Tag Archives: economics

Why I Want (to Start?) a New Political Party

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I want a new political party.

To be clear: I want a new political party almost enough to stop playing my “Anti-Candidate” game — as fun as it’s been — and start playing the political game seriously. If I thought there were enough interest, I would pursue it.

I’ve never felt completely bound by party affiliation. I can’t remember ever voting a straight party ticket. I’ve been a Republican as long as I can remember, though, so it might have happened once or twice. But lately I’ve been displeased by my own party almost as much as by any other.

The parties today spend vast amounts of time, effort, and money trying to distance themselves from the others. “We’re not them” seems to be the rallying cry, even when their criticisms of the other side sound rather similar.

Consider, for instance, that both Democrats and Republicans like to claim that the other side is what I’d call the “party of taking.” Democrats warn that Republicans are the party of the rich, of banks and big business, who by the very fact of their wealth must be hoarders who take and take from the economy, enriching themselves and their friends at the expense of the poor and downtrodden. Republicans warn that Democrats stand ready to take what they can, from whoever they can, in order to redistribute it according to their socialistic visions.

Instead of saying what they are, they focus on what the other party is, or what they think it is, or what they want to make it seem to be.

I’m weary in my soul from all of that.

The parties rarely hold themselves up to scrutiny, rarely articulate clear visions, and rarely offer compelling arguments for their positions. What are they all about? What do they represent? With the number of issues in play, and the vast array of opinions on even the simplest subjects, it’s easy to get overwhelmed by the totality of their platforms; but, in the interest of time and attention, let’s keep the focus on economic matters.

Democrats appear to want to be the “party of providing,” or the “party of giving” — emphasizing the “have-nots” of society and determined to transform them directly into “haves.” They seem to downplay the source of the largesse they would distribute, except to say that much of it would come from the hated rich. Republicans like to present themselves as the “party of protecting” when it comes to securing the blessings of liberty, and are very much the “party of earning” — especially in the way they deemphasize society’s economic safety nets. And Libertarians — while in some respects I appreciate their positions on many issues, though I shudder at how far some of them tend away from Heinleinian “rational anarchy” all the way to full anarchy — appear to be the “party of keeping,” from the standpoint of everyone keeping what they have and doing with it what they please.

I want a new party: one that is not about “giving” or “earning” or “keeping” but is about “producing.”

North Carolina Potter
Where is the political party for the creative class, and the people who produce? (Image: “North Carolina Potter,” by Robert Nunnally, on Flickr under Creative Commons.)

I want a party for the makers, for the creators, for the ordinary as well as the remarkable people who design, who build, who produce and maintain everything that makes modern life possible, comfortable, and enjoyable. And I mean everything, from houses to housewares, from food to furniture, from semiconductors to symphonies. Not a party of “labor” by itself, but a party of industry — remembering that those who drive trucks are just as industrious as those who direct movies, and those who make repairs are just as industrious as those who make … well, anything.

I want a party that not only recognizes but celebrates the creative productivity — or, if you prefer, the productive creativity — that leads to inspiration, innovation, and invention. Productivity that is uncreative winds down into obsolescence, and creativity that is unproductive remains underappreciated if it is not lost forever, but creative productivity leads to great gains in every field of endeavor. I believe creative productivity is essential to establishing, growing, and sustaining any civilization, and those who are creative and productive have earned the right to be represented by a party (and a government) that values their contributions to society.

That’s the new party I want.

Is that too much to ask? Maybe. And I wonder whether anyone else might think it worthwhile.

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What to Do With an Empty Mall?

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A few weeks ago I had the opportunity to visit a mall near my hometown. Here’s a picture of the inside of one of the stores:


An empty store in a nearly empty mall.

That wasn’t the only empty store, and I understand that mall properties in other places have also had difficulties due to the way online shopping has impacted anchor stores as well as smaller businesses. It was a little sad to walk through and see most of the big stores vacant and the remaining stores struggling.

Walking through the largely abandoned space, I wondered whether vacant malls might be ready-made infrastructure for expanding schools. A couple of years ago, not too far from where I live now, a new school was built in what was once a factory building — why couldn’t a local district purchase a declining mall and refit it into a school?

