Thursday, August 29, 2013

The Quest for Equality


     Many people worry about inequality.  They claim some
control far more wealth than others.  Supposedly those who
control more wealth are better off.  The next step in this
reasoning is that it is unfair that some are better off than others. 
The final step in the chain of thought is that someone must
intervene with force to end the inequality.

     Before we can even consider equality we must find a way
to measure it.  The knee jerk way to measure equality of wealth
is to compare the market values of what each person owns.  It
may come as a surprise to some that market value doesn't
measure what things are worth to those who use them.

     The one thing we all seek is to increase our satisfaction. 
      We value each thing based on how much we expect it will
contribute to our satisfaction.  We always value our things more
than what we pay for them.

     Bob trades a loaf of bread to Egbert for a dozen eggs. 
The loaf of bread is the exchange price Bob pays.  Bob wouldn't
have traded unless he believed that his use value of the eggs was
greater than his use value of the bread.  Likewise Egbert
believed that to him the bread had a greater use value than the
eggs.

     In neither case do we have any way of knowing how
much the use value exceeded the exchange value.  If necessary,
perhaps Egbert would have given three dozen eggs for the bread.
Or, perhaps he wouldn't have given even one more egg.
     All we know for sure is each individual believes the use
value of the things he keeps is greater than their exchange value. 
If the exchange value was greater, he would sell.

     An individual may own something that has a very small
exchange value.  Yet, he refuses to sell it for a very high price. 
All this means is that the individual places a larger use value on
something others value far less.  If the owner refuses to sell a
trinket for a million dollars, he expects the trinket to bring him
more satisfaction than he could buy with a million dollars.  To
him the trinket is worth more than a million dollars.

     There is no way to measure the use value.  The most we
can do is observe that an individual places a greater use value on
one thing than another.

     We have no way of measuring and comparing the use
value on one person's wealth to another's.  Thus, there is no way
to measure wealth and declare that one person has more wealth
than another.  Considering that the most satisfied person has the
most of what he really wants, the most satisfied person is the
wealthiest person.  There is no way to measure and compare
satisfaction.  It is futile to pursue equality of wealth when we
can't even recognize it if we see it.

     There are other important points ignored in the pursuit of
equal wealth.  Individuals gain satisfaction from wealth they
don't own.  That satisfaction is just as real as satisfaction gained
from their own wealth.

     Who hasn't enjoyed the sight of flowers, Christmas lights,
or great architecture, etc., none of which they owned?  The
owners of these things either deliberately, or incidentally, use
their wealth to provide satisfaction to others.  This satisfaction is
a benefit to those who enjoy it.  It doesn't add one cent to their
measurable wealth.  Measurement of wealth will tell us that the
so called poor and the so called rich are still as unequal as ever.

     One thing is certain.  If the owners who incidentally
provided satisfaction to others were deprived of their wealth, the
others would be deprived of satisfaction.  Those others might
even be deprived of more satisfaction than were the owners who
lost their property.

     Next time we will consider whether the rich giving to the
poor helps or harms the poor.

aldmccallum@gmail.com
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Copyright 2013
Albert D. McCallum

Thursday, August 22, 2013

Who's the Boss?

     An employer hires an employee to manage some of the
employer's interests.  The employee appears trustworthy and
reliable.  Still, caution is always warranted.  The employer
installs cameras and recording devises to monitor the employee
on the job.

     The employee doesn't trust his employer either.  Besides,
the employee would like to keep his misdeeds secret.  If the
employee can dig up some dirt on the employer, it could be
useful to the employee if his misdeeds threaten to get him fired.

     The employee sets up his own surveillance.  He even
hires a detective to spy on the employer.  The employee goes
through his employer's private files.  Then the employee steals
some of the employer's cameras and batters a camera technician
in the process.

     Someone is in big trouble.  The employer orders the
unfaithful employee to leave and quit spying and otherwise
violating the employer's trust.  The employee refuses to leave or
mend his ways.

     Instead the employee files a complaint against the
employer.  The prosecutor files charges and the employer is
arrested for violating the employee's privacy.

