particular resource than there is supply of that resource. Your want toalways gets beat up by your can do!

The simple answer to the sticky wicket question is that you ultimately have to make choices. The discipline of economics is the study of making good choices. Wouldn’t you like to know how to make better choices? Wouldn’t it be a good thing if you could learn to make better decisions so that your life would be better off and more fulfilling? Wouldn’t it be nice if your whole culture, including your government, could learn how to make informed, responsible choices?

To say yes to one thing means we say no to another. It is as simple as that. Yet, choices are closely connected with values, and that takes the issue of choices out of the simple and shoves it into the category of the complex. Would you rather purchase a home in a congested, troublesome neighborhood close to your work, or own a home with a few acres out away from the city, where you can enjoy a quality of life and space enough to raise your family, but spend all your time in your car or on the transit, commuting and arriving at home after your family is already in bed asleep?

In our local county, the residents get all excited about preserving certain pieces of land that perhaps have a lovely view of one of Colorado’s snow-covered mountains. They feel that they have a certain inheritance giving them birthright to always having an unencumbered shot at looking westward at the sunset and seeing that particular mountain. So the residents, especially the ones just across the street from the property, put up campaign signs, run ads in the local paper, hold meetings, and petition the open space committee of the county to purchase the land so that no homes can be built in the whole valley, thus successfully preserving the view.

Of course the action becomes contagious, and the race begins to protect everyone’s view of every beautiful snow-covered mountain. Then it begins to dawn on the people that they have just emptied the coffers of the county to preserve all the views. They have just removed forty-five percent of the open real estate in the county from the property tax rolls, and have, moreover, eliminated the possibility of future residential and commercial development that would have provided financial sustainability in perpetuity. By their choices, they have forfeited the possibility of generating necessary revenue to pay all the bills. But the views are nice, especially for the folks who live just across the street from the property.

Choices can become difficult and complex whether they involve just the individual, the family, the corporation, the community, or the national government. When it comes to dealing with limited resources and unlimited wishes, there will always be tension. The choices we must make as a result of scarcity of resources will always include at least the following issues:

• What should be produced from those limited resources?
• Who should produce and distribute the goods and services?
• How should goods and services be produced?
• For whom should goods and services be produced?             

Next Week: The cost of choices.

(Research ideas from Dr. Jackson’s new writing project on Cultural Economics)

© Dr. James W. Jackson  

Permissions granted by Winston-Crown Publishing House

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Cultural Econ.: Scarcity

When I was growing up, we had a colloquial phrase we used to express something that was really difficult to find. We would say that is scarcer than hen’s teeth. Wow! Everybody knew how scarce hen’s teeth were to find.

When I started studying the subject of economics, I learned a little different meaning of the word scarcity. It wasn’t that things were hard to find, it was that anything capable of having at least two alternative uses is considered scarce. It is scarce because we can figure out more uses for each commodity than there are commodities. Our wants and desires for the things that we can produce from those commodities are limitless. Our resources are limited and our desires and demands are unlimited. Therefore, we live in a world of scarcity. There is just so much of anything and no more.

Now, the questions arise in the end, how will that commodity be used? Who will get to produce something from the commodity? What product will be realized out of the commodity? For whom should the goods or services be made from the commodity? When the commodity is used to produce something, can the commodity be replaced or duplicated? Can it be recycled for another go around?

The question of scarcity is a question of cultural economics because it involves people and their behavior. It is a great study just to observe how people decide to answer the above questions. Everybody would like to have more and better everything, so our unlimited wants are forever smashing into the limits of our resources, forcing us to pick some alternatives and reject others.

When Jackson Brothers Investments was involved in real estate development in the ski areas of Colorado in the late 1960s and 1970s, we owned a motel right in the middle of the Winter Park Village on Highway 40. We wanted to build the local post office there, thinking that if we owned the post office building on our ten acres we would always have a say in where the center of the village would remain. If we could get the contract for the post office, it would also make the remainder of the property surrounding the post office more valuable forever. But we couldn’t use the ground for a post office and more development sites if the motel continued to fill the space.

