Category Archives: Economics

Globalization China Style One Belt One Road

Posted on by

one belt one roadThere is a lot of strong sentiment about Globalization in the United States and other parts of the western world. The United States and some other European countries are moving away from it but China is moving forward with something called One Belt One Road (OBOR). This creates an interesting situation.

I’m not going to try and convince you of the virtues of such initiatives. That’s your decision and nothing I say will likely change your opinion. What I will talk about is the result of China moving forward while the United States retreats, that’s something it would be wise to understand.

Globalization is largely about economic development through trade. When raw materials are developed in one location, moved to a second location to be processed, shipped to a third location to be assembled, and finally transferred to a market; it becomes cheaper to produce said products. This is undeniable. Any single nation doesn’t have the ability to do all those things as cheaply or efficiently as a group of nations.
In the last decades, China has initiated massive projects around the globe and particular in Asia, designed to speed this process. A massive port in Genoa, highways to connect the biggest markets in Asia, railways in Nairobi, even canals in Nicaragua. The plans are enormous and there is some doubt they can be achieved, but it is a bold move. If Asia, parts of Europe, Africa, and South America succeed with these projects it means enormous employment and wealth. And China is leading the way.

There is, of course, the potential some or all of these projects will fail in their goals.

The populations of United States and some of western Europe are clearly in an Anti-Globalization mood. They’ve elected leaders who advocate an Us First policy. The leaders of United States are moving forward with plans to disentangle our nation from such projects.
Again, I don’t want to tell you what China is planning and implementing is good or bad. I just want people who advocate Us First to be aware that it creates a void. Where there is a void, something will fill it. In this case, it is China.

These projects are going forward. China has a huge number of highly educated college graduates and these are the people who will be developing, innovating, and leading these projects. When the young people of other nations start working on these projects, they will be working for Chinese supervisors. They will take trips to Beijing to discuss the plans. China will become the center of commerce in the world.
Again, this might be a bad thing. All the projects could go badly and China might go bankrupt. Those who advocate an Us First policy might end up laughing all the way to the bank.

On the other hand, the projects might create enormous wealth for the countries and the people who take part. The European, African, and Asian nations that participate in these projects might reap rewards in the trillions of dollars. The people of these nations might see reduced cost of goods and all the benefits that come with it.

The United States once led the world in projects like this. We, through our votes, expressed the idea that we don’t want to do so anymore. That’s fine. That’s what living in a Representative Republic is all about. We the People get to, through our proxies, decide.

Just be aware of the potential ramifications of what you are deciding, and the possibilities for good and ill.

Tom Liberman

It is National Fill in the Blank Day and that is Good

Posted on by

national holidayThis month is apparently National Hamburger Month. At least that’s what Facebook tells me. Or more accurately, one of my friends on Facebook.

These things are often called Hallmark Holidays because they encourage people to purchase greeting cards. Hallmark denies responsibility for this phenomenon, but it cannot be denied it exists. The commercialization of various products is largely the reason such days litter our social media walls. Every industry worth their salt … hey, is there a National Salt Day? Let’s find out! Off to the internet.

Now, I want you to know this was a complete coincidence. I’m writing this post on May 12, 2017 and I just found out National Salt Day is May 17! That is hilarious. There is also National Salt Awareness week in late February and early March but that is actually a holiday trying to keep us from buying something. So, it doesn’t count.

Is there any end in sight? A simple answer, no. As long as there is profit to be made, we’ll have more and more of these consumer holidays. And, to be honest, it’s not a bad thing. If a company wants to promote their product and they find a good way to do it, why shouldn’t they? No one is forced to purchase Salt on National Salt day. You don’t have to buy a Mother’s Day card, flowers, or candy. Consumerism is a wonderful thing because it is largely voluntary. We buy things we want.

It is only when capitalism is constrained that we should start to be worried. When one company is not allowed to sell their product because it competes with another favored by the leaders of a country, then there is a problem.

