Here are some great videos on personal and economic freedoms:
One thing that stands out in this video is- the poorest people in the most free countries have a higher share of wealth than poor people in the least free countries. This means poor people in capitalist countries have a higher share of the wealth than they would in a communist country! Amazing, isn't it? How can this be? When you give so much power to a central government, you can't expect to be treated equally. Who do you suppose benefits from a communist system? Mostly, government officials and employees. They are able to build wealth while they force everyone else to be "equal."
If you went to a public school (like me), you've probably seen the graphs showing the inequality of wealth in the U.S. It's used as an argument for the redistribution of wealth, but if you consider the facts brought up in the above video, it really doesn't make sense. That's okay. Propaganda doesn't have to make sense.
This is one of my favorite videos, but I won't say much about it because it articulates the point way better than I could. But if you agree with this video, you must question even the basic idea of a progressive income tax system.
This video brings up a great point that many seem to forget. When we ask for government security, we are also asking for limitations on liberty. So, I ask you, how far do we allow the government to go in securing us? Our welfare, our health, our property? When you allow the government security over these things, you give also give up your own right to choose how you manage those things. Take public health care for example - If the government secures your health, they now have a right to tell you want you can and cannot eat or drink. Personally, I would rather be held responsible for my own health, and choose what I consume.
Monday, July 11, 2011
Saturday, July 9, 2011
A Tragic Hypocrisy
The manufacturing industry of the United States is widely regarded as the most important industry for jobs. We hear it from the politicians. We hear it from the media. We even start to hear it from ourselves. It's used as a reason for bailing out large automotive companies and as an argument for tariffs and quotas against countries such as China, that compete with our manufacturing industry. They're too big to fail, of course. What would happen to the workers and their families if General Motors closed down?
I don't know of many people who aspire to be factory workers, but in the U.S., we have a peculiar obsession with those types of jobs. Has anyone questioned the importance of the manufacturing industry? If someone in the media has, it has went unnoticed. Certainly no politicians have. With the Democratic Party being funded by labor unions, and the Republicans funded by corporate fat cats, they wouldn't dare.
I guess it will have to be me.
Let me first say that I will not refute that manufacturing does currently provide many jobs for our economy. What I do argue is that those jobs are not any more important than any other type of job, and they are very much replaceable with other industries. Consider another industry that was once considered the backbone of America - farming.
Until the mid 1900's, 70-80% of jobs in the United States were farming related. Today, that number is down to about 2%. Yes, those farming jobs were "lost." But how many people would like to go back to those days, for the sake of keeping so-called important jobs? We produce significantly more food, with less effort now. So what happened to the people who lost their farming job? They moved on to something else that there was demand for, namely manufacturing jobs.
Sounds like the transition went smoothly, right? Wrong. Just as there are people today arguing that the manufacturing industry should be kept afloat at the expense of the public, there were people making the same arguments for farming jobs then. Franklin Roosevelt went as far as to pay farmers to destroy their crops! The intention was to keep the farmers well off (remember, this was the "important" industry of the time) and raise the price of food, for the farmers benefits. Well, anyone with common sense would tell you that destroying a country's food supply during a depression could have some negative effects on consumers, and it did. Many went hungry. Our government propped up an industry that was trying to shrink. Who knows how much the country was held back due to policies preventing the economy from progressing. But it was all for the sake of the precious farming jobs.
This was a long time ago, in a very different era. So you may be wondering what FDR's food destruction policies have to do with current industrial protectionists. We would never be so foolish as to destroy resources for the sake of a certain industry, would we? It turns out, we're just as foolish now as we ever were. Consider what a tariff or quota truly does. It limits the availability and raises the prices of goods, in the name of job protection. Sounds familiar, doesn't it? I wonder which industry we are preventing from development now.
My Republican friends are the first to bash FDR, especially for his food destruction plan. He's considered one of the worst presidents ever, by some (and I would agree with that). Yet many of those same people clamor for quotas and tariffs against those job-killing Chinese. That, my friends, is a tragic hypocrisy.
I don't know of many people who aspire to be factory workers, but in the U.S., we have a peculiar obsession with those types of jobs. Has anyone questioned the importance of the manufacturing industry? If someone in the media has, it has went unnoticed. Certainly no politicians have. With the Democratic Party being funded by labor unions, and the Republicans funded by corporate fat cats, they wouldn't dare.
I guess it will have to be me.
Let me first say that I will not refute that manufacturing does currently provide many jobs for our economy. What I do argue is that those jobs are not any more important than any other type of job, and they are very much replaceable with other industries. Consider another industry that was once considered the backbone of America - farming.
Until the mid 1900's, 70-80% of jobs in the United States were farming related. Today, that number is down to about 2%. Yes, those farming jobs were "lost." But how many people would like to go back to those days, for the sake of keeping so-called important jobs? We produce significantly more food, with less effort now. So what happened to the people who lost their farming job? They moved on to something else that there was demand for, namely manufacturing jobs.
