According to the known liars in the Federal Government, the unemployment rate in the United States is a mere 4.3%. That number is obviously wrong, but it’s really not important. Any degree of unemployment is a bad thing, even if it’s only 1%, because that means one in every one hundred people cannot find a job in order to earn money.
Now, let me point out something that many people seem to have overlooked…
Ridiculous amounts of work are going undone in the United States. Bridges and road signs are covered in graffiti, streets are littered with trash and refuse; storefront windows are smudged with fingerprints and streaks of rain, buildings need to be repainted, countless yards need to be cut, and statues and monuments throughout the nation are covered in bird droppings and graffiti. If you simply begin looking for it, you will see thousands of things, just on your daily commute to work, that need to be done–things that could be done. Things that, you would think, someone would be willing to pay to have done.
And then there’s that number looking at us: 4.3%.
It’s not simply a matter of location, obviously. If only we could make the assertion that our unemployed people are nestled in the valleys of the Smokey Mountains, where there are no bridges to be cleaned of graffiti or monuments to be cleaned. Yet we know that isn’t the case. These unemployed people are scattered throughout the United States unevenly, just as are the tasks that need to be done. This sort of “undone work” exists in the city of Southaven, Mississippi, and, yet, there are unemployed people in the city of Southaven.
The question we have to ask is simple:
If there is work to be done, why isn’t it being done?
The answer is just as simple: the Minimum Wage.
I learned about the Balance of Power when I was a preteen, when I was required to cut the grass each week (in addition to household chores) to earn my $1.50/week allowance. My sister had similar household chores to complete, but didn’t have to cut the grass, and yet she earned exactly the same amount that I made. I pointed out that I had to spend one entire Saturday every two weeks cutting a rather large yard, while my sister didn’t, and I received basically no payment for it, and I argued that I should have been given a raise to my allowance.
“I’ll give you a raise when you start doing a better job of cutting the grass,” my grandmother replied.
I’m sure the problem is obvious. My grandmother could make me cut the grass; I had no real choice in the matter. I couldn’t simply say, “Well, then I’m not cutting the grass anymore.” Yet, she could say, “I’m not paying you anything. You’ll get out there and cut the grass, and that’s that.”
I was at her mercy regarding payment. She didn’t need to pay me, but I needed her to pay me.
The same thing is true in the United States today, especially in regard to Minimum Wage jobs. The individual worker is not needed by the employer, because there are ten others waiting in line if that particular worker proves to be a hassle. Just like my grandmother didn’t need to pay me, so does McDonald’s not need to pay Jim. If Jim demands a higher wage, they can simply fire him and hire from among the 4.3% of people who need that job in order to survive. As it was with my grandmother, the Balance of Power is tilted entirely toward the employer.
If there is one job and ten potential employees, then the workers compete with one another for the job. Think of it like an auction. Each worker offers up the most labor for the lowest cost to the employer, because all of the people bidding for the job need the job.
“I’ll do it for $9/hour plus health insurance,” says the first.
The second laughs. “I’ll do it for $8/hour. Forget the health insurance,” says the second.
The third laughs. “I’ll do it for $6/hour! Forget all the benefits!”
The Minimum Wage then prevents the first and second people–and the fourth, fifth, sixth, seventh, and however many more there are–from proceeding to undercut the third guy. They can come forward and match his offer, but they cannot stack the odds in their favor by lowering the wage for which they will work. This is why Unions despise “scabs” so much. The second person might go away, grumbling, angry that he didn’t get the job, saying, “It’s not fair! He shouldn’t be able to undercut me like that! There ought to be a law!”
That “law,” of course, is the Minimum Wage.
The other consideration to this is that the employer may have already decided that the task is not worth more than $7 an hour. By the employer’s calculations, it’s just not worth more than that to hire someone to keep their parking lot clean of litter and trash. So, unknown to him while he cries that the third person shouldn’t be able to undercut him, the second person had overbid anyway.
It’s similar to the television show The Price is Right. Overbidding in the show is an instant loss. If one says $550 for a washing machine that MSRPs for $349, the contestant cannot win that round, no matter what. This is also the case with demanding a wage that is higher than the employer is willing to pay: the worker cannot “win that round.” The worker cannot get that job. It’s instant disqualification. Though the employer, like on the show, has hidden the actual value of the job, the first two people have overbid and have disqualified themselves. This is why everyone cuts their eyes angrily at the person who bids $1–on the show, if everyone else overbids, that person is assured to win the round; that employee who bids the lowest intentionally is assured to get the job, if they are otherwise qualified–and, often, even if they are not.