We buy the things we want because they are priced attractively. This is the very nature of consumerism. We too often blame the corporate world for causing us to eat too much, go too far into debt, or something else related to capitalism. I won’t deny these things exist. We have an unhealthy population in the United States because of abundantly available food of a type we like. People go into debt because they want things, this overwhelms their financial good sense.

If I happened to want a nice hamburger, I might use the excuse that this is National Hamburger Week to purchase one. I’d be interested in seeing the metrics involved with many of these new holidays. Certainly, we see an enormous uptick in sales of flowers around Mother’s Day and ties around Father’s Day. If not, we wouldn’t see all these new holidays appearing on our calendar.

Naturally they are somewhat self-defeating in that as we see more and more of these holidays appear, we become inured to them. That’s perfectly normal as well and eventually someone will find a new way to market their product.

Here is an interesting theoretical question. If the government banned such days, would it reduce consumption of that particular item? I think the answer is yes, but no one is calling for such bans. Mother’s Day is a huge boon for the flower industry but we don’t see consumer protection groups advocating the end of the holiday to prevent people from spending their money.

On the other hand, we do see all kinds of groups promoting the outlawing of particular items, be they drugs or simply large soda containers. The thrust of these laws is that we don’t know what is good for ourselves. That we lack the impulse control to stop self-destructive purchases. This is true. We do lack such control, but solutions based on legal remedies are doomed to fail.

We must teach people impulse control. We must educate them on financial realities. These are the methods by which we improve the lives of citizens, by helping them improve themselves.

It’s just not the role of government to protect us from ourselves, or made up national holidays.

Tom Liberman

Sears was too Big to Fail but It Did

Posted on by

SearsI’d guess the majority of people under my age, fifty-two, don’t remember how dominate Sears, Roebuck and Company was in the retail industry. Sears was enormous. Too Big to Fail according to a metric that seems to be prevalent in this political era. Sears has pretty much failed and it hasn’t affected the economy or jobs in a significant way. There’s a lesson to be learned in that.

First let’s take a look at how dominant was Sears prior to the Wal-Mart and Internet era. At the turn of the century, that’s nineteenth century youngsters, people purchased things from their local general store. The selection was limited and the price was exorbitant. Then came the Sears Catalog. It changed everything in the same way as did Amazon and online shopping. People no longer had to rely on their local store. People simply sent an order form in and, within a few weeks, they had their item. It was revolutionary. It was the beginning of the end for small stores across what was then the largely rural United States.

Sears grew from that initial catalog until they were the dominant retail sales company in the country. There were, and remain, Sears stores in every city. The Sears Tower was for a time the largest building in the world. They employed huge numbers of people and their sales methods allowed others all over the country to purchase the goods they wanted at an affordable price.

I feel confident suggesting that if someone back in 1980 told Congress Sears was going to fail, there would have been panic. The thought of all those lost jobs and the fact that so many wouldn’t be able to purchase cheap goods would have caused an immediate effect. We would have seen a rush of public committee meetings, speeches about how vital was Sears to the economy, and a plethora of grim looking politicians pledging to save us from this impending disaster.

Happily, no one knew. Wal-Mart came along. The Internet came along. Sears pursued a bad business model and now they stand on the brink of insolvency. They are closing stores all over the country but, and this is important, politicians don’t care. It’s the natural course of business in their eyes and, for once, they are right.

Businesses fail. When executives make poor decisions, when the nature of the market changes, when circumstances and luck go against it, a business fails. The vital factor is that it failed for reasons. Another business model can succeed and provide profit, and people who pursue a good strategy will fill the void.

If the car manufacturers had been allowed to fail someone else would have stepped up to take their place. If the financial institutions that badly managed their affairs had been allowed to fail, others would have ably stepped up to replace them. For every job lost to the failing company, another one would have been created, if not two.

There is no such thing as too big to fail. What exists is too much vested interest in politics. The businesses that were going to fail had the Democratic and Republican Nation parties in their pockets. It was in the interest of the two major political parties to save those companies. The politicians and their parties don’t want the gravy train to stop.

