Informing consumers

It is fair to say that informed consumers are a positive force in free markets because a market where “prices for goods and services are set freely by consent between sellers and consumers… free from any intervention by… authority” needs market competition to set prices. And competition is hinged on consumer choice. This is where information comes in - informed consumers have the tools to differentiate products and services and make buying decisions accordingly; uninformed consumers are dupes, malleable and subject to the persuasive antics of marketing campaigns. So only informed consumers are truly capable of participating in market competition necessary to a free market. This means a real free market demands producer transparency.

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Examples of product labeling…

GMO content (in food)
list of ingredients (food)
Nutrition label (food)
Fiber content (clothing)
Washing instructions (clothing)
Made in…
Assembled in…

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But separately mandating transparency for each class of consumer products through legislation counters the “free from any intervention by… authority” of free markets. So what would be the least intrusive legislative means to inform consumers about market products? A single law would encompass many of these issues: demand that all claims on product labels be truthful. This allows producers to be as transparent or opaque as they wish and consumers are assured that the available information is true, even when incomplete.

For example, any of the following lists of ingredients would be consistent with a truth in labeling law:
-flour, sugar, salt…
-pesticide free: pesticide free (flour, sugar, salt… )
-95% GMO free: non-GMO flour, non-GMO sugar, salt…
-organic: organic (flour, sugar, salt…)
-95% organic: organic flour, organic sugar, salt…
-flour, HFCS from glyphosphate treated corn, salt...

An interested consumer would reasonably infer the first three contains ingredients derived from conventional and/or GMO crops and the last contains GMO corn. A disinterested consumer would not bother to read the list and make purchases based on other criteria. And fanatical consumers will choose to cook at home from quality ingredients.

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Food labeling rules have been among the most contentious in recent years. Anti-labeling forces have often made paternalistic arguments: studies have shown [GMOs] are not dangerous to humans; labeling [GMO] foods would promote fear of ‘frankenfood’; BSE testing/reporting would generate confusion amongst consumers. These are baseless arguments because added information will clear up the confusion of interested consumers and disinterested consumers will be unaffected one way or another.

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Producers would not be able to claim unfairness because they are free to respond to market forces by changing their product… labeling, marketing, production, formula, etc... at will. A truth in labelling law does not compell transparency or disclosure. Untenable truths can be avoided by evasion, in which case, the only information available to consumers is through the process of comparison.

This also has the benefit of extending transparency to all consumer products, including manufactured goods and pharmaceuticals. Minimum regulation for maximum benefit for all concerned.

First extinction event?

A claim frequently made by climate change skeptics is that humans cannot create a sufficient imbalance in nature to cause climate change. They deny that the current mass extinction is related in any way to human activity. Is it not curious that an early, perhaps first, extinction event was precipitated by the anaerobic metabolism of microscopic life which released sufficient free oxygen into the atmosphere to allow aerobic life, like mammals, to evolve (see here and here)? It would appear that living creatures can unwittingly change their environment. The question for humans is can/will we do so wittingly.

Time in an infinite universe

Does time exist in an infinite universe (greater universe than the one we occupy)? If all possibilities are always present, can past be differentiated from present?

Trickle down is working too well…

The problem isn’t that trickle down economics isn’t working. The problem is it is working all too well…

Capital, therefore wealth, is produced by the labor of workers. Instead of a more equitable distribution of this wealth where workers retain a sizable proportion of the capital they create…

…The capital made by workers/managers flows down through legal and illegal corporate practices backed by government policy to concentrate with the 0.1%.

American Democracy

Source image

Economies are fabricated ecosystems

Recent events have brought the common issues of environmental preservation and economics to the fore: the release of Naomi Klein’s new book, This Changes Everything (which I have not read); The People’s Climate March, Flood Wall Street and the U.N. climate summit. To take advantage of the spotlight and keep it focused on these issues, this is an introduction the link between the economy and the environment and why a complete reworking of the economy is necessary for a sustainable future.

