Economics

29 Sep 1932, Manhattan, New York, New York, USA --- Construction workers eat their lunches atop a steel beam 800 feet above ground, at the building site of the RCA Building in Rockefeller Center. --- Image by © Bettmann/CORBIS
by Reid Fitzsimons

There are those who don’t always accept the premise that the impoverished in America, as compared to the realm of the truly poor in non-developed countries, are hapless victims of extrinsic factors. Within this perspective is a belief that bad personal choices are made in the continuum of life that either keep people impoverished or disallow them to rise above it. In other words, individual poverty in America can’t always be traced back to Big Corporations and societal oppression in general, but that opportunities for education, to obtain marketable skills, and to establish a secure financial foundation are lost out to greed and pleasures of the here and now. People with this view are referred to as conservatives, often with pejorative adjectives attached. If we were actually honest we would admit that state lottery tickets aren’t routinely purchased by the economically self-actualized, but by people who can least afford them. One cannot smoke dope, shoot heroin or methamphetamine, or drink to excess with regularity as a means to success. Money used for tattoos and body piercings could probably be spent more wisely. Conservatives are more of the Morning in America mindset, whereas progressives tend to find themselves stuck in a narrative based in some cruddy New England textile mill from the early 20th century, allowing them to deflect blame for individual and societal failings.

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state

by Barry King, November 28 2015

Thanks to Reid's son Forest for introducing me to this book. If you buy it, or buy anything else from amazon.com, please shop at smile.amazon.com instead of www.amazon.com, and select The Virunga Fund as your beneficiary. It won't increase your price, but amazon will make a donation to Virunga.

http://smile.amazon.com/Seeing-like-State-Certain-Condit…/…/

Book review: Seeing Like a State: How Certain Schemes to Improve the Human Condition Have Failed, by James C. Scott.

Prototypical scheme: A wild forest was designed by God, or by Darwinian evolution, to "succeed" as an ecosystem capable of sustaining a bio-diverse assortment of plant, animal, insect and bird species (and many other kinds). Modern "scientific" forestry, on the other hand, in its early stages, focused on maximizing board-feet of lumber produced, and chose mono-culture: a whole forest of trees of a single species, planted in rows. Many such projects worked for a few years, then failed as the whole forest ecosystem collapsed for unforeseen reasons involving complex interdependencies. The key insight is: these projects, and many others like them, were promoted as "modern", "scientific" and "rational", but were nevertheless unsustainable.

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cc

by Barry King

For lovers of science and of nature, parasitism is a fascinating topic. An important detail is the complexity of the definition of "success" for the parasite, who prefers to rely on the productivity of others rather than on his own productivity (the cuckoo prefers not to be bothered by the hard work of building a nest, incubating eggs, and feeding chicks, so she just lays her eggs in someone else's nest.) The "success" of parasitism has an obvious strategic limitation in this consequence, that if the parasite is too "successful" the host is overwhelmed and goes extinct. Then the parasite goes extinct because it had become fatally dependent on a now-extinct host. Cuckoos can get away with it sustainably because they are parasitic only gently and on a wide variety of other species rather than on just one. A forest with cuckoos is more (bio)diverse than one without, but if the cuckoos collectively are not careful they will end up subtracting both their hosts and themselves from the biodiversity gene pool. That's why infectious organisms that cause 100% fatality in their hosts are extremely rare: their evolutionary tactic is strategically suicidal within just 1 or 2 generations. In human politics and economics, the analog to parasitism is misleadingly called "rent-seeking" (https://en.wikipedia.org/wiki/Rent-seeking) I guess it's a good thing that we humans are not aggressively parasitic organisms - or are we?

by Barry King

I have Mennonite relatives who travel all over North America without paying for hotel rooms, by staying in the homes of a network of relatives of relatives or friends of friends. In so doing, they fail to support the hotel industry and perhaps contribute to slow job growth in that sector. I have Amish relatives who, when they suffer fire damage to a barn, will accept the volunteer help of neighbors for rebuilding, instead of hiring unionized construction workers for that job. In so doing, they take jobs away from those unionized workers. Further: the working conditions at the Amish Barn raising might possibly be OSHA-non-compliant. The Amish also plow their fields with mule teams instead of tractors, and drive horse-drawn carriages on the roads, instead of cars.

