Tag Archives: Economics

Inane Arguments Against Wealth Creation, Supposed Exorbitance

I read an article the other day. The title of the article is “Huge Houses Are Morally Wrong.” I had to read it twice to make sure the author wasn’t pulling one over on me. In the end, I am left feeling both a sense of outrage and sadness. And here is why:

  1. On his mention of Bill Gates’ fortune, and the $30 billion he has given away to charity, the latter of which the author decided isn’t enough, I say this: $30 billion isn’t enough? Is there a “moral” number? Do you, dear author, give away 40% of your wealth? I doubt you do. And if you did, I don’t care. It’s none of my damn business. So, in addition to the $3o billion, which in and of itself is a tremendous value, what about the value Bill Gates has brought to the world with Microsoft? But no, the author doesn’t seem to think that the billions of people who have benefited from his company is a matter of importance. I say poppycock. I hope Mr. Gates continues to make tons of money. But, in the end (and which will be my main point here), I don’t give a darn what he does make or doesn’t make, or does do or doesn’t do.
  2. On his mention of Peter Singer and his argument that no one is entitled to live beyond $30,000/year. What a sick, depraved way to live. It’s these type of folk that want us to revert to a time wherein technologies were of the simplest and less impacting variety. The argument disregards all of the tremendous value (jobs, wealth, well-being, more efficient and less expensive production methods, etc.). But, again, who cares? If my bachelor neighbor decides to move out of his one-room apartment into a 3-room house, that’s his prerogative; that’s his right. But Hamilton’s argument would say that my neighbor should not do this; that it is of waste; and that it is immoral. That’s bogus. Let’s say I want to buy an Apple laptop. It may be a bit outside of my price comfort range, but I desire the product, its accoutrement and warranty program. Is it immoral to decide to ditch my $300 Acer in place of the $1,500 Apple? Of course not. My money is precisely that. Mine. What I decide to do with it is entirely on me.
  3. In the end, for me, all that matters is this: it is theirs. Their money. Their wealth. Regardless of how they acquired the wealth (it could be via hard work and determination or nepotism or whatever), it is theirs, and they get to decide what they do with it. They could just sit on it. Literally. They could exchange it for gold and sell it. They could travel. They could buy million dollar homes. It doesn’t matter. Not I or the billionaire has any moral obligation to live by certain socially constructed means.

I say stop whining about what isn’t yours. What others do with their money doesn’t concern you (unless, of course, they are using the money to inflict actual harm).

I say, dear millionaires and billionaires, please continue doing what you’re doing. You provide me with entertainment in the movies you create. You make it easier for me to do business, in the software programs you create and the social media websites you develop. You make everyday staples of living less expensive and easier to consume. Your homes, your wealth, your success and celebrity are the things rational, reason-minded, positive people aspire to achieve.

Live well. Live “ridiculously well.”

As for the Hamiltons of the world, go ahead and keeping thinking squalor is of some intrinsic value. That’s fine. As long as you give up the iPhone, the laptop, the vehicle.

For other tidbits of mine on this topic, go here and here.

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Your Rights As They Exist On An Island, By Your Lonesome

I saw a sign at the Occupy Wall Street protest that, well, sort of boggled my mind.

To Say That a Job is a Right is the Same Thing as Claiming You Have the Right to Enslave

How can you claim a job to be a right? Are you not claiming ownership over the product or service of another person?

And this is where the “rights on an island” scenario comes into play. My dear friend Justin used this analogy. Imagine if you were on an island and you were the only person there. No other human exists on this island. Additionally, there are no merchants or health care providers or attorneys or–yes, that’s right–employers.

Consider the way in which your rights exist in this setting. On this island, you have freedom to do as you please. If you wanted to spend time doing jumping jacks, that is your right. If you wanted to build a home* on this island, you could do that too. But your rights are limited to what you can provide for yourself, without infringing upon another.

You have the right to pursue (your own, unique, personal, individual) happiness. You have the right to liberty. That is all.

You do not have the right to another man’s product or service. Or, in the case of the employer, you do not have the right to a job. A job is a value the employer has created for themselves. They worked to achieve a status that affords them the freedom to hire. That is their achieved liberty. They can hire, and that is their choice.

You do not have a right to a job. A job is product that is created and carefully constructed; to be offered, only at the will and desire of the employer who created it. If they deem a candidate of worth and relevance for the job, then they have the liberty to choose said candidate.

