This week’s Vintage is chapter four of “Our Enemy, the State” by Albert J. Nock: Economic Means vs. Political Means. Read the full piece here: http://at.fee.org/18pJKdx
FEE’s on tumblr? Nice!
Can you relate to this? Which are you most days - the user or the programmer?
The only relevant issue in the debate about a government mandated minimum wage is: Does it reduce employment opportunities? The debate is not whether some workers will be better off after legal minimums are increased; some workers will. The debate is not whether “consumption” may increase when some workers are paid higher wages; it may, although unemployed workers will consume less. And the debate is not whether “rich” employers can afford to pay higher wages; some surely can, but whether they should be forced to do so by law is another matter entirely.
Defenders of the minimum wage law make two broad claims. The first is that raising the minimum wage does not increase unemployment among the young and poorly skilled, the only relevant labor pool; and two, that there are empirical studies that support the conclusion that higher minimums don’t hurt employment.
Common sense, logic, and the law of demand easily refute the first contention. Raising the price of anything, while holding other variables constant, always reduces consumption somewhat. With income fixed and substitutes available, private employers use marginally fewer workers when their wages are increased by law. Simply exaggerating the wage increase will make the point obvious: If we double the minimum wage and leave productivity unchanged, is there anyone on the planet who believes that employment would not dramatically decline? Well by the same logic, a marginal increase in the minimum wage, say from $8 to $10 as California has just legislated, will have a marginally negative effect on young and low-skilled employment. Case closed. …
In short, the preponderance of the evidence over the last 75 years is that low-skilled jobs (mostly held by the less-educated and less-skilled young and minorities) are extinguished by government wage fixing. Absent the repeal of minimum wage laws–which is totally justified by theory and the bulk of the economic evidence–the best that we can do is urge the Congress and the states to allow employers and young workers to freely negotiate wage rates or, alternatively, to set far lower legal minimums for younger and part-time workers.
Everyone at some point needs an entry-level job and a chance to climb an employment ladder to higher pay. There is no moral or economic reason why government should discriminate against such jobs or eliminate the first few steps of that ladder.
The 3D printing revolution shows no signs of letting up, and now has made its way on to the next dimension. The U.S. Army Research Office has awarded $855,000 to three universities to make advances in 4D printing, which is the ability to 3D-print objects that can change their shape or appearance over time (the fourth dimension), or in response to some condition. “Rather than construct a static material or one that simply changes its shape, we’re proposing the development of adaptive, biomimetic composites that re-program their shape, properties or functionality on demand, based upon external stimuli,” said Anna Balazs, a researcher at Harvard, in a statement. The U.S. Army awarded additional 4D-printing grants to scientists at the University of Pittsburgh and the University of Illinois.
Finally, drones being put to good use.
This is simply brilliant. Just think of the ingenuity involved here, all to please consumers without putting taxpayers on the hook for “research.”
And what does Jeff Bezos, Amazon CEO, note as the “hardest challenge”? FAA approval. He creates a network of flying robots that use GPS coordinates to deliver myriad products created and assembled around the world to a consumer’s doorstep within 30 minutes, and the most difficult obstacle to this enterprise is getting approval from government.
Chew on that for a bit.
Edit: To address some concerns, I’d like to note that drones in and of themselves are not some force for evil. They are merely a tool. There is no cognitive dissonance with my being impressed by their use here.
In addition to the fact that - when used by the state - their actual purchase/creation is funded by taxes, I object to government utilization of drones because of how they are used. Spying and the bombing of innocents are unacceptable actions no matter what technology is used.
On the other hand: if I want a package delivered quickly, what difference does it make to me - except concerns for speed and price - if it is driven to me by a man in a truck or dropped off by a flying robot? Opposition to industrialization and the advancement of technology is only opposition to greater human efficiency and human progress.
The drone - like the wheel and the cotton gin and the automobile and the gun - is here. It - like the wheel and the cotton gin and the automobile and the gun - may be put to good use or bad. I will of course denounce whenever such technology is used for bad (whether by the state or otherwise). And I applaud when it is used for good.
