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A new economic paradigm

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A New Economic Paradigm  for  Robust Sustainable Progress  with  Stabilizing Feedback Control The Swedish Sustainable Econ...

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The Economy an  Inherently Unstable System <ul><li>The natural destabilizing forces in the economy are constantly forcing ...

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What are the basic requirements for a fundamentally stable and sustainable economy? <ul><li>An economic incentive structur...

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A new economic paradigm

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The economy is inherently unstable. This slide deck explains how to stabilize the economy so it brings the stability and prosperity citizens desire.

The economy is inherently unstable. This slide deck explains how to stabilize the economy so it brings the stability and prosperity citizens desire.

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A new economic paradigm

  1. 1. A New Economic Paradigm for Robust Sustainable Progress with Stabilizing Feedback Control The Swedish Sustainable Economy Foundation
  2. 2. The Economy an Inherently Unstable System <ul><li>The natural destabilizing forces in the economy are constantly forcing the system away from a stable equilibrium </li></ul><ul><li>These destabilizing forces are the main underlying cause of business cycles, housing bubbles, financial crises and many other harmful instabilities </li></ul><ul><li>The current economic paradigm is painfully impotent to fulfill its important task to secure a stable and reliable economic and financial system </li></ul><ul><li>As a result of the shortcomings of the current economic paradigm millions of people suffer unjustly and bitter seeds are sown − potentially one day resulting in civil unrest </li></ul>2 The Swedish Sustainable Economy Foundation
  3. 3. What are the basic requirements for a fundamentally stable and sustainable economy? <ul><li>An economic incentive structure harmonizing individual and private interest with common long-term interest </li></ul><ul><li>A basic income, sufficient for the fundamental needs of the individual − food, shelter, security, health care and education </li></ul><ul><li>An economic feedback control ensuring a sufficiently high, stable and sustainable demand in the economy − rewarding investment, employment and production </li></ul><ul><li>An economic feedback control stabilizing the value of real assets in the economy and securing the underlying securities in the financial system </li></ul><ul><li>An economic feedback control discouraging the generation of external effects causing long-term damage and a net loss to society </li></ul>3 The Swedish Sustainable Economy Foundation
  4. 4. Necessary societal and economic conditions <ul><li>A financial system fully secured by real assets in the economy </li></ul><ul><li>A economic feedback control to stabilize the value of the stock of real assets in the economy </li></ul><ul><li>A fair and balanced rate of interest reflecting the rate of growth of the average labor productivity in the economy </li></ul><ul><li>An average real wage reflecting the average labor productivity in the economy </li></ul><ul><li>A free floating currency fundamentally balanced by a continual clearing of the trade deficit − secured through a continual acquisition of a ‘trade deficit currency reserve’ </li></ul><ul><li>An economic feedback control system with sufficiently high fees on negative externalities − to economize the use of limited natural resources and to reduce the emissions of pollutants </li></ul><ul><li>A control fee reimbursement mechanism securing a regular repayment of an equal share of the income from these fees to every individual </li></ul>4 The Swedish Sustainable Economy Foundation
  5. 5. Some fruits of a sound economic paradigm <ul><li>A stable and secure financial system </li></ul><ul><li>A stable value of the stock of real assets and real estate </li></ul><ul><li>A stable, fair and balanced rate of interest </li></ul><ul><li>A steady growth of the average real wage </li></ul><ul><li>A steady reduction of emissions of pollutants </li></ul><ul><li>A steady and regular repayment of the income from control fees </li></ul><ul><li>A reliable currency with a unique trade balancing capability </li></ul><ul><li>A robust high rate of employment without inflation problems </li></ul><ul><li>A robust, fair and efficient pension system </li></ul><ul><li>A robust, balanced budget with powerful resources for development </li></ul>5 The Swedish Sustainable Economy Foundation
  6. 6. A proposed initial economic reform <ul><li>Begin with a relatively limited and well defined economic reform − preferably an economic feedback control system for the reduction of CO2 emissions </li></ul><ul><li>Create a control fee fund </li></ul><ul><li>Create a control fee reimbursement account for every individual </li></ul><ul><li>Introduce an upstream feedback control fee on fossil carbon, expressed as a price per ton of CO2, and begin with a relatively small CO2 fee </li></ul><ul><li>Let the fee be paid to the control fee fund and repay a sufficient fraction of the reimbursement fund income, in equal amounts, to the individual reimbursement accounts monthly </li></ul><ul><li>Evaluate and adjust the fee and the fraction repaid, monthly </li></ul><ul><li>Continually monitor and evaluate the results of the economic feedback control system </li></ul><ul><li>Investigate other potential applications where economic feedback control fees can be efficient and valuable </li></ul>6 The Swedish Sustainable Economy Foundation
  7. 7. A continued initial economic reform <ul><li>Introduce an upstream feedback control fee on water, expressed as a price per m3 of water, and begin with a relatively small fee </li></ul><ul><li>Let the fee be paid to the control fee fund and repay a sufficient fraction of the reimbursement fund income, in equal amounts, to the individual reimbursement accounts monthly </li></ul><ul><li>Evaluate and adjust the fee and the fraction repaid, monthly </li></ul><ul><li>Continually monitor and evaluate the results of the economic feedback control system </li></ul><ul><li>Investigate other potential applications where economic feedback control fees can be efficient and valuable </li></ul><ul><li>The regular repayment of a sufficient fraction of the fee income benefits the majority of the population and redistributes purchasing power − stimulating demand, investment, employment and production in the process </li></ul><ul><li>A certain fraction of the fee income can, with advantage, be used for the purpose of strengthening the budget </li></ul>7 The Swedish Sustainable Economy Foundation
  8. 8. A plan of major economic reform <ul><li>Make a comprehensive analysis of the state of the economy and determine the best plan of action </li></ul><ul><li>Let all steps in the economic reform be transparent and inform and educate the public about the purpose of the reform </li></ul><ul><li>Secure the long term fundamental value of the currency by beginning to accumulate a trade deficit currency reserve and let the currency find its equilibrium value by floating </li></ul><ul><li>Disarm harmful speculation and support sound investment by stabilizing the price of the stock of real assets by using the interest rate and the financial policy </li></ul><ul><li>Stimulate consumption and demand to elicit investment and production to reduce the rate of unemployment and to create optimism by using subsidies and fee rebates and make the measures budget neutral by using fees and taxes </li></ul><ul><li>Secure popular acceptance through a regular repayment of a sufficient fraction of the fees and taxes to benefit the majority of the population </li></ul><ul><li>Avoid instabilities, bubbles and inflation by using stabilizing economic feedback </li></ul><ul><li>Open a dialog with other countries to discuss the advantages of properly applied economic feedback control </li></ul>8 The Swedish Sustainable Economy Foundation

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