[From Rick Marken (970212.1830)]
Bruce Abbott (970212.1255 EST) --
I'm sure Rick will be just as pleased with Holland as he is
with Vroon [Marken (970212.0930)].
Was I wrong to be displeased with Vroon? My displeasure was based
only on what I said: Vroon argues for an output generation model
of behavior and presents no data that such a model can work. What's
to be pleased about?
In fact, I'm rather surprised we haven't heard from him yet about
this. Let the garment rending commence!
I haven't read Mr. Holland's opus so I have no reason (yet) to rend
my garments (a good thing too, since I'm wearing my sexy cowboy
outfit;-))
By the way, in an earlier post [Bruce Abbott (970211.2310 EST)] you
said:
Because of mass production, more value is added in goods than need
be paid out to the producers in return for their products; wealth
is created in the process. This is the reason the economy can
support nonproducers such as children and college professors, the
poor as well as the idle rich. There is leakage, but there is
amplification as well.
This speculation is not really relevant to the anaysis in "Leakage".
The analysis assumes that the composite producer produces goods AND
services. So college professors are (amazingly;-)) part of the aggregate
producer. The aggregate consumer consumes ALL of these
goods and services.
Leakage is the difference between the aggregate consumer's income and
the total cost of the goods and services produced by the aggregate
producer. Leakage represents money that COULD NOT be used by the
aggregate consumer to purchase goods and services. The only people
around who have so much money that they can't possibly spend it all
on consumption (stuff they can use) are, of course, the very rich.
Powers pere shows that this leakage is not going to investment;
PRECISELY the same proportion of the aggregate produce's income (20%)
has gone to capital investment over the last 100 or so years, regardless
of the amount of leakage or the amount of production (measured as GNP).
So the belief that savings drives investment which drives prodution is
factually false.
Best
Rick