Equality – the impossible dream

Charlie can’t breathe

The most evil of all people are those who believe they can force their religion, beliefs, values and will upon others.  There are evil people in all nations, religions and cultures.

Inequality is an issue that will probably never go away because it has traditionally been the natural order and because its solution, perfect competition,  is something few people will be able to accept.

Inequality was a feature of Roman and Medieval societies and probably of most historical large-scale civilizations.  To find true equality one would probably have to look to small tribal groups where everybody knew each other and were probably related.  (I suspect these groups had relationship problems in that lots of people didn’t speak to each other.)

In historical civilizations the elite depended upon the work of the peasants for their food and luxuries.  The challenge was to confiscate as much of the agricultural surplus as possible while leaving enough for subsistence.  Probably a factor in the calculations was the supply of workers.  If there was a shortage, the workers were able to retain a little more than when there was a good supply.

Inequality has historically been so much the norm that the general prosperity following  the industrial revolution should be considered an aberration. One of the things which has happened since the start of the industrial revolution has been  the exploitation of energy and mineral resources found in the earth’s crust.  The result has been a lot of prosperity which had to be shared with most of the population because the prosperity depended upon the labor of the working people.  Once again supply of workers was  a concern and generally  there was a shortage – until recently.  With a limited supply of labor the elite had to tolerate sharing some of the wealth.

In historical times the agricultural surplus was probably taken with the use of force or the threat of its use.    Since the industrial revolution the elite has discovered a less messy way of getting the greater share – legislation which restricts competition and allows for profits.  If we had perfect competition there would be no profits, we would have equality and the one percent would be just like the rest of us.  Licensing, copyrights, patents, health and safety regulations and tariffs all work to restrict competition.  If we did not have copyright Bill Gates would be just another programmer and we would all be using super great software. Recent prosperity has been so great leaving some for the rest of us was not an issue.

Other ways in which  the elite exploit us are  by the work ethic and debt.  So long as we believe in the divine nature of work we will continue to produce the profits which the elite need to maintain their fortunes.  So long as our money system is based on debt we will be chained to our employers.

It may be the golden age of prosperity is coming to an end.  We still have lots of mineral and energy resources but the most easily accessible have been taken.  It now takes more energy and effort to get at what is left and this limits the potential for future growth.

With the end of growth and a surplus of workers we are ripe for a return to historical inequality.where the elites take for themselves most of the agricultural surplus and leave a minimum for everybody else.  The difference is that we now have technology to replace workers.  This guy does not want to think about the implications of this.

It is my understanding that in some parts of the United States some local level governments are getting a significant part of their revenues from petty  fines enforced by police.  This source of revenue falls heaviest on poor people.  The justice of this program is questionable. Another source of revenue is called civil forfeiture where authorities confiscate the proceeds of crime even if there has been no conviction.  Once again this has potential for abuse and raises justice questions.   I am sad to report that my home province of British Columbia uses this process.

I have to wonder if these developments are part of increasing inequality and a return to inequality enforced with force in that they have a lot of potential for abuse of poor people and involve police.

This writer is pessimistic about the future.  To increase equality we will probably have to increase competition and introduce an income scheme.  These are controversial concepts although they will never come into being if we don’t talk about them.  In the meantime,   probably the best way for individuals to deal with inequality is to become a part of the minority  and one does that by taking advantage of legislation which restricts competition.

If you liked this post your are invited to comment, press the like button and/or click  one of the share buttons. If you disagree you are invited to say why in a comment.  While I like the idea of sharing this platform, my personality is such that I don’t reply to many comments.

A grumpy old man in favour of a basic income scheme

The “free money” giveaway or basic income or universal income scheme being proposed by a few people is a great idea but one that is probably impossible to implement.  However it is nice to dream and fun to think out how to solve economic problems; so here goes.

The basic questions are where does the money come from and how to give the money to people?

The simple answer to the first question is that with a universal income scheme there will no longer be a need for subsidies to producers.  A more difficult answer is that the introduction of an income scheme would be the ideal time to reinvent money.

Generally subsidies (sometimes as tax exemptions)  are given to firms to encourage them to establish plants and provide employment or to save the business and save jobs.  This is great for those who get the jobs or whose employment is saved but it leaves a lot people with nothing.  Subsidies also distort prices so that when we make purchasing decisions based on price we are not necessarily getting the item that was cheapest or most efficient to produce.

Money is something most of us use daily and is probably the least well understood of all the things that are a part of our economy.  When central banks were doing quantitative easing there was some disbelief that they could create money out of nothing.  This is because we have for so long associated money with gold that we think of it as a commodity with value in itself.  It might be better to think of it as a tool with which to facilitate the exchange of goods and services.  It represents purchasing power.

