Don't be fooled by economists, experts, and politicians who say that JOBS can be created

If  economists, experts, and politicians say that JOBS can be created, they are creating an illusion in innocent minds.

Jobs are incidental to deliver a product or service. Jobs can't be the goal. 

The focus should be on creating a conducive business environment  where  setting up a business  to deliver a product or service is easy. The entrepreneur decides on techology, location, financing, and manpower for delivering a product or service. The role of entrepreneur is forgotten  by Government policy makers , economists, and experts who also ignore the impact of stringent labour laws, strong unions, minimum wages act, hyper active investment bankers, robotics, and automation.

Economists fail to see reality

 

Economists want name and fame and, if possible, a Nobel Prize without solving any real-world economic problem.

Economic Theory and Economists have failed to recognise combined impact of Investment Bankers, Financial Institutions, Share Market, Trade Unions, and Government policies in killing jobs and job opportunities. A singular goal to satisfy the stock market has influenced management of companies to resort to large scale automation and mergers and acquisitions that has reduced number of jobs despite GDP growing. This state of affairs will only become worse over period of time.

You manage the economy for every citizen's wellbeing and not to satisfy the stock market. A flourishing stock market is no indicator of a robust economy where people in general are not  doing good. The industries in the world needs to strike a balance between technology/manpower to ensure demand for the product and services. A factory with near 100% automation, in the absence of employees will not need, bread, butter, tea, clothing, or cars. Blind automation will kill the economy but economists will escape without seeing reality.

Investment banking and financial speculation has to be segregated from the real economy with no recourse to Government rescue or tax payer’s money. This has to be ensured for the global economy to revive.

 

Blaming Capitalism and free market for Financial Market failures is wrong.

 Blaming Capitalism and free market for Financial Market failures  is wrong. Clubbing Real Economy with Financial market failures is wrong.

Governments, Economists, Policy Makers, and Powerful Bankers are collectively wrong for repeated financial crisis. Banks are assumed to  collect deposits and lend prudently. Banks are assumed to manage their loan accounts or assets. Why should Banks trade in securities like derivatives, shirk their responsibilty to manage their loan assets by securitising them? Why should Banks lend money to speculators like hedge funds, derivative traders etc?

Ordinary citizens whether they are Americans, Europeans, Britishers, Asians  have paid a price for financial failures. 

When financial failure occurs, Banks stop lending to the real economy to give it a facade of economic crisis.

Investment Banks, Hedge Funds, or Financial Institutions trading in Derivatives should not be saved by the Government or Traditional Banks. The world economy will recover only then.

Is economics a science?

 Is economics a science?  Please  read the article by Richard Denniss in the Guardian whose link is given below:

https://www.theguardian.com/commentisfree/2019/oct/30/if-economics-is-a-science-why-isnt-it-being-more-helpful

After reading the above article you will wonder whether Economics can be treated as Science when Economists do not agree on major issues.

Scrap NOBEL PRIZE In Economics

I want readers of this blog to know that world economic crisis will not be resolved by listening to economists. All economists suggestions (tried, tested, and  failed umpteeen times) kills the very economy it intends to revive.

The global economy will be revived only with ideas that are outside the theory of economics.Period.

I have written to the Nobel Committee to scrap Nobel Prize in Economics. The letter is reproduced below:

Dear Sirs,

It is indeed perplexing that despite awarding Nobel Prize in Economics every year based on different topics the world is unable to revive its economy since the internet bubble. It means nothing in economic theory works in practice or reality. Economists ignore the combined effects of printing paper currency, artificial fixing of interest rates, trade unions, minimum wages act, taxes, stock market pressure, role of investment bankers, shirking of responsibilities by banks to manage assets by securitization, unprecedented speculation in currency and commodities many times the size of real economy etc.

The prescriptions of economists kill the very economy they want to revive. No economists are prescribing taming the reckless finance industry that includes banks for the global economy to revive. As long as the derivatives, speculation on currency and commodities etc. continues unabated aided by very low interest rates Global economic mess will persist.

I am not an economist. But, am capable of thinking in ways that can help revive global economy. For example:

1.The jargons of economists like full employment, frictional unemployment, structural unemployment is useless in reality. See the absurdity of economic concept of full employment at 4% or 6% unemployment which in reality means lakhs of people are still to find jobs. Why are economists advocating such an absurd policy as Full Employment? Focusing on jobs is wrong and am willing to debate with any economist.

2.Global trade will be performed by paying in local currency. US exporters to India will get paid in Rupee. Indian exporters to US will get paid in dollars. Trade will balance. This act will get rid of foreign currency speculation.

3. Focus of economists on consumption is wrong. This can also be proved.

Economics is anything but science. The Nobel committee should consider stop awarding Nobel Prize in Economics to save the world.