It wonders me (that’s a Pennsylvania Dutch phrase) how I should understand Anabaptist attitudes toward innovation. Anabaptists until very recently have been counter-cultural in a variety of ways, which is kind of innovative, but on the other hand, plowing with a mule team in the 21st century seems old-fashioned. Now comes another data point: modern internet-based ride sharing via Uber looks a lot like “Mennonite-Your-Way” travel arrangements and like the Amish approach to barn-raising, and the Uber economic model is considered innovative rather than reactionary, whereas, the growing backlash against it looks pretty darn reactionary. Sixty years after Bill Buckley coined the phrase, who is it now who is standing athwart history and yelling “Stop!”? (Hint: read Hillary’s recent speech in which she scolded Uber, without mentioning it by name. If the guy in Seinfeld who withheld soup was a “Soup Nazi”, does that mean Hillary is now an “Uber Nazi”? Just wondering...) Bill Clinton wanted to build a bridge to the 21st century, which at the time was a forward-looking idea. Now here we are, and Hillary apparently wants to build the same bridge, but she plans on using it to go the other way.

So why exactly is Hillary staking out a position as an Uber Nazi? Well, she counts on union support, and the unions hate Uber, and she likes tax revenues and regulation, while Uber drivers and customers tend to dislike those things. How much do unions and government regulators hate the Uber-style economy? In France, Hillary’s fellow travelers (mobs of taxi drivers) “went full Luddite”, destroying Uber cars, and the French government joined them by arresting Uber managers.

Bottom line: the fundamental difference between the Amish, the Mennonites, and the Uber drivers on the one hand, v. the Uber Nazis on the other is this: the former are content to do their economics via free contracts voluntarily entered, while leaving the rest of the world also free to do whatever they want, whereas, the Uber Nazis want to impose their preferred models on other people by means of government coercion or violence.

http://www.nationalreview.com/article/421134/hillary-uber-economy-speech-sharing-economy-2016

worship_12

by Barry King

President Obama called recent years of record federal spending, including billions of Keynesian "stimulus" using borrowed money, "mindless austerity" - as though if he had his way such spending would be even more prodigal. That's hard to imagine, but he can apparently imagine it. Americans are consuming all of their income, and then consuming more and spending more long after they should stop, They are able to continue that for now only by borrowing from China, leaving it to their grandchildren to repay those loans to China with interest. That can't continue much longer, and the only reason it can happen at all is because 21st-century Chinese, unlike 21st-century Americans, produce more than they consume and save the difference, so that their net savings are available to be loaned to Americans - and invested in Africa.

If the President thinks current US federal spending can be described as "mindless austerity", that means he wants to spend even more, in support of American consumption of goods and services. And of course there may well be enough American voters who like that idea, to keep him and politicians like him in power for a while longer. In that milieu, China's surpassing the US as the world's largest and most powerful economy is not only inevitable: it will happen very quickly now, more quickly than almost anyone expects. Here in Africa, that process is more clearly visible - I have been meaning to write up a report of what I saw during a recent visit to Beira, Mozambique - but I suppose there in the USA it might remain out of sight and out of mind for a little while longer. ...continue reading

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minimum mcdonlds

by Reid Fitzsimons

A retired friend of mine, a conservative, expressed his frustration in discussing the drawbacks of raising the minimum wage with his liberal/progressive friends. He felt his arguments were solid but perhaps he was presenting them ineffectually. For whatever reason he has confidence in my abilities of articulation and asked if I would write some basic points that would win over his progressive friends. I have to admit I fully lack economic credentials. I have certainly worked for minimum wage and at times for much less and, along with my wife, have paid the wages of local workers in our Central American charity project, but I never even took Economics 101.

My friend, however, joined by essentially all conservatives, is completely clueless in his rationale: that a reasoned, thoughtful, and logical argument can sway a person engulfed by the progressive mindset. For better or worse, my life experience has afforded me an opportunity to know the progressive mind close-up, and it is indeed hermetically sealed. Trying to describe this is not unlike attempting to describe an odor or color without similes. We’re essentially talking about people with addictions to a worldview that cannot be challenged, and not the kind of addicts who have some degree of insight or even awareness a problem exists. We’re talking about rock-bottom addicts who have permanently scarred their loved ones and otherwise lost everything they ever had and will angrily protest that just a little more scotch or cocaine will be their redemption. We are talking about minds so closed that undeniable direct evidence is dismissed with contempt, suspicion, and hostility. ...continue reading