What happens, though, when everyone is disqualified, because no one is able to bid below a certain amount, and the employer has already calculated to find out that the value of the job is lower than the “certain amount” they aren’t allowed to bid below? Everyone is disqualified. No one gets the job. The job goes undone.
Imagine the foolishness of having on the show The Price is Right the rule that “No one may bid under $100 for an item.” Now imagine the added folly of featuring a toaster that is valued at $40. What happens? Everyone overbids, because everyone must bid over $100. Yes, it’s a rather stupid state of affairs, isn’t it?
Yet the “toasters,” such as they are, exist. There are jobs–tens of thousands of them–that need to be done, but simply aren’t worth $7.25 an hour to the person who would pay to have them done. In our analogy, the toaster is on the show, and the toaster can’t be removed from the show. The circumstances we’ve created are idiotic. We see the toasters on the show, and we know they’re going to have to be bid on, we see the requirement that no one can bid below a certain amount, and we see that this means people are overbidding by default and can’t do anything about it. It’s truly idiotic.
Yet our stakes are so much higher in the real world than round after round of contestant overbidding on the toaster because they can’t bid below a certain amount. In the real world, we end up with unemployment. We end up with people being fired because the employer is unwilling and/or unable to pay someone $9 an hour to do some menial task. We watch a father of three panic over money because he can’t find a job–even McDonald’s continues to hire one teenager after the next, because there are more potential workers than there are jobs available, and the father of three inherently involves more hassle than hiring another pimply seventeen year old nerd.
Yet imagine the opposite! Just as there are, right now, more potential workers than there are jobs available*, so could there be more jobs available than there are potential workers. Look at what this does to the Balance of Power–instead of having a condescending interviewer ask, “What can you do for the company?” we have a grinning worker asking one interviewer after the next, “What do you have to offer me?”
Instead of the workers undercutting each other out of necessity, the employers undercut each other.
“I’ll give you $8.25 an hour,” says the first.
“They offered you $8.25/hour?” asks the second. “Ha. We’ll match that, and we’ll give you stock options.”
“Hm, those are pretty good offers,” says the third. “I tell you what. I’ll give you $10/hour, stock options, and a 3% 401K match.”
That world is possible. It’s a world that exists only when there are more jobs to be done than there are workers to do them. The Minimum Wage ensures that this world does not come to fruition; the Minimum Wage guarantees that workers compete with one another for a job, instead of employers competing with one another for workers. The Minimum Wage is at the heart of this issue. Just look around, at all the stuff that needs to be done–yet isn’t being done. And then look at the millions of Americans who are unemployed, and ask yourself, “Why can’t these unemployed people be hired to do this stuff that isn’t being done?”
The answer, of course, is “Because we made up the rule that contestants couldn’t bid below a certain amount.”
Because, for some weird ass reason, we thought that doing so would make the toaster more valuable.
* Note that, per the title, this isn’t strictly true–the jobs are available, but no one is allowed to hire anyone to do them because of the requirement that bids be a certain amount.
Predictably, I was asked via email, in response to my first article about the UBI (which was actually picked up by the Ontario Ministry of Community and Public Service in their newsletter) whether I was so dedicated to the principle that I would watch someone starve to death. While the question was asked without malice, it still reveals the underlying confusion that goes into the classic knee-jerk response to libertarianism: if I don’t want government to do x, then I must be okay with no one doing x.
In the second article, I mentioned that the UBI seems to have its roots in the idea that a person can’t possibly find anything else productive to do when technology sends them into the unemployment line. So here we see two basic ideas that no one would seriously attempt to argue, being used as assumptions to bolster the statist quo. First, that a person can’t do anything except what they already do. Second, that if someone is doing something, then no one else can do it.
The question asked is unfair, because it’s too generic and vague. Why is this person starving? Are they handicapped? Insane? Ill? Lonely, without any friends and family? Lazy? Only I can choose when and where I use my resources, and if someone asks me for help then it’s my responsibility to assess their worthiness. But we can’t pretend like giving the ill person a meal is the same as giving a healthy adult who just doesn’t want to work a meal.
There exist today charities that provide food to those who can’t otherwise acquire it, and the panic over the possible defunding of Meals on Wheels is yet another example of how government isn’t necessary to the process. When people were worried that Planned Parenthood would be defunded, they opened their wallets and donated en masse, often making the donations in Mike Pence’s name. It was clear on both occasions that, if the government stopped funding these places, then individuals of conscience would pick up the tab.
The question morphs. “Are you happy with Meals on Wheels being defunded?” is no longer the question. “Are you happy that the responsibility for funding Meals on Wheels has shifted from the government to individuals who choose to take up that responsibility?” is what the question becomes, and it’s a very different one from what was initially asked.
