My property has irrigation water available. Rather than running ditches across my yard, I decided to install a pipe system to distribute the water, as it would give better control of distribution, and reduce waste.
By calculating the number of holes I would need and computing the sizes to obtain a total opening area less than the diameter of the pipe, I was able to evenly distribute the water across the area. I have observed a number of other systems, and if the total area exceeds the diameter of the pipe, the end holes receive little or no water. A proper balanc of hole sixes will produce equal height streams the entire length of the pipe. An improper balance will result in streams which are much higher at the first openings than at the last ones.
Frequently, people will install a pump to increase the pressure in an effort to get higher flow at the end of the line. While the flow may increase marginally, the flow at the start is drastically increased so that first part tends to be flooded. It doesn't matter how much the pressure is increased, the problem remains. If the pressure becomes too great, the pipe cracks or bursts, completely stopping flow where it is wanted.
One way to get more water to the end of the pipe is to reduce the number or size of the openings, so that even pressure is maintained over the length of the pipe. The other way is to increase the amount of water available by increasing the size of the pipe. Excess water is collected in a tail water ditch at the end of the field and returned to the river or lake.
The current economy has some significant similarities. The economy is based on what is produced and sold. Many salesmen love the saying, "Nothing happens until some one sells something." This ignores the fact that unless something is produced, there is nothing to sell. Sales can only exceed production until prior production, "inventory", is depleted.
In the analogy of the irrigation system, production is the water supply, and sales are the distribution pipe. Wages, taxes, and services are openings to distribute the water. In the economy, the tail water is returned to the production to increase available supply.
In our society, Government spending is the first area to receive water. Most taxes are paid on the initial amount received. Each tax is a separate opening drawing water from the economy. If the total taxes are too high, there will not be enough money flow to carry through the entire economy. If the pressure is increased, the amount of revenue in the Government area will increase, but will not greatly benefit the rest of the economy. Unfortunately, Those who work in the area seldom see the other end of the economy, and devote their efforts to increasing the available supply to their particular field of interest.
Government spending can include education, military spending, regulation and infrastructure such as roads, welfare, healthcare, and retirement programs. Excess money used in government spending tends to move back into the supply without great spreading to other areas, resulting in minimal benefit to the overall economy. It effectively short cycles.
The second major economic area in our society is the service area. The Stock market, banks, insurance companies, shipping, and utility companies are in this area. So are business managers and accountants. They are a very necessary part of the economy, but if they try to take out too much in fees, charges, wages, or profits, they reduce flow to the next area. Their surplus rarely migrates to the next area.
The final area is the actual production area. Primary openings drawing from the economy in this area are machinery and tools, raw materials, buildings, and labor. What this area produces goes back into the system along with any surplus they receive and is available to all the rest of the system.
Thus far the efforts to resolve the economic problems have consisted of increasing pressure by increasing the amount of money in the supply. Because no effort was made to reduce the upstream openings, more money has been expended , greatly increasing the national debt, but production is still starving. The bailouts for the banks did not reduce their excessive compensations and fees. AIG and other insurers are able to continue just as before, and in many cases to increase their fees, or to focus on other sources of profit, actually reducing money available for production.
Falling production is resulting in reduced flow of money and many states are now moving to increase taxes to maintain government at close to the present level, further decreasing flow to the production sector. In addition, movements such as the current healthcare initiative, efforts to enact legislation about Global warming, and Swine -flu debacle are opening additional draws, further reducing the production stage, and thus the available resources.
Until the Government and service sectors reduce their demands on the economy, the production sector will be unable to attain maximum production. The economy will continue to weaken, even as profit margins increase, because inventory is falling. If those demands are not reduced sufficiently, or soon enough, inventory will be wiped out, and the economy will collapse. Politicians, financial experts, investors, and consumers can voluntarily reduce their demands, and save the economy, or they can try to maintain the status quo until they are forced to do without. At present the latter choice seems to be preferred.
Trickle down economics is a theory many Republicans subscribe to. The idea is that if the service sector gets rich, the overflow will get to the production sector. Most of the surplus is not passed on. Democrats have their own version, believing that money spent on government will produce wealth for everyone. Though they use other names, it is just a different trickle down theory, commonly called socialism. History has shown it doesn't work. The collapse of communism and the Berlin wall clearly demonstrate that point.
For information on balancing your personal economy, go to [http://www.debtmanagement.dobettertoday.com]. For lessons to strengthen your Christian life, visit http://www.BeingChristianToday.blogspot.com.
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