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The dictionary defines an economy as ‘the wealth and resources of a country or region, especially in terms of the production and consumption of goods and services’. Wealth and resources covers everything which can be priced. This includes everything that can be purchased with money: houses, buildings, land, personal property, etc. and every service a person can be paid to perform. So the economy is the manufactured environment we live in. Seeing as human activity builds towns, cities, suburbs, roads, farms, fields and provides services and experiences like legal advice or wilderness adventures, there are no places within human boundaries which can be outside of its economy.

Then there’s money; it’s a medium of exchange - meaning what? People work for money so it is, effectively, a means to store labor so it can be later traded for other people’s labor (in services or products). So a shortcut to measure economic productivity is to look at the movement of money. [For this discussion, money equals labor which equals all capital goods and services.]

Economics is a social science. Social sciences study ‘society and the relationships among individuals within a society’. There are primarily two classes of economic relationships (a relationship which involves an exchange of labor) - producer and consumer. Of the two, consumer transactions tend to be transient so the more significant economic relationship is that of producer, or the relationships among individuals we work with.


Part 1: Economics as social science

So how do economic relationships drive and sustain the flow of capital for a functional economy? The short answer: Money in economies is like water in land based ecosystems (Figure 1). In other words, the money economy of people is like the water economy of ecosystems.

There are several currencies in the economy of ecosystems including carbon, nitrogen, energy and water. Of these, water is most comprehensively similar to money in that it is fungible (dew water, rain water and snow melt are treated the same by plants just like fruit flies don’t distinguish between water from an apple or a grape) and the water cycle is a part of everyone’s normal experience.

Water enters the biota of an ecosystem when rainfall is taken up by soil microbes (which fix nutrients) and plants. The plants absorb water and other nutrients from the soil to make more plants (by growth and reproduction) (Figure 1A). The water in plants is taken up by herbivores when they eat and used to grow more herbivores (growth and reproduction). The water in herbivores is taken in by carnivores when they prey on herbivores and used to grow more carnivores and this cycle repeats up the food chain to the apex predators.

Likewise, in economies, supervisors ‘prey’ on workers by claiming the products they make (Figure 1B). And just as the primary producers of a food chain supports the entire food chain, workers are the primary generator of capital for businesses.

But in an ecosystem, water is not lost solely through predation. It is also lost to the atmosphere through respiration; the biochemical reactions necessary for life. The water vapor in the atmosphere from organic respiration and geophysical evaporation then coalesces into clouds which rain water down to waiting vegetation, repeating the cycle of water through the food chain (Figure 1A). Each rainfall is an opportunity for the food chain to capture and retain water to support their growth so ecosystems have evolved to retain and promote the local cycling of water. The pattern of regular circulation of water through the ecosystem determines its ultimate productivity; low-rainfall deserts are not very productive, mid-rainfall forests are moderately productive and high-rainfall biomes are very productive capable of generating enormous biomass.

In contrast to natural ecosystems where rain precedes production, in businesses, wages succeed production. Unlike predators which do not devour the total productive output of prey, in a business relationship, the total output of workers is claimed by the higher ups. This output is converted into money in the marketplace and a fraction of it is returned to workers as income. Workers ‘respire’ or consume their income by spending it in the marketplace or save it for later consumption. And similar to the condensation of water into clouds, monies spent at the marketplace is concentrated by corporations and banking institutions to be distributed as wages, taxes or other forms of dividends. (In keeping with the common economic assertion that market forces are beyond the ken and control of the business community, this metaphor equates the marketplace with the atmosphere which is subject to a combination of predictable and unpredictable geological and physical forces.) And just like water circulation in ecosystems, consumer spending generates the capital movement essential for a robust and functioning economy.

