EXPOUNDING ON COST CUTTING (II)

Smokey backrooms. Exploiting poor people (whatever that means). I love it. Cutting programs comes along with that. Let's talk about welfare.

You're just like every other elitist who wants to cut welfare!

No. I am just like every other elitist who wants to reinvigorate mutual aid societies.

Mutual Aid? What's that?

I've alluded to this in previous posts. Mutual aid is a process whereby people of generally limited financial means pool together resources to purchase services that are accessible to a group. So, person A can't afford to pay a doctor and person B can't afford to pay a doctor, but person A, B, C, D, and E can afford to pay for a window of access to a doctor for each person. These sorts of schemes eventually brought people together and inspired them to create "mutual aid" societies. The first recorded of these societies was found in Tang Dyansty China. Over one thousand years ago. In medieval times, guilds often served the purpose of mutual aid. The organizations are generally tied to trade unionization, minority and immigrant groups, religious organizations, and the working poor.

In the US and Britain, these societies gained prominence beginning in the 19th century. In the US these societies were called "lodges" or "fraternal organizations." in Britain, they were called "friendly societies" or "friendlies"Some examples include the Freemasons, Independent Order of the Foresters, and the Free African Society of Philadelphia.

In addition to helping members provide services like medical insurance and child care, these places also served as meeting grounds and helped connect and build communities. They were an integral part in the life of working-class and middle-class people in the 19th and early 20th century. They helped more people of limited means than government-funded almshouses and debtor's prisons.

They were robust and competitive in providing these services, and all based on the principle of self-help, meaning the members would contribute what they could when they could. They were distinct from charities, however. But charities also operated very efficiently during the same period that mutual aid societies were significant in the West.

Another important aspect of these organizations is that they were owned and run by their members. Everyone had a say in operations (ie. the members would vote on decisions like who the new lodge doctor would be, rates to charge or how they would admit new members, etc). They were also very important for integrating minorities and immigrants into society and in helping people overcome occupational prejudice.

Al in all, these organizations were wonderful for the working poor, an helped provide a robust safety net in an apparently dog-eat-dog society. So what does the government do? Destroy them, of course.

Of course? You act like the government is out to get you and everyone else.

I'm white and domestic. The government isn't out to get me. At least not during the times it started federal welfare programs.

By providing welfare services through the state, politicians realize they can buy votes. Additionally, destroying mutual aid societies works to weaken the status of workers and makes voters more dependent on voting in order to receive benefits. It also weakened minorities' ability to succeed and advance in society.

And the economic impacts of a chronically poor population that faces counter-productive incentives and the massive administrative nightmare that was installed to redistribute the wealth created by the market? Obviously not good. I don't feel I need to get into them, as they're littered all over the internet.

I will say that welfare needs to end and people ought to know more about the free market alternatives.

What do the dogs have to do with it?

Lodges served as social gathering places. Each card is a social gathering and each poker chip represents services provided by the fraternal societies. The lodge leadership made a bet with the government as lost and now we have what we have now.

MINIMUM WAGE

I don't get paid for this. I'm actually paying my school for the opportunity to write this to receive some grade.

A similar situation occurs with unpaid internships. Students want experience in the field and they voluntarily agree to work without pay for the opportunity and experience gain through an unpaid internship.

Internships

I always viewed unpaid internships as smarmy, but they do have some merits, especially for some hard-to-enter industries. If the minimum wage applied to internships, how many internships would be available? Well, according to supply and demand, far fewer.

In this post, I will talk about wages in general, how they are calculated in an economy, and what effects a minimum wage would have on certain groups.

The market supplies a certain level of a type of labor. Since the minimum wage currently in effect only affects those with the fewest number of marketable skills, we'll mostly be talking about low skilled labor. The type of labor usually found in the kitchen in eating establishments or bagging groceries and dry goods in grocery stores and retail establishments. There are a certain number of people who are willing/able to work such positions and a certain number of employers willing to hire this form of labor. According to basic microeconomics, the market clearing-price will be what the starting wage is for the average entry-level worker.

A minimum wage set above this price, as indicated in the picture, would create an artificially high floor on wages. Not everyone who was in the labor market could be hired at this rate. Naturally, this will allow the employers to be a bit more choosey in who they hire. This makes it harder for people with no background or skills to get their first job.