Could is the key word: of course they could, but that doesn’t mean it would be the smartest decision. In addition to up-front costs of purchase and refit, the long-term maintenance costs would have to be considered and compared to land and new construction. (Costs of a mall property might be particularly prohibitive in the out years, for instance, if the mall owners did not keep the physical plant healthy.) But schools have been built into malls before: e.g., in Joplin, Missouri, as a temporary measure after a tornado devastated the town in 2011.

For some areas, turning malls into schools may make reasonable economic sense. And mall properties are big enough that they might even provide the opportunity for collaborative educational enterprises, say between a school district, a community college, and a local business incubator. (I’m big on collaboration between schools and the wider world.*)

What do you think? Do you have a mall nearby that is fading into obscurity? What would you like to see done with it?

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*I wrote a little bit about that in Quality Education: Why It Matters, and How to Structure the System to Sustain It.

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Do You Prefer Your Socialism Voluntary, or Mandatory?

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Recently there’s been a lot of social-media talk about socialism, what it is and what it isn’t, if for no other reason than one of the candidates to be the Democratic nominee for the Presidency is a self-described Socialist.

Now, before we get to the question posed above: in the hopes of improving communication let’s take a moment to define a few terms. At the very least, we might ensure that we are not confusing socialism with other -isms. According to the online version of Webster’s:

  • socialism is “any of various economic and political theories advocating collective or governmental ownership and administration of the means of production and distribution of goods”
  • communism is “a theory advocating elimination of private property; a system in which goods are owned in common and are available to all as needed”
  • capitalism is “an economic system characterized by private or corporate ownership of capital goods, by investments that are determined by private decision, and by prices, production, and the distribution of goods that are determined mainly by competition in a free market”
  • fascism is “a political philosophy, movement, or regime (as that of the Fascisti) that exalts nation and often race above the individual and that stands for a centralized autocratic government headed by a dictatorial leader, severe economic and social regimentation, and forcible suppression of opposition”
  • altruism is “unselfish regard for or devotion to the welfare of others”

From the dictionary definition, it would seem as if there could be no such thing as “voluntary” socialism except in the context of voluntary adherence to the dictates of government and collective society. But socialism seems to have come to mean something different in common usage, which is why I included altruism among the defined terms.

So far as I can tell, a lot of the people who advocate for socialist policies do so out of personal altruism — i.e., out of concern for others’ welfare — and not because they believe that the government or other collective entities should own and operate factories and businesses. That is, in some respects “little-s” socialism has come to be understood in terms of social action (or even social “justice”) and thereby in terms of caring for members of society, as opposed to its dogmatic, collectivist big brother: systematic, capital-S Socialism. In other words, from what I’ve observed some people look at socialism not as an economic theory, but as a form of human tribalism (defined by Webster’s as “tribal consciousness and loyalty; especially, exaltation of the tribe above other groups”) where the “tribe” consists mainly of the downtrodden as opposed to the related.

altruism makes you more attractive

(Image: ” altruism makes you more attractive,” by Will Lion, on Flickr under Creative Commons.)

 

In this manner of thinking of socialism, the question posed in the title distinguishes between two possible modes of implementation: voluntary or mandatory.

The first is voluntary socialism, practiced primarily through personal social action: giving of one’s excess treasure, time or talent to help the less fortunate. This is the socialism of charity, of personal altruism, of expressing one’s individual concern for one’s fellow man by actually doing something — writing a check, building a house, cooking a meal. This is the socialism of the soup kitchen, the homeless shelter, the sanctuary.

The second is mandatory socialism, practiced primarily through government-led social action: empowering the government to take everyone’s (and particularly other people’s) excess — most readily in the form of treasure — to help the less fortunate. This is the socialism of confiscation, of redistribution, of assigning responsibility to the government to take care of one’s fellow man and thus absolving oneself of the need to act. This is the socialism of the tax office, the entitlement check, the welfare line.

So, do you prefer your socialism to be voluntary, or mandatory? Do you prefer to volunteer your contributions to social action, or to be made to contribute to it?