The lesson to be learned is that there is no too big to fail. Failure is as much a part of capitalism as is success. Where one business fails, for whatever reason, another arises with a better model. Where one job goes away, two more appear.

Does it hurt for those who lose their job? Is it painful for the executives who have failed? Yes.

That’s capitalism.

Tom Liberman

The Decline of Golf

Posted on by

decline of golfThe year was 2006 and Tiger Woods won The Open Championship, the PGA Championship, and six other events. The game of golf had 30 million regular players. Courses both public and private were being opened and designed all over the country. The world was bullish on golf and apparently rightly so.

Since then the total number of players has dropped by more than five million despite the population rising. More golf courses are closing than opening and only a small number of highly exclusive courses are even in the planning stages anymore.

What happened? It’s a complex question and there are many factors involved; including lack of star power, economics, and the time and difficulty required to play. What I’d like to focus on is the nature of economics. If golf was banking or car manufacturing there would be panic in Washington D.C. and in statehouses across the country. How can we save golf? It employs so many people. It provides an entertainment outlet for many more. We can’t let it fail.

A once thriving industry is struggling badly. People just don’t want to play anymore, for whatever reason. That’s the nature of economics and capitalism. The fact courses are closing all over and the government isn’t intervening is exactly how it should work. If a golf course cannot generate enough revenue to stay open, it should close. This means economic hardship for the employees. It means I have fewer options when I want to play a round.

What will be the result? The golf industry is coming up with innovate ways to solve the problem. There is talk of six hole courses. Courses with bigger holes to make playing a round easier. There are many ideas being discussed and implemented. Perhaps some of them will work and a new generation of golfers will once again fill courses, or perhaps it will go the way of the horse and buggy. I don’t know. I can’t know. No one knows. That’s the nature of this world.

What government often tries to do is alleviate this uncertainty. It is not merely economics. It is lives. When the golf industry falters, any number of people are affected in a negative way. Government tries to assure people it will be fine. They will prop up the golf industry so no one loses their job. So there is always a place to play. It’s a reassuring thought. Gosh, it’ll be great. We’ll never have to worry about the course closing. I’ll always have a job and be able to pay for the food on my children’s table. Thanks, government.

The problem is that it doesn’t work. When the government attempts to prop up a failing business or industry they are merely delaying the inevitable. When a business fails through natural capitalistic forces, it does so in a way that allows for it to be replaced. If people are not playing golf, they are doing something else. In this other thing there are jobs, there is security.

I think it’s important to consider where we would be today if the government hadn’t intervened in the Global Financial Crisis of 2015. Many of the car dealerships and the ancillary suppliers would have had a hard time, but now we’d have vigorous young companies established in their place. The industry would have been reborn, people need cars, that is not going away. Perhaps in the innovative storm that followed the demise of the industry we’d have fully automatic cars by now.

It is clear to me if those banks that made foolish loans had simply been allowed to go bankrupt, others would have risen in their place. And the new ones would probably not have charged me nearly as much to simply withdraw my money from my own accounts.

It is important to remember one vital fact. While failure is a disaster for one person, it is opportunity for a dozen more. It eliminates the bad and allows for new ideas to enter the market. These new companies are agile, vigorous, and provide a service wanted by the people. This is why capitalism, largely unfettered, is such a good thing for all of us.

The decline of golf is an important lesson in economics.

Tom Liberman

Trump and the Constitutional Crisis of Marijuana

Posted on by

marijuanaTrump dropped the big one. No, not Health Care. Medical Marijuana. I’ve been speaking with friends about this issue since before the election and I’m of the opinion it has the greatest potential to destroy the United States. My friends mostly laugh at me but read on and see if I’m being an alarmist or not.

Legal marijuana. President Trump and his Attorney General, Jeff Sessions, have been talking about enforcing the federal marijuana laws against states that have legalized or decriminalized it.

