Reversing immigration reduces economic disparity between countries.

The economic disparity between countries and within emerging economies is the principle cause of the current global economic crisis. It is generally known that the lack of employment opportunities in the emerging economies is forcing workers to migrate to the more industrialized economies world wide in the search for  employment opportunities.  The problem of unemployment in struggling economies has turned into a global crisis because of the decline in demand for consumer products has reduced employment opportunities in the industrialized nations.

Because the more industrialized economies currently have more workers than they can employ the situation is creating a major cost burden for their tax payers. Large expenditures by governments for welfare, unemployment benefits, medical treatment and housing subsidies, to meet the needs of the unemployed are increasing taxes on the working people who are already having trouble making their income meet their basic needs.  Governments have resorted to borrowing money to meet the challenges of the immigration cost burden which is increasing the debt to an unsupportable level and transferring the cost of the incoming immigration and unemployment to future generations.

The postings to this  blog describe a strategy for  Creating Global Prosperity for all  people in every nation,  including those in the  emerging  economies,  by establishing a Global Home Building Industry that will generate jobs for hundreds of  millions of workers worldwide and reverse the need for migration. Trillions of dollars  invested in home mortgages in emerging economies will create opportunities for employment worldwide. Loans would be made to qualified homebuyers that are employed and the affluent for the development of quality homes constructed to modern standards.


Workers from around the globe will go to or return to the booming emerging economies to take advantage of opportunities to share in the enormous increase in prosperity. The spending of the money disbursed during the development and construction of homes and communities will  increase the demand for imports by the emerging economies. This will require that the existing global manufacturing capacity be revitalized,  putting  millions back to work. Read the following posts to learn how the strategy can be implemented. Please feel free to comment and make suggestions.

Toward a new international economic and political constitution

To establish a global home building industry successfully requires international cooperation and economic restraint to prevent worldwide inflation problems. This strategy funds the emerging economies by the extension of credit by the international financial institutions, both domestic and foreign, to the working and the affluent people of the emerging economies who qualify for home loans . Funding home loans through the hands of the people  increases aggregate demand according to the economic principles of Friedrich A. Hayek the Austrian economist.  It  is the same strategy that evolved in United States of America over the past seventy years and created the enormous prosperity enjoyed by Americans. That is, up unto the point that their irresponsible government acted in complete ignorance of the proven principles of economics and insisted that banks fund housing developments that were not viable for the lender or the mortgage insurance agencies.  

Past socialistic attempts by global governance entities, such as the World Bank and the International Monetary Fund,  to organize and to control the economies of struggling nations from the top down with conditional lending to national governments and international corporations have failed to increase prosperity and reduce the enormous disparity within economically struggling  countries and between nations. This socialistic approach is based on the failed theories of John Maynard Keynes, also an Austrian economist.

Visualizing the eradication of severe global poverty and the enormous potential for worldwide prosperity and international interaction that will unquestionably result from the implementation of a global home building industry illustrates the emerging need for a new international constitution or set of agreements not based on past globalization theories. The new agreements and international laws must addresses the challenges to the existing political and economic governance that will concur. Increasing prosperity by this strategy empowers the people who become prosperous because they become the force that increases the global aggregate demand for consumer products which is the key to energizing the global economy and increasing global employment.  As the economies of the emerging countries improve, the people will seek to increase their independence and their sovereignty which must be supported by an new international governance that protects and promotes the emerging economic freedom of the people.

The credit of the people is the primary force that creates prosperous nations. Why?

In response to a posted comment requesting more detail on what is "aggregate demand", as explained in another post, it is important to understand how the credit of the people is used to increase the prosperity of a nation and why their exercising a natural right to borrow money will increase the prosperity of all people in every nation. In countries where a powerful centralized government is used to tax the people and spend money the people receive little or no direct benefit or government assistance toward their efforts to improve their personal net worth. This process is known as socialism and follows the theories of an economist Maynard Keynes who had no knowledge of how economies become prosperous.  The government may employ more ans more people and the country may gain the use of better bridges, highways, transportation systems and increase the welfare payments to the people but the expenditure of funds in this manner does not increase the demand for consumer products by the people which is what creates jobs, drives an economy and creates prosperous people.

