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SOME ECONOMIC PROPOSITIONS


	1. In 1973 the U.S. economy is growing very fast as it should.
This produces spot shortages, because the economic servo-mechanism
by which shortages raise prices which raises production operates
with time constants that depend on the technology of the particular
industries, on construction lags, and on the economic situation of
industries related to the given one through the Leontiev matrix.
This can be relieved by good predictions of future demand.

	2. There is a certain parallelism between planning and prediction.
Namely, a good economic plan will make many of the same decisions
that would be made by individual producers if they knew future
demand curves.  There probably are some important discrepancies, however.

	3. There ought to be a social contract that tells the relative
rewards of different occupations.  This contract would be subject to
change by politics and other power struggles but would reduce the amount
of conflict.  This is because economic struggles are needed at present
even to maintain a groups present share of the GNP.  It could be 
accomplished with a universal cost-of-living adjustment to salaries
with a variable deflator to adjust total demand to total supply.
A corresponding regulator on the price side should also exist, but
it should be less rigorous, because of the greater differentiation
of products makes rigid rules difficult to define properly.
	4. Perhaps there ought to be futures markets in more
commodities and in labor, i.e. in such a market one would be
able to buy or sell a man-hour of plumbing in 1976.

	5. The stock, commodity, and real estate brokers can be
and should be substantially wiped out by a uniform computerized
property exchange that everyone could join for a $25 initiation
fee and charges for keeping track of transactions.  Workers have
had to worry about technological unemployment for many years.  Now
it is the brokers' turn.

	6. All technological improvements should produce unemployment;
otherwise they aren't worth making.  Full employment is and should
be assured by a general economic servomechanism.  If we understood
this mechanism better, it would work better.  Probably, a first step
is to provide the government with more precise controls than just
controlling the interest rate and money supply.
One candidate is government purchase and sale of other commodities
than agricultural in order to buffer markets.  Of course, there is a lot
of complaint about how this has worked out in agriculture, but perhaps
the troubles stem from political determination of prices paid in
particular years and also because weather fluctuation generates more
instability in agricultural supply than would be affected elsewhere
in the economy.  Perhaps there should be a rigid rule that the
any government stocks would be reduced to a fixed level, e.g. a
six months supply within say three years and would be bought up
to that level in order to have a supply.  This number would be predictable
in general but all these numbers would be moved in parallel in order
to have a gross economic effect.

	5. Suppose some organization introduced the credit as a
pseudo-monetary unit.  A credit consists of a fixed physical
mixture of commodities, e. g. 5 pounds of steel + 2 gallons
of regular gas + 1 bushel of wheat + one haircut in Denver.
They would buy and sell credits at current prices for the
commodities involved.  Some people might find it worthwhile to
make loans in credits and charge interest in credits.  Thus
credits would be an inflation proof currency.  This would cause
a desire to bargain for wages expressed in credits.  I suppose
it's a bad idea.

	6. Occupations can be divided into two categories - those
that produce a storable product and those that don't.  If the demand
for a non-storable service is miscalculated, there is either a
shortage or an unsalable service while a storable product can
be stockpiled if there is an excess of capacity.  Apart from the
incentive mechanism to achieve it, it seems moderately clear that
the production rates of storable products should not be allowed
to fluctuate rapidly.  They only need to be servoed enough so that
stocks don't get out of hand.  If 10 percent inefficiency is tolerable,
then accumulating a year's supply of something is tolerable.
While a service doesn't have a storable product, delays in obtaining
the service are often tolerable.  For example, there is ordinarily
a delay in obtaining a dentist's appointment.

	7. The oil problem is interesting from the economic point of
view.  There is a large supply of cheaply produced oil in the U.S.,
but the demand exceeds this supply, and foreign oil is expensive.
Maintaining two prices is an unstable situation, since people will
find ways of hoarding the cheap oil.  If people are to have proper
incentive to save oil, they should pay for marginal oil at the
marginal price.  Likewise producers should receive the marginal
price for marginal oil they produce or import.  Assuming there
aren't too many producers and their previous productions are known,
once could assign each producer a quota of oil that he must sell
at the old price.  Above that he can charge the marginal price.
The consumption problem is harder.  If the users are charged an
average price, they haven't enough incentive to save oil.  However,
an individual's normal usage of oil is hard to determine and
subject to finagling.  A good system might be to charge each user
the marginal price, but allow users to apply for subsidies based on
factors in their previous lives that caused them to consume much
oil.  These factors include large poorly insulated houses, living
a long distance from work, having to chauffeur children, having
a second house or a boat a long distance from home, etc.  Each of
these subsidies should decay with time, perhaps rates varying
according to how long it would take to change the situation
impelling the subsidy.  Chauffering and boat subsidies would
decline rapidly, subsidies for uninsulated but insulatable houses
would decline slower, a subsidy based on an owned house would
decline slower than one based on a rented house, etc.