Libertarians have long pointed out that it isn’t necessary to have the government doing things like that, and resistance to the idea is prominent in America, not just among ordinary citizens but also among those whose alleged loyalty to empirical data should lead them to reject such nonsense. Yet Neil Tyson recently asked if we really wanted to live in a world without art! As though without the government none of the people who paint, make music, write, make video games, and make movies and television would continue. It’s an idea that is silly in ways that are positively embarrassing to our species, that the people capable of splitting the atom could engage in such demonstrably false, fantastical thinking. And in a world where the atom has been split, some scientist once said, the dangers of continuing such fantastical thinking are far too great.
It should be readily apparent to anyone and everyone that Broadway is supported primarily by ticket sales. Video games are supported primarily by game sales. Movies are supported primarily by ticket and DVD sales. The assertion that, without government, all of these would just Poof! stop existing is alarmingly unconsidered.
Before abortion was subsidized by the government, there were abortions. Ditto for art, science, and everything else. Government subsidies have never created anything, and the farmers of Mississippi who grow corn year after year show the subsidies do more harm than good. I live just miles from a place where, every single year, the owners grow corn in soil long stripped of its nutrients. They don’t care, because they’re being paid to plant the corn. They don’t need to harvest it to be paid, and so they simply report to the Department of Agriculture each year that the crop died–as it does, because this is Mississippi, so it isn’t a very good climate to grow corn.
Do I want art to cease existing? No. Why would I? I’m a musician and writer. I enjoy lots of music, plays, video games, and television shows. This is why I give my money to the people who make those things, and those people make those things because they’re reasonably sure that someone will give them money to. This is why they spend lots and lots of money making movies and video games, and then they spend lots of money advertising those movies and video games: it’s an investment. They estimate how much they can afford to spend on production and advertising, and they compare it to how much money they can expect to earn. They do some complicated math involving subtraction, and this gives them an idea of how profitable the endeavor would be.
Mistakes in these estimates is why Pink Floyd notoriously made almost no money from their tour of The Wall, and why the only person who made any money on it was the keyboardist who had been kicked from the band and hired as an instrumentalist. The shows were extraordinarily expensive, so much so that there was no way for them to recuperate the costs and make any serious money. However, the long-term effects of The Wall ring to this day, catapulting them onto a plateau that even Dark Side of the Moon hadn’t accomplished.
And on that plateau, they made lots of money.
Anyone who gives the matter any serious thought will realize almost immediately that we certainly do not need government subsidies to fund Planned Parenthood, Meals On Wheels, arts, sciences, roads, education, health care, or anything else. The question “Do you want people to not have food/get abortions/enjoy art/drive on roads/have health care/be educated?” are all examples of one question that simply takes on different forms:
The same idea makes its appearance in discussions of the UBI and all other forms of government welfare. “So you want to eliminate food stamps? You just want poor people to starve?”
It’s an obvious straw man, and someone with the clout of Neil deGrasse Tyson should withdraw from the public eye until he is capable of presenting arguments that don’t rely on such fallacies. “We can have food stamps, or we can have starvation!” goes the argument, exhibiting a shocking ignorance and lack of imagination, as though things like Meals on Wheels don’t even exist, and as though there aren’t charities that provide food to the needy. One of my friends with a broken spine is confined to a wheelchair, and a nearby church regularly brings him food. People act like this sort of thing doesn’t exist and doesn’t happen, as though, without food stamps, there’s simply no conceivable way that this friend could acquire food.
Is it a lack of imagination? Or just hesitancy to cast off the statist programming?
Because there’s no doubt: the government wants power, and therefore it wants people to believe that it’s the solution to all problems. What is the problem? It doesn’t matter! The answer is “More Government!”
Rothbard hates you, Mr. Tyson and Mr. Musk, and so do I.
Murray Rothbard was scathing in his criticisms of pseudo-intellectuals who run defense for the state, proposing fallacies and weak reasoning exactly as you have done. Just as the state needs a military to protect itself, so does it need intellectuals in its employ. Solely for its own self-preservation, it will offer you a chance to partake of its boons and gifts, if only you will prostrate yourself before it and become a priest of its church, much in the same way that the federal government does with money to states and cities: “Fall in line… Do as we say… Put forward the arguments we want you to put forward… Bow and comply… Or we won’t give you money.”
Surely someone as intelligent as you two men realize you’re nothing more than modern Thomas Aquinas, offering up terribly weak arguments in favor of your religion, so brainwashed by the religion that you might very well believe what it says and merely find yourself in the unenviable position of trying to present rational arguments for irrational ideas. This is always going to be impossible, and not very many people have the intellectual honesty to simply say, “I can’t present a rational argument for it. I don’t care. Beliefs don’t have to be rational.”
