Relay-Version: version B 2.10 5/3/83; site utzoo.UUCP Posting-Version: version B 2.10.2(pesnta.1.2) 9/5/84; site scc.UUCP Path: utzoo!watmath!clyde!burl!ulysses!mhuxj!houxm!vax135!cornell!uw-beaver!tektronix!hplabs!pesnta!scc!steiny From: steiny@scc.UUCP (Don Steiny) Newsgroups: net.flame Subject: Re: economy Message-ID: <165@scc.UUCP> Date: Sat, 22-Sep-84 17:36:00 EDT Article-I.D.: scc.165 Posted: Sat Sep 22 17:36:00 1984 Date-Received: Wed, 26-Sep-84 06:42:00 EDT References: <855@ihuxe.UUCP> Organization: Personetics, Inc. - Santa Cruz, Calif. Lines: 93 *** I am not fluent in economics, but I do not believe that comparing Carter vs. Reagan without considering the oil glut, the subsequent drop in oil prices and the near collapse of OPEC as being contribution factors to both the deterioration and subsequent regeneration of the economy. Martin Gardner had an article several years ago in "Scientific American" in which he pointed out that a model like Laffer's was to simple to be accurate. One observable effect of the current administration's economic policies (and the Federal Resereve is the most important factors) is that we continue to have high interest rates. This has an effect on the national economy and it has an effect on the economies of other countries. The high interest rates makes the United States a good investment. For this reason the dollar has been gaining against other currencies of the world. Lots of foreign money has been coming in to take advantage of the high interest rates. Unfortunately for, say, Brazil and Mexico, they must pay back loans at the high interest rates. This burden of debt lowers the standard of living in the debtor countries. It lowers the price of goods from the third world and greatly increases the cost of United States goods. That is why we have a massive trade deficit. It also puts many banks on shakey ground, because there is always a danger that the social instability caused by the economic burden will bring someone to power that forfits payment. Some people, including Pope John Paul, have bluntly called these economic policies "imperialistic." The whole situation leaves me with many more questions than answers. At the bottom lies the question, "Is the world economy a zero sum game?" A zero sum game is one where there is the same amount of "money" and it distributed among the players during the game. That would mean that if people in the United States were enjoying a higher standard of living someone somewhere else would have a lower standard of living. The high value of the dollar is great for US tourists abroad. The exchange rate is at unprecedented levels. A day's wages for the average computer programmer buys weeks or even months at a luxury motel in Mexico. On the other hand, for a Mexican, a peso buys no more, and because of austurity measures forced on them by irresponsible government spending and the drop in oil prices, the average Mexican's standard of living is worse than it was a few years ago. It takes less American dollars to buy people's labor almost anywhere in the word than it did when Reagan came in office. It seems to me that from one point of view, the policies are imperialistic, or at least we are "gaining" at the direct expense of others. I believe that the cows will come home (so to speak). The whole "illegal immigrant problem" is caused by the economic inequities and the current economic policies have to make it worse. If you have not seen "El Norte" I highly recommend it. It gave me strange dreams for days. It is a story of two Central Americans who make their way to "the North" to become laborers. With events whose horror is increased by not only by their realism, but also by their close proximity, the movie illustrates its central theme: "To the rich, a poor person is just two strong arms." People often come from Latin America so they will not die there. Though Mondale would probably be less imperialistic with his economic policies, who knows for sure if that would be the best in the long run? Throwing money at things does not help anything either. I don't think anyone really knows what to do and what to consider. Maybe the best idea would be to start an international project to model the world economy considering such variables as standard of living, literacy, medical care, and other standards to measure the quality of life. If a model was developed and modified to reflect new variables and relationships that were not thought of at first, maybe it would eventually give us enough information to begin to adjust the system with some idea of the consequence. I think Bush described Reagan's economic policies best: "voodo economics." Of course, "voodo economics" is a self-canceling term. -- scc!steiny Don Steiny - Personetics @ (408) 425-0382 109 Torrey Pine Terr. Santa Cruz, Calif. 95060 ihnp4!pesnta -\ fortune!idsvax -> scc!steiny ucbvax!twg -/