Things I've Said

Category: Economics

  • Inflation is the Tool of the Tyrant

    You don’t need a federally mandated $15/hour minimum wage, you need a federally mandated “stop inflating the dollar, stop deficit spending”.

    Contrary to the policy of the Federal Reserve, a vibrant and healthy economy should have a deflationary trajectory. As technology improves, we can produce better goods with less effort. That is a deflationary path. People who save money under their mattress should reasonably expect the dollars that they earned 20 years ago would buy as much as or more than they would have bought 20 years ago. People who deposit money in a bank should expect to earn interest in return for their discipline.

    The US economy is precariously balanced on the confidence of the rest of the world, and nothing more. We print dollars and offer nothing in return. If the world economy determines that the Chinese Yuan, gold, or any other currency is more stable, and therefore a better tool for international trade, the impact on the US will be disastrous.

    We need to stop making silly jokes about how McDonald’s employees deserve $15/hour (or any other arbitrarily asserted pay rate), and start figuring out how to produce real goods that the word wants.

    With or without cause, the loss of global confidence in the US will be catastrophic to our economy.

  • Capitalism is the Only Moral Path to Prosperity

    If you have a bakery, chances are you have a lot of doughnuts that you don’t want all that much.  If I have a job, chances are equally good that I have at least a few dollars I don’t want all that much.  I would be happy to trade you one of my dollars for two of your doughnuts.  Deal?

    Capitalism allows people to trade away things that they don’t want in return for something that they do want, or to trade off their excess for something that they lack.

    There are additional benefits to capitalism that are less obvious, but that distinguish it from other economic systems: Capitalism discourages laziness, while encouraging generosity, kindness, and progress in all things that make humans happy and comfortable.

    All those benefits are probably the opposite of what you’ve been told, and even counter-intuitive at first pass.  How can capitalism discourage vices and encourage virtues?

    Capitalism encourages you to trade with other people for mutual benefit, just like the doughnuts.  I gave up a dollar, and you gave up a doughnut.  We both end up happier at the end of that transaction.

    But in order to get that dollar, I had to do work.  I traded my time and labor in return for money.  My employer pays me $80/day to fix bicycles.  At the end of each day, I have $80 more than I started the day with.  My employer was able to spend his time selling new bicycles while I was doing repairs, so he was happy to pay me.  Meanwhile, we’ve made our customers happy by fixing their bikes.

    Do you suppose I would have spent my day fixing bicycles if I didn’t get paid for it?  Not likely.  Capitalism discouraged my laziness.  And it didn’t just discourage laziness and get me to go do something for my own pleasure.  Instead, it encouraged me to provide a product or service that makes other people happy.  And in the morning, I can buy two more doughnuts from the baker, the baker can get his bicycle fixed, and we’ll all be happy.

    Capitalism encourages us to do work that enriches the lives of others by providing food, housing, automobiles, entertainment, etc.  The more we enrich others, the more we enrich ourselves.  In an ideal capitalist setting, it would be impossible to get rich without making those around you a bit richer, too.  Even in the absence of an ideal setting, capitalism is the best system for turning our vices into virtues.

  • What Does Stephen Hawking Know, Anyhow?

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    I saw this:
    Stephen Hawking Says We Should Really Be Scared Of Capitalism, Not Robots


    Hawking’s comments were limited to:

    If machines produce everything we need, the outcome will depend on how things are distributed. Everyone can enjoy a life of luxurious leisure if the machine-produced wealth is shared, or most people can end up miserably poor if the machine-owners successfully lobby against wealth redistribution. So far, the trend seems to be toward the second option, with technology driving ever-increasing inequality.

    Hawking’s comments are pretty hard to dispute.  It seems implicit in the phrase “how things are distributed” that there must be some “distributer of things”, but he doesn’t state it outright, so we’ll leave that alone.  However, the editorial writer (Alexander C Kaufman) does take a lot of liberties with Hawking’s comments, starting off with the title of the article.  So I am addressing the author of the editorial more than Hawking himself, when I say:
     
    “Nonsense!”
     
    The lopsided distribution of dollars and property is the wrong way to measure economic divergence. The wealthy in the world have vastly more dollars than the poor. But the poor in capitalist countries are vastly better off than the poor in less capitalist countries. Capitalism (even the distinctly non-free over-regulated crony-capitalist market under which most capitalist countries exist) has pulled the masses out of the miserable poverty suffered by their ancestors and their communist or dictator-ruled contemporaries. Meanwhile the wealthy have simply remained exquisitely comfortable everywhere.
     
    As China has embraced capitalism, more of the poor in China are comfortable, while the wealthy in China simply remain pampered. And so it is everywhere that capitalism is allowed to flourish.
     
    “Wealth inequality” is a non-issue. “Income inequality” is a non-issue. And capitalism is the worst economic system except for all the others.