     Some may consider this hypothetical to be silly,
ridiculous and outrageous.  Outrageous it is. Silly and ridiculous
it's not.  It is ridiculous that it is happening every day.  It is silly
that so many people don't seem to care.

     The teachers in government schools tell us about
government of the people by the people and for the people.  We
are supposed to believe government works for us.  Government
and its agents are our employees.  Laws and union contracts
made possible by laws make it all but impossible to fire those
teachers, no matter how disloyal or incompetent they may be.

     In some states it is a crime to photograph police working
in public.  Elsewhere the police merely beat up photographers
and take the cameras.  Who is the boss, we the "employers" or
our "employees?"

     Politicians, bureaucrats, and their minions have hissy fits
if we the people ferret out some of their secrets about their
misdeeds.  In their eyes they, the employees, have been wronged
by the employer's misdeeds.  Under laws enacted by the
"employees" the "employers" must be punished.

     Meanwhile government endlessly invades what used to be
our private lives.  Nothing is private from government.  It steals
E-mail, phone calls, and anything else it can get it mitts on.  It
puts a tracking device in your cell phone so it can track your
every step.

     If you have an interactive television, government has
software for secretly turning on the camera and watching you in
your living room, bedroom or any place else you have an
interactive television.  One reporter said he was going to put
tape over the camera anytime he wasn't using it.  Expect
government to make it a crime to tape the camera.

     Naturally the first and foremost purpose of laws made by
government is to protect government.  Thus, we the people have
no privacy or secrets.  If we somehow violate government's right
to keep its misdeeds secret, we are criminals.  Sorry, I forgot for
a moment.  Government makes the rules. Thus, by definition,
there is no such thing as a misdeed by government and it agents,
unless that deed is somehow detrimental to government.

     The idea of government secrets is troublesome.  Servants
don't have the right to spy on and keep secrets from the master. 
Masters aren't punished for checking up on their servants.  The
mere existence of the right of government to punish citizens for
violating government's secrecy puts the lie to the idea that
government serves the people.

     Government secrecy should be limited to a few narrowly
defined instances.  Even in these cases no one should be
punished for discovering and publicizing government secrets.  It
should be a crime for anyone to try to keep government
wrongdoing secret.  Government secrecy undermines any chance
we have to protect ourselves from out of control government and
hold it accountable.

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Copyright 2013
Albert D. McCallum

Friday, August 16, 2013

Is Our Civilization Sustainable?

     Many people worry and fret about environmental
sustainability.  They are sure we are headed for destruction and
disaster because of environmental excesses.  They warn that we
face doom from depletion of resources, pollution, global boiling,
etc.  The more shrill among them are certain that disaster will
strike little beyond the middle of next week.

     We do face a sustainability crisis.  Every past civilization
has faced the same crisis. It isn't particularly encouraging that
most, possibly all, past civilizations have self destructed because
they were unsustainable.  It wasn't their physical environment
that was unsustainable.

     Like with past civilizations, our present social-political
environment isn't sustainable.  Humans are social.  We live,
work and play together.  For this to work and endure we must
trust each other and get along with each other.

     All friction among individuals tears at the fabric of our
social-political order.  The fabric of a strong social-political
order can withstand quite a bit of stress.  It isn't indestructible. 
People can't interact without some tension and stress.  Even the
best of families have disagreements and quarrels.

     The larger the group, the greater the potential for friction
and stress.  The question that should concern us most is, How
can we keep the friction and stress down to a level that doesn't
threaten the sustainability of our civilization?  Mostly we ignore
that question.

     In the struggle to sustain our civilization and prosperity,
environmentalism is a distracting sideshow.  If we don't radically
change our ways, our physical environment will long survive the
implosion of our social-political environment.

     A sustainable social-political environment depends on
voluntary cooperation.  Individuals must be self regulated. 
Constructive self regulation will occur only if individuals see
that they will benefit from it.

     If most individuals believe they can benefit from stealing,
lying, and punching out their neighbors, they will steal, lie and
punch.  Constructive voluntary cooperation is impossible in such
an environment.