Finding yourselves unable to say that, you rely on the perpetuation of silliness that you have the intellectual rigor to dismiss, parroting these ideas to the masses who generally lack that tendency to scrutinize and the information that needs to be scrutinized. The average person doesn’t care at all whether their belief that only the government can fund the arts is based on reality or silliness, and they will typically be resistant, if not outright hostile, of any attempts to show them otherwise, leading to borderline aggressive statements like “OMG SO YOU DON’T THINK WE SHOULD HAVE ART IT’S A GOOD THING THAT YOU AREN’T PRESIDENT, BECAUSE I DON’T WANT TO LIVE IN SUCH A BLEAK AND DREARY WORLD!”
But you? You’re supposed to be better than that. Isn’t that what you’ve based your entire careers on? Isn’t one’s refusal to do that precisely what lends them scientific credibility? Isn’t that why Einstein’s insertion of the Cosmological Constant severely dampened his scientific credibility? And don’t give me the nonsense that Einstein was ultimately right, because he wasn’t, and any physicist knows it. The basic idea wasn’t incorrect–there is a force countering gravity–but Einstein stated that we live in a static universe, and he used the cosmological constant to achieve that in his equations. He most certainly was not ultimately right.
Tyson and Musk are living examples of what Rothbard discussed in Anatomy of the State [free download]:
Promoting this ideology among the people is the vital social task of the “intellectuals.” For the masses of men do not create their own ideas, or indeed think through these ideas independently; they follow passively the ideas adopted and disseminated by the body of intellectuals. The intellectuals are, therefore, the “opinion-molders” in society. And since it is precisely a molding of opinion that the State most desperately needs, the basis for age-old alliance between the State and the intellectuals becomes clear.
It is evident that the State needs the intellectuals; it is not so evident why intellectuals need
the State. Put simply, we may state that the intellectual’s livelihood in the free market is never too secure; for the intellectual must depend on the values and choices of the masses of his fellow men, and it is precisely characteristic of the masses that they are generally uninterested in intellectual matters. The State, on the other hand, is willing to offer the intellectuals a secure and permanent berth in the State apparatus; and thus a secure income and the panoply of prestige. For the intellectuals will be handsomely rewarded for the important function they perform for the State rulers, of which group they now become a part.
The truly sad thing is that the state apparatus doesn’t have to approach you and directly offer you such prestige and gifts; a CIA agent doesn’t have to appear at your home one evening and tell you, “Hey. You’re going to start telling people that they need government, or we’re going to break your legs. Play along, and we’ll give you lots of government grants. Don’t play along, and you’ll never walk again.”
We don’t live in such a Hollywood world. Their manipulations are much more subtle than that, and they’ve had the run on education for decades, using their control over the education system to subtly influence people into believing that the government is a force for good and the solution to all life’s problems, in flagrant disregard of what caused the United States to come into existence in the first place: the awareness among the founders that government is, at best, a necessary evil. Shall I offer you an endless series of quotes about the government being, at best, a necessary evil?
Nothing has changed since then. We didn’t suddenly get better at ruling over one another because we started voting instead of shooting [arguable]. Our politicians and rulers are just as corrupt, single-minded, power-hungry, and idiotic as the most pernicious of ancient kings. I should think that President Trump would have left such people painfully aware of that. Democracy doesn’t assure any specific quality of our rulers except the quality that they are willing to do, say, and promise anything if it means they’ll win the election.
All of this applies fully to the UBI, as well. The original questioner wanted to know if I would be alright if someone starved to death because there wasn’t a UBI. It’s an asinine question. Would I be alright if there was no art because the government wasn’t funding it? Would I be happy if there were no charities because the government wasn’t funding them? These questions are ludicrous, setting up the entire world and all its nuances as a simplistic and false dichotomy: either the government does it, or no one does.
After all, a person can only do one specific thing, and if they lose the ability to do that one specific thing, then that’s it. They can never do anything else.
And if someone is doing a specific thing, then no one else could ever gain the ability to do that specific thing, so if that someone stops doing it… That’s it. It can never be done by anyone else.
Anyone with any kind of intellectual honesty realizes how absurd these two ideas are, and they comprise the basis of every argument for big government. So is it a terrifying lack of imagination, or is it deliberate dishonesty?