At that point, the highway property on ten acres in the middle of the village became a scarce commodity. It had at least two viable alternatives for use. Additionally, other people were knocking at our door wanting to buy the property for projects of their own. But, we thought to ourselves, the motel is presently giving us cash flow, and if we tear it down the income will stop. So what should we do? You are right! We scraped it, hauled off the debris, built the post office, and lived happily ever after.

We have to face this economic principle of scarcity every day of our lives. Do we go to the gym and work out next Tuesday after work, or do we use the time to get the oil changed in our car? Time becomes a scarce commodity, and we have unlimited demands on that piece of time. It seems that virtually everything is scarce. We used to think that the air we breathe was a free commodity. But then we realized we had to either keep it clean and breathable, or we could dump garbage into it.

We used to consider the space above the earth as a free good: it just goes on forever. But now we discover that conflicts are even arising over the allocation of orbital slots. They, too, are becoming scarce commodities for our telecommunication satellites. Commercial airlines end up squabbling over new and improved “highways in the skies.” Maybe, the power of gravity that keeps us tethered to this old earth can be used as an example of a remaining free good. But almost everything you can think of is a scarce commodity simply because it has limited uses and we have unlimited desires and demands. So, what does all that have to do with cultural economics?

Next Week: The matter of choice.

(Research ideas from Dr. Jackson's new writing project on Cultural Economics)

© Dr. James W. Jackson  

Permissions granted by Winston-Crown Publishing House

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Cultural Econ.: A Working Definition

I will take the opportunity at the beginning of this new year to thank Winston Crown Publishing House for inviting me to continue writing these articles under their banner. It has been a delight to work with them since their publishing of my book, What’cha Gonna Do With What’cha Got? in1982. I look forward to sharing with my reading friends the ongoing literary adventure of investigation, information, and inspiration. Thanks for the opportunity

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In especially the last twenty-five articles, we have talked a lot about Cultural Economics. Perhaps it is time to inject some basic definitions. The word economicscomes from the Greek words oikos (a house) and nemein (to manage) and quite simply deals with the efficient allocation and management of goods and services.

I like to think of economics as the study of making good choices under conditions of scarcity . . . or even abundance. Economics is not all about charts with axis points, slopes, and curves. To me, economics is all about people. People with their emotions of love, joy, surprise, anger, sadness, and fear make up cultures, and cultures affect economics. And, of course, in turn, the chosen system of economics affects the cultures and individual persons.

Cultural Economics is the branch of economics that concerns itself with the relationship of culture to economic outcomes. It studies how various aspects of human cultures interact with economic events, behaviors and conditions. A given culture will even influence the political system with its traditions, religious beliefs, the formation of institutions, and the value ascribed to individuals.

Sometimes folks raise their eyebrows at me when I suggest to them that the major defense for the existence of economists is to accurately predict the future. They are expected to be fortune tellers. They collect their data about what is apparently going on in the world, compile their evidence, and arrange it neatly on charts and graphs. Then, they go back to their study cubicles and see if their data matches up with what they had been espousing as a theory of truth. There is a supposition with economists that future reality will be an extension of past reality. If they feel their findings are trustworthy enough, they project into the future some expected outcome. If they are right about the future they become acclaimed economists . . . if not, they go to work for the government.

Economics, however, is a great practical exercise and is not a Dismal Science, as Thomas Carlyle referred to it in his essay written in 1849. When we consider that there are well over seven billion individuals alive on earth today, and they are each making scores of individual choices right now, it is a bit overwhelming. Each person is involved in trying to figure out how to make better choices regarding efficiently allocating and managing the resources of land, labor, capital, and entrepreneurs, and how they are going to organize and manage the production of millions and millions of goods and services all at the same time.

In the studying of cultural economics we have the thrill of taking some basic principles of economics and combining them with the unpredictable thoughts, choices, and actions of over seven billion people on earth today. That makes for an exciting adventure that can open our eyes to the understanding of motives, methods, behaviors, successes, and failures regarding our world’s resources and human life styles. Follow the money.

My love and interdisciplinary bias certainly leans toward the behavioral aspects of the study of economics rather than the pure analytical number crunching of the econometrics laboratory. So, the notes and research findings presented in the future articles will be aimed at how people affect economic systems and how cultures are affected by economic choices. Who knows, I might even throw in some moral observations I have witnessed in my travels around the world regarding peoples’ influence on economics, and the economic influences on the cultures of this old world. 