Thanking you

 

R Narayanaswamy

IGNORE ECONOMISTS IF YOU WANT JOBS

 

Economists including Nobel Laureates ignore irresponsible behaviour of Banks, Investment Bankers, Financial Institutions trading in derivatives including exotic ones which nobody understands including themselves. You (whether you are an American, Canadian, French, German, Indian, Britisher, Spaniard etc.) don't find jobs because Governments have allowed Finance to dominate economic policies.

Mergers and acquisitions in the name of efficiency destroy jobs. Pressure exerted by stock market expectations on Company Managements destroy jobs. Add to this list Trade Unions, Minimum wages act, Outsourcing effect which further destroys jobs. These combined forces resulted in large scale automation, engagement of Robots, Bots etc. further reducing employment opportunities. Capitalism which truly reflects human nature can create employment opportunities. Capitalism and Free Market have earned a bad name because Governments save irresponsible Banks including Investment banks and Financial Institutions. Free Markets do work in real economy. Retail sector is the best example of free market efficiency. Real economy can create job mobility which will reduce income disparity and push up wages. Apple phone is useless for jobs in America if it is manufactured outside USA.

The jargons of economists like full employment, frictional unemployment, structural unemployment is useless in reality. See the absurdity of economic concept of full employment at 4% or 6% unemployment which in reality means lakhs of people are still to find jobs. Why are economists advocating such an absurd policy as Full Employment?

Paul Krugman, a Nobel Laureate in economics made this statement in an interview in 2010:

"We are still at 10% unemployment in the country, with full employment being more like 5%." Mr Paul Krugman an economist can tolerate lakhs of people still unemployed at 5% Full Employment. Do we really need economists like him?

Paul Krugman also wrote a book " The Return of Depression economics and the crisis of 2008". If any government follows his advice then they can be assured of permanent presence of depression economics and persistent crisis.

Genuine Capitalism needed for economy of United States

Irrespective of who rules United States its economy will need economic policies that is different from what Paul Krugman or his likes suggest. Fixing or manipulating interest rates hasn't worked. Government spending or stimulus hasn't worked. Manipulating taxes hasn't worked. To make Americans happy economy has to be run with new ideas that are implementable.

How do we run the US economy to deliver double digit growth and create ample employment opportunities  for Americans? Some of the ideas are highlighted below:

1. Raise Government revenues without resorting to taxes and duties. This will eliminate Government borrowing. Shut the Federal Reserve Bank. The US government has the power to print currency and coins and that power will be limited by the amount of Gold in the possession of the Government.

2. Since Government doesn't have to borrow money there is no need to set interest rates by the Federal Reserve.

3. Regular Banks will function but they will be full reserve banking. Fractional Reserve Banking will be out.

4. Regular banks will pay interest to depositors based on their capacity to attract savers.

5. Regular banks will manage the assets created by them by extending loans. No securitization or off balance sheet trickery.

6. Regular banks accepting deposits will not invest money in the derivatives or futures market.

7.Pension savings of US citizens will be invested in a US government account. The US Government can use the money by paying interest. This act will ensure pensioners savings is not squandered by reckless banks or pension funds.

8. Manufacturing Companies will be funded by Preference Shares paying fixed dividend. The management of the companies will be freed from the pressures of stock market which is a key driver of outsourcing manufacturing, mergers etc which kill both economy and jobs. As fixed dividends outlay will be far lower than equity dividends companies will have more money to reinvest in the business. The value of the company will be its net worth.

9.As businesses can't be saved so jobs can't be saved. Reckless Banks or companies will not be saved with tax payers money. Mismanaged companies can be taken over by other companies.

10. As businesses or banks are free to open and close geuine capitalism will operate creating enough opportunities for people to get jobs and also raise wages. What Americans need is job mobility not job security.

11. Plenty of job opportunities or job mobility will ensure the best working conditions and also raise the wages. Trade Unions can be made redundant.

12. Global trade will be performed by paying in local currency. US exporters to India will get paid in Rupee. Indian exporters to US will get paid in dollars. Trade will balance. This act will get rid of foreign currency speculation.

I want students and professors of MIT, Stanford, Harvard to read this post. 

I also request World Bank and IMF to read this post.

I want the Noble Prize Committee for economics to read this post.

Post Covid 19 economy cannot be revived with pre covid 19 economic policy prescriptions.

Beware of economists who advocate more government control and spending because market economy has failed. In reality, Capitalism has earned a bad name because of the Government act of saving banks who indulge in greed and questionable practices. If you keep aside Banks for a moment, in the real economy producing goods and services businesses open and close down on a regular business. The outstanding example of Genuine Capitalism is in the retail sector where businesses open and close on a regular basis.

The global economy will recover if Banks that are mismanaged are allowed to die or taken over by another bank

The United States is taken as an example to illustrate the point. What is written in this post is applicable to every economy be it Germany, France, United Kingdom, Denmark, Sweden, Canada, Japan, India, Vietnam etc.