Ecosystems in different biomes are variable resistant to environmental perturbation. Of these, semi-arid ecosystems are particularly fragile. But overpopulation and trade pressure have forced many communities to over utilize these desertification susceptible biomes. Deforestation (harvesting of wood for fuel or clear-cutting for other purposes), over-grazing (more animals than a range can support due to high demand for meat) and conventional farming effectively strip away native vegetation, the foundation of the food chain. The loss of water vapor contributed by an intact food chain in a semi-arid environment reduces overall local rainfall. In the absence of vegetation, soil is readily lost to wind erosion. Without viable soil, the land can neither be farmed nor can native plants regenerate their prior presence. The result is that moderately productive ecosystems are degraded to marginally productive ones with no economic value. The Dust Bowl period of the 1930s in the U.S. was an early indicator of this phenomenon.

There have been forces acting on the American economy in the past three decades to similar effect (Figure 2). With declining union membership, workers have little bargaining power over wages. In addition, policies which prioritize profit over people engender corporations to maximize ‘return’ from workers in productivity to maximize business income which is then apportion to CEO/executive pay and shareholder dividends at the expense of worker wages. Workers have adapted as best they could by committing to two income families, refinancing their homes, delayed saving for or eliminating higher education and/or retirement and multiple jobs when possible. Despite these efforts, worker incomes have declined to the point where their lack of consumption has reduced monies entering the marketplace, thereby reducing total capital flow. On the short term, businesses lose sales opportunities and market shares; the long term cost to workers is food and housing security, poor health (due to unaffordable healthcare, poor diet and stress), lack of opportunity to advance their careers (high education costs), and lack of retirement security (no savings).

In the same period, the consumption by top earners has not significantly changed so increasing the income of this class does not increase the rate or volume of capital flow in the marketplace. Instead, the monies they have siphoned off is sequestered offshore or reinvested in corporations, effectively creating a financial whirlpool - rich in hustle and bustle but poor in productivity (consistent with recent reports of economic growth absent increase in most household incomes -see here and here).

To date, these trends have not abated; if anything, they have intensified and shifted to target the wages of higher wage tier employees. In the private sector, profit taking has normalized conspiracies amongst prominent technology firms to depress wages (see here and here) and caused insurers to undermine the practice of medicine by requiring pre-approval for medical procedures and tests, often in opposition to physicians’ professional judgment. Privatization of public sector functions (military support operations, prisons, charter schools and attempts to privatize Social Security, for example) offer more opportunities to retrofit non-profit organizations into for-profit capitalist business concerns. As per capitalism, the goal is to identify a large pool of spending, public or private; use all available financial and political machinations to bring it under private contract by corporate capitalists. So long as this business model generates a good return on investment, capitalism demands followers.


Part 2: Economy beyond social science

Beyond the social science of economics, materials economies presume the unlimited availability of raw materials… and thereby build in the seeds of unsustainability. Modern economies are driven by the non-stop consumption of disposable goods; a model which circulates human labor but does not cycle materials. Economics is a social science because it assumes the environment can and will provide all the materials cycling services necessary to sustain an economy (Figure 3A). On this premise, economies are designed to generate a positive return at each processing step needed to transform raw materials extracted from the environment to finished product. The do this by profiting off the labor added at each step. Environmental damage is not factored in as a cost of doing business because  environmental damage has no financial cost. So it is a good business practice to extract maximum investment return from the environment without regard to consequences.

