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Five-Fold Path towards
a Robust Economy

Ways to strengthen local, community, state,
national or regional economies

by Win Wenger, Ph.D.

I hereby suggest five ways in which a local, community, state, national or regional economy can be readily moved toward a stably robust condition.
o Each of these five diverse ways makes stronger use of immediate local resources.

o Each of these five diverse ways is a self-reliant way of moving ahead without waiting upon external help or developments. Meaning, among other things, that no help is required from IMF, the USA, or other international power or institution before desired results can be brought about.

o Each of these five diverse ways can be actualized directly from local resources and through local people.
In economic hard times, nearly everyone suffers at least somewhat while waiting for someone else to do something that will make things work right again. Withheld products and services result in less wealth, less means with which to seek to find means of recovery. Many factors contribute, but it usually takes far longer than it should for economic arrangements to re-work in ways which enable people and resources generally to get productive again.

If we look at the most basic issue and principles, the problem becomes obvious and its solution apparently simple. Once we look at that simple point, then I will propose five different ways for restarting and augmenting the productive use and flow of people and resources characteristic of a stable economy at its most robust.


The basic issue
Ask most people what the most important things are that a market economy does, and they'll say, "Production and distribution."

Not quite.

While these are essential, they are not the most important aspect of a market economy. The main role of a market economy is to serve as a directory.

Usually through some sort of self-adjusting pricing mechanism, a market economy's most crucial function is to serve as a directory steering people and resources toward more and more productive uses. It is precisely that function which falters or fails in economic hard times.

And, losing such direction, people and resources are no longer steered toward more and more productive uses; existing arrangements begin to unravel; and productivity drops, reducing wealth and reducing the resources from which new arrangements must be struck and supported in order for conventional economic recovery to happen. And so the slump goes on and on and on....

Even in economic normal times, for a variety of specific reasons, economies around the world are not doing this primary role of directory very well. Despite relative prosperity in a handful of advantaged nations, the economies of most nations (and in most inner cities in even the prospering countries) are a disaster in this most crucial regard.

And governments perform this directory service far worse, as we've watched the whole communist endeavor join the long dreary list of failed command economies in the dustbin of history.

Within the present defective mechanisms, most of you now reading this are not permitted to perform at your best in, or to properly develop, your most valuable capacities. A few of us get lucky in connecting up with the present system; far more of us are not so lucky. Maybe our own rocket scientists are no longer having to serve burgers at McDonald's restaurants the way they were a few years back; but they are still functioning way below the levels they are capable of serving in—along with so many others.

I weary of talking with highly trained university professors managing copy shops, teachers and engineers who have to eke out a living as security guards. And our U.S. economy is one of the few advantaged ones in the world, booming along at close to what economists consider to be "full employment"! (Maybe the U.S. economic boom can buy Asia and Latin America out of their recessions, but I wouldn't want to count on it.) I don't consider highest-calibre professionals ekeing out a life as bus drivers to be "full employment."

Even in its stronger examples, such as the advantaged U.S. economy of the late 1990s, the pricing mechanism falls far, far short of its essential role as a directory steering people and resources toward more and more valuable uses. It generally runs far better than do authoritarian, command-based systems, but not so much so that we in this country don't hesitate to turn to from-outside-the-marketplace devices when the going gets tough and the pricing directory mechanism comes unglued, to help things get back on track.


How we in America helped deepen
Russia's economic woes

This is an aside, but it helps illustrate the point. When the Soviet Empire collapsed, it was with the expectation and implied promise that to turn to a free market system would bring about more human living conditions, material and otherwise. Then we betrayed that hope. Here is how we did so— We did send over some material aid, but what we also sent over was a flock of economists as advisors, advisors who had ideological blinders on. Among the many things they disregarded was America's own use of outside-the-market devices when the market is out of kilter, to help things get back on track. Our economic advisors thought their mission was to get the Russian and eastern European economies, as quickly as possible, away from an authoritarian command system and throw off all the restraints standing in the way of unmitigated market forces.

Of course the economies in question were in infinitely worse condition to begin with than was ours during the Great Depression, where we most had to turn to outside-the-market mechanisms to contain the damage and to restart key sectors of productive activity. That in itself should have been one good alarm that what our economic advisors were insistently proposing would not work.

The worst part was this:  Our ideological economic advisors were in such haste to cut loose the controls that
  1. They did not only do so without first bothering to ensure that competition was in place in every industry;

  2. They did so without first bothering to ensure that competition was in place in any industry.
Result:  the most extreme case of monopoly pricing inflation on historic record, and a ruin of the economy so profound that, by conventional means at least, it will take a decade or longer before peoples of Russia and Eastern Europe can begin to find decent human living standards. (There are some possible solutions and shortcuts to that problem also, but these will need to be given in another presentation.)

I blame the quality of our educational system for this. I don't think it was any malign intent on the part of the people sending the advisors and making the use of those advisors a requirement for the material resources they were providing as aid—much the way you see the USA and the IMF doing now in Asia or in Latin America.

I once had an amazed conversation with two doctoral Ph.D. candidates in economics at the University of Maryland: neither of the two had ever even heard of the original Adam Smith and The Wealth of Nations, much less had any understanding of the basic mechanisms of a market economy!

Maybe they were atypical, but I've had other amazed conversations in many different fields at many different university and teaching institutions. Don't be too surprised to see my whole dear country, apparent world leader though it is and has been and generous-hearted to boot, not many years hence go shockingly down the tubes through some amazing stupidity or other. The people now running things here just don't know any better. And developments have not yet sobered them to the realization that they've let things get very amiss.


Finding Solutions
Well, in these few paragraphs we've attempted to present what we see to be at least the key part of the problem. Behind the context of those paragraphs, we see the key to be that, within the present imperfect mechanism, most people and most resources and you who are (somewhat patiently, thank you!) reading this are not permitted to perform at your best in, or to properly develop, your most valuable uses and capacities. A few get lucky; most of us fall way short of our potential value.

Another statement of the key is this:  potentially, at least, and probably right now, you have services and resources to contribute, in the complex joint societal endeavor which creates wealth. Other people are in need of your better services and resources—and they, in turn, have also services and resources to contribute. But an impaired Directory or pricing mechanism means that most of those who want and need what you have to offer, can't pay for what you have to offer.—And you can't pay for much of what you yourself need and want from them.

Another statement of the key is simply this:  with those impaired mechanisms, you are left dependent upon questionable structures and focussed not on what you have but on what you don't have.

You know of course from my other writings, and generally, of psychology's first law of behavior:  that you get more of what you reinforce. But the matter goes far beyond even that hugely comprehensive principle.

So long as you are focused on what you don't have, you are dependent upon what others do in order to improve your lot. As you've seen historically and maybe are seeing now, that can be a slow process. And while you wait, you're being unproductive (or at least far less productive than you could be). The very wealth you might be aspiring to doesn't exist, in part because you aren't creating it via your own high and best productive uses.

What's crucial in a down economy is not what people don't have, but what people aren't doing!

Get people doing, get them doing productive things, and the economy starts moving up.

How can this be done? The first of our "five-fold paths" suggests the way to address this issue most directly.
Five-Fold Path, page 2 of 4
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