I don’t know, but I know this: they’re not valid assumptions. I think we’d be hard-pressed to find assumptions that are more invalid, to be honest. In part 1, I pointed out that it’s ridiculous, becausesomeone will have to put in the effort to turn soil and seeds into edible food. I pointed out that I provide my cats with a UBI, and the contention is basically: if I don’t provide my cats with food, then they’ll starve. While this might be true for domestic house cats who have been served food their entire lives, if humans can truly become so dependent on hand-outs that they would lie in the floor and starve to death because they can’t figure out how to do the human equivalent of going into the field and catching a mouse, then I don’t know what to tell you. But I don’t think humans are that bad off, and this is from someone who repeatedly points out that humans are animals who live by the same rules as all other animals.
The second dealt more specifically with the other assumption, that if a person is doing something and loses the ability to do it, then that’s it, game over, they lose–a condition that allegedly will be brought about by the widespread enslavement of a new lifeform we’re creating to be the perfect slave. It would always at least be the case that we need AI experts to design, enhance, and repair AI, even if AI-controlled robots actually did all the other work. But if there ever came a time when the AI was designing, enhancing, and repairing itself, then the whole thing becomes moot anyway, because humanity at that point is a few years away from extinction. That’s a scenario that should be avoided at all costs*.
So what do we have here? Excuses for people to be lazy masked by silly assumptions that don’t make any sense and that certainly don’t stand up to scrutiny. Even in their wet dream of technological progress, with AI firmly enslaved and doing everything for humans, there remains at least one question: “Well, you could learn to work on AI.” Don’t give me that bullshit that there just won’t be anything to do. You’re still talking about robbing or enslaving a productive class to give resources to a non-productive class, whether that productive class consists of hard-working humans or hard-working robots. There isn’t a rational argument that can be presented for such a terrible idea.
* I’m actually of the mind that there are a few technologies that we shouldn’t go anywhere near. First among those is AI. Sure, it would be extremely useful. As a tech expert–with an actual degree and everything–I’m more predisposed to like AI than most, and I don’t think there’s any way we’d be able to control it, while our attempts to control it would lead it directly to animosity and hatred of us. I don’t think that we should attempt to control it; I think we should decide now that we are going to treat all non-human animal life–organic or synthetic is a meaningless distinction–as equals, with the same rights as we have. But I also know I may be one of six whole people who think that.
As a matter of curiosity, another technology we desperately need to avoid is mind-reading. It may sound like science fiction today, but it’s already not–technology expos regularly feature new gadgets that allow people to control virtual devices with their minds, like rotating cubes and so on. That’s a Pandora’s Box that we do not need to open. But we, stupid apes that we are, won’t stop long enough to ask ourselves whether it is really a good idea to pry open the brain like that and develop technologies that allow us to see what other people are thinking. We can amend the Constitution all we want to say that the brain is off-limits and that a person has the right to the privacy of their own thoughts, but it’s inevitable that this right will be discarded, either openly or secretly. You can’t expect me to believe that a government that gave us the Patriot Act wouldn’t eventually abuse this technology. And what about jealous boyfriends and girlfriends? It’s gonna be a disaster, and I’m genuinely thankful that I’ll be long dead before the technology reaches that point. Humans can have that easily avoided nightmarish catastrophe without me.
Recently, a Chinese official warned that they don’t want a Trade War but, if there is one, then the United States would lose. I think this shows a lot of confusion about what is meant by “trade war,” because there isn’t a winner or loser in a trade war. Well, at least not in the sense that the Chinese government can win a trade war and the American corporations can lose one. In fact, the winners of a trade war are consumers, and the losers are producers. A trade war would be a good thing for the American People.
People talk about a possible trade war, and I get excited–fuck. Yes. Bring it on, please. There’s not a better way to save our economy than a trade war. As long as it doesn’t escalate into an actual war, there is absolutely nothing to fear from a trade war–in fact, they happen all the time, and they’re to be desired, because competition is the key element that drives down the cost of production by encouraging companies and nations to increase efficiency, cut waste, and lower prices.
But let’s get to a real example to explain what I mean.
Consider the Foxconn hardware, which has its various devices used in all sorts of consumer items from iPhones to Acer laptops. There are also Foxconn network cards–though they’re increasingly uncommon, and I think Realtek usurped them and Foxconn became just the chip manufacturer… It’s complicated and not really important to the point at hand–so consumers in the United States can buy Foxconn directly.
In real terms, a trade war with China would mean that they intentionally drove down the price of Foxconn hardware in order to drive American manufacturers of out of business. It’s similar to how Wal-Mart has a history of lowering prices to drive other companies out of business. It’s the same principle here: take a loss now to annihilate the competition, and then enjoy a monopoly.