This is where materials economics comes into conflict with ecology and geology. It is clear from part 1 that ecosystems cycle. And though not as obvious, there are also cycles in planetary geology (examples include formation/erosion of mountains and fossilization - think fossil fuels). These natural cycles are how raw materials are replenished. But just as over-grazing can irreversibly damage fragile ecosystems, materials economies over ‘harvest’ the bounty of the environment. And as harmful as rapid resource depletion can be, given sufficient time, ecosystems (and sometimes geography) can recover. But in addition to over-drawing resources, materials economies discharge vast amounts of toxins which devastate ecosystems beyond recovery. Just consider, aquifers all over the world are being depleted faster than they can recharge to irrigate crops in conventional agriculture. Then the burning of fossil fuels depletes the global supply of fossil fuels and pollutes the atmosphere with excess carbon dioxide. Carbon dioxide is particularly damaging because it traps heat and both heat and high carbon dioxide levels inhibit plant growth which is an important component of the geological hydrocarbon cycle, consuming crop and seed, resource and generator. This is happening now (Figure 3B) and the consequences of not changing this trajectory is the loss of an environment capable of sustaining a functional economy (Figure 3C). But a devastated environment is not inevitable; it may still be possible to alter the course of the economy and develop a sustainable future (Figure 3D).

Part 3: Sustainability

Economies, like ecosystems, exist to promote the growth and well-being of its members. This is why workers engage in economic relationships. But today’s economies selective benefit top earners at the expense of other workers and deplete environmental resources at higher than replacement rates (Figure 3B). If this trend continues, either workers will revolt and take what they need by force - even one-percenters understand this - or the economy eventually ceases to operate due to environmental failure (take your pick: climate change, industrial pollution, dropping water tables, habitat loss…). At that point, science deniers be damned, natural selection will cull populations without regard to humanity (Figure 3C). And though the natural environment is, in physical terms, substantively larger than the economy, the solution must be economic because that is the source of the problem.

Prominent economists have suggested policies or reforms to address the issues of income inequality, low/under employment and unstable financial institutions. Thomas Piketty, for one, has suggested income redistribution through selective taxation and others have called for the return of Glass-Steagall and/or promote union membership and/or enforce anti-trust laws… These proposals would all have a positive effect on the economy in so far as promoting the well-being of workers and consumers but they offer what is essentially a patch over the inherent flaws of capitalism, not a long term solution. For that matter, no economic system is free of income inequality. Just consider how economies work (Figure 1B). The business pyramid is a reflection of the variation inherent in any population. Individuals have different skills, interests, motivations, opportunities; on these alone, there is stratification. Capitalism enforces stratification and differentially distributes wages based on it thereby instituting income inequality. Communism seemingly discounts inherent variation yet still operates manufacturing concerns with more workers than managers. For social stability, we need an economy which encompasses the social science aspect of economics; for sustainability, we need an economy that interacts with the environment commensally and not antagonistically as current economies do.

The solution is not likely to be found in a single monolithic economic system; no major modern economy holds pure to a particular economic ideology. The place to look is the source metaphor of economies, ecosystems, specifically, the food web of ecosystems. Figure 1A depicts the food chain as a linear flow of calories along a defined series of trophic levels. This is not completely accurate; in reality, food webs are complex networks of interwoven inter- and intra-species interactions developed over millions or billions of years of evolution. These networks feedback onto themselves and often have redundant functionalities which keep the ecosystem in balance (Figure 4A). They include predator-prey (capitalism-like), symbiotic (socialism-like), parasitic, altruistic and mutualistic interactions among many others. Translated into economies, it would mean many small independent business concerns with various organizational structures resembling interactions between organisms (Figure 4B). A combination of competition and regulation would presumably prevent businesses from getting too large. (There are two reasons a business can be ‘too large’: in the sense that economies of scale are bad for the environment. Mountaintop removal or deepwater oil drilling need enormous capital input to initiate. Small business do not have such resources. The other being deepening inequality; larger businesses have more workers to produce capital which concentrates towards the peak of the pyramid.) And being small confers great flexibility on businesses to collaborate and form mutually beneficial relationships. The goal is a ‘living’ economy capable of evolving regulatory and other mechanisms to meet changing economic conditions.

Cultures have yet to design such an economy, so it would be worthwhile to consider how to evolve a sustainable economy. So a challenge to evolutionary biologists and economists: what constraints would permit the evolution of a sustainable economy geared towards the well-being of its members? (One of mine would be to ban profiting from weapons of war; they are necessary for defensive purposes but selling at cost eliminates incentives for producers to lobby for war. On the opposite end of the spectrum, profiting from medical services/products is acceptable.)

