Other Money Perspectives

The Form of Money

Money by Edwin Walter Kemmerer, Princeton, 1935

Money is a comparatively modern device. Our earliest record of coin dates back to the eleventh century before Christ in China, although at that time man had been on the earth probably a million or more years. Goods were exchanged long before money existed, and the origin of exchange was in gifts. One would make a present to another in the hope of obtaining a present in return. Our modern customs in regard to Christmas and birthday presents are reminiscent of these primitive forms of exchange.

Mammon by Robert Graves, Annual Oration, London School of Economics, 1963

Let us go back farther in ancient history, to the idea of barter; and beyond that to the idea of obligatory gift-exchanges; and beyond that, to the still purer idea of unconditional gift. What we now call ‘finance’ is, I hold, an intellectual perversion of what began as warm human love.

A People’s History of the United States by Howard Zinn

Everyone could share the routine but necessary jobs for a few hours a day, and leave most of the time free for enjoyment, creativity, labors of love, and yet produce enough for an equal and ample distribution of goods.

Alternate Forms of Money

The Form of Money

In the looming eventuality beyond Legal Tender, commodities will always be front runners as dominant forms of money. As mentioned in Money Defined, which commodity transforms into or out of the category of ‘money’ is a Darwinian selection process determined by the Market. Precious metals always have, and always will, have roles as forms of money, as do most other commodities.

With that said, there is one commodity that is recent in the history of humans, and that’s electricity. Electricity is now a primary societal need; its importance is obvious. To not have electricity is, and would be, severely disruptive.

The intrinsic value of an electrical unit, measured in kilowatt-hours (kWh), is uniform and measurable. One root of all comparative valuation could be a kilowatt-hour, kWh. A 100 Watt light bulb on for 10 hours is 1 kWh. The relationship of a kilowatt-hour with its energy source would become primary societal knowledge.

Oil, natural gas, coal, nuclear, and hydro are the predominate sources of energy used in the generation of electricity. Solar, wind, bio, and storage are rapidly emerging energy sources. To ‘save money’ would be to save electricity; perhaps enough to rapidly eliminate the need for carbon-based generation.

The utility industry is currently undergoing an enormous change. The old utility model has large concentrated facilities to generate electricity (coal, nuclear, natural gas) and distributes that electricity through the grid, a one way flow. The new emerging model has many electrical sources of generation (solar, wind, bio, storage), which tend to be smaller in generation and more geographically dispersed.

The challenge is to create macro and micro grids that can integrate all the energy technologies, balance generation with demand, be dependent and resilient, and bill appropriately. In essence, the grid becomes a clearinghouse for kWh exchange, an electrical form of money, comparative with all other forms of money.

The logistical details of how an actual transaction occurs using the kWh as a form of money becomes the project deliverable. It takes a lot of people to operate and maintain the grid, and they have needs like everyone else, the basis of trade with others, the Market.

Constitution Series

This series draws primarily from two primary sources: An Economic Interpretation of the Constitution of the United States by Charles Beard, 1913, and The Anti-Federalists by Jackson Main, 1961.

Charles Austin Beard [1874-1948] is widely regarded as one of the most influential American historians of the early 20th century. He is most widely known for his radical re-evaluation of the Founding Fathers of the United States, whom he believed were more motivated by economics than by philosophical principles.

It is difficult to conceive of the Constitution as an economic document. It places no property qualifications on voters or offices; it gives no outward recognition of any economic groups in society; it mentions no special privileges to be conferred upon any class. The concept of the Constitution as a piece of abstract legislation reflecting no group interests and recognizing no economic antagonisms is entirely false. It was an economic document drawn with superb skill by men whose property interests were immediately at stake.

Jackson Main [1917-2003, Academic and Historian]:

I had chosen to tackle Beard’s Economic Interpretation with the notion that Beard erred, but discovered that the secondary literature supported him, at least in general if not in detail.

The Power of the Purse by E. James Ferguson, 1961, Excerpt

Beard’s major thesis that the Constitution was the handiwork of the classes of American society possessing status and property cannot be ascribed to him alone. What shocked Beard’s contemporaries and still provokes the most criticism was his purported demonstration that many of the founding fathers held securities and stood to profit from their work. Although his declared object was merely to identify the founders as members of an economic class, the implication was that they had a profit motive.

Howard Zinn:

When economic interest is seen behind the political clauses of the Constitution, then the document becomes not simply the work of wise men trying to establish a decent and orderly society, but the work of certain groups trying to maintain their privileges, while giving just enough rights and liberties to enough of the people to ensure popular support. The American system is the most ingenious system of control in world history.