The minimum wage started as a means for unions to prevent strike breaking. Because unions would typically demand higher-than-market wage rates, they would often either threaten or enact strikes if their requests were not met. Strike breakers were people who would go to work during strikes to take advantage of the (usually) slightly hire wages than what the worker was used to. Typically, minorities and the very poor would be strike breakers. This registered minimum wage laws as one of the most racist laws on the books because the lowest skilled labor during the time of minimum wage enactment was found among black populations. Starting the workforce late or not at all has very detrimental effects on income growth in one's lifetime. Across an entire population, this has had inter-generational effects that have been noted by several prominent economists.

Another effect of minimum wage is to completely phase out/eliminate jobs that would only be productive at lower wage rates. There no longer exist elevator operators or movie ushers, for instance. There are legal exceptions for people like Wal-Mart greeters who may not find work anywhere else. But even so, people who are not mentally capable of work that would merit anything above 5 or 6 dollars and hour are barred from working anywhere but a few places by law.

I mentioned unpaid internships before. College students who need credits and a foot in the door need an internship. If the minimum wage was applied to internships, the unpaid ones would no longer be available. That would clearly adversely affect lots of students nationwide.

Conclusion:

The minimum wage is great if you are one of the slightly-higher skilled people who would not be fired from their current minimum wage job, but for everyone else (minorities, mentally disabled or developmentally disabled, and college students) the minimum wage is a raw deal. Economically it makes no sense to shrink supply and leave our labor supply undeveloped and un-utilized.

What does the dog have to do with it?

The dog is working at a sewing machine. The minimum wage in conjunction with other laws in the US has relegated this type of work to the their work to the third world. It isn't glamorous, but that dog sure makes it seem so.

SAFETY DANCE

This post is going to revolve around workplace safety. I made reference to the title of the seminal piece performed by "Men Without Hats" for views.

The Occupational Safety and Health Administration is looking out for worker safety. And health. They impose regulations on employers on behalf of their blue collar workers. Let's outline the basic logic behind workplace safety regulations:

First, we need to establish motives. Companies/corporations/businesses/firms/employers/whatever you want to call them exist for one reason: Deliver the highest profit to their shareholders possible. If they fail to achieve this goal then they no longer exist. It turns out that the best way to do this in a free market is to produce goods and services people are willing to buy at prices that are competitive. So, the business needs to do a few things to achieve its primary objective. These are:

-Produce things people want
-Produce them cheaply/efficiently

Where does worker safety fit in to this? Well, it may not be directly observable on its face, but it is certainly integral to the goals of a business organization.

There is a market for labor. There is a supply and demand for different types of labor (at different skill levels and specialties). If we're talking about standard blue-collar work that would be regulated by OSHA, we can divide it into skilled and unskilled labor. Skilled labor is more rare and may have a background in certain trades. Unskilled would be equivalent to an immigrant worker from the third world or a teen on his or her first job.

The business wants things produced cheaply. They will seek out the workers who will work for the lowest pay. But they also need the worker to produce more than what they're paid, so it is productive workers that businesses seek. A large part of productivity is a result of the work environment itself in combination with the pay and respect given to the worker. One thing is for sure: A dead worker is not a productive worker. Moreover, a business that treats its workers poorly will have trouble finding high-quality labor. They might be more relegated to using unskilled labor. But unskilled labor has the widest number of available choices.

Logically, this would result in businesses improving conditions over time as they can afford do due to competitive forces for labor. This is in fact what happened.

Then why do we have OSHA at all?

Good question. Certainly, OSHA has had no effect on workplace fatalities. Most of the decreases in workplace fatalities has to do with improvements in technology that were the result of investments on the part of businesses. OSHA has, however, laid a high high cost of compliance upon businesses operating in the US, especially manufacturing businesses.

Conclusion:

There are a myriad of regulatory agencies which do not accomplish their goals and merely add to the budget deficit. No one wants to throw money into a bottomless pit. OSHA happens to be one of these agencies. So, stop stealing my money and throwing it into bottomless pits.

What does the dog have to do with it?
The green worn by the dog symbolizes the money thrown into the aforementioned bottomless pit. The dog's eyes are big and brown and dark, much like bottomless pits. The dog also managed to put on its safety goggles without the help of OSHA. Who needs OSHA when even animals without opposable thumbs can be make themselves safe?