Sounds like the transition went smoothly, right? Wrong. Just as there are people today arguing that the manufacturing industry should be kept afloat at the expense of the public, there were people making the same arguments for farming jobs then. Franklin Roosevelt went as far as to pay farmers to destroy their crops! The intention was to keep the farmers well off (remember, this was the "important" industry of the time) and raise the price of food, for the farmers benefits. Well, anyone with common sense would tell you that destroying a country's food supply during a depression could have some negative effects on consumers, and it did. Many went hungry. Our government propped up an industry that was trying to shrink. Who knows how much the country was held back due to policies preventing the economy from progressing. But it was all for the sake of the precious farming jobs.
This was a long time ago, in a very different era. So you may be wondering what FDR's food destruction policies have to do with current industrial protectionists. We would never be so foolish as to destroy resources for the sake of a certain industry, would we? It turns out, we're just as foolish now as we ever were. Consider what a tariff or quota truly does. It limits the availability and raises the prices of goods, in the name of job protection. Sounds familiar, doesn't it? I wonder which industry we are preventing from development now.
My Republican friends are the first to bash FDR, especially for his food destruction plan. He's considered one of the worst presidents ever, by some (and I would agree with that). Yet many of those same people clamor for quotas and tariffs against those job-killing Chinese. That, my friends, is a tragic hypocrisy.
A Follow Up- Who Really Pays the Price?
In my previous post, the question was posed- When a business incurs and unexpected cost, is it passed down to the consumer? I came to the conclusion that it was not, but promised I would take the question into further consideration. Well, after months of deliberation, I have a definitive answer. I know all 3 of you eager readers out there have been waiting for a follow up. I will not disappoint.
While trying to answer the, by now, age-old question, there was a flaw in my thought process. I was attempting to find a general answer for a question that needs to be addressed on a case-by-case basis.
Let's look at the question from perspective of a large corporation, McDonald's. When Mickey D's experiences an unexpected cost (maybe they lost a lawsuit over hot coffee), does the price of a Big Mac rise? In this scenario, my logic works well. McDonald's would have already been charging the profit maximizing price. An increase or decrease in the price of a Big Mac in response to the unexpected outside cost, would only decrease McDonald's profits.
Now, we'll attack this question from another view point. A poor college student decides to start producing and selling bowls. One day, while deliver bowls, the entrepreneur is ticketed for speeding. Would this mean an increase in the price of bowls? Most likely, yes.
What's the difference? A large corporation will likely have large amounts of excess/rainy day funds. When they receive an unexpected cost, they can use these excess funds to maintain the same level of production of services or products (in this case, Big Macs). So for McDonald's, the supply curve doesn't shift leaving them at the same profit maximization price.
On the other hand, the poor college student likely has very limited excess funds. That means that they will be able to afford less resources, after the unexpected cost. In turn, they are not able to produce as many bowls. This would be a negative supply shock for the poor college student, increasing the profit maximization price.
Obviously, most businesses are somewhere in between, but in each case, the answer to the question depends on whether or not the business has enough in reserve to make up for the cost. If they do, it would be in their best interest to maintain the current level of profit. Meaning, there would not be a change in prices. If they do not, you could realistically see the customers pay the price. To summarize, it is possible that consumers would pay for an unexpected cost to a particular firm. Does that mean it's likely? Since most businesses seem to have some sort of excess or rainy day funds (especially the ones that would be subjected to the most extreme unexpected costs), I would think not.
So there you have it. I will now consider this case closed, as I have spent way too much time on it.
While trying to answer the, by now, age-old question, there was a flaw in my thought process. I was attempting to find a general answer for a question that needs to be addressed on a case-by-case basis.
Let's look at the question from perspective of a large corporation, McDonald's. When Mickey D's experiences an unexpected cost (maybe they lost a lawsuit over hot coffee), does the price of a Big Mac rise? In this scenario, my logic works well. McDonald's would have already been charging the profit maximizing price. An increase or decrease in the price of a Big Mac in response to the unexpected outside cost, would only decrease McDonald's profits.
Now, we'll attack this question from another view point. A poor college student decides to start producing and selling bowls. One day, while deliver bowls, the entrepreneur is ticketed for speeding. Would this mean an increase in the price of bowls? Most likely, yes.
What's the difference? A large corporation will likely have large amounts of excess/rainy day funds. When they receive an unexpected cost, they can use these excess funds to maintain the same level of production of services or products (in this case, Big Macs). So for McDonald's, the supply curve doesn't shift leaving them at the same profit maximization price.
On the other hand, the poor college student likely has very limited excess funds. That means that they will be able to afford less resources, after the unexpected cost. In turn, they are not able to produce as many bowls. This would be a negative supply shock for the poor college student, increasing the profit maximization price.
Obviously, most businesses are somewhere in between, but in each case, the answer to the question depends on whether or not the business has enough in reserve to make up for the cost. If they do, it would be in their best interest to maintain the current level of profit. Meaning, there would not be a change in prices. If they do not, you could realistically see the customers pay the price. To summarize, it is possible that consumers would pay for an unexpected cost to a particular firm. Does that mean it's likely? Since most businesses seem to have some sort of excess or rainy day funds (especially the ones that would be subjected to the most extreme unexpected costs), I would think not.
So there you have it. I will now consider this case closed, as I have spent way too much time on it.
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