It’s a commonly held workplace belief that employees who succeed in their current roles should be rewarded with the chance to manage other employees. But big data reveals that what might be prized qualities for an employee are not necessarily traits that drive managerial success.
Managers are the single most important influence on how long an employee stays at her job by a factor of six, which means that effective managers are essential to a healthy and engaged company culture. Attrition and engagement are material concerns for most businesses—employees who are unengaged cost the economy $350 billion yearly, according to a Gallup poll and “corporate directors identified talent management as their single greatest strategic challenge,” according to Harvard Business Review study.
New data from Evolv reveals which leadership characteristics actually drive performance in an organization. The conclusions go against conventional, intuition-based business school wisdom from academics like Peter Drucker, Michael Porter and Dale Carnegie, perhaps because these luminaries didn’t have to deal with the challenges of today’s globalized and technical workforce.
The Federal Reserve was created in 1913, and during its first 73 years it grew its balance sheet in turtle-like fashion at a few billion dollars a year, reaching $250 billion by 1987—-at which time Alan Greenspan, the lapsed gold bug disciple of Ayn Rand, took over the Fed and chanced to discover the printing press in the basement of the Eccles Building.
Alas, the Fed’s balance sheet is now nearly $4 trillion, meaning that it exploded by sixteen hundred percent in the last 25 years, and is currently emitting $4 billion of make-believe money each and every business day.
So we can summarize the last quarter century thus: What has been growing is the wealth of the rich, the remit of the state, the girth of Wall Street, the debt burden of the people, the prosperity of the beltway and the sway of the three great branches of government which are domiciled there—-that is, the warfare state, the welfare state and the central bank.
What is flailing, by contrast, is the vast expanse of the Main Street economy where the great majority has experienced stagnant living standards, rising job insecurity, failure to accumulate any material savings, rapidly approaching old age and the certainty of a Hobbesian future where, inexorably, taxes will rise and social benefits will be cut.
And what is positively falling is the lower ranks of society whose prospects for jobs, income and a decent living standard have been steadily darkening.
I call this condition “Sundown in America”. It marks the arrival of a dystopic “new normal” where historic notions of perpetual progress and robust economic growth no longer pertain. Even more crucially, these baleful realities are being dangerously obfuscated by the ideological nostrums of both Left and Right.
Contrary to their respective talking points, what needs fixing is not the remnants of our private capitalist economy —-which both parties propose to artificially goose, stimulate, incentivize and otherwise levitate by means of one or another beltway originated policy interventions.
Instead, what is failing is the American state itself——a floundering leviathan which has been given one assignment after another over the past eight decades to manage the business cycle, even out the regions, roll out a giant social insurance blanket, end poverty, save the cities, house the nation, flood higher education with hundreds of billions, massively subsidize medical care, prop-up old industries like wheat and the merchant marine, foster new ones like wind turbines and electric cars, and most especially, police the world and bring the blessings of Coca Cola, the ballot box and satellite TV to the backward peoples of the earth.
In the fullness of time, therefore, the Federal government has become corpulent and distended—-a Savior State which can no longer save the economy and society because it has fallen victim to its own inherent short-comings and inefficacies. …
What is really happening is that Washington’s machinery of national governance is literally melting-down. It is the victim of 80 years of Keynesian error—-much of it nurtured in the environs of Harvard Yard—— about the nature of the business cycle and the capacity of the state—-especially its central banking branch—- to ameliorate the alleged imperfections of free market capitalism.
As to the proof, we need look no further than last week’s unaccountable decision by the Fed to keep Wall Street on its monetary heroin addiction by continuing to purchase $85 billion per month of government and GSE debt.