Next Week: Scarcity, choice, and cost.

(Research ideas from Dr. Jackson’s new writing project on Cultural Economics)

© Dr. James W. Jackson  

Permissions granted by Winston-Crown Publishing House

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Power of Story: So Long, FDR and Keynes

There is a lot more to share about the intriguing saga of Franklin Delano Roosevelt and John Maynard Keynes. I think for now, however, when we consider these brief comments, we will have spent enough words out of the bag of history to shed some light on one of the most defining periods of the American story. Every story has a spine. The spine of the American story certainly took a bend during the decades of the late1920s through the end of the 1940s.

Europe and parts of Asia had become mesmerized by the economic and cultural models that included the breaking up of the dynasties, the overpowering of the royalties, and the reshuffling of the world properties. The political models of Communism, Nazism, and Fiat regimes became the vehicles that carried the economic and cultural models down the road of reality.

The ideologies of the rest of the world could not help but influence the American story forever. Progressive socialist thinkers like Keynes really believed that they had the answers for America. The experiment with free market enterprise and capitalism was viewed with disdain. The new game in town was government controlled production and distribution of goods, and also ownership of public resources and services.

The strange story of Roosevelt and Keynes becomes a classic tragedy of success as we continue to discover more information from the 1930s. Each character was becoming more and more co-dependent on the other to find fulfillment of his personal dreams. Roosevelt was willing and eager to keep Keynes’ bathtub of deficit spending full in order to assure his position in history as the world’s preeminent political leader and supplier of great free gifts and, eventually, military supplies and soldiers. Keynes saw his opportunity to use Roosevelt’s unusual political position and the economic aspects of the Great Depression to thrust himself into the position of perhaps history’s most influential evangelist of the economic philosophies of Marx, Engles, and Lenin.

Before we wrap up Keynes and Roosevelt and tuck them away in their crypt of history, there is just one more insightful episode I want to share with you.

Roosevelt, who had run his presidential campaign on balanced budgets, frugality, and the elimination of bureaucratic largess, had been inaugurated March 4, 1933. Somewhere, his economic thinking processes had been restructured, and he had fully bought into the Keynesian economic bathtub thinking. But by late December, 1933, Keynes hit the panic button. Roosevelt was not complying with the implementation of the program quickly enough. He decided that subtle and quiet tutoring of Roosevelt was not going to be enough.

Keynes decided to take his bully pulpit to the whole bully American nation. He would use an open letter to the president to explain what he knew was needed to cure America. He would utilize the invitation of the New York Times to publish his message. The New York Times would publish the article in the December 31 Sunday Edition in a syndicated article that also would be simultaneously printed in newspapers around the country. Keynes could articulate how brilliant he was with his views of curing America, and at the same time force Roosevelt into an open position of accountability to the American people for implementing the programs that would give them more of what they wanted.

That weekend, Roosevelt was on the ship Bremen headed across the Atlantic Ocean. Here are some of the direct quotes from Keynes’ open letter to President Roosevelt:

• You have made yourself the Trustee for those in every country who seek to mend the evils of our condition . . . If you fail, rational change will be gravely prejudiced . . . But if you succeed, new and bolder methods will be tried everywhere, and we may date the first chapter of a new economic era from your accession to office . . .
• At the moment your sympathizers in England are nervous and sometimes despondent. We wonder whether the order of different urgencies is rightly understood, whether there is confusion of aim, and whether some of the advice you get is not crack-brained and queer . . . The average City man believes that you are engaged on a hare-brained expedition in face of competent advice, that the best hope lies in your ridding yourself of your present advisers
• It will be through raising high the prestige of your administration by success in short-range Recovery, that you will have the driving force to accomplish long-range Reform.
•  . . . public authority must be called in aid to create additional current incomes through the expenditure of borrowed or printed money.
• I lay overwhelming emphasis on the increase of national purchasing power resulting from government expenditure . . .
• That is why a war has always caused intense industrial activity. In the past, orthodox finance has regarded a war as the only legitimate excuse for creating employment by government expenditure.
• The set-back which American recovery experienced this autumn was the predictable consequence of the failure of your administration to organize any material increase in new Loan expenditure during the first six months of office. The position six months hence will entirely depend on whether you have been laying the foundations for larger expenditures in the future.
• With these adaptations or enlargements of your existing policies, I should expect a successful outcome with great confidence. How much that would mean, not only to the material prosperity of the United States and the whole world, but in comfort to men’s minds through a restoration of their faith in the wisdom and the power of Government!