Most of what we use as money is created by bankers making loans.  How this works is explained at numerous locations throughout the world-wide web.  My own version along with some of the problems with fractional reserve money is included in the essay “LETS go to market: Dealing with the economic crisis” on this weblog.

One way to reinvent money and implement a universal income scheme would be to take the concept of “local exchange trading system”  and expand it to the national level.  A good part of the essay talks about how this could work and again  I refer you to the essay.  There are many details to be worked out and many problems to be overcome.  The mechanics of the money supply would be easy.  Getting people to accept new ways of thinking about money would be extremely difficult.   Getting people to accept that others should be allowed to do as they wish, whether that be creating art works or drinking beer, would also be difficult.  Getting people to change their vested interests would probably be impossible.

One of my concerns is that our economic order is going to return to something similar to what existed before the industrial revolution in which there was a small group living in relative luxury and the balance of the population lived at a subsistence level. (The ultimate inequality)  I am concerned because I think our economy is possibly going into an extended period of decline.  While there are lots of energy and mineral resources left on this planet the energy required to extract them is becoming more and more excessive to the point it will be less viable.  Without resources it will difficult to maintain everyone at what has been the North American standard of living.

An income scheme would make it a lot easier to cope with an economy on a downward slope.

More and more I am getting to be a grumpy old man.  My generation has been very lucky in the time and place we have lived out our lives.  More and more I am recognizing the next generations, including my grand children, are going to have to deal with a lot of economic pain.  I hope I am wrong and if not I hope I won’t have to see it.

 

If you liked this post your are invited to comment, press the like button and/or click  one of the share buttons. If you disagree you are invited to say why in a comment.  While I like the idea of sharing this platform, my personality is such that I don’t reply to many comments.

Tax avoidance through the ages

A sure way to commit suicide would be to hold one’s breath waiting for the G8 leaders to actually clamp down on money laundering, illegal tax evasion, and corporate tax avoidance.  It’s theater in which the politicians can pretend to deal with a problem while listening to the lobbyists who want even more loopholes.

Through the millenia those in the elites have taken for themselves the agricultural and luxury surplus mostly using force or coercion.  With the industrial revolution things changed.  Production increased so that there was some to share and the supply and demand for labor to produce that production was such that workers could claim some.

In this new situation the most effective way to cream off a big chunk of the surplus was to get governments to pass legislation restricting competition.  Thus we have trade restrictions, licensing requirements and patent and copyright legislation.

As the economy has gone into an extended decline tax avoidance has become another effective means for getting an excessive share.

Both of these approaches provide lots of work for lobbyists and most politicians are willing listeners.

So we now have increasing inequality, a concern for some but not all people.   The rich keep getting richer and more people are sliding onto or over the margin.

Even if we come up with a non-violent way to eliminate the rich it would not solve the problem as the rest of us would be lined up to take their places.  The most effective way to deal with the rich would be an economic crash and/or hyperinflation, but that would get the rest of us as well.

Intelligent machines, neurological disorders and decision making

It is tempting to say computers with artificial intelligence will never replace humans with all their neurological disorders but after reading this article in The Economist a couple of weeks ago, one needs to be careful.  It could be wishful thinking.

For me this raises the issues of how we use agricultural surpluses and what impact smart computers will have on decision-making..  How do we use the human energy and time released by technology?

When I studied European economic history the professor spent a lot of time talking about medieval improvements in agricultural productivity.  In medieval times there were three classes of people – those who prayed, those who fought and those who worked to support the first two.  The more productive agriculture became the more people could pray or fight as most of the agriculture surplus went to monks and knights.

This professor went on to write a book about the industrial Revolution in which he pointed out the plague reduced the supply of workers who were then able to claim a better standard of living and keep it.  (This made it efficient to replaced labor with coal which was very cheap in England.)

For most of human history those who prayed and those who fought were able to claim for themselves the surplus.  Since the Industrial Revolution the increased production and the supply and demand for labor have been such that  workers have been able to claim a share of the agricultural surplus and industrial production.  To the fighters and the prayers have been added those who manage.  We also have the work ethic and a religious like belief that the only way to share the surplus to have everyone working regardless of how useless and meaningless the work is.

With the development of machines that can make decisions  and with problems in the resource base the demand for labor is going down quickly and lots of people around the world are unemployed.  I fear we are returning to what has been the norm for several millenia – a few people will live in luxury and the rest will survive at a subsistence level.

computer_rageThis post started with an article about smart machines.  I figure that most, if not all of us, have a neurological disorder in that our brains are wired differently.  We behave differently, develop different values and make different decisions. How will this impact on machines that make decisions?  How will our society be changed if decision-making is by computers that do not have disorders?   Will different machines be able to make different decisions from the same inputs or will all machines make decisions according to the values of the people who programmed them?