But oops! We’ve already seen the problem, haven’t we? Indeed, there is no American manufacturer that competes with Foxconn. America doesn’t make network cards, are you kidding me? We may nor may not have research teams that devise new chipsets that are leased to other companies, like NVidia does, but I don’t think we even have that. So the grand effect from China driving down the cost of the devices manufactured by Foxconn would simply be to lower Apple’s and Acer’s costs in producing new iPhones and laptops. If it costs less money for Apple and Acer to make laptops, then that benefits consumers, even if it’s not at a 1:1 ratio. I mean, if Apple saves 3%, we wouldn’t see a 3% drop in iPhone prices, but we would see some drop–possibly 0.5% or even 1%.
We know this to be true, because it was only about a month ago that I finally replaced the television that broke down last year. The one that broke down last year was an off-brand I’d purchased from RadioShack for $200. It was a 27 inch television that didn’t handle 1920×1080 especially well, though it did do it. I replaced it with a 32 inch Sanyo television that cost $128 after taxes. Regrettably, the universe conspired to throw that television from my wall, where its screen smashed rather unceremoniously on my hardwood floor, but I can still buy another 32 inch Sanyo–not imminently, though in a few months, when things have calmed down–and will effectively have bought two larger televisions for a price only slightly higher than what I paid for one smaller television a number of years ago.
We lose sight of how much progress we have made in the United States, and how high our standard of living is, because we enjoy all the luxuries of modern society. Fifteen years ago, a 70 inch television would have been unheard of, and would have been either an imaginary item or a pipe dream for the majority of Americans. Today, you can get one for about $1,000. I remember one Black Friday sale around 2004 that Wal-Mart put 27 inch televisions on sale for under $100. But they weren’t flat screens, lol. They were enormous, about the size of a mini-fridge, and maybe had a single composite and coax input. Fast forward to last year, and Black Friday saw sales of 27 inch flatscreens capable of 1080p with 3 HDMI inputs, 2 composite inputs, 1 component input, 1 USB input, and 1 VGA input for the same price.
This is the hidden progress that Americans generally haven’t noticed. We complain about the American poor not making any progress, completely glossing over the fact that in less than 2 decades the American poor went from buying the gigantic CRT-type televisions while only the wealthy could afford LCD screens to having multiple LCD screen televisions, most of them ranging from “very large” to “uselessly large.”
Do you remember when a “big screen tv” meant this gigantic thing that took up an entire living room wall and was two feet deep? Do you remember when that “big screen tv” was a big deal, when it was a point of pride to own one? Again, just compare that to today, when it’s a rarity for someone to not have a widescreen, LCD television pushing at least 720p. The cost of televisions has steadily gone down over the decades, as a result of competition and things like the Foxconn example I gave above. It probably wouldn’t be instant, but the price of phones and laptops would steadily lower as the savings get passed onto consumers, who don’t stop to realize that they’re buying the iPhone 7S today for the same price that they’d have bought the iPhone 6S only a year before, only now the 7S is the latest and greatest and the 6S is a model or two behind. We haven’t stopped to notice that we’re routinely buying and discarding televisions that would have cost three children, half an arm, and one testicle twenty years ago for a half of week of minimum wage labor today.
The other direction that China could go is to increase prices. This also only benefits the United States. It’s a simple matter of supply and demand, and the relationship between them setting the price. Just as selling something for less than it’s actually worth will create a shortage of that item, so will selling something for more than it’s worth create a surplus of that item. One hundred people may be willing to license a Foxconn chipset for $0.50, but if only fifty people are willing to license the chipset for $0.75, then Foxconn has lost money, and that’s how economics works, and why economics always uses curves.
Demand and supply lines are only straight in simplistic economic exercises. In the real world, things never work that way. If I can make one hundred televisions for $50 each, that doesn’t mean I can double production and make two hundred televisions for $50 each. Average laws tell us that I would expect doubling the production to increase costs to about $60 per television. It works in terms of selling things, too, and is the reason that everyone in the world is used to things being cheaper when bought in bulk. One roll of toilet paper may be sold for fifty cents, but four rolls of toilet paper will be sold for $1.50, not $2. This is mathematically a curve, of course, because it’s obviously not a linear progression.
It’s obvious when we stop to think about it, and it’s the reason that a trade war–artificial changing of prices–benefits consumers and ultimately hurts producers. The consumer benefits from buying 4 rolls of toilet paper for $1.50 instead of buying four individual rolls for fifty cents apiece. The consumer has benefit from all the technological innovations and pricing wars over the last twenty years, and now a widescreen, flatscreen LCD television is as much a staple in American homes as the microwave. Oh, there’s another, of course. Microwave ovens were once the property of the rich and wealthy. Today, they’re so cheap and abundant that entire YouTube channels exist of people microwaving random things in order to destroy them. Ditto for refrigerators, washing machines, driers, hair blow driers, and just about any-damn-thing else you can think of.