As oddly as it may sound, that article by Keynes was exactly what Roosevelt needed and what he keyed on for the rest of his life. Now, the smartest economist in the whole world, Dr. John Maynard Keynes of King’s College in Cambridge, England, had just told the people of America that they would be better off if their president would keep the bathtub full to the brim with deficit expenditures and debt. If he didn’t perform, they, along with the rest of the world, could blame Roosevelt for not taking care of them.

As we can now observe, there could not have been a better set up of circumstances imaginable. The circumstances fatefully allowed each man to find fulfillment of his dream in the actions of the other man. Roosevelt could go on to become the war-time hero and most powerful leader in the world. He had to keep the spending programs going, which would ensure his continued re-elections, because John Maynard Keynes had not only told him, but the entire nation, what he had to do.

Keynes could become the smartest and most respected economist for years to come. He had even predicted that it would take World War II to pay for the extravagant cost of keeping the bathtub full of debt. Roosevelt could continue on with his image of the reluctant president extolling neutrality and isolationism, and still ramp up for war and continue to give away our naval ships to Great Britain at the same time. As Keynes had said, “. . . orthodox finance has regarded a war as the only legitimate excuse for creating employment by government expenditure.”

America would never be quite the same again following the market crash of 1929, the Great Depression, The Roosevelt/Keynes socialist saga, and World War II. That really shouldn’t be all that surprising, since all global transformation takes place at the intersection of culture and economics.

Next Week: What in the world is Cultural Economics? 

(Research ideas from Dr. Jackson’s new writing project on Cultural Economics) 

© Dr. James W. Jackson  

Permissions granted by Winston-Crown Publishing House

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Power of Story: Letters Between Keynes and FDR

It is difficult to grasp the rapid expansion of government programs in the early months of the Roosevelt administration. His advocacy and implementation of government social entities redefined the role of government in the U.S. for coming generations. He saw his New Deal policies not only central to his legacy but to his re-elections.

Franklin D. Roosevelt’s governmental activities, however, cannot be fully understood or appreciated without an understanding of his relationship with John Maynard Keynes. The rest of the world was intrigued and abuzz about the economic and political philosophies of Karl Marx and Vladimir Lenin. Hot new ideas of centralized governments and controlled economies were being touted across Europe and Great Britain. Scuttlebutt had it that capitalism, free market economies, and even democracy could be lumped together in a heap and considered failed relics of another day.

Keynes did not see himself as just another author of economic ideas. His writings portray himself as an historic individual who had the answers to the inadequate and seemingly failed economic systems especially of the UK and America. His confidence and insistence almost spilled over into an elitist position as he endeavored to guide and mentor Roosevelt through the social and economic changes in America.

Much of the Roosevelt and Keynes relationship for years had been left to conjecture. More recently, however, letters between Keynes and Roosevelt have surfaced and been made available to the viewing public. My response, as I study the era more closely, is that of surprise that the U.S. did not travel more quickly and farther down the road of progressive socialism than it did. FDR was never defeated in a presidential election. In history’s supermarket of dictators, eyebrows are usually raised when the Castros, Kim Il Sungs and Robert Mugabes approach that mark of continuous control.

When FDR ran into opposition over his programs of deficit spending, regulation, and unparalleled politics, he sought to enlarge the Supreme Court to guarantee theproper legal interpretations. He lost the battle of direct takeover but was still able to appoint eight of the nine Supreme Court Justices. What followed was a pattern of presidential Executive Orders and a constitutional law revolution that ultimately resulted in the government legally being able to regulate the economy.