POLITICAL EXTREMISM

Applying consistent thought/principles to political life should not be extreme and traditionally never was extreme. It's also quite dubious the distinctions between "extreme" and "not extreme." On some level it comes down to consistent vs. non consistent, pragmatic vs. non-pragmatic, consensual vs. non-consensual. Some people view extremism more as a means to political ends, rather than beliefs in and of themselves. I think it is important to distinguish between means and ends, however. The two are not interlinked.

Often times the difference is denoted as percentages of preferred tax rates. Libertarians want 1% or less. Conservatives want 10%. Liberals want 25%. Socialists want 75% or higher. "Centrist" is somewhere between those four depending on the size of each constituency. In the case of the US, which is split between conservative and liberal, the ideal rate would probably be near 15-20% in this example. In reality, of course, it's far more complicated.

Then you have "far" left and "far" right people who agree that eminent domain should be done away with. I don't like keystone XL pipeline because it involves forcibly taking individuals' land. Others don't like it because it is generally used by larger corporations to bully the little guy. Others don't like it because they don't like oil or think there are environmental concerns that transcend economic concerns. I've outlined my position on the issue.

What about pro-eminent domain vs. anti-eminent domain? Lots of pro eminent domain people can be found in the majority liberal AND majority conservative populations. The debate usually resides over when it is justified rather than how it can be justified at all.

Is a property-focused perspective "extreme?"

It is certainly uncommon. But the principle is rooted in the more pragmatic ideologies of conservatism, and to a lesser extent, liberalism (in the Unite States). Those two ideologies are willing to throw away the property-focused perspective when it serves their interests. Conservatives love eminent domain when it is for pipelines, while liberals love eminent domain when it is used to protect a rare species of owl or help "restore" our wetlands. But on principle, both will use the property argument against the other.

We already know politics is dumb, though. Why do I care about this?

These inconsistencies are ignored by the public at large whenever these debates emerge. I care because this affects my taxes and the prices of what I will buy and the condition of the world I plan to leave the children I'd like to have. People should not be labeled "extreme" for staying by their principles. If their principles conflict with someone else's wishes, then the debate should start on the legitimacy and validity of the principles in question. Ends don't justify means and all that.

What does the dog have to do with it?

The dog is relaxing after a long, tenuous day to watch some Shark Tank and Grey's Anatomy. She isn't concerned with politics because her principles matter more than vapid, weekly political dynamics.

REFUSE TO REDUCE REUSE AND RECYCLE

I am only kidding. I don't refuse to do any of what the title says. Just want to grab your attention. But I am frustrated from both an economic and environmental standpoint.

"Reduce"

I love reducing my consumption. It saves me money. It can also free me up for other things, like having a "social life" and going "out" every once and a while. I need to get out more, if you couldn't tell already.

"Reuse"

Learning how to properly amortize purchases is key to living frugally. I had my phone for over 5 years until I finally replaced it. I wear my clothing until not even the poorest person will want them anymore. I purchase only food that I know I can consume before it goes bad. You don't need to look or live like a hobo to do this. Just take better care of your possessions. Purchase things that will last longer term.

"Recycle"

This one is more specific and nonsensical. You don't have to compost, but if you have the means, putting clearly biodegradable items into a pile and using the pile as fertilizer could end up saving you money. Many companies buy aluminum cans and glass bottles. That is the consumer side of things. But not everything that people want to recycle makes sense to recycle. Paper, for instance. It generally costs more to re-purpose used paper than it does to produce new paper. The energy and water usage is the key factor here. By recycling paper you are using more resources than by purchasing new paper and throwing out used paper.

The Three R's of consumer-oriented environmentalism are only environmentally considerate when they positively affect the consumer's budgeting and lead to savings instead of additional spending. That principle of positively affecting finances is a very important aspect to environmentalism. In fact, most environmental concerns boil down to economic concerns. I'll go through a few here:

-Overfishing/Overforesting/Overuse. This problem is based on the classic economic problem of "tragedy of the commons." (Look up for yourself). The best and longest-lasting solution to this problem is to implement property rights and enforcement of existing legal structures. Fish farms have increased in popularity over the past few decades. These enclosures allow people to "farm" saltwater fish populations without completely removing them from their habitats. There have been some concerns about overcrowding of these fisheries and polluting of bays, but there are technological remedies in progress for these. And importantly, the pollution of the bays affects the bottom lines of the fishers/farmers. They have the incentive to fix this problem themselves. Overforesting is a similar concern. The most often cited example is the Amazon Rainforest, and how it is being clear-cut at astonishing rates. The enterprises attaining the timber, in many cases, do not own the land. They just pay off the government through bribes to clear-cut the land. The problem is one of corruption and lack of enforcement than one inherent in economic growth or free market capitalism. Conservation efforts here seem to be the best solution, since we cannot depend on the government of Brazil to change them.

