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.
Wednesday, July 9, 2014
Saturday, July 5, 2014
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.
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.
Monday, June 30, 2014
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.
Tuesday, June 17, 2014
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.
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.
Monday, May 26, 2014
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).
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).
Friday, May 2, 2014
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.
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.
Wednesday, February 12, 2014
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
- (national) debt : (national) deficit :: news : history
- (national) debt : (national) GDP :: mortgage : capital appreciation
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