When people purchase food the demand for goods creates jobs. The food is necessary for sustaining life obviously but it does not increase the personal net worth of the people except to the extend money is saved from the earnings derived from those working to provide the food. The same thing holds true when consumer products such as clothing, automobiles, or toys are purchased. The demand for such goods creates jobs and energizes the economy. Because of their limited use the value of the products drop immediately upon purchase and continue to decline until they are of no longer any benefit or sold. The people can own a large number of such items but it does not increase the net worth of the people over time.

However when the people purchase an asset which is personal property, such as a building, home or parcel of land that has the potential overtime to increase in value they are increasing their net worth. Purchasing an appreciating asset is the economic principle that creates prosperous people when they are free and possess protected rights to own private property. This is the result of following the sound economic principles taught by Friedrich A. Hayek. They become investors in their own economy by borrowing if necessary some portion of the purchase price and use future income to pay off the loan on an asset that is actually increasing in value as the debt is reduced. Increasing the net worth of the people in this manner increases the prosperity of any totally free nation as the value of what the people have created and own grows. The degree to which this process increases employment as aggregate demand for new products increases is explained in another post on creating a prosperous nation.

Why does "Stimulus Spending" fail to create jobs and restore prosperity?

Increasing government spending either by borrowing money or increasing the taxes people and corporations must pay which in the end is the same thing, will not increase "Aggregate Demand" in a manner that creates jobs and prosperity. This economic theory is known as "Keynesian Economics". Increasing Aggregate Demand or the demands of consumers for products and services can only be accomplished by consumer spending.

When the people borrow the funds to purchase an appreciating asset their equity in the asset, a  home, increases over time as the asset increases in value and the debt is reduced. When a home is purchased the owner is making interest payments and reducing principle on the loan with the monthly payments instead of paying rent. As a result the net worth of the owner increases as the value of the home increases and the debt is reduced.

When the government taxes and spends the funds go to pay direct expenses and for infrastructure. The government may own beautiful highways and bridges and other structures but that does not increase the net worth of the people. In fact the over taxing of the people reduces their ability to purchase an appreciating asset which is the key to creating a prosperous nation.

That is why during a housing construction boom the number of jobs increase in every industry and small businesses when the money spent from the home loan turns over as it moves through the economy. Keynesian economic theory where the government assumes control of the economy, even going so far as to take over the management of corporations, has been tried many times by many countries, including the United States and has failed each and every time to produce jobs. The people who advocate big government believe they know how to manage the economy and impose their theories through government regualtions and taxes in an attempt to achieve their own personal gain.  Every time it has been tried it has been eventually abandoned. Germany tried Keynesian's Economic theory and found it to lead to a very poor economy. The Germans now have the strongest economy in Europe and practice principles of economist, Friedrich A. Hayek based on  aggregate demand being created by the people through a more capalistic approach.  In order to create aggregate demand by the consumers, which is what creates prosperity, the money to be spent must be money the  people either earned or borrowed.

Why is Friedrich A. Hayek's theory of Aggregate Demand the solution to global poverty?

Aggregate Demand is defined as the total of all expenditures for goods and services of any nation or state economy. Friedrich Hayek, an Austrian economist, believed prosperity improves by the degree Aggregate Demand increases as a result of consumer demands of the people. He taught that the people could only increase aggregate demand if they owned private property which provided a means for private production, the creation of self employment and employment for others to be divided among all people which in turn created more demand for goods and services. He was proven correct when a dramatic increase in the number of  home mortgages on new homes established a major home building industry in United States after World War II and the people created enormous consumer demands when the funds from financing new homes spread throughout the economy.

How are the homes to be financed?

The funding of the mortgages for homes to be constructed  in developing economies will be in the same manner as funding loans in the United States. Banks in the emerging economies and international financing interests will fund domestic banks in the developing economies based on the buyers providing evidence of legal ownership along with an appraisal to be approved by the domestic banks making the loan on each home. This approach insures that the funds will only go for the purchase of a home based on actual local cost without unnecessary fees being added.  By this method the homes prices will not be inflated  because each borrower is personally guaranteeing the repayment of the loan out of future income to be earned. The homebuyer can verify that the price being paid is resonable based on other local costs for material and eventualy for homes that have already sold.   It is also feasible under this process to acquire international mortgage insurance to protect the lenders from loss on foreclosures. More important, international mortgage insurance will increase the number of lower income buyers that will qualify for a home loan.

Why is it neccessary for a nation to have laws that provide Protected Private Property Rights to create prosperous people?

