THE
NATURE
OF
WEALTH
Narrative by Fred Lundgren
Charts & graphs by Jerome Friemel
Chapter Three
The Rules for Unlimited Prosperity
We (the capitalists) can enjoy any degree of prosperity we desire while leaving as many people in poverty as we choose. However, to be inclusive, our capitalist economy must pays itself fairly and adequately at every stage of production, sufficient to insure internal balance. This "balance" is a prerequisite to consistent full employment and optimal production. The Nature Of Wealth argues for a set of rules that define macro-economic fairness and foster economic "balance". In so doing, this book proves the necessity for a fair and balanced economy. We explain WHY every American must be paid a parity price for their domestic product or service in order to grow the American capitalist system in a manner that affords prosperity for all, as opposed to our current system which perpetuates poverty in the midst of plenty. For over a century, the most powerful people on earth have cloaked this truth in the mysticism of so-called "free markets", and by doing so, have committed crimes against humanity sufficiently gruesome to be characterized as economic genocide.
With that statement in tow, please review rules one through fourteen that will insure a balanced economy with a fully employed and prosperous work force.
Rule One
The national minimum wage for an hour of labor must be set by law at a level equal to the parity price for a bushel of wheat. Rule Two
These two prices must be updated yearly and extended from, (or indexed to) the only balanced base period in American history, {1946 through 1952} = 100.
NOTE! National economic balance is impossible if these two prices are artificially set to conform with imbalanced base periods. Today, the only correct answer is $12.50.
Rule Three
The number of persons employed in raw materials production, (Agriculture, Forestry, Fishery, Mining, and Recycling) as a ratio to the total national work force must remain consistent with the state of the arts. This proper or (parity) ratio is currently 1 to 7.5 (circa 1994) and it increases very slowly as technology increases the efficiency of labor and production. This ratio was only 1 to 2 in the year 1900 when a majority of Americans lived, worked and died on farms. Industrialization expanded the ratio to a level of 1 to 5 by the year 1950. As better technology continued to release more and more labor to our cities, this parity ratio eventually expanded to approximately 1 to 7.5. We refer to this ratio as the Parity Labor Ratio The need for adherence to this ratio has been unknown to the masses while being ignored or manipulated by the most powerful in each society. Adherence to the parity labor ratio is a prerequisite to achieving a gainfully employed workforce and full employment.
Rule Four
The ratio of total annual raw materials income (paid by the first buyers at the first points of sale) to total National Income must be the same as the labor ratio. This is the Parity Ratio of Raw Materials Income to National Income. Rule Five
The Government separates National Income into the five segments. The "cost segments" include wages, salaries, supplements to wages and net interest The "income segments" which combine as the total profits of private enterprise include Farm and Non-Farm Proprietors Income, Corporate Profits, and Rental Income. Annual National Income must be created in a fixed ratio of two parts "cost" to one part "income". Stated another way, 66 2/3% of all National Income must be earned by the "cost segments" of wages, salaries, supplements to wages and net interest and 33 1/3% of all National Income must be earned by the "income segments" of Farm and Non-Farm Proprietors Income, Corporate Profits, and rental income. Rule Six
Adherence to rules 1 through 5 yield a National Income "Multiplier" effect whereby one dollar of parity raw materials income generates $7.50 of "Earned" National Income. This multiplier will increase as technology expands the ratios. This is the only path toward the monitization of labor and production. It is the only proven way to replace capital debt expansion with real economic expansion driven by the intelligent manipulation, conversion and utilization of raw materials by skilled labor. Rule Seven
Adherence to rules 1 through 5 produces an annual level of national "Gross Savings" equal to all raw materials income earned annually at the first point of sale. (Gross savings is defined by the Federal Government's Bureau Of Economic Analysis as a nation's gross annual private savings or, the sum of personal savings and gross business savings, after adding or subtracting government surpluses or deficits. Rule Eight
Adherence to rules 1 through 5 also yield a "capital pool" sufficient to fund the next annual cycle of investment. The capital pool is defined as the annual sums of corporate profits, net interest income and rental income. The pool is filled to levels which approximate gross savings or parity raw materials income. The ratio of available funds in the capital pool to annual National Income must remain consistent with technology and expand with the other ratios. Debt must be injected across the economy to permit the flow of goods and services at any time these ratios increase beyond their state of the arts limit. Rule Nine
A nation's total annual return on investment can be accurately calculated (regardless to adherence to the aforementioned rules) by subtracting total annual public and private debt expansion from the capital pool and expressing the net sum as a percentage of Domestic Wealth. Rule Ten
Gross annual raw materials income flows through a nation's economy in its several forms to become the natural floor under the profits of private enterprise. Rule Eleven
Total public and private debt is nothing more than the accumulated loss of National Income over time when state of the art ratios are consistently ignored. These losses originate when raw materials are underpriced (below parity) at the first point of sale thus expanding the ratio beyond said limit. Capital debt expansion, subsidies and ever greater social services will always be necessary to maintain consumption and sustain employment when parity ratios are ignored. Rule Twelve
The "Profits of Private Enterprise" earned during any calendar year will always approximate all parity raw materials income, (paid at the first point of sale) during the previous year. Rule Thirteen
Total checkable deposits, (as calculated by the Federal Reserve) will always approximate raw materials income at parity or, debt expansion plus actual raw materials income which is far less efficient.Achieving economic "balance" and full employment is impossible without adherence to these rules. These rules are the essential elements to the creation of economic lodestars (stars that leads or guides with certainty, such as the North Star), in the expanding universe of active and progressive economies. Dire consequences always accrue to any society when the economy is altered in opposition to these natural parity ratios, because the gradual movement of these ratios is controlled by the expenditure of, and payment for, human and mechanical energy. Therefore, they should only change in response to improvements to technology and refinements in the "State of the Art". PROGRESSMoreover, a close examination of these natural ratios prove why debt cannot be repaid with more public or private debt expansion and why the so-called profits earned from capital debt expansion must eventually become more debt. Failure to obey to these rules has yielded a system so out of balance that Bill Gates has more net worth than the poorest 100 million Americans. Oh, I almost forgot rule fourteen.Rule Fourteen
There is no free lunch!
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"For the study of political economy, you need no special knowledge, no extensive library, no costly laboratory. You do not need textbooks or teachers, if you will but think for yourselves!" Henry George, Economist, speaking at the University of California.