Just as a job is a product, so is, let’s say, a lamp. The Lamp Store sells lamps. Do you have a right to the lamp? What about the dentist? Her product is dental care. Do you have a right to that?

No.

Remember, you are on an island. Your rights exist only as if you were on said island, all by your lonesome.

I don’t have a right to a job. I do have the right, however, to make myself relevant and of value to the employer. I do this by honing my skill. Gaining experience. Contacting people in the industry.

I own a small business. It’s new and, week to week, I work hard to build something that will, in time, be enough to support my family. It’s not easy work. It takes dedication. Toil. Sweat. Patience. Do I have a right to this job? Heck no.

I imagine a scenario in which I walk into the office of a local marketing firm and tell them that I have a right to procure a writing project from them. They’d laugh me out of their office and possibly call the police. And rightfully so.

So, please, don’t claim you have a right to a job. You don’t.

*The island is only metaphorical. It doesn’t exist. The home you build is also metaphorical. No private/public property arguments.

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Sweatshops, Welfare and Poverty

As Ben Powell says, “defending sweatshops is not about defending corporate profits, economic efficiency. It’s about the welfare of the third world workers.” I think this has some merit. Sweatshops are notoriously lambasted for exploiting individuals, and/or providing “too little.” But I think it’s much more complex than that. To start, I’d recommend watching the below video. Ben Powell, PhD (from Suffolk University), along with the Institute for Human Studies, lends some insight into this:

To lend additional insight, for sake of argument, Professor Matt Zwolinski, over at Bleeding Heart Libertarians, says this:

Even if they are unfair, there is very good reason to believe that all of the exchanges described above are usually mutually beneficial.1  In other words, both parties come away from the exchange better off than they would have been without it.  This claim is supported, I think, by the rather impressive empirical data on sweatshop wages.  But even apart from the empirical evidence, there’s a fairly strong a priori argument to be made in favor of the assumption of mutual benefit.  After all, if workers didn’t expect to be made better off by working in a sweatshop – if they didn’t think it was all-things-considered their best available alternative – then why would they take the job?  And the poorer workers are, the more dramatic the impact on their overall welfare will be of even slight improvements to their material conditions.

So sweatshops are doing something to make poor workers better off.  On the other hand, I assume that most of us do nothing to make any serious improvement in the lives of people in desperate poverty.  We might give a few dollars to the Red Cross when a tsunami hits and makes the evening news, but most of don’t do anything on a regular basis that is going to have any real long-term impact on the lives of poor workers in the developing world.

I think this is a tremendous point. And yes, surely it sucks that they are making a choice between meagerness and starvation, but it’s a choice that they own. Hell, sometimes, “sweatshops are a dream.” But to ridicule the sweatshop owners isn’t going to do anything about the poverty, or the welfare of the workers.

I say keep up with the sweatshops. Let them be. I want to provide them with the choice. Meanwhile, as Kristof says, let’s “promote manufacturing” in these countries. Encourage imports and exports. Open up trade barriers. Set them free.

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Subsidized Bike Rentals in Paris – Failure

From the NY Times, via the Mises Blog:

Many of the specially designed bikes, which, when the system’s startup and maintenance expenses are included, cost $3,500 each, are showing up on black markets in Eastern Europe and northern Africa. Many others are being spirited away for urban joy rides, then ditched by roadsides, their wheels bent and tires stripped.

With 80 percent of the initial 20,600 bicycles stolen or damaged, the program’s organizers have had to hire several hundred people just to fix them. And along with the dent in the city-subsidized budget has been a blow to the Parisian psyche.

I’m going to go out on a limb and say that, while possibly well-intended, the bicycle sharing idea, with the lack of rules and measures of protection, is wholly irrational. Such is the case for many “well intended” government-subsidized ventures. Would such an operation exist in the real marketplace? Absolutely not. Without any of the proper, rational mechanisms to protect the investment in the product/operation (i.e. GPS, collateral, et al), it will invariably fail, as is seen in Paris.

Alternatively, if measures were put into place to prevent theft and hold both the business (the bike rental company) and the renter accountable, then there would be a stronger chance for success. Bureaucrats and government bodies can’t make decisions about business. And with the backing of said government, where is the incentive to make a profit, be successful? Businesses need to be mindful of the long-term. They need to understand their target audience, their market, and act accordingly. They need, above all, to be cognizant of what it is that makes them a successful, healthy, thriving operation.

This venture, sadly, is not one of these.