When the people of any nation have PROTECTED  PRIVATE PROPERTY RIGHTS under the law it is legal for a potential buyer of  a home to borrow money for the purchase a home or a parcel of land and use the home or land as collaterial on the loan. Homes and land are considered to be private property and as such can be assigned to the lender  as collateral for the loan.  The lender is given the right to  record a lien against the property which gives the lender the right to take possession of the property from the owner in the event the borrower does not make the payments on the loan. Having the right to lien the property also permits the lender to take possession and sell the property to recover any amount remaining on the loan.  

This process permits the prospective homeowner to borrow money for the purchase of a home and make payments. The is referred to as purchasing an  appreciating asset by leveraging future income. The pay off off the loan and the appreciating value  increases the net worth of the homeowner over time as the loan is paid off and the home increases in value. The normal monthly payments are increasing the net worth instead paying rent.

Why is important to plan and construct communities within cities?.

In response to questions regarding why we should build communities of homes within cites it should be noted that the so call "modern cities"  that have evolved to date have many problems that we now know how to solve.

To demonstrate the viability of building homes as an economic development strategy for emerging economies it  is planned that new quality housing of various sizes will be constructed on the edge of major cities or within major cities. The homes will be grouped into small communities or neighborhoods, each with their own commercial center and sold to those who are Working And Affluent that qualify for a home loan.. The creation of communities within cities also provides an opportunity to demonstrate  how a city can be designed to be sustainable, energy efficient, and durable while integrating the societal behavior of a village. Constructing homes for qualified buyers creates quality housing to be added to each city while providing affordable homes for the lower income buyers because of the Moving Up Effect.

City planning in the past has failed to created communities that are interactive and cohesive.

Where you live is it not uncommon for specific areas within the cities to take on names indicating a neighborhood or a district as people find ways to identify where they live or work. It is uncommon for these areas to contain all of the services of a village or a working community need. Because of this it has it not been necessary for many of you  the living in large and small cities to travel for services, products and employment.  Travel becomes a major time consumer and a significant cost and in many cases requires that the family own at least two cars.


The  planning for the new housing to be constructed in emerging economies presents and opportunity to create communities within the cities or on the edge of cities that are complete "villages" or integrated communities with many of the services within walking distances or on public transit. This is the most critical design requirement for cities of the future that reduces the cost of living in a community to a minimum. It is believed that the cost of living will be playing an even more critical role in determining wages in the economy of the 21st Century as international trade becomes even a larger factor in our life style.

Tuesday, December 21, 2010

How do you create interactive neighborhoods that are conducive to creating a sense of belonging to a community in emerging economies?

What design features for planning new communities must be incorporated to reduce the cost of living in the new neighborhoods?

The design of the new urban communities must concentrate on reducing the cost of living by reducing travel time, observing energy concerns, and establishing an interactive living environment that creates  a "community of families". 

 

Why is important for lenders that will  finance the homes that the homes be part of a well designed community with retail and other commercial services?

The primary concern of financial intitutions that are interested in financing the Global Home Building Industry focus on whether the homes will appriciate in value over which is what increses their collaterial value.

 What are the first steps to establishing a Home Building Industry in your country?

Educating people world wide that severe global poverty can be eradicated.

In summary the goal now is that we must educate people worldwide that they do not have to live in poverty when the Twelve Economic Principles That Create Prosperty are adopted by the leaders of their nation.

It is crtically important that we stop believing  that a national economy functions solely in terms of economic theories about how industrializing an economy produces prosperous nations if people are to learn how to create prospoerity. These outdated  theories are meaningless discussions using terms such as labor, capital, and productivity. The theories have never proven how it was possible to generate the prosperity enjoyed by Americans because they are limited by discussions about how industries and governments increase consumer demand for products and services. These discussions ignore the requirement that when altering an economic system the new process must  provide a means for the people, not governments or manufacturing companies, to create a demand for manufactured goods. The empirical data taken from the economic history of America proves these principles and the significance of home loans in creating a new global economic system.

The American economic history over the past sixty years tracks how it was the increase in equity in homes that lifted lower and middle income families and created unimaginable prosperity. It was the Americans working in industry and businesses earning sufficient funds to qualify for borrowing future earnings and investing them in a home that created the demand for consumer products that energized manufacturing and established the American economic paradigm of prosperity. This same model will eradicate poverty and energize the global economy when adopted by developing countries. It will create hundreds of millions of jobs that are so desperately needed and a demand for consumer products that will energize manufacturing around the globe and eradicate severe global poverty.