However intelligent computers develop I enjoy the reading and thinking that goes into this weblog.  I hope I don’t lose that.

Counting money

Bank tellers tend to be very fast and very accurate at counting money.  Economists have a more difficult time of it.  They can’t even agree on a definition.  This post was prompted by this article criticizing The Fed on how it measures the money supply.

Once upon a time I worked as a journalist.  I used to say there are two types of figures.  One kind we photographed and put on the front page and they help to sell newspapers.  The other kind help to put things into perspective.  When I got to university and wanted to study economics I found I didn’t have the calculus skills to do econometrics so I have stayed with my idea that statistics help with perspectives.

mystica_Coins_Money_Economics is about relationships.  It is about the relationships that go with the exchange of goods and services and since some exchanges involve the state it is also about our relationships with governments.

Not all exchanges can be recorded let alone measured therefore statistics are of limited use.

Mathematical concepts are useful in that they can simplify the analysis of relationships and help us understand what is happening.  Sometimes statistics can be useful for evaluating things we want to believe.  One should be leery of drawing conclusions from emotional accounts of events.  For example, a former professor claimed that during the industrial revolution things got worse for working people before they got better.  One of his arguments was highly emotional newspaper accounts of children dying in poverty.  I would have been more convinced it he had produced statistics of child mortality rates before, during and after the industrial revolution.

Back to money.  For economists it is difficult to count because there are so many things including cigarettes and candy have been used and there are a number of economic  definitions  depending upon what types of bank deposits are included.  I figure money should be defined as anything that represents purchasing power including and especially computer impulses.

Money is my favorite subject although I have never wanted to be a bank teller.

Intellectual property rights

The protection of intellectual property rights in one of the foundations of our economy and is responsible for all the modern gadgets we use including the computers used in writing and reading this weblog.

Yes, in that property rights are one of the major ways in which we restrict competition in our economy.

But we might be better off if we didn’t protect intellectual property.

Here’s an article which claims Germany was able to quickly industrialize and catch up to the British because that country was slow in enacting copyright legislation.

I have read that during the British industrial revolution patent legislation was loosely enforced if at all and  there was  considerable circulation of ideas.  Some of the major inventors did not get rich and some died poor.

If the Romans had had copyright we would not have the Bible and if the Elizabethans had had copyright we would not have Shakespeare. It may be that a lot of creative people are motivated by things other than money.

If we didn’t have patent and copyright we might now be using more advanced and much cheaper computers, some of the world’s most difficult diseases might have been dealt with and the Olympics would probably a lot less commercial.

On the other hand, British Columbia coastal natives are quite possessive of their dances and songs.  While watching some visiting dancers I  asked the lady who led her band’s dancing if she was noting some of the steps to incorporate into her own dancing. She was somewhat emphatic in telling me she couldn’t do that because the dance belonged to those dancers and couldn’t be used without permission.  That was a part of their culture.

One of the features of perfect competition is that there must be no barriers to people getting into a field.  If we really wanted a competitive market economy we would abolish patent and copyright legislation.

 

If you liked this post your are invited to comment, press the like button and/or click  one of the share buttons. If you disagree you are invited to say why in a comment.  While I like the idea of sharing this platform, my personality is such that I don’t reply to many comments.

Agricultural surpluses, relationships and Occupy Wall Street

Here is a possible explanation for the Occupy Wall Street protests which are currently happening around the world.

For a relationship to be satisfactory there has to be a more or less equal two-way exchange.

However, there is no law that says relationships have to be satisfactory,  Furthermore, some people take advantage of others by exploiting or coercing them.

How do these observations apply in economics.

Throughout history there has been exploitation of some people by others.  Mostly this has involved agriculture and force.  The surplus has been taken.  Mostly enough has been left for the producers to just subsist.

Starting with the Industrial Revolution three things changed.

First the surplus started increasing so that more could be left for the producers.  Eventually during the recent years of prosperity  the surplus was so large that many people (especially in the industrial countries) could have a nice share of it.

Second, population levels (at least in the industrial countries) have been low relative to the opportunities for employment.  As wages are a function of supply and demand wages have been good and thus the surplus has been shared.

Third, those people who do the exploiting have discovered psychological ways of getting their hands on the riches of the world without using force.  These include legislation which restricts competition,  sneaky marketing, promoting the work ethic and emotional appeals such as to our greed.

To those of us who have been able to share the wealth it has not been clear that we have been exploited.

Once again, things are changing.  There is some evidence we are now using resources at an unsustainable rate and there is now more competition for the surplus.

As the above listed psychological instruments are still working the rich are getting richer, the poor are getting poorer   and the Occupy Wall Street protests are spreading around the world.

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