Each of us must also sell something, even if for most of us it is our own services rather than goods, in order to get the purchasing power to buy.
In every country it always is and must be the interest of the great body of the people to buy whatever they want of those who sell it cheapest.
Who subsidizes the consumers will depend upon the incidence of taxation. But men in their role of taxpayers will be subsidizing themselves in their role of consumers. It becomes a little difficult to trace in this maze precisely who is subsidizing whom. What is forgotten is that subsidies are paid for by someone, and that no method has been discovered by which the community gets something for nothing.
Though the legislation follows the rise of the prevailing market wage rate, the myth continues to be built up that it is the minimum wage legislation that has raised the market wage.
The best wage rates for labor are not the highest wage rates, but the wage rates that permit full production, full employment and the largest sustained payrolls.
Therefore, for every public job created by the bridge project a private job has been destroyed somewhere else.
Proposals for an increased volume of credit, therefore, are merely another name for proposals for an increased burden of debt. They would seem considerably less inviting if they were habitually referred to by the second name instead of by the first.
There is actually no limit to the amount of work to be done. Work creates work. What A produces constitutes the demand for what B produces.
Prices are determined by supply and demand, and demand is determined by how intensely people want a commodity and what they have to offer in exchange for it.
And in terms of welfare, of course, the loss suffered will be much greater than the loss in merely arithmetical terms, because the psychological losses of those who are unemployed will greatly outweigh the psychological gains of those with a slightly higher income in terms of purchasing power.
What a commodity has cost to produce in the past cannot determine its value. That will depend on the present relationship of supply and demand.
It has been frequently said that many of the world’s greatest inventions were due to accident. In a sense this is true. But the accident was prepared for by previous hard thinking. It would never have occurred had not this thinking taken place.
There is a strange idea abroad, held by all monetary cranks, that credit is something a banker gives to a man. Credit, on the contrary, is something a man already has.
Functional prices are those that encourage the largest volume of production and the largest volume of sales. Functional wages are those that tend to bring about the highest volume of employment and the largest real payrolls.
Up to a certain point it is necessary to produce shoes. But it is also necessary to produce coats, shirts, trousers, homes, plows, shovels, factories, bridges, milk and bread. It would be idiotic to go on piling up mountains of surplus shoes, simply because we could do it, while hundreds of more urgent needs went unfilled.
Full employment – very full employment; long, weary, back-breaking employment – is characteristic of precisely the nations that are most retarded industrially.
The government never lends or gives anything to business that it does not take away from business.
If we look at it now from the consumer’s point of view, we find that he can buy less with his money. Because he has to pay more for sweaters and other protected goods, he can buy less of everything else. The general purchasing power of his income has therefore been reduced.
The volume is therefore primarily one of exposition. It makes no claim to originality with regard to any of the chief ideas that it expounds. Rather its effort is to show that many of the ideas which now pass for brilliant innovations and advances are in fact mere revivals of ancient errors, and a further proof of the dictum that those who are ignorant of the past are condemned to repeat it.
The idea that an expanding economy implies that all industries must be simultaneously expanding is a profound error.