It may yet be possible to avert the worse outcomes of our current trajectory but much work lies ahead if we want to achieve a sustainable future for humanity (Figure 4D).

Part 4: Closing comments

This essay is a bare bones introduction to parallels I see between natural ecosystems and economies. It is not a treatise on how to unwind the economy out of its current spiral. Numerous critiques can justifiably be made against using the ecohydrology cycle as a metaphor for the economy. For one, I have completely neglected the role of monetary policy in influencing the flow of capital. Fact is, I am not an economist; I do not have an understanding of monetary policy. But I do think this metaphor resonates with some basic economic truths that beautifully counters the meme ‘the one percent are the job creators’. (Compare figures 1B and 2 to see that consumption by workers increases job demand.)

And two final points. Economics is based on goods gaining value through addition of labor. When fast food chains threaten replace workers with iPads or Bill Gates posits a workerless software and robot driven future, what value is added to the products they hawk? Those without money can barter amongst themselves but what would a robot take in trade?

Lastly, the economic cycle depicted in Figure 1B has much broader implications than is described here. They can be used to model open economies where capital enters and exits the cycle through corporate institutions or closed economies where no external capital movement is possible. As open economies, the pyramid can be used to break down the spending priorities of individuals or households or time-to-task allocation of businesses of any size (micro-economics). It can be scaled up to local town, city or state economies; then there are national economies (macro-economics). And globally, the world economy is a closed economy where the world’s poorest form the base of the pyramid. (In case the discussion above was not clear, a quick reminder to business and political leader, stable structures require strong foundations so support the base for long term return.)

A final note for researchers: a good thought exercise would involve constructing larger economic pyramids as the sum of smaller pyramids… makes me wonder if computational ecohydrology models can predict economic trends. Can computational ecohydrology models be adapted for economic modeling?


Lots to think about...


Update: About the role of the war making/defense industry in an evolved economy... I'm beginning to think it should not be necessary to outright ban certain economic sectors or behaviors. The whole point of establishing a living economy is to evolve internal control mechanisms... perhaps to where there is no market for such products.

Update 2: More related thoughts - I will keep adding until I can them organized a coherent narrative structure and integrated into a new essay...

-More evidence of increasing imbalance in current economic system... here and here. Then there's the stress human population has on the ecosystem which threatens environmental collapse... here.

-I was wondering what factors determine optimal size, be it plant, animal, business or government. Don't get me wrong, I like living in a rich country with all its advantages and I am too selfish to give them away for the sake of equity... But if governments are examined as economic units which are responsible to both their workers, consumers and owners... is there a size at which all these goals are ideally balance?

-I just found an (informal?) organization of activists working on these issues... see here.


Update 3: Even when I update, I forget some of the points I want to cover :(...

 A small change with huge effects on the economy would be reform of intellectual property. Just consider how the value of drug companies would change if the length of patents were shortened or lengthened; what about the value of Disney if copyright rules were different? This may be a good target for legislative reform.

Third party politics

In third party politics, there is often internal conflict between preserving the purity of party ideology versus compromising for the sake of electoral success. Without taking a firm line on the debate (it depends on the probability of candidate actually winning and their visibility), it is important to emphasize the unstated mission of third party politics is to goad and challenge the major party with the closest ideology to adopt positions closer to that of the third party. With this in mind, the most important elements of third party politicking is clarity of message and transparency of organization.

First and foremost, outside parties are engaged in educating voters about overlooked issues. Effective education requires clear and concisely precise communication of party and/or candidate issues and positions. This information should include descriptions of the office each candidate is running for, especially the responsibilities of those offices; how each candidate would carry out the responsibilities of office (would they consider constituency opinions in office or are they free of constituency opinions because voters elected them knowing their positions on the ‘important’ issues) and how candidate political positions will affect their decision making and conduct in office.

