van der merwes blog site

An economy is an infrastructure for growth similar to a garden. Economies need regulation (tending) just like a garden does.

Whilst establishing a civilisation we humans have made a choice to order our environment. So its is contradictory that some people advocate an unregulated economy.

A self-regulatory (untended)   garden (economy) will let unwanted plants prosper. Weeds will take over and the most useful plants and fruits die out in untended gardens.

The flipside is also true. A good gardener (economist) will not be heavy handed on pesticides. The garden ecosystem require spontaneous interaction between organisms.

“Market forces” is just another name for greed that must be constrained in a civilised society.

The garden is used as a comic metaphor in Being There.
The terms “Capitalism” and “Socialism” introduce ideological prejudices into viewpoints on money and equity .

We can get the exchange rate down by having a negative balance of payments with the rest of the world.

Unfortunately a negative balance of payment causes debt that has to be paid off!
The solution is to invest in large capital projects and infrastructure that will provide a return on investment.
We go into debt and get delayed payback over one or two decades (the return on investment gradually pay off our debt).  In the first decade our exchange rate will go down and we will stimulate our job market through a negative balance of payments.

The caveat with the above strategy is that we have to be smart when we select capital projects (investments).

The crazy thing is that the current New Zealand  government (John Key and friends) is doing exactly the opposite. The government is hiking up the exchange rate by signalling that we are going to sell our assets (achieving a good balance of payments, but destroying our ability to export).  As a double whammy the income from sold assets will go elsewhere, causing a negative balance of payments in the future.

The only way to have a healthy economy is to have one that produces, and for that we need infrastructure.

One of the things that is bothering me is obscene salaries. Some CEO’s earn more in a day than many people earn in a year.

We can resolve this by legislating that organisations may not pay anybody ten times  more than any wage in their organisation.
So a CEO can earn no more than ten times the minimum wage paid by their organisation.

This may also be the most effective way to lift wages above the minimum wage.