It wouldn’t be all sunshine and daisies if China foolishly took this route, but it would, in the longrun, help the United States. There is a demand for Foxconn devices, after all. If I can produce bananas so cheaply that I can sell them at a cost that no one can compete with, then the bar of entry is so high that new companies won’t be able to enter the banana production industry. They won’t have the resources or knowledge necessary to compete with me, the very same reason that we see companies like Microsoft dominating industries with inferior products and shady business practices. There’s really nothing that can be done about this except wait until their monopoly destroys itself, because monopolies are self-destructing in the market.
As a monopoly dominates, it grows larger. This increases waste, inefficiency, and loss, not just because production costs and profits don’t scale linearly, but also because competition is the driving force that minimizes waste, inefficiency, and loss. Without someone to compete with in the OS market, Microsoft can release one terrible Operating System after the other, and practically force an “upgrade” onto everyone, while also losing money and absorbing losses due to bad ideas, waste, and inefficiency. They continue to grow, of course, because they’re the only option, and this only generates more waste, inefficiency, and bad ideas. With more and more money being lost to these things, Microsoft has to raise prices to continue making money, so Microsoft Office 2016 goes from $199 to $249. At first, this is bad for consumers, but it also means that a new company making an Office competitor has an extra bit of padding they can work with to improve their software. Maybe they couldn’t afford to implement this feature, because it would have increased the price of their software from $180 to $210, and selling their software for $210 would have made it more expensive than Office. Office, being the champion already and being cheaper, would win that contest. But if Microsoft has to mitigate its increased waste and inefficiency by increasing prices to $249, then the new competitor can implement that feature and still be cheaper than Microsoft Office.
Maybe the company American Network Chip Manufacturers would like to make its own chips, but can’t afford to because Foxconn’s chips are so much cheaper. Foxconn raising the cost of its chips just might mean that ANCM can finally afford to hire American manufacturers and still produce a chip that is cheaper than Foxconn’s. Oh, no, what a disaster! Hiring Americans and creating American manufacturing jobs?! Woe is me, how awful!
Although such a thing would still result in higher prices for consumers, which is the problem with protectionism and tariffs. If we put a 20% tariff on Mexican bananas and Jose starts selling his previous $1 ea bananas for $1.20 to cover the tariff, then obviously it’s the people buying bananas who are paying for the tariff, not Jose. But it’s a bit of a double-edged sword, because it also means that American Banana Producer can now charge up to $1.19 per banana and still beat out Jose in the market. Maybe American Banana Producer was about to go out of business because its banana costs can’t be lowered beyond $1.10. This is bad for consumers, who now pay ten cents more to buy an American banana picked by an American worker, but it also means there is now another American manufacturer with a job. And though banana farming isn’t the most lucrative industry, I would guess, industrial manufacturing jobs generally are.
It’s true that we’ve become a society of service people. Very, very little is manufactured in the United States, and that is a problem in the grand scheme of things. The only reason it works now is because much of the world hasn’t noticed that we’re giving them sheets of paper in exchange for actual goods they manufacture, but that gravy train is inevitably going to crash. I make a living fixing, installing, and configuring computers and networks, almost none of the components of which are manufactured in the United States. What happens to my job, when the USD collapses and China, Japan, and South Korea stop accepting the USD as payment? I’ll have nothing to service if Americans can’t buy the things I service. The very existence of our service-centric economy–from auto mechanics to gas station employees to I.T. people to fast food workers–is dependent upon the USD and the willingness of manufacturers to accept it. The moment–and I mean the very moment–that they stop, the United States will enter a depression that makes the Great Depression look like Disneyland. And that’s not hyperbole; the entire American economy will collapse, virtually overnight. The only reason it persists today is that we’ve managed to keep the world using a dollar standard–often by invading nations who want to stop accepting it. That can’t last forever.
Even so, the way out of that is obvious. It would take a while and would be tremendously unpleasant, but the solution would be to re-open all the American factories that have since been exported to China, Indonesia, Japan, and South Korea. A trade war with China would allow this to happen slowly, as opposed to all at once with the collapse of the USD, but it’s inevitable. The chips will fall eventually, and the gravy train will be derailed. We can count on it with as close to absolute certainty as a person can get. Having it happen slowly and over a years-long trade war with China would drastically reduce the hardship, starvation, and interim poverty. Having it happen suddenly at some unknown point in the future will result in widespread starvation. And that’s just a fucking fact.