Generalizations always exclude those who do not fit them, but I have observed that, in general, many people who regularly practice voluntary social action oppose mandatory social action, and many people who promote mandatory social action don’t seem to engage in much voluntary social action (other than perhaps organizing people into promoting more mandatory social action). That is, many people who frequently donate their time or money to charities they deem worthy oppose efforts to empower the government to exact donations from them, and many people who support the idea of the government providing and expanding all of the social safety nets do not often seem quick to engage in personal acts of charity. I find that curious, but I admit my observations are limited and perhaps flawed.

But which do we emphasize: the voluntary, or the mandatory? As with most dichotomies of this sort, most continua, I think that everyone favors a little bit of volunteer action and a little bit of mandatory contribution. I’m not sure I’ve ever met someone so dyed-in-the-wool that they did not accept some of the alternative approach. (Perhaps the one Trotskyite I’ve met, though we have not discussed this in any depth. Perhaps a Libertarian or two.)

When we emphasize the voluntary, we allow ourselves to practice socialism — to contribute to social action — to the degree we feel comfortable, and we allow others also to practice it (or not) to whatever degree they want.

But when we emphasize the mandatory, we may ourselves end up practicing socialism to our preferred degree but we almost certainly require that others practice it to a greater degree than they feel comfortable. And when we enforce contribution through coercion via the rule of law, we should not be surprised when those others bristle, and balk, and even prepare for battle.

Where do you fall on the continuum between voluntary and mandatory contribution? If you tend to take the burden of helping others onto your own shoulders, with no thought of reward and no expectation of other people pitching in, then you probably fall closer to the voluntary side. If you sometimes think “someone ought to do something about that” and sometimes think “can I do anything about that,” then you probably fall somewhere in the middle. But if you tend to think “those other people ought to do more to help” more than you think “what can I do to help,” then you probably fall closer to the mandatory end.

I’m not here to pass judgment; in the end, I think in some way we will all pass judgment on ourselves. But I know who I’d rather have as my neighbors, if I ever find myself in a pinch. And I know what kind of neighbor I’d like to be.

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Bookstore Survives Governmental Charity by Resorting to … Charity

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What do you do when you run a store that can’t remain profitable due to governmental regulations? Why, ask people to “sponsor” you!

Charities online
(“Charities online,” by HM Revenue & Customs, on Flickr under Creative Commons.)

A little background, for those who need it: There’s a specialty bookstore in San Francisco, Borderlands Books, that is well-known to the science fiction and fantasy community because it’s an independent SF&F bookstore. A few weeks ago it announced that it was closing because the city of San Francisco raised the minimum wage to $15 an hour and when they ran the numbers they couldn’t sustain operations for more than a few months. Their announcement prompted an outpouring of angst among the SF&F literati, such that the bookstore owners decided to ask people to bail them out and began selling annual “sponsorships” for $100. Now, having gotten the 300 sponsors they need, they’re going to be able to stay open for another year.

Am I the only person who finds this a little hard to follow?

1. The city raises the minimum wage, to the level specified by burger flippers and their loyal supporters.

2. A business announces that it can’t remain profitable and provide that wage, just as predicted by people who understand economics and the law of supply and demand. Actually, it said,

The change in minimum wage will mean our payroll will increase roughly 39%. That increase will in turn bring up our total operating expenses by 18%. To make up for that expense, we would need to increase our sales by a minimum of 20%. We do not believe that is a realistic possibility for a bookstore in San Francisco at this time.

3. In response to expressions of regret over its impending closure, the business asks good-hearted friends as well as total strangers to keep it afloat, not by providing goods or services in exchange for value (though they did offer some token items that few people are likely to redeem), but by begging people to just give it money, even though the owner admitted:

I didn’t think that it was right for a for-profit business to ask for a hand-out to continue operating.

4. The bookstore also stipulated that this trend of relying on charity will continue, year after year, into the future:

If next year we again reach our goal by March 31st, we will remain open through 2016. This process will continue each year until we close, either because of a lack of sponsorship or for other reasons.

5. People come out of the woodwork to give the business money.

To rephrase my previous question, Am I the only one who finds this passing strange?

Maybe I shouldn’t find it surprising or strange, in this age of “crowdfunding” that allows people to engage in commerce not by taking on the risk of an enterprise but by generating interest and spreading the risk around. I’ve backed several Kickstarter campaigns myself, and don’t get me wrong: I wouldn’t turn up my nose at anyone throwing money my way, and can even provide quick and easy ways to do so. But I can’t help but wonder about people far removed from San Francisco who decided that the best way to use an extra $100 was to prop up a failing bookstore there, rather than, say, help out real charities in their local areas.