Transparency functions to void issues of trust. Consider how Congress is ranked lower than lice. It’s understandable because we can see and know what lice are up to; politicians can and do hide their true constituents and interests. A third party candidate with little hope of winning office can set a high standard of transparency by doing the following: (1) respectfully answer relevant questions from reporters and voters (intrusive personal questions should be ignored); (2) make campaign donations publicly available (properly coded for donor privacy); (3) make schedule of campaign & fundraising events and meetings with persons with interests associated with the office publicly available (with appropriate regard for security). It would also be nice to know how candidates would have addressed some of the issues actually faced by the current office holder. Transparency would serve to diffuse opponent attacks and contrast the differences between candidates. The hope is that opponent transparency would increase scrutiny of major party candidates and force them to be more responsive to the interests of voters and improve the quality of political discourse. Third parties should lead by example by taking the high ground.

Ban profiting from warmongering

I just saw a news clip about how the Israeli military industrial complex has, for all intents and purposes, designated the Gaza strip as the testing site for their products of warfare. I have previously written “…economies exists to advance the survival, well-being and growth of all its participants.” An economic sector whose products do the opposite and who very coldly sets aside a densely populated geographical area as grounds to test the effectiveness of their killing machines runs completely counter to the purpose of an economy. Because self-defense is occasionally necessary, arms production cannot be banned but profit should not be made from widgets which kill en mass. It is immoral and anti-economic.

Not Carbon Tax, Extracted Materials Tax

With the upcoming People’s Climate March and the U.N. climate summit in New York City, more attention has been focused on the carbon tax in recent weeks. While the carbon tax addresses the most pressing environmental issue, climate change, there are many others including pollution of all sorts and land degradation. A number of instances of these stem directly from various extractive industries; think mountain top coal mining, drilling and transport of crude and refined oil products, hydraulic fracture mining of natural gas, mercury in gold mining and mining and refining other industrial minerals/metals. Some of these effects could be mitigated by switching to renewable energy and recycling. But current cost structure favors virgin extracted raw materials over renewable energy and recycled material. This is why expanding the carbon tax into an extracted materials tax would be a positive move. Considering that extractive industries consume immense amounts of energy, this would increase the cost of virgin materials and provide incentive for entrepreneurs to develop more efficient recycling capacity… renewable energy and material stream; reduction in landfill use; less extractive industry pollution… many positive outcomes for one tax.

Does how you pay taxes affect how you feel about taxes?

It’s fair to say there is a significant difference in the reaction to paying taxes between social classes in the U.S. While no one is thrilled about having to pay taxes, it is primarily the rich who lobby for lower taxes; poor people contact their representatives mostly for other issues. So given that rich people have a stronger aversion to payer taxes, I am curious if there is a difference in the way taxes are paid by each class and if there is a correlation between payment method and attitudes.

The majority of taxes paid by most people are garnished from their wages before they receive their paychecks. In other words, the taxes they shell out never directly pass through their hands so they don’t experience the feeling of directly paying the government for government provided services. But the majority of the income earned by rich people is through returns on investment. How are taxes paid on this income? Do these taxpayers personally make direct payments to the IRS? Do they feel as if they are paying the government (mostly federal) for services (mostly local) they don’t receive?

If the way rich people pay taxes fosters a sense of resentment towards the government, are there ways to change how taxes are garnished to minimize this effect?

On a related note… How are tax payments managed in Scandinavian countries where taxes are much higher than in the U.S.?

Smaller percentage of a growing pie

Many mainstream economists avoid the issue of income inequality by claiming it can be resolved by ‘growing the economy’ so that the entire ‘pie’ gets larger. This argument is essentially that a smaller percentage of a larger pie is more than a larger percentage of a small pie. This is true in absolute terms: 12% of 1000 (120) is greater than 15% of 750 (112.5). But if the piece of the pie held by lower wage workers continues to shrink, at some point the absolute value shrinks to some negligible amount… obviously not a cure to income inequality. So do those mainstream economists have a real fix or is it all smoke and mirrors?