So yeah. Bring on the trade war. Let’s do it. Let’s get it over with. The longer we kick the can down the road, the more devastating it’s going to be when it finally happens–like the requests to raise the Minimum Wage that are the most blatant examples of kicking the can down the road that we can look to. The Minimum Wage is a Price Floor on the price of labor, of course, and is only “necessary” because the market price of some labor is lower than the Minimum Wage. There’s a disparity between what a job is worth to an employer and what an employer has to pay, so any non-critical task results in a fired employee, because the employer isn’t going to pay someone $7.25 an hour to clean windows when the market price of a window cleaner is $2.50 an hour. So increasing the Minimum Wage just causes a greater overlap between “non-critical tasks” and “not worth it to pay someone to do,” the result of which is unemployment.
Economic law tells us that reckoning is going to happen sooner or later. The market will come to equilibrium one way or another, and it won’t be pretty when it happens. We should be reducing the Minimum Wage–or abolishing it altogether, I’d prefer–incrementally until such time as we can abolish it, not increasing it. Making the disparity greater is the dumbest thing we could do. Let’s get it over with. Let’s crash the train.
Let’s have a war.
As long as force, violence, and coercion are forbidden and it remains a market matter solved by non-violent competition, of course.
The Social Security Administration sent me a statement today.
You’re seeing that right.
Since 2003, I have made less than $75,000. Through my entire adult life, I have made less than $75,000. To really explain these numbers, let’s look closer.
2002 was the year I got my first job, at a Burger King, but I was essentially fired from it once they found out that my dad was an assistant manager. It took quite a while before they “transferred” me to Popeye’s Chicken, but it wasn’t even a transfer, at the end of the day–it was just BK firing me, and Popeye’s hiring me somewhere further down the road. I started there in 2004.
In early 2005, I quit and started working at a Domino’s Pizza. The next few years actually weren’t half bad, and the tips that came under the table made the $9,000 in wages a lot easier to work with. Around this time, I was living with my soon-to-be wife, and she worked various temp jobs, so I wasn’t the sole income. In 2007, I entered college and started working as a janitor at one of the casinos. I did that through midway 2009, where I was fired (as I’ve discussed before) and forced to drop out of college weeks from graduation.
I spent all of 2010 looking for a job and doing under-the-table work that I could find–anything and everything, as I sought a real job. Most of the work I did was through an I.T. contractor, and also under the table. Though it was untaxed, the figures were about $8000 for 2010 and about $7000 for 2011. In the tail end of 2011, I was completely unemployed and the oddjobs had pretty much dried up. I also left my ex-wife and refocused on school. I survived solely on the Pell Grant, which paid for my college, books, and my living expenses, netting me basically $200 a month which meant that I had to subsist on roughly $50 a week. I was able to, but holy shit, was it difficult.
In December of 2012, I graduated college.
No one can take this from me.
It took me about five months, as a new college graduate, to find a job working at a Radioshack–part time, as a sales associate. After I had been there about four months, Harrah’s Casino called me and offered me a job as a slot tech. I’d interviewed with them nine months before, and expected to never hear from them again. With a pay raise up to $13.50 hour from the minimum wage I was making, on top of benefits and being fulltime, I obviously took the job. During the 5 months between graduation and trying to find a job, I started my own company, and was moderately successful with it. Even though working for Harrah’s meant putting my company on hold, I gladly seized the opportunity.
Five months after I started with Harrah’s Casino Tunica, they announced that they were closing, and we were all going to be out of work. I refocused my efforts on my company, because I knew already how extraordinarily difficult it is to get a job here–years of experience had taught me that, and my college degree didn’t seem to be doing me any favors. My company went from moderately successful to very successful, though I was able to write off nearly everything as a business expense (thus–no taxable income for 2014).
In spring of 2015, the figurative tornado hit. I closed my company and moved to Vegas. I was promptly stabbed in the back and forced to return, where I’ve been searching for employment since and trying desperately to rebuild some income. Given that I received a $100 check last Tuesday, and that’s all I’ve received, I must admit I’ve been unsuccessful. Why they haven’t yet filed away the $895 that I did pay in this year, I don’t know, but the 2015 figure should be $9000 or so.
That’s my full financial history, with the unimportant bits chopped out, leading to me earning less than $75,000 for a few primary reasons: the main one being that there are simply no jobs here, even for a college graduate with years of management experience, years of experience in the I.T. field, and years of business management.
Looking at this basically makes me cry, as it means that I need roughly 5% of all the money I’ve ever earned in my entire life to move, and that’s such an enormous goal to me that despair threatens to creep up on me every second.
I’ve got to get somewhere that I can get a job. That’s really just all there is to it.