Why is this such a potentially destructive issue? Because it brings State’s Right to the front in a way we haven’t seen in generations. A number of states have made their will apparent. The people of those states want legal marijuana. The federal government disagrees. The question then becomes how the federal government enforces the restriction. That’s what I believe to be extremely dangerous.

There are some nonviolent methods available to the federal government. Banking restrictions on the funds generated by legal marijuana for example. That being said, the main option the federal government has is interdiction. This means sending federal Drug Enforcement Agency officers into various states to arrest owners and employees of such stores. This means there is the potential, I would say likelihood, of law enforcement officers for the various states defending these locations. That could easily lead to armed encounters.

We might see federal law enforcement officers killing or being killed by state law enforcement officers. What you must remember is that federal law enforcement officers also have loyalty to the various states to whom they associate themselves. A DEA officers who hails from California, for example, might well be in an armed confrontation with his brother who is a police officer from the state.

When was the last time brother fought brother in the United States? I know I’m sounding a shrill alarm and nothing has happened to date. I’ve been listening to the words of President Trump since he was campaigning and I’ve also read much of what Attorney General Sessions has said in the past. They are both strong believers that drugs are tearing the fabric of our nation apart.

I disagree, it is the illegal status of drugs that is causing all the problems. If we followed the various state’s leads by decriminalizing drug use, this entire problem would largely resolve itself. That clearly does not seem to be the aim of this administration. They want heavy-handed law enforcement. I, for one, don’t doubt the resolve of the people of California, Colorado, Washington, Oregon, and other states who have made marijuana legal. I don’t think they’re going to simply back down.

If the states refuse to back down, then the federal government has two options. They can reverse course and stop enforcing marijuana crimes or they can escalate the situation by sending in more troops.

If hostilities between federal and state law enforcement agencies becomes a reality, that is a serious issue. It could potentially destroy the United States as we know it. The western states could simply leave the Union. Another Civil War could begin if the remaining states decided to prevent such an exodus.

Again, I know I’m setting off extreme alarm bells here. I’m probably being overly dramatic but this is the first time in my life I’ve seen the potential for armed conflict between the federal government and the various states. Once that starts, it’s impossible to predict how or where it will end.

All over a simple weed that grows just about everywhere in the country. All over one group of people who think they should be able to tell legally competent adults not to smoke it.

Tom Liberman

What Asteroid Mining Means for Precious Metals

Posted on by

asteroid-miningWhat does asteroid mining and flooding the world’s supply of precious metals mean economically? What would that mean for the world and for you?

For many people the idea of mining asteroids is the stuff of science fiction. Most people roll their eyes at me when I talk about our ability to make this fantasy a reality.

I’m here to tell you, asteroid mining is not far away. There are a number of ideas on how to accomplish it, but one of the easiest is simply changing the velocity of small asteroids so they enter into Earth’s orbit. From there break them down aboard a space platform and drop the material to the surface.

Getting the mining platform built would be a task but once it was done there would be an endless series of asteroids floating gently in to be processed. Asteroids as small as ten meters across generally contain more than one-hundred pounds of gold and seven-hundred tons of other useful metals. Larger and more metal rich asteroids have far more. To put this in perspective; the total amount of gold mined from our planet is about 152,000 tons.

When asteroid mining becomes a reality, there are economic issues to consider. We often consider things precious, or valuable, simply because they are scarce; not because of their value in industry. Platinum is scarce and used in industry primarily for emission control on vehicles. It’s very possible that we will not need catalytic converters on modern cars. At that point, the value of platinum is reduced dramatically. Couple this with the fact an asteroid as small as one kilometer in size might be mined for more platinum than currently exists on Earth. Suddenly platinum is all but valueless.

Gold certainly has value in industry but also largely for artistic endeavors. The things we consider valuable today will be super-abundant tomorrow, and thus have little value. This has happened before. There was time when aluminum was more valuable than gold. Aluminum has incredible value in the industrial world. Luckily it is readily available on Earth so scarcity is not an issue, although I’m guessing it will be a target of asteroid mining as well.