     The first step to preserving our social-political
environment is to recognize how everyone gains through
peaceful, voluntary cooperation.  The key is recognizing that we
are traders who depend on trade for almost everything we have. 
We produce for each other.

     For this to be sustainable everyone must benefit from the
exchanges.  Exchange extends far beyond commercial trading. 
Exchange permeates everything we do.  Social interactions are
an endless succession of exchanges.  We socialize with each
other.  Both commercial and social exchanges must be peaceful
and voluntary to be sustainable.  One person or group using
threats and force in any relationship destroys long term
sustainability.

     Spontaneous order where each individual seeks to
maximize his gain in voluntary cooperation is the only system
that works.  It works when each individual realizes that to
increase what others provide him, he must increase what he
provides for others.  We all end up voluntarily serving each
other.

     No one wields a club to make this happen.  The only
way we can sustain our social-political environment through
voluntarily cooperation is to allow liberty for everyone.  No one
is a master.  The only role for threats and force is to prevent
aggression and exploitation.

     Unfortunately we are headed in the opposite direction. 
Ever expanding government is  the opposite of voluntary
cooperation.  It is "Do it my way, or I will hurt you."  The
powerful gain in the short term.  The weak lose.  When the
unsustainable system crashes, everyone loses.

     Unless we stop government, it will destroy voluntary
cooperation and shred the fabric of our civilization in the
process.  No society built around big government and its endless
use of threats and force is sustainable.

aldmccallum@gmail.com
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Copyright 2013
Albert D. McCallum

Monday, August 12, 2013

Is Low Pay Worse Than No Pay?

     A "news" article complained that Walmart wasn't paying
its employees enough in Wisconsin.   If it was a real news
article it would have stuck to the facts and left the complaining
for an editorial.  The writer was picking on Wisconsin because it
had more extensive statistics than other states.

     This article claimed that thousands of Walmart employees
were getting government assistance.  The conclusion was that
this was Walmart's fault because it didn't pay its workers
enough.  The article didn't mention that many government
military employees are also getting food stamps and other
assistance beyond their pay.  It would be faint praise of Walmart
to point out that at least it is no worse than the government.

     Sometimes sellers at auctions complain that items go for
far too low prices.  Should the seller blame the high bidder who
bought the item?  But for the high bidder, the item would have
sold for even less.

     For Walmart's employees Walmart is the high bidder. 
Usually if an employee gets a better offer he accepts it.  If some
employers must be blamed for employees working at Walmart
for lower pay, it should be the employers who didn't offer the
Walmart employees better deals.  Walmart lifted the employees
above their next best opportunity.

     There are many people who claim pay should be based
on the employee's needs.  There are several reasons why this
won't  work.  First, who will decide what the employee needs? 
The employee is likely to claim that whatever he is being paid
isn't enough.  He needs a little more.  Surveys have confirmed
this to be true.

     The real problem is that wages are compensation for
value produced by the employees.  Wages can't exceed that
produced value, no matter how small it may be.  This is why
minimum wage laws cause unemployment.  Those who can't
produce more value than the minimum wage remain unemployed
at zero wage.

     An employer can pay some employees more than they
produce by underpaying others.  In the long term this doesn't
work.  Those underpaid employs will find employers who will
pay them for the value they produce.  The employer who pays
some of its employees more than they produce soon only has
those over paid employees.   Next it is out of business.  Then it
doesn't pay any employees any wages.

     In the short term this principle doesn't apply to
government jobs.  Government can pay employees more than
they produce so long as it can stick the taxpayers for the losses. 
Municipal bankruptcies, unfunded  pensions, etc. are in large
part the product of government paying employees more than they
produce.  Eventually even government will be unable to continue
paying employees more than they produce.

     Those who complain about Walmart employees being a
burden on taxpayers should instead be thankful for those
Walmart jobs.  Without those jobs the employees would be even
bigger burdens for taxpayers.

     Any pay an employee receives beyond the value of what
he produces is a gift.  Someone has to pay for those gifts. 
Trying to force investors, customers and other employees to pay
for those gifts doesn't work. The exploited investors, employees
and customers jump ship.  Then the ship sinks.