I would encourage you to read some of the Keynes/Roosevelt correspondence for yourself. The personal letter, from which I will be quoting here as an example, can be located at www.fdrlibrary.marist.edu/about fdr/pdfs/smFDR-Keynes_1938.pdf. I love it because it was hand-typed on King’s College stationery, Cambridge, UK

In Keynes’ letters he does not hesitate to put pressure on FDR to take control and move America to a centralized, government controlled, economic system. Allow me to share some direct excerpts from the 1938 personal letter from John Maynard Keynes:

• Can your administration escape criticism for the failure of these factors to mature? Take housing. When I was with you three and a half years ago the necessity for effective new measures was evident. I remember vividly my conversations with Riefler at that time. But what happened? Next to nothing. The handling of the housing problem has been really wicked . . . I should advise putting most of your eggs in this basket, caring about this more than about anything, and making absolutely sure they are hatched without delay . . . If a direct subsidy is required to get a move on . . . it should be given without delay or hesitation.
• Next, utilities . . . Why not tackle the problems by insisting that the voting power should belong to the real owners of the equity, and leave the existing organizations undisturbed, so long as the voting power is so rearranged . . . that it cannot be controlled by the holders of a minority of the equity . . . Personally I think there is a great deal to be said for the ownership of all the utilities by publicly owned boards.
• Finally, the railroads. The position there seems to be exactly what it was three or four years ago . . . Nationalize them if the time is ripe.
• Businessmen have a different set of delusions from politicians, and need, therefore, different handling. They are, however, much milder than politicians, at the same time allured and terrified by the glare of publicity, easily persuaded to be “patriots,” perplexed, bemused, indeed terrified, yet only too anxious to take a cheerful view, vain perhaps but very unsure of themselves, pathetically responsive to a kind word. You could do anything you liked with them, if you would treat them (even the big ones) not as wolves and tigers, but as domestic animals by nature, even though they have been badly brought up and not trained as you would wish . . . If you work them into the surly, obstinate, terrified mood, of which domestic animals, wrongly handled, are so capable, the nation’s burden will not get carried to the market . . .
• I accept the view that durable investment must come increasingly under state direction.
• I regard the growth of collective bargaining as essential.
• I approve minimum wage and hour regulation.
• But I am terrified lest progressive causes in all the democratic countries should suffer injury because you have taken too lightly the risk to their prestige, which would result from a failure measured in terms of immediate prosperity. There need be no failure.

It is easy to see how Roosevelt needed Keynes to accomplish his political aspirations, and Keynes needed Roosevelt to accomplish his grand international economic dreams. It was almost as if Keynes was afraid that FDR would not act quickly and completely enough to allow Keynes’ grand ideas to be implemented into America’s economic and political system as true answers sufficient to save the economy and culture. Keynes was trying to establish the shining light of a controlling centralized government, and to extend across the ocean the new titillating socialist experiment.

It seems to me that Keynes saw himself as the economic maestro who was afraid that his pupil would not quite get the scope and importance of the performance and mess up the whole concert, thereby disallowing the maestro his deserved place in history. What a lucid example of cultural economics, where historic transformation was taking place at the intersection of culture and economics.

Next Week: So long, FDR and Keynes

(Research ideas from Dr. Jackson’s new writing project on Cultural Economics)

© Dr. James W. Jackson  

Permissions granted by Winston-Crown Publishing House

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Power of Story: Slippery Flaws of Keynes' Bathtub

Probably, you are a good detective and have already perceived that my love and concern for economics has less to do with graphs, axis points, or shifts and slopes of curves, and more to do with those things behavioral. The classical aspects are certainly important to the presentation of an economic concept, but I am more interested in the why and how everyday people choose to adopt certain economic concepts.

That is why I am a cultural economist, and why I continually repeat that all global transformation takes place at the intersection of culture and economics. In fact, I am coming to believe that all transformation, whether global, national, corporate, institutional, or personal, takes place at the intersection of culture and economics.

When the studies of economies and cultures are combined, it is an exciting and revealing adventure. It can open our eyes to the understanding of motives, methods, behaviors, successes, and failures. Religious beliefs, for example, and political persuasions even influence purchasing patterns. Our economic environment has the flexibility of metamorphosis in reaction to current events and the preferences of respective groups. That makes for an exciting study.