Basically gold, platinum, silver, and other metals we associate with monetary policies will become super-abundant. This means every person who invested in such metals will lose their money. This also infers that any country basing their economic system on precious metals will instantly become bankrupt. Their savings will be worthless as the price of gold plummets.

The economics of the world are changing and it’s wise to be prepared for such events. Gold, platinum, silver, nickel, cobalt, rhodium, and other rare and useful metals aren’t going to be readily available immediately, but there is no doubt in my mind they will eventually become so.

Someday there will be mining bases embedded in the asteroid belt that will ship billions of tons of useful elements to Earth for processing. Scarcity is no longer an issue.

I’m not saying sell all your gold and platinum today. I am saying, if you’re a gold bug or hung up on precious metals, you need to consider what’s happening in the world and off it, and plan your future accordingly.

Tom Liberman

Bill O’Reilly and why Money Matters

Posted on by

bill-oreillyThe slow unraveling of the career of Bill O’Reilly has an important lesson for everyone. Money matters. At least that’s the angle I’d like to examine.

O’Reilly made a lot of money for a great many people including himself. O’Reilly’s top rated show generated enormous income for Fox News but also for the advertisers. They weren’t spending tens of millions on his show for no reason. Everyone who worked at Fox and far beyond benefited from the ripple effect of his money printing machine. Camera operators, commercial actors, executives, other personalities at Fox, the list is almost endless.

That’s why it took so long for Fox to finally fire O’Reilly. Imagine O’Reilly was a simple camera operator. How many incidents with women would it have taken for him to get fired? I think we all know the answer to that one. How many people would have risen up in support of O’Reilly under those circumstances? Again, we all know the answer to this question.

We can lament this situation all we want. We can complain about the extra chances someone in O’Reilly’s position gets, the opportunities many others would not, but reality must be considered. Someone who is generating huge amounts of money will almost universally get the benefit of any doubt and even be allowed to continue long past the point of uncertainty.

I think it can be argued that simply being in the position O’Reilly was in encourages the sort of behavior in which he engaged. If you are immediately punished for wayward behavior then you just don’t get an opportunity to repeat it, you’ve been fired.

There are lessons to be learned for those who have a pragmatic mind. Sure, the ideologically motivated will attempt to lay blame on one group or the other but that’s really beyond the point. The reality is people who generate a lot of revenue are going to get more chances than those who do not.

If someone in a position of power does something reprehensible to you, you might want to seek financial rewards rather than taking the high ground. No matter your principles, the person who wronged you is going to avoid consequences, at least for a while, until multiple allegations begin to pile up.

Certainly, you should report the situation to whatever authority you can but if nothing is being done about it, you must be a pragmatist. Get out of there as quickly as your legs can carry you, like Megyn Kelly. The old adage about life giving you lemons has validity in today’s world.
There are people like O’Reilly everywhere in this world and they often crush those who get in their way. They don’t hesitate to use their wealth and power to get away with many terrible things. That’s the lesson. Don’t let yourself be crushed. Understand that life is extraordinarily unfair. That many times you’ll be in the right but won’t be rewarded for it, you might even be punished.

The final lesson to consider is your own behavior. If you find yourself in a position of power, a place where you are allowed to get away with things, don’t do it. Take the high road, you’re the only one with the option to do so.

Tom Liberman

If you Like Sports you’re not a Capitalist

Posted on by

capitalist-sportsI’m a Libertarian and there is not much about socialism I find enticing as a political philosophy. I also like football. Finally, I’m a realist. Sports organizations exist today almost completely as a conglomerate of policies that can only be described as socialistic and communistic.

Drafts are one of the most anti-capitalistic entities that exist in the western world. Imagine if young college students were drafted upon graduation by a particular corporate entity, their salary was predetermined by some equation, and they were unable to negotiate with anyone else. Should they choose not to sign with the company that drafted them, they could not sell their skills elsewhere for one full year, upon conclusion of which they were back in the same situation, hoping to be drafted by a company for whom they wanted to work. Yikes.