Cornell Chronicle: Scholars explore Constitution's history in May 26 panel

http://www.news.cornell.edu/stories/2016/06/scholars-explore-constitutions-history-may-26-panel

21 Jun 2016

Klarman, Professor at Harvard Law School, in his forthcoming book, “The Framers’ Coup: The Making of the United States Constitution,” explains how and why the constitution that was ratified differs from what was expected. It gave the federal government almost unlimited taxing power and military power, along with the power to regulate commerce. The goal of the framers was to ensure that the federal government never fell under the sway of populist demands for debt relief laws.

Series:

The Articles of Confederation

The First President - John Hanson

Class Distinctions 1780's

Debt and Taxes 1780's

The Antifederalists

1780's Post Revolution Depression

Shays' Rebellion Series 

Society of Cincinnati

Federalists Push for a Constitution

The Federalist Papers Series - Economic Excerpts 

The Constitution as an Economic Document

Fear of Aristocracy

Skewed Power Structure

Philadelphia Convention of 1787

The Founding Fathers’ Economic Interests

Constitution Ratified

The Whiskey Rebellion Series 

The Revolution Financiers and Creditors

Robert Morris

Alexander Hamilton

Haym Salomon

Timeline

1776: Declaration of Independence

1777: Continental Congress drafts Articles of Confederation

1781: Americans defeat British at Battle of Yorktown

1783: Treaty of Paris signed

1786 to 1787: Shays' Rebellion

1787 May: First meeting of Philadelphia Convention

1787 Sep: Proposed Constitution signed, ratification called.

1787 Oct: First Federalist Paper appears:

1789 Mar: First United States Congress is seated.

1789 Apr: George Washington is inaugurated as the first President of the United States.

1791 to 1794: The Whiskey Rebellion

Case Against Large Fast Food Franchises

Franchise (Business Dictionary):

Arrangement where one party (the franchiser) grants another party (the franchisee) the right to use its trademark or tradename as well as certain business systems and processes, to produce and market a good or service according to certain specifications. The franchisee usually pays a one-time franchise fee plus a percentage of sales revenue as royalty, and gains (1) immediate name recognition, (2) tried and tested products, (3) standard building design and décor, (4) detailed techniques in running and promoting the business, (5) training of employees, and (6) ongoing help in promoting and upgrading of the products.

Franchises are an easy way for an investor to have ownership rights without the responsibility of actually managing. Franchising is the business structure for large fast food companies like McDonalds, Burger King, Starbucks, Taco Bell, Subway, Pizza Hut, KFC, etc. McDonald’s is the largest fast food chain in the world with 35,000 outlets across 119 countries, employing 1.7 million people. Starbucks is now the largest coffee company in the world with 23,000 stores across 64 countries. From a technological or logistical perspective, there is no reason these companies should have such domination over flipping burgers, making a sandwich, and brewing a cup of coffee.

In 19^th century America, most businesses were locally owned and managed by the same people. As sole proprietorships, profits would stay with the owners, providing a livable income. In a food franchise, ownership is separate and absent from the management/operations of the food establishment. Operators (cooks) are reduced to a non-livable minimum wage and the local manager doesn’t fare much better. Profits are skimmed to support an absentee owner who has no real interest in the local community nor in the managing/operating of the food establishment. The franchisee pays royalties to the corporation to govern that aspect. The food is engineered, standardized, unhealthy, but cheap. Culinary creativity is nonexistent at the establishment level.

The CEO of McDonald’s has a yearly salary of $16M with generous salaries cascading through the executive leadership. That’s a lot of burgers. Each franchise can cost $2-5$MM. A local burger joint should not cost millions to start, but somehow it does and it’s still profitable. What could have been a local establishment that supports a livable income for sole proprietorships is an establishment that reduces cooks to minimum wage with absentee owners skimming all the profits, skewing wealth to the few, wealth that could have gone to the many.

Today, the preponderance of fast food franchises are owned by LLCs, a financial vehicle that obscures ownership and liabilities. Absentee owners have no concern for the local community nor for the workers. They just want a rate of return. Many LLCs are of foreign origin, the entry price to gain citizenship in America.

Merely taxing the wealthy will not fix the problem of skewed wealth. Changing the financial vehicles that propagate skewed ownership will fix the problem of skewed wealth. Limiting the proliferation of fast food franchises is an easy first step to fixing the problem of skewed wealth.