[Rhodes22-list] Reduce your federal income tax (political humor)

[stan]

Dave,

Don't want to see you get discouraged from doing what you do so well because 
of anything I say - I was just picking up on his basic point to run with and 
then putting words in Milt's mouth to make my philosophical points.

Undoubtedly you are correct on the practical aspects and it is big problem 
we will just have to wait until my daughter's book comes out (I think in 
Dec.) on the Bubble

stan/gbi


----- Original Message ----- 
From: <DCLewis1 at aol.com>
To: <rhodes22-list at rhodes22.org>
Sent: Wednesday, June 28, 2006 5:31 PM
Subject: Re: [Rhodes22-list] Reduce your federal income tax (political 
humor)



Stan,

In my view Mr Friedman has an overwhelming handicap, he’s a  tenured
economics professor at a renowned University.  We should not  assume his 
deliberations
have much to do with the real world.

You may be old enough to recall that Mr Friedman played an  dominant  role
during the Nixon administration.  I believe he was on Nixon’s Council  of
Economic Advisors, or something like that.  He claimed that by  modulating 
monetary
policy ($ in circulation) you could control inflation.   After attempting 
the
theory for several years, with no hint of success, he left  government 
service
and commented he was sure he was right but the time constant  for monetary
policy might be very long.  It’s exactly that type of small  theoretical
oversight that plagues his statement in your post.

The small theoretical oversight that appeared in his material in your post
is that In the real world you can’t simply buy from the lowest priced vendor 
to
 maximize your standard of living - unless you have something to sell in
return that generates the liquidity for your purchase.  Exactly what is 
that
thing you are going to sell?  Mr Friedman posits "If you are the best  body 
parts
supplier...."; in fact, there is no reason at all to assume that "we"  are
the best or uniquely capable at anything much less body parts. What we  can
guarantee is that we have some of the highest labor costs  and strictest
environmental regulations in the world - but neither  are a plus.  As a 
practical
matter, anything you can manufacture  in Edenton can be manufactured 
cheaper
somewhere else - so what are  you going to sell back?   There's no 
substantial
protection for  intellectual property in most of the world, so what are you 
going
to sell  back?

>From my perspective it's not enough for Mr Friedman to speculate regarding
".... endless unimagined enterprises ..." that we could pursue to generate 
the
liquidity to support our foreign purchases.  Friedman needs to be  specific
as to how liquidity will be generated, and he needs to demonstrate his
proposal will work in the real world in a credible time frame.  Our 
inability to
generate liquidity is demonstrated in the humongeous trade deficit  that has 
been
going on for decades - it's a big problem.

Dave


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