How does the economic system affect a culture? And how does a culture affect an economic system? Those were the questions I would ask myself as I traveled and visited more than 150 different countries of this world. When in Rwanda, I would try to learn about the inequities of the economic model, as well as try to understand the flash points of the culture that would cause strife violent enough to promote the genocide of over a million simple citizens in a thirty day period. In Cambodia, I would try to study why a leader like Pol Pot would torture and kill everyone who was educated and those outside the agrarian culture. During my many trips to Vietnam, I would try to find out why and how the Vietnamese people were becoming such budding entrepreneurs by 2004.

A similar curiosity has made me interested in the economic and cultural shifts that took place in Europe and America during the Great Depression period and the time leading up to World War II. John Maynard Keynes at one point had stated,

There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose. (1) 

I guess I am still curious about what is happening even to this day concerning that insightful statement. As I see the present U.S. Senate and the Federal Reserve chairman (as of December, 2013) encouraging the full acceptance of alternative international currency systems, such as Bitcoin, PayPal, or an existing international credit/debit card, I can’t help but speculate on the effect the debauching of our present currency system would have on the international standard of value traditionally controlled and enjoyed by the U.S. dollar. What would you do for a currency if the dollar becomes a hyper- inflated relic of the past through monetization of uncontrolled deficit spending and debt?

Speaking of Mr. Keynes . . . for one more minute let’s again visit his aggregate expenditure economic model (the bathtub). Let me share here only two of the five historically recognized slippery limitations to Keynes’ theory:

• Balancing the books or the budget is not a priority. It is simply not an issue to the bathtub folks. The idea is to spend your way into prosperity. Spend like you are rich, and the self- fulfilling prophesy will make you rich. Government is the true source of wealth and unending supply.
• There is no way of measuring the real rate of inflation with the model. You have no basic idea of what is happening to the true value of your money because it doesn’t really matter. In our earlier discussions, we carefully examined how arbitrarily increasing the aggregate money supply without increasing products or services into the system simply devalued the currency and forced all prices to go up.

When the kings clipped or drilled out the gold in the coins to make new coins, and used the new coins as additional money, then the value of all the coins was reduced. If you double the supply of money in the system, you nearly cut the value of the present money in half. The Keynesian’s concern is to keep the bathtub full and let the stimulation of the new spending try to cover the gap.

Inflation has historically been measured by the Consumer Price Index (CPI), where the Feds pick a market basket of selected items and track the prices. If the prices go up during the period by 9%, then it is calculated that the inflation rate has increased by 9%. In the 1980s people reacted negatively to the high rates of inflation, so Congress and the Federal Reserve arbitrarily put a cap on how much inflation there could be in the system. They targeted the inflation rate not to exceed say 2.5%. And it didn’t.

We all empirically knew, however, that the prices we were paying were doubling even though the CPI was only increasing by 2.5%. How does a thing like that work? It requires tinkering with the yard stick. It requires changing the items in the market basket that you are pricing, (The Great Inflation Cover-up, Fortune: April 3, 2008). It is only necessary to go back into the market basket of measured products, pull out the expensive items like food, utilities, and housing and replace them with cheap imported goods like $2 shirts from Hong Kong and $1 sox from China. The CPI prices then tend to comply with the targeted percentages. No problem.

On January 25, 2012, the Federal Reserve took it one step farther. They announced that with regard to calculating inflation, the Federal Reserve would no longer be using the CPI, but, rather, a new index they labeled Personal Consumption Expenditures Price Index (PCEP). But the problem is still the ugly gorilla in the room . . . how do you hide or ignore the monetizing of seventeen trillion dollars of deficit spending and debt into our economic system without admitting to hyperinflation? What pin prick of the bubble will cause the loss of confidence in the present currency and economic system and tip over the bath tub? (3)

One of my ongoing concerns is the persistency of the call to keep the bathtub full even though the present level of debt has never before been so great. . When real people in real business situations pursue such lines of business reasoning, they end up in bankruptcy court. And yet, in the October 25, 2013 issue of The Week (p.36), Tim Koechlin pushes his demand, “. . . but, in a stagnant economy like ours, cutting spending is like ‘bloodletting an anemic patient.’ If we want to reduce the jobs deficit, the government needs to spend more . . . .” How will history judge and record this episode?
 

Next Week: Roosevelt and Keynes correspondence

(Research ideas from Dr. Jackson’s new writing project on Cultural Economics)

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