Category Archives: Economics

S. 510 Food Safety Modernization Act

As if humanity didn’t have enough agricultural problems coming down the line, the US Federal Government is presently seeking to expand them with additional regulatory burdens and concomitant inefficiency. Bureaucrats are attempting to use recent egg recalls to ram through a new grab for power. Thousands of new bureaucrats will be hired, vast amounts of money will be wasted, and the ability of farmers to actually do their jobs will be compromised. Aren’t we having enough trouble with the economy right now? This isn’t the time to be taking actions that can only lead to shedding jobs.

Nor will this be chiefly a threat to big Agribusiness corporations. Centralized and mechanized procedures are more easily ‘overseen’ than are the countless independent efforts of small farmers, and the owners of those centralized and mechanized outfits have much more political power. Major agribusiness interests are more easily capable of hiring lawyers and lobbyists to handle the FDA or fend it off entirely. Their procedures will improve little if at all. Small farmers and independent businesses will face the bulk of the increase in regulatory costs. This means that the ‘modernization act’ will mean more inequality and less innovation. Will there ever be a right time for that?

I doubt it! We need to act to stop this expansion of the federal government. If we don’t act on this, food prices will go up, agricultural employment will go down, and the union between big agribusiness and big government will grow stronger.

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A United Interest Between Rich and Poor

Death to Social Security!
Would that it were a battlecry I actually heard. I would vote for a politician who uttered those words.

I recently read an article from www.salon.com entitled “Why has the Post series created so little reaction?” that was about the corruption of our government and how it has empowered and enriched a corrupt elite. It was more heartening to me than disheartening. I have long argued that capitalism is something we haven’t a shadow of; our government is corporatist. It is designed, owned, and operated by major corporations. Capitalism would destroy these entities. They are as hostile to the ghost of real capitalism as any socialists ever were. Our corporatist system is functionally socialist in a lot of ways, from the way small producers are uniformly squashed in favor of larger (and supposedly more capable) entities, to the chilling effect that economic restrictions have ultimately had on other freedoms. And to continue that last little reference, Friedrich Hayek once said that socialism can not be implemented without means that socialists will not approve of. I do not think corporatism suffers that problem.

Of course, this all must seem an odd digression. Where does Social Security come into this picture? Well the article also mentioned that there is a drive among the ‘billionaire class’ to cut Social Security. This is the only place where the criticisms in the article really miss the mark. It is hard to overstate this case – Social Security, as done in the USA, is not ultimately beneficial to anyone. It may have provided short-term benefits to some people, especially those who got into the program early. And for those who are presently beneficiaries, I am sure they would suffer to lose the income stream now. However, the program has eaten capital throughout its entire history and it will continue to do so as long as it exists in whatever form it exists in. By providing an illusion of late-life safety, it even discourages effective planning and saving. It shortens the already short time-horizons of Americans. And I know this idea is terribly long out of fashion, but I dare say the program is bad for our national spirit.

Social Security has done nothing for social justice. Instead it has damaged our economy. It has damaged our ability to plan for the future. It has damaged our ability to function independently of government. It has even, by consuming capital that could have gone to industrial and technological causes, held back our sciences. And as capitalism has been the engine to lift humanity out of poverty wheresoever some piece of the market was allowed unburdened to function, so I say Social Security has even left poverty that much more prevalent in our society. It is a bitter legacy for liberals that has become a strangely holy pig in the public trough.

It was a bad idea implemented poorly. It doesn’t even come close to providing income commensurate with the expenses of aging! That’s why I called it an illusion of late-life safety. The entire program is a foolish pyramid scheme and it is long overdue to go away. I don’t care who exactly slaughters the holy pig. As much as I abhor the corporatist, corrupt, overcentralized government of our modern age, exactly what the motive of those who kill Social Security is seems irrelevant to me. The death of the program is an interest shared by very nearly the entire country. Rich and poor alike should rejoice to see Social Security vanish from America, and were it up to me, the event would be heralded by parties in every city street.

And just maybe, if this program is cut, people will come to realize how unreliable this corrupt government of ours really is. That will be a valuable day in American history.

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Wealth and Niches

An often overlooked aspect of economic growth is that it encourages market niches. There are some products for which there is always a market of one form or another; everyone must eat, after all. However there are many products for which there is only a market if the market at large is sufficiently wealthy. This is most prominently true in entertainment and leisure. Everyone wants entertainment, but if you have a small poor town in the middle of nowhere you won’t be hosting an opera house. Even if everyone in town loved the opera poverty can stand in the way. Worse though is if not everyone loves the entertainment. Many a small town in poor areas that I have seen have had a bar and/or a restaurant, plus a gas station and its meager stock, for the local acquisition of entertainment. Even this is a wild abundance compared to many periods in human history. By today’s standards it is a distinctive scarcity of entertainment.

The problem isn’t necessarily that it is bad entertainment. The half-rack of bestselling books and movies at the gas station may have earned their way onto the bestseller list. I don’t know, I don’t think I’ve ever read a bestseller, but millions of people seem to enjoy them. The restaurant may offer some very good food. Small town restaurants often do. The problem is that people have a wide variety of tastes. Small town vendors have to appeal to the majority in all but the richest of small towns. They simply can’t afford to carry something for everyone.

Two things can change this. The first one is more or less universally understood. This one is population density and transportation, which I am grouping together under the term convenience. When there are more people in the ‘operating radius’ of a business, when that business is convenient to more people, it can profitably carry products that appeal to smaller portions of the market. A store specializing (for instance) in board games doesn’t appeal to the majority of the people who live in a region. It doesn’t need to. It only needs to appeal to enough people. I’ve never seen a small town with a boardgame store, but in cities they aren’t that hard to find.

The second one is the actual point of this essay. As wealth increases, niche markets can be supported by fewer people. Everyone knows that rich people can indulge in their idiosyncracies. The eccentric wealthy are practically an archetype. What most people don’t realize though is that this effect also applies to those who aren’t what we commonly think of as “wealthy”. In areas of high population density, a small increase in wealth can translate to a large increase in interest in niche products. Large, that is, from the point of view of those who would distribute such items. People don’t realize the extent to which the modern world is rich relative to history, and the extent to which that wealth allows us relative abundance.

The wealthier an area is, the less convenience it needs to support niche products*. If it were dense with prosperity, a small town could easily support a boardgame store – perhaps even an opera house! When one acts on the scale of a city, where convenience already exists to benefit merchants, small changes can be huge statistically. As a city gets richer, new and stranger products become available. That’s one of the things I look forward to as an influence to bring us farther into the future. It is not merely that we need more technology, but economic growth itself means that more and stranger technologies can be brought profitably to market.

*The flip side of this is that the poorer an area is, the more convenience it needs to support niche products. This is part of the effect that creates cities in the first place. People crowd into populated areas to take advantage of goods and services that they can’t get at home, which makes it profitable to offer new goods and services, which attracts more people… et cetera! Of course, there are many functions that cities serve. This is only one of them. Without further research I cannot guess how important it is.

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Conditional Unemployment

“Assume that a worker offers his labors for a certain price and there are no takers. If he then refuses to lower his price, he can hardly be said to be involuntarily unemployed. He is conditionally unemployed, the condition being imposed by himself. Only if his price is a government-imposed one, such as a legislated minimum wage, can he be said to be involuntarily unepmloyed.”

excerpt from Paying Men NOT to Work – Oscar W. Cooley

Most economic wisdom is neither new nor inaccessible. More people should study it.

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