July 5090Noel Faustin explaining his revolutionary theoryNew economic theory developed by New Aldurian Research Institute, claims a new socialist economic modelDevelopment of new artistic currents was accompanied with a concurrent development of other social fields, one of it being the economic field, which with funds from government and large time for the research project has announced a revolutionary model, an improvement of past model espoused by Isaac Osborne, shocking economists at home, but raising suspicion among capitalist classical economists, who see this model as nothing new but left-wing debauchery. The new model claims to have solved the fragility of past Lodamese economic system and has instead fixed the spending issue, the dependency on external trading and has found a solution between the divide laid out between the "international currency" and "domestic currency", as seen in writings of Lodamese philosophers and economists centuries ago.
The old economic model must be explained before criticized. For this, analyst and new important economist, Noel Faustin, explains it as follows: The currency as we know it oppresses the workers , creates inequality, inefficient spending and is exposed to economic downturns. To fix this issue, in the Lodamese lenses, such as the important revolutionary and syndicalist Isaac Osborne put it, "we must divide the national currency into two parts, the international currency and the domestic currency. Without currency we cannot trade or survive against foreign capitalist markets, but with currency active at home, we are impoverished and exposed to the shortcomings of capitalist system. To solve the tension, the government will start with this division of currency, then retract from the markets the domestic currency, allowing only currency to be the foreign oriented currency, with its usage destined to mediate government-outside discrepancies, as tool to import and export goods, to instill control over businesses and ensure population control.
Under this system, the government would pursue projects and offering of services free of charge to citizens, but to not run on deficit, part of these projects would be considerable aid for the industry and agricultural sectors of the nation, with hope that these investments on long-term would pay off in companies producing goods, which would be sold on the foreign markets, in exchange receiving money, with companies estimating the cost of goods to run profit and the government issuing that cost to foreign buyers. With the new money, the government would be on profit, and be able to pay up for the free social services and subsidies for the national industry, it formed of cooperatives. The state regulations would be complex and many, while ecological care would be offered to the environment. This system though has been tried few years and many economists, including along socialist ranks of Lodamese Ethical Socialist Party have pointed out that this system is fragile to economic meltdowns provoked by foreign economic instabilities and potential of mismanagement of supply and demand, setting the whole nation into a huge crisis. The need for control over factories and people is also noted by Libertarian economists, alongside problems with the lack of taxation inside the system. The government is too exposed to foreign competition, market instabilities and bad bureaucratic management.
Linking the economy completely to the outside world, in the name of liberating people at home may be fine, but long-term it will hurt it more than do good. But how do we solve the issue of a divided currency, how do we combine a national domestic currency, and an international one? Is it possible? Why the past leaders have failed to sense this opportunity for a more stable economic system? Glad you asked! Below first of all is the scheme for the economic system patented by Syndicalists, with the state funding cooperatives and welfare programs, for in exchange people would run these businesses into profits, profits which would be controlled by the state through state exports, which in turn would reuse the money to finance even better services and more subsidies for the national industry and agricultural sector, making in turn more profits, and so on. The fact that this is fragile is because it depends solely on the ability of the state to grow and sell products, and in case of an economic global recession, or price drops for certain goods Lodamun would sell, it would send the nation into chaos. New Aldurian economists sensed this danger long ago, but no economic theory to replace old Lodamese school of thought came, up until recently, with minds like Noel Faustin coming with a genius solution to the problems faced by the old scheme.
The new economic system would have then to ensure that it would tackle the main problem of past economic system: dependency, be it businesses and services on state funding, or be it the foreign market having too much leverage on how well the national economy would fare. To sort things out, going back to the first chapter, onto the division of currency, Faustin thought that instead of the abolition of national domestic currency, the state would limit its use to luxury goods. However as past economists faced challenges, how would the domestic and foreign currencies relate in value, what would be the ratio of exchange? How we would determine basic goods and how the economy would be more stable? For this, Faustin realized quickly we cannot split actually the currency in two, but instead gave up on the concept and reiterated the importance of a single issued currency. The problem now would be how it would apply only to certain parts of economic goods, while when used in foreign exchanges, it would apply to all goods. It has theorized that the key step toward improvement would be a new division, but of basic goods, and luxury goods. This first division would ensure that basic goods are ensured by the state for working people, like housing, food, water, electricity, heat, infrastructure, and the second part, the luxury goods would be the rest. The solution would be thus state control on basic goods, energy production and resource extraction, and when comes to luxury goods, the private market would do the rest, but not any private market, a socialized market, oriented toward protecting workers and consumers alike. With this in mind, any wish for luxury goods from the people, the private market would offer to the people, alleviating the costs of the state for industrial subsidies, limiting such to taxes and tariffs.
Because of this new change, it means that the government is now not anymore reliable only on international market, meaning that tariffs, control of imported goods, but most importantly, taxes levied on companies and citizens can now be reestablished. Through system of taxation, the government can gain much more than through past means, alongside tariffs, it means that the government will have a safer income. Even if the income would be net smaller, the fact that the government does not need to subsidy all of industry and provide all of goods and services to the people, means that the state can leave the markets to produce them, meaning in turn lower taxes, and taxes that levied will not affect the poor as before, leading to solution both for government spending and for sheltering individuals, be them rich or poor from taxation, because everyone will have ensured a house and basic necessities met, with taxes applying only to private luxury goods, owning of such in some cases and tariffs levied on products from abroad. As such, remains the last part of the issue: how does the economy become more stable?
The economy would become more stable and growth would be achieved because this system does not only solve spending issues, but it also will solve the issues of productivity. Because of the regulations imposed on companies, it would be easy to think of this system fragile to be outcompeted, but because the state can also fund and tax companies at the same time, plus tariffs, any competition can be avoided. This is even more prominent in the importance of investments into the state by private actors and other states, alongside no taxes levied on corporate activities, outside the value added tax on luxury goods. Because basic goods are free for citizens, it means that the government, in case of economic collapse, will not render these services unusable and cut off from people, but instead cut spending on industrial subsidies and raise taxes and tariffs, allowing for safety nets to be on even during worst global economic periods of turmoil. The fact that the currency is still used even domestically means that economic activity can take place outside government control, and including inside the nation, not only abroad through trading. This local economy can prosper so much, that it could even finance services, leading to possibility of the state to not need anymore foreign exports and tariffs, which leads to emergency funds and fiscal responsibility.
Faustin has received a prize for his findings, with many stipulating that he will create his own party. In other views espoused by Faustin and recommendations for government, included the need of automation in shortening working hours and increasing wages, support for worker cooperatives, industrialization and production of machine parts, as well the importance of an economy friendly to foreign investors with tax hikes and relaxed laws on investments. His theory has attracted many people on his side, given that large portions of New Aldurian population is still poor, and many more middle class citizens feel that Le Changement and the government limits their economic freedoms.
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