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Bookstores Close; Non-Booksellers, In Turn, Sell Books

Reading the Mises blog, I came across this article commenting on a piece in the NY Times which speaks to the recent bookstore closings and how publishers are, in response, reaching out to non-bookseller retailers to help with sales.

From the blog:

While big-box bookseller Border has filed BK and announced it’s closing 200 of its superstores in the US, more nonbook retailers are selling books. Stores peddling apparel, food and most anything are starting to offer books. Grocery stores and Wal-Mart have been selling books for a while and now “Coldwater Creek, Lowe’s, Bass Pro Shops and even Cracker Barrel are adding new books,” the New York Times reports.

Big publishers are looking to specialty retailers to replace the drop in business by Borders. “The books tend to be profitable for the retailers, since they select them carefully and do not usually mark them down,” explain Times writers Stephanie Clifford and Julie Bosman. “More important, they can drive other purchases and help with branding.

For the NY Times article, go here.

It does make sense. And it’s kind of cool. Do I want all bookstores to remain open? Sure I do. Is that realistic? Likely not.

Books live on!

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Henry Hazlitt on The Minimum Wage

From Economics in One Lesson.

We have already seen some of the harmful results of arbitrary governmental efforts to raise the price of favored commodities. The same sort of harmful results follow efforts to raise wages through minimum wage laws. This ought not to be surprising, for a wage is, in fact, a price. It is unfortunate for clarity of economic thinking that the price of labor’s services should have received an entirely different name from other prices. This has prevented most people from recognizing that the same principles govern both.

Thinking has become so emotional and so politically biased on the subject of wages that in most discussions of them the plainest principles are ignored. People who would be among the first to deny that prosperity could be brought about by artificially boosting prices, people who would be among the first to point out that minimum price laws might be most harmful to the very industries they were designed to help, will nevertheless advocate minimum wage laws, and denounce opponents of them, without misgivings.

Yet it ought to be clear that a minimum wage law is, at best, a limited weapon for combatting the evil of low wages, and that the possible good to be achieved by such a law can exceed the possible harm only in proportion as its aims are modest. The more ambitious such a law is, the larger the number of workers it attempts to cover, and the more it attempts to raise their wages, the more certain are its harmful effects to exceed any possible good effects.

The first thing that happens, for example, when a law is passed that no one shall be paid less than $106 for a forty-hour week is that no one who is not worth $106 a week to an employer will be employed at all. You cannot make a man worth a given amount by making it illegal for anyone to offer him anything less. You merely deprive him of the right to earn the amount that his abilities and situation would permit him to earn, while you deprive the community even of the moderate services that he is capable of rendering. In brief, for a low wage you substitute unemployment. You do harm all around, with no comparable compensation.

The only exception to this occurs when a group of workers is receiving a wage actually below its market worth. This is likely to happen only in rare and special circumstances or localities where competitive forces do not operate freely or adequately; but nearly all these special cases could be remedied just as effectively, more flexibly and with far less potential harm, by unionization.

It may be thought that if the law forces the payment of a higher wage in a given industry, that industry can then charge higher prices for its product, so that the burden of paying the higher wage is merely shifted to consumers. Such shifts, however, are not easily made, nor are the consequences of artificial wage-raising so easily escaped. A higher price for the product may not be possible: it may merely drive consumers to the equivalent imported products or to some substitute. Or, if consumers continue to buy the product of the industry in which wages have been raised, the higher price will cause them to buy less of it. While some workers in the industry may be benefited from the higher wage, therefore, others will be thrown out of employment altogether. On the other hand, if the price of the product is not raised, marginal producers in the industry will be driven out of business; so that reduced production and consequent unemployment will merely be brought about in another way.

When such consequences are pointed out, there are those who reply: “Very well; if it is true that the X industry cannot exist except by paying starvation wages, then it will be just as well if the minimum wage puts it out of existence altogether.” But this brave pronouncement overlooks the realities. It overlooks, first of all, that consumers will suffer the loss of that product. It forgets, in the second place, that it is merely condemning the people who worked in that industry to unemployment. And it ignores, finally, that bad as were the wages paid in the X industry, they were the best among all the alternatives that seemed open to the workers in that industry; otherwise the workers would have gone into another. If, therefore, the X industry is driven out of existence by a minimum wage law, then the workers previously employed in that industry will be forced to turn to alternative courses that seemed less attractive to them in the first place. Their competition for jobs will drive down the pay offered even in these alternative occupations. There is no escape from the conclusion that the minimum wage will increase unemployment.

Henry Hazlitt- One Lesson

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