How much extractive economic activity can the earth support?

Economic activity starts by extracting something from the environment…

To understand this conclusion, work backwards from any final consumer product, be it physical or intellectual: plastic toy <- molded from resin <- chemical transformation of petrochemicals <- drilled/extracted from environment; book <- printed on paper <- made from wood pulp <- from trees cut from environment; meal at a local restaurant <- made with ingredients from local supplier/distributor <- grown by farmers who extract their products directly (plants) or indirectly (animals) from their environment… this is true for all products in the economy.

So how much exists to be extracted and what happens when we reach the limits?

America trending...

The American economy is trending towards an extreme form of capitalism known as oligopoly if it’s not there already (see here). How is a ‘capitalistic’ oligopoly significantly different from a planned economy? In both, major sectors of their respective economies are controlled by a small select group of powerful individuals (board of directors or central committee). They have sufficient financial resources to influence public policy as they please. They are, for most part, free to ignore the wishes of ‘junior’ members (small shareholders or citizen workers) and direct their business strategy as they see fit. As I see it, the current American economic system is pushing this country away from its representative democratic roots as a republic to a something resembling an oligarchy like the Russian Federation.

Too many MBAs

This country has produced too many MBAs. They are so common that an MBA is considered de rigueur for public office which has resulted in governments whose policies and practices are infused with business ethics and priorities. One negative example: education was once considered a public investment but since funds spent on education are not classified as investments by business economists, government policy has changed. The single most important form of long term planning in any society, the one which promises the best return on investment, public education is now being managed as a short term purchases with immediate return on monies spent. This is the justification for student testing and teacher accountability - immediate return on money spent on teacher pay - and not long term investment on student learning, growth and achievement.

With the emphasis on business degrees, our academies have turned the brightest minds in the country away from intellectual innovation to financial innovation and the result is a loss of intellectual specialists and a glut of inequality maximization specialists at the cost of national and international economies and ecosystems.

The only positive is these institutions are still (mostly) intact so we only need the will to invest in a future that benefits all people. It can take decades or centuries to grow a forest that man can now cut down in a day.

To advocates of expanded Second Amendment rights…

Regardless of your motivations, as a supporter of gun control, one of mine is to avoid accidental gunshot deaths or injuries of your children. Unfortunately the expansion of gun rights for which you advocate (stand your ground laws and open carry provisions) put all our children at risk. I would ask that you respect the lives of my children as I do yours.

A Major Failure of Capitalism

If the opposition to a minimum wage (either its existence or increase) were drawn out to its logical extension, it would lead to the conclusion that capitalism is not the ideal economic system, contrary to what minimum wage opponents might say…

To make this argument, it is necessary to go into the meta-level questions about economics. An economy can be defined as all the exchanges of goods and services within some area. But why do those exchanges occur at all? In even the most dire of circumstances, such as refugee camps, people will organize and engage in some form of exchange of goods and services. Why is that? What purpose does it serve? Looking at it from the most basic level, people trade to get the things they need to survive. So under less dire circumstances, the developed world for example, economies exists to advance the survival, well-being and growth of all its participants. A good reason to be, at least to my mind.

So how does the minimum wage fit into this? It relates to the unwillingness of capitalists to pay their full time employees a living minimum wage. An economic system which is not willing to compensate full time workers sufficient wages to support themselves is not fulfilling its reason for existence and thus a full out failure. It is long past time to reconsider capitalism as an economic system.

A minimum wage is pro-business

I saw two ire raising online posts a few days ago about the minimum wage. One primarily made the disingenuous argument that workers should be paid according to their productivity and (out of concern for low wage workers) that any [low] wage is greater than no wage. The problem with this position is the onus of productivity is placed completely on the workers as if managers and business owners have no control over production.