Never mind that the first $2.5 trillion of QE has done virtually nothing for jobs and the Main Street economy or that we are now in month number 51 of the current economic recovery—- a milestone that approximates the average total duration of all ten business cycle expansions since 1950. So why does the Fed have the stimulus accelerator pressed to the floor board when the business cycle is already so long in the tooth——and when it is evident that the problem is structural, not cyclical? …
The answer is capture by its clients,that is, it is doing the bidding of Wall Street and the vast machinery of hedge funds and speculation that have built-up during decades of cheap money and financial market coddling by the Greenspan and Bernanke regimes. The truth is that the monetary politburo of 12 men and women holed up in the Eccles Building is terrified that Wall Street will have a hissy fit if it tapers its daily injections of dope.
So we now have the spectacle of the state’s central banking branch blindly adhering to a policy that has but one principal effect: namely, the massive and continuous transfer of income and wealth from the middle and lower ranks of American society to the 1 percent.
The great hedge fund industry founder and legendary trader who broke the Bank of England in 1992, Stanley Druckenmiller, summed-up the case succinctly after Bernanke’s abject capitulation last week. “I love this stuff”, he said, “…. (It’s) fantastic for every rich person. It’s the biggest redistribution of wealth from the poor and middles classes to the rich ever”. …
If this sounds like the next best thing to legalized bank robbery, it is. And dubious economics is only the half of it.
… [T]he other side of the virtually free money being manufactured by the Fed on behalf of speculators is massive thievery from savers. Tens of millions of the latter are earning infinitesimal returns on upwards of $8 trillion of bank deposits not because the free market in the supply and demand for saving produces bank account yields of 0.4 percent, but because price controllers at the Fed have decreed it.
For all intents and purposes, in fact, the Fed is conducting a massive fiscal transfer from the have nots to the haves without so much as a House vote or even a Senate filibuster. The scale of the transfer—-upwards of $300 billion per year——causes most other Capitol Hill pursuits to pale into insignificance, and, in any event, would be shouted down in a hail of thunderous outrage were it ever to actually be put to the people’s representatives for a vote.
Read the whole thing; it’s well worth your time.
Social Creationism and the Secular Deity that is the State
[M]any people simply cannot conceive of social order that isn’t consciously designed and enforced by some secular creator (that is, by the state). Most people are secular theists regarding social order. Order must, for secular theists, be the result of a some higher power that designs, intends, imposes, and guides willfully the order that we see about us. Without a higher secular power designing and keeping control of things, chaos or near-chaos would necessarily reign.
Get rid of this secular deity – or suffer it to fall under the influence of secular devils (for American “Progressives,” those devils today are tea-partiers) – and society must deteriorate. Rules of the road would wither away, or certainly not be enforced; roads themselves would never be built; the electromagnetic spectrum would become a commons tragically overused (and, hence, rendered useless) by countless broadcasters scrambling for airtime; and automobiles – were they to exist at all – would be horrible death traps.
The great insight of the social sciences – which too few social scientists themselves get – is that society, to the extent that it is complex and functional, is necessarily the result of human action but not of human design. …
Sadly, most people are apparently just incapable of understanding that almost all social order emerges undesigned and unplanned. Most people are and seemingly will remain naive secular creationists, ignorant that the forces of natural selection and evolution are constantly at play in society, and that these force are usually only thwarted or distorted by attempts to engineer society from on high. And (here’s an irony) this sad ignorance of the nature of society afflicts even – perhaps especially– those people who have no difficulty understanding that very complex, beautiful, and highly functional non-social orders (such as biological order and the order of the cosmos) emerge unplanned and undesigned.
The vision on which the all-encompassing and all-controlling welfare state was built is a vision of widespread helplessness, requiring ever more expanding big government. …
The last thing the political left needs, or can even afford, are self-reliant individuals. If such people became the norm, that would destroy not only the agenda and the careers of those on the left, but even their flattering image of themselves as saviors of the less fortunate. …
The very word “achievement” has been replaced by the word “privilege” in many writings of our times. Individuals or groups that have achieved more than others are called “privileged” individuals or groups, who are to be resented rather than emulated.
The wise in heart will be called understanding,
And sweetness of speech increases persuasiveness. (16:21)
Fools find no pleasure in understanding
but delight in airing their own opinions. (18:2)
A person’s wisdom yields patience;
it is to one’s glory to overlook an offense. (19:11)