-Pollution (general). This problem is known in economics as a "negative" externality. "Negative" because it imposes costs on a third party without their consent. Polluting a river produces costs on those who depend on the river for livelihood. In common law, the precedent would allow the people downstream to sue the polluters for damages/demand payments for the portion of their business that was lost as a result of the pollution. Polluting the air is more difficult, but a case can be made in some instances. No one can own the air because of its over-abundance. Hong Kong has developed a problem with air pollution caused by automobiles, but this is being dealt with privately by donations to organizations that provide more efficient, less polluting means of transportation. Pollution in streets before automobiles came along was generally caused by the proliferation of horses as a means of transport. The solution was the invention and subsequent adaptation of the automobile. Horsey poop everywhere was no more.

Conclusion

Most major environmental concerns can be and have been dealt with through voluntary means, usually by adding up real costs in dollar terms. Technological advances typically save the environment the most. The USB-flash drive saved more trees than the EPA, automobiles replaced smelly, unsanitary horsey manure with more acceptable smog. Conservation and property rights have saved and will continue to save fish populations and lessen the pressure put on the Earth's natural environment. Technological advances that make profitable recycling (like those that occurred in the steel industry) or those advances that make more productive smaller portions of land (like those that occurred in the oil industry and the advancements in fertilizers and genetic modification in agriculture) is where our next major breakthroughs in environmental protection will occur.

What does the dog have to do with it?

This one is straight forward. The dog is ticked off by the anti-environmentalists who claim to be pro-environmentalists. The dog also dislikes Pabst Blue Ribbon but is going to recycle the aluminum cans after he takes a cute doggy-nap.

KEYSTONE XL PIPELINE

I am going to come right out and say it: I DO NOT KNOW ALL THE FACTS. There. Done. Let's move on.

I am against the construction of this pipeline. Here are the reasons:

-I think it utilized eminent domain to purchase the land upon which it will be constructed.
-I think it received some subsidy, either directly or indirectly, from the federal and state governments.

Both are unconfirmed, but not unreasonable assumptions. Eminent domain is known for being used in large-scale infrastructure projects. Energy companies are known to have received subsidies for constructing power plants and building/maintaining other types of infrastructure.

Another thing: There are no real environmental or economic concerns. As far as I can tell, none of the environmental concerns are substantiated and the economic effects on the macro-economy can almost only be beneficial long-term. Another pipeline would be great. But my better judgement tells me that I shouldn't compromise on my principles. So here it goes:

Why is eminent domain bad?

It's only bad if you think innocent people should be allowed to keep their stuff if they want to keep their stuff. The Nickelodeon-esque example is of a granny who is retired and collecting social security, pension, and any other form of retirement checks, enjoying her reverse-mortgage on her family home that has been with her for the good years and the bad years, and hopefully will be with her to her deathbed.

This is a property rights issue. The property owner (granny) may NOT want to sell the land to anyone for any cost for reasons that are purely subjective and, quite frankly, none of our business. We should probably leave the property owner alone. Perhaps we offer him or her lots of money. Perhaps much more money than their land is actually worth at book value. They still say no. Most people would give up and go home now. As we've said, this is really none of our business and we should respect their sovereignty.

Except of course, the property owner's land is everyone's concern. It says so in the Bill of Rights that we can take any land for "public use" if "just compensation" is offered. Who determines what "just" compensation is or what "public" use constitutes? Well let's just say we can say what those are for a second.

Granny still doesn't want to sell. This clearly violates her property rights. But she did agree to the Constitution when she signed it... I mean, when her ancestor signed it... I mean when her ancestor's politician voted on it... or against it... well, democracy. Just know that your rights go away when a majority says they do.

I don't agree with this. Lysander Spooner laid out some great arguments on why the Constituion has no authority in his essay "No Treason: The Constitution of No Authority." So I'm going to say that you, the reader, decided to read the essay that was linked and have concluded that the constitution does indeed have no authority over any citizen that does not expressly consent to it.