I look at the minimum wage from a completely different perspective. By setting a minimum wage, the government expects that all businesses operating within its jurisdiction do so with sufficient efficiency to ensure their employees are able to earn some preset minimum wage. The effect is twofold: assurance that the standard of living does not slip below some minimum and promotion of profitable business practices, that is, demands all businesses have a good business plan. Business owners and entrepreneurs are still free to pay themselves as they see fit.

The second post added, on top of the above argument, a  hypothetical: employee wages absorb all the business profits so owners cannot use their profits to expand into another location. Since the expansion of low wage work does not build healthy economies, I propose a different narrative… what if some of these ‘profit pilfering’ employees save enough of their wages to start their own business (or support their children’s education to the same effect). These novice entrepreneurs would seek out unmet niches in the market, thus increase the diversity of local enterprises. And municipalities with diverse business bases are better buffered against market forces and more capable of responding to changes in supplier, manufacturer and consumer demands. All good reasons to improve worker wages.

P.S. Service work does not have to be low wage. Here are two examples of successful service worker heavy business plans in operation (see here and here).

What are the First Principles of Economics?

Physics has the General theory of Relativity, Quantum theory, String Theory and the Theory of everything.

Chemistry has the Atomic Theory.

Biology and medicine have the Germ Theory of [infectious] disease and the Theory of Evolution.

What does economics have? Public debates over the economy frequently come down to differences between planned vs. market systems. But there are more than a tinge of political ideology in such debates. A more pointed question is ‘what are the natural laws of economics?; the first principles on which all economic systems depend’. History and current events suggests these principles exist… (1) All modern economies, regardless of economic system, undergo non-seasonal cycles of recession and expansion. (2) The collapse of nations and empires (modern examples are Somalia and the British Empire) do not eliminate market commerce. (3) Even in the most straightened of circumstances where capital and goods are in short supply; infrastructure is nonexistent and social structure best described as absent (such as refugee camps), trade can commence and economies birthed. These examples show that geopolitically determined economic systems are not essential for functional commerce and thus the growth of economies, suggesting the possibility that economies are self-organizing entities directed by rules which economist have yet to determine. Any economic debate in the absence of understanding of these elemental principles are arguably futile.

For example, a basic principle which has been proven invaluable in the field of medicine is the the germ theory which postulates germs cause [infectious] disease: The observation made by Alexander Fleming that some microbes secrete a substance which kills germs was worthy of further exploration because… maybe microbial secretions can kill the germs which cause disease. And a revolution in the fight against infectious disease was born.

It is perhaps unfair to compare the social science of economics to three mature fields of physical science but economics plays a role in public policy that is second to none. In fact, economic policy arguably has a greater impact on the everyday lives of every person on the planet than much of the cutting edge research in all the physical sciences. This being the case, all people have a right and duty to expect the highest and most rigorous standard of theoretic and applied economics be practiced when used to determine policy which effects the lives of everyone within its sphere of influence.

Two analogies…

I love analogies; they help clarify misleading language. These occurred to me when I heard Robert Reich talk. One thing he mentioned was that the absolute national debt/deficit was not as important as the debt-to-GDP ratio. So government austerity is not necessarily good for the economy.

- (national) debt : (national) deficit :: news : history

- (national) debt : (national) GDP :: mortgage : capital appreciation

Carbon free renewable energy…redux...

Float and tether energy collectors (any combination of solar/ wind/ wave collectors) onto offshore (and potentially out of sight) platforms: use the energy to generate hydrogen by electrolysis from sea water. The hydrogen gets stored in tanks on the platforms and harvesting would entail swapping empty tanks with charged tanks.

In today’s climate of peak water, there is an additional positive effect of this model: the fresh water by product of hydrogen combustion as fuel. In effect, hydrogen by electrolysis from sea water is a form of desalinization.