And maybe I’m the only one to suspect that at least some of the people who donated to this for-profit business have no deep appreciation for capitalism and see no irony in having to make up for falling profits caused by a governmental edict that they agreed with in the first place.

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When Does ‘I Want’ Become ‘You Must’?

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I think it’s important that we remember that the Law of Supply and Demand does not state, “Someone else must supply what I demand.”

Economics Basics: Demand and Supply
(“Economics Basics: Demand and Supply,” by Fabio Venni, on Flickr under Creative Commons.)

We would do well to remember it when we “demand” anything, of anyone, whether we do so with a threat or simply without offering any recompense, and whether we do so to benefit ourselves or on behalf of others. It is one thing to make a request, or to suggest an exchange of value that someone else may consider, and quite another to make a demand.

The Rush song “Something for Nothing” comes to mind, e.g., “you can’t have freedom for free.”*

It seems to me like the most basic economics. We want (and even perhaps need) something that someone else has, and we either: request them to share it, offer to earn or purchase it, or demand to be given it. The first is mendicity, and meeting the request would be charity; the second is commerce and industry, and accepting the offer would lead to an exchange of value; the third may range from immaturity to larceny, and meeting the demand would seem to be little more than acquiescence and an invitation to further demands.

So far as I can tell, then, “I want” does not require or even imply “you must.”

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*As much as I would like to quote more of the song, I’m not convinced a longer quote would be considered “fair use” and my respect for their copyright prevents me from doing so.

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Disney Magic Not Working So Well in Europe

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From The Guardian, a report that Disneyland Paris — once called “Euro Disney” — is in financial trouble.

le château de Disneyland Paris
(“le château de Disneyland Paris,” by Louis Engival, on Flickr under Creative Commons.)

From the article, Disneyland Paris forced to ask for €1bn emergency rescue,

The theme park, which was dubbed a “cultural Chernobyl” when it opened 22 years ago, is haemorrhaging visitors. It drew in 14.1 million over the past 12 months, a drop of 800,000 on the previous year and 1.5 million lower than 2012…. But experts believe that to start making money it needs to draw in at least 15 million people a year. The park last turned a profit in 2008 and expects to lose €110m to €120m this year.

So, as a result, the Walt Disney company, which owns 40% of the Paris attraction, is stepping in for “its third multimillion-euro bailout of its French offspring,” to the tune of a billion euros (at today’s exchange rate, $1.27B, some in cash and some converting debt into shares) and ten years of “breathing space” on the remainder of its €1.75B ($2.21B) debt.

It surprised me to learn that, “While visitor numbers are down, the park still pulls in more people than the Louvre and the Eiffel Tower combined, making it Europe’s biggest tourist attraction.” I never even considered going to Disneyland Paris when Jill and I were in Europe for the World Science Fiction Convention this past August — not that our entry fee would have made a dent in that amount of debt!

I’m not sure that there’s any big lesson in all this — you can take it as a cautionary tale; as an example that just because something works in one place it’s not guaranteed to work somewhere else; or as encouragement that even highly successful companies don’t always succeed when they pursue new ventures — but it was interesting to me.

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‘Shovel Ready’ Depends on What’s Being Shoveled

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Or, Why Improving Infrastructure Won’t Create a Whole Lot of Jobs.

The economic stimuli that Washington has tried in the last few years have included a number of construction programs; probably in your area, as in mine, a few project sites are marked as being the results of the Recovery Act. And in his press conference today, the President alluded to our country’s need for infrastructure repairs and intimated that, if we would only fund the needed repairs, we would see significant job growth and economic growth.

Road construction - 1921
(Road construction – 1921. OregonDOT image, from Flickr, under Creative Commons.)

Sorry, Mr. President, but it doesn’t work that way anymore.

In the old days, when huge teams of men were needed to clear trails, prepare roadbeds, pour concrete or spread asphalt, “shovel ready” meant just that: ready for lots of men with shovels to get started on the work. But when was the last time you saw a construction site full of men with actual shovels, doing the backbreaking work of building something big? Armies of men could be employed to complete such projects in the past, because manual labor was not only cheap and plentiful, it was also necessary.