So now that that is out of the way, granny's rights are being violated. Eminent domain is bad because you don't want to violate granny. Please. It's rude and equivalent to theft. People go to jail for that.

And Subsidies?

Recipients of stolen goods do not deserve said stolen goods. They are stolen. We've already gone into why in my first post.

What does the dog have to do with it?

The dog is your regular hard-working american. The glasses are the the blinders of state promises delineated by promises of majesty and progress that would result in these projects that utilize eminent domain. The cement is sealing our morals that we threw away to justify the atrocity that is eminent domain.

OCCUPATIONAL LICENSURE

Hair braiding is complicated. I can't figure out how to do it. Although it's unlikely, I might pay someone to braid my hair if I ever need it done.

How qualified would I need this individual to be? Braiding has been done for generations by many different people in many different cultures. A large portion of the population is capable of performing this. But if I need it done extremely well for whatever reason, I would want a qualified individual. But I certainly can't dictate who is qualified and who isn't qualified to braid hair.

Luckily for me, several states have taken it upon themselves to set up systems and procedures to evaluate and determine whether or not hair braiders are qualified to practice.

Wait a minute, this is actually true?

Yes. Even I thought I was joking, but apparently I wasn't.

Let's get a few things straight:
-I am a white male. Unless I'm trying to pull some strange joke, I will never get my hair braided, let alone braided professionally.
-States and municipal governments are interested in regulating hair braiding.

Why is the latter the case? ECONOMICS!

Existing hair braiders, politicians, and even racists stand to benefit from these regulations. Yes, racists.

Existing hair braiders: Through a process known as "regulatory capture," which you are free to look up on the interweb, hair braiders essentially get to decide who gets licenses and who does not. As largely independent business owners, this is a way for the hair braiding "industry" to form a loose cartel and mitigate their competition.

Racists: The largest population that typically solicit the services of hair braiders in the US are constituted by black people. By restricting the entry of hair braiders into a neighborhood or town, said town/neighborhood will appear less attractive to black people looking to move in.

Politicians: They get donations from small business owners and racists alike (not that small business owners and racists are alike. It's quite the contrary, in most cases.). They also get votes from said populations. Plus they get the bonus of "protecting the consumer" by "ensuring strict quality standards." Yup.

There's a larger issue here, but I thought I would shed light on it with an absurd, though very real, example.

A long-standing tradition in economic history is the granting of commercial privilege to favored merchants on the part of governments. Only merchant X could sell good Y in region Z. All other competitors were typically banned, or had to seek some means to sway the king (usually political donation/bribery). For kings this ensured a loyal tax base and a means to grow commerce and trade, which is beneficial to growth and power. Economists view this as a grant of monopoly and generally view such grants as retarding economic growth (as would any sane person). Competition bids down the price of the goods being sold/produced. The savings to the consumer is then spent in other areas or reserved as savings to be invested in larger, more long-term projects whenever the business environment is deemed good (ie. when interest rates are low).

Anyway, in democracies, these types of relationships still exist, but are controlled more by the industry cartel than by the government in question. Licensing is one way governments create barriers to entry into industries, which is a key component of an oligopolistic/monopolistic industry. We frown on monopolies for generally good reasons. So why not here?

Doctors. We all want good doctors, right? They MUST be qualified. It's life and death for heaven's sake! From an economic perspective, the fundamental principles have not changed. The doctors are rent-seeking. And we still get hacks every now and then, even with all of the high restrictions and requirements to practice medicine. In fact, one of the reasons healthcare is so expensive is because of all of the requirements we put on our medical professionals in the US (by "we" I refer, of course, to the US government). Restricting supply while keeping the demand schedule constant raises prices. In the past, low-cost medical care was widespread and of high quality. The payment model was typically dependent on mutual aid society membership which was, again, widespread among the working poor. The quality between lodge doctors (those who worked for the poor) and non-lodge doctors is seen as nearly identical and competitive by modern academics.

What does the dog have to do with it?

Come'on. This one is easy. We're talking about hair. So obviously, the dog's look of discomfort is a symbol for hair braiding. It's handkerchief is the noose of industry regulation and occupational licensure, and the man getting his hair washed by a dog is the ignorant consumer who thinks he's being protected by regulation. He's getting his hair washed by a dog, obviously the regulation isn't working.