     The only sustainable solution is to leave the giving to
voluntary donors.   Any other attempted solution is only
temporary.  In the end those so-called solutions only yield lower
wages and unemployment.

     In free markets all employers bid for the services of
employees.  Employees seeking the best deals force wages up
toward the value of what each employee produces.  The average
wage can't be sustained above that level.

     The only way to raise wages further is through
investment that increases the productivity of workers.  As long
as government continues to drain investment capital and divert it
to consumption spending, we face declining productivity and
declining wages at Walmart and everywhere else.

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Copyright 2013
Albert D. McCallum

Friday, August 2, 2013

Bad Apples

     Much of the recent news has been about bad apples in
the government barrel.  The IRS end of the barrel seems to be
shedding bad apples like a cat sheds hair in the spring.  The
National Security Agency has yielded a lot of rot too.  Whoever
named that agency certainly had a sense of humor.  It would be
better named The National Insecurity Agency.

     The search for bad apples at the State Department has
been on going since Benghazi became a household word.  Who
knows where someone will discover the next rot?

     What amazes me is how the politicians act surprised,
even shocked, at the discovery of those bad apples.  I remember
the noise about bad apples being found in government since my
early years in grade school.

     Bad apples in the government barrel is the theme of
several of the older books of the Bible, Samuel, Kings and
Chronicles for starters.  In the "Decline and Fall of the Roman
Empire" Gibbons devoted many chapters to the bad apples in the
Roman government barrel.  Eventually those bad apples
produced so much rot that the whole Roman barrel fell apart
ushering in the Dark Age.

     The politicians' favorite "solution" is to cast out a few
bad apples and replace them with fresh ones.  Then they assure
us that all is well.  Next thing we know those politicians are
expressing surprise and shock that the government apples are
still rotting.   Again, the politicians prescribe fresh apples as the
solution.

     Sometimes the action to purge the rotten apples is more
drastic.  Throw out all the apples and start with a new barrel.  It
isn't long before the apples in the new barrel are as rotten as
those in the old one.  After thousands of years of this cycle of
failure, Why do naive voters still believe the solution that never
has worked will work next time?

     The apples in the government barrel always rot, sooner or
later.  Usual more sooner than later.  Might it be that the
problem is the barrel not the apples?

     Getting rid of the government apple barrel isn't an option. 
Like Freddy Kruger, it always rises from the dead.  We can't
eliminate the barrel.  And, we can't stop the barrel from rotting
the apples.  John Dalberg Acton observed one of the few eternal
truths. "Power tends to corrupt.  Absolute power corrupts
absolutely."

     Power  is the fungus that inevitably rots the apples in the
government barrel.  Government is power.  Without the power to
enforce "Do it my way, or I will hurt you," government wouldn't
be government.

     Rotten apples in government is an incurable, insoluble
problem.  Should we just give up and accept endless abuse from
government's rotten apples?  Incurable isn't necessarily
untreatable.  Individuals with incurable disease may with
appropriate treatment still live a reasonably decent life.

     A small amount of rot in the government barrel won't
enslave and destroy us.  When rot in the barrel is inevitable
there is only one way to limit the rot.  That is, limit the size of
the barrel.  A smaller barrel will rot fewer apples and be easier
to clean out from time to time.

     Putting new apples in the IRS barrel, the NSA barrel, or
the State Department barrel aren't solutions.  Everyone knows
what rotten barrels do to fresh apples.  The only treatment that
has a chance of helping is drastically shrinking the entire
government barrel.

     Government will never volunteer to shrink its barrel. 
Only if voters demand a much smaller barrel will the politicians
take action.  The politicians' knee jerk response always is to
make the government barrel bigger.  Some even claim Detroit
went bankrupt because government was too small.

     It is well past time to stop quibbling over how to shrink
the barrel and simply start chopping.  Most of that huge barrel
didn't exist less than 100 years ago.  We can live without most
of it.  We won't live much longer with it.

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Copyright 2013
Albert D. McCallum