Modern construction equipment has replaced the phalanxes of shovel-wielding workers, the number of people required to wield shovels on any job site is quite small, and no amount of increased spending on infrastructure is going to change that. In fact, it seems that the very people who propose that “shovel ready” might involve hiring huge numbers of the currently unemployed would howl at the thought of the conditions under which such people would have to work in order to match the output of a mechanized road crew.

Do many of our roads and bridges need to be repaired? Yes, and that has been true for as long as we’ve had roads and bridges. In many cases we have not done a good job of maintaining the infrastructure on which our economy depends. But we cannot expect investments in roads and bridges to lead directly to monumental gains in employment.

Nor can we expect investments in roads and bridges to lead directly to tremendous economic growth, but for a different reason. When roads and bridges were built to connect places that had until then been unconnected, allowing commerce between the places to develop, we saw great economic gains* — but repairing existing infrastructure cannot supply that same benefit. Especially in the U.S., most places are already connected that need to be connected. Unless the widened road, or the repaired bridge, or the expanded airport, or the upgraded rail line will actually reduce the time and cost of transporting people and goods, it’s unrealistic to expect any great economic benefit over and above the wages paid to the people who are doing the work.

And, as stated before, there won’t be as many of them as were needed in the past.

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*One of the reasons the development of trains and railroads could be considered a great moment in manufacturing history, as I talked about in this video.

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A Micro (Really Micro) Economic Observation

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In the anti-gravity category:*

Last year, when gas prices were moving up toward record highs, the company that operates the vending machines in our building raised its prices. My twelve-ounce can of diet liquid caffeine carbonation went up, as did the prices of all the anti-diet items in the snack machine one pace to the left. This was concurrent with prices of almost everything everywhere going up and being blamed on the high gas price.

But since gas prices have come down to the lowest seen in years, the prices of these other things are still at their elevated levels.

The main effect of the lowered gas prices, then, appears to be higher profit margins for the purveyors of consumer goods. If they were wise, they’d plow those increased profits back into their businesses to improve their products, distribution systems and other practices, so that when the next increase in their operating costs comes along they don’t have to pass it on to the consumer right away — using the fat years to store away surplus for the lean years.

Wishful thinking.

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*I.e., the what-goes-up-doesn’t-always-come-down category.

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Missing A Sense of Perspective

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When I read the headline that Adolf Merckle, a German industrialist, had committed suicide over recent financial losses, I wasn’t too surprised: after all, accounts of businessmen jumping to their deaths after the 1929 stock market crash are legendary. When I read the early report, though, I thought there had to be more to the story.

The original story I saw highlighted Mr. Merckle’s $9.2 billion fortune and losses that were reportedly in the “hundreds of millions.” It seemed almost impossible to me that someone would choose suicide over losses that amounted to less than a tenth of their wealth.

And, as I suspected, there was more to the story. According to this Bloomberg report, “Merckle, 74, spent December negotiating with banks he owed about 5 billion euros ($6.7 billion) to save the family empire he built over four decades.”

So he was struggling with the potential loss of over 70% of his personal fortune. That’s a lot, no doubt, and quite a shock to the system, but it still would have left him with a cool $2 billion or more. That’s a quite different position from folks who start off with fewer zeroes and end up with next to nothing.

Maybe my perspective is skewed because I don’t have a lot of zeroes behind my personal fortune. (In fact, like many people, my personal fortune is effectively nil, since most of what I have is largely owned not by me, but by the bank that holds the note on my house.) And maybe there’s still more to this story, more than will ever come out. But it’s a cautionary tale, and a warning that we should maintain a sense of perspective that emphasizes what we still have, rather than what we’ve lost.

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New Blog: NC State of Business

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Today I kicked off the “NC State of Business” blog for North Carolina State University’s Industrial Extension Service; as a staff writer and one of a handful of IES members acquainted with blogdom, I now “own” the blog.*

Thankfully, I’m not responsible for developing all the content on the blog. The Executive Director and several of the other key folks will make most of the blog entries — I’ll just moderate the thing and post my own occasional screeds.

Check it out here: NC State of Business.

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*The power’s not going to my head. Really. 😎

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