The process young high school students endure is slightly better. They can at least choose which college to whom they sell their services. However, once that letter of commitment is signed, it’s a different story. They are largely stuck. If they want to leave, their boss must approve of the school they transfer to and even then, they must sit out for a full year. And, of course, they can’t negotiate their salary.

Everyone on the team earns exactly the same amount. From the star quarterback to the third string strong safety, not that I’m picking on safeties, they all get room, board, and tuition. That, dear readers, is communism.

The amount of money each team in the NFL, NBA, and NHL is allowed to spend on salary is strictly controlled by rules. No one can spend as much as they want, each team is limited to the same value. This means each player gets remunerated at a rate that fits into a predetermined structure rather than a fully capitalistic system.

A portion of the total amount of money each team earns over the course of the season is subject to division and split among all the teams in the league equally.

Can you imagine such a system anywhere except sports? The thought is horrifying, but we accept it without thought when it comes to the various leagues. The structure is different from league to league but it is fairly similar from one to the next.

The alternative is to treat athletes like everyone else. Every school and team can offer whatever incentives they want to each player. You’re a star eight-grade basketball player? Perhaps a top school in another state wants you. Maybe they’ll move your family to a nearby home and pay you. How is that bad for the athlete?

At the end of the college season each player is free to negotiate with every professional team and arrive at a contract that is acceptable to all parties. How can that be bad for the players?

Yes, the wealthy high schools, colleges, and professional teams will get all the best athletes. That’s how a business succeeds in this world, they get the most talented players.

We must consider personal gain as well. The second-best running back would almost certainly sign with a different team than the best running back for the opportunity to play more. Teams would have to manage their expenditures within their economic means.

I have no illusions that such a system will ever be implemented for athletics across the country. I don’t deny that almost everyone reading this will call me an idiot, and they won’t hesitate to tell me why. However, in addition to being a Libertarian, I’m a dreamer. Maybe one day we’ll have a system designed to benefit the individual. That’s my dream at least.

Tom Liberman

Trouble at America’s Malls so we Blame Who?

Posted on by

malls-closingNewsflash! American brick and mortar retail stores are closing in record numbers. What sort of genius do you have to be to figure out why? Not much of one. Total sales aren’t going down, just sales in such stores. More and more people, me included, are purchasing online.

Yet every time I read an article in one business publication or another about how malls are losing their anchor stores and closing down in record numbers, the comment section is filled with tirades about President Obama or President Trump. Filled. I’m not willing to start counting comments and tell you what percentage want to lay blame on one of the two major political parties. Nor will I bother figuring out how many rational people explain there is no blame to be laid, it is simply an example of changing market environments.

This is what happens. This is why buggy whips, to use the example from the hidden gem Other People’s Money, are no longer manufactured in large numbers. This is economics. This is capitalism. While many people benefit from this there are, and always will be, losers. The people who lose their jobs in the malls. The companies that go out of business.

In the end capitalism will benefit the majority of us. We get a product at the price we want without having to leave the comfort of our Tom Pagnozzi locker room chair given to me as a gift many moons ago. I love this chair but that’s beside the point.

It’s obvious why malls are closing. Everyone knows the root cause. It’s not rocket science. I don’t believe people are so stupid as to think political policy is driving this trend. I think their motivation is to convince someone else to further their political agenda.

What can we do about this? You certainly can’t argue someone out of their position on this because they really don’t believe it anyway. You can call them stupid if you want but that’s not really helping matters. You can certainly ignore them and that’s largely what I do. I think often times that’s the best strategy. Don’t get into a pointless debate. Don’t call them idiots. Don’t get enraged. Simply ignore them.

The other possibility is to do what I’m attempting to do here. Plainly, clearly, logically, and without malice lay out some facts. After that it’s just not your responsibility any more. You can’t think for other people, speak for anyone else, or act for anyone else. Do what is in your power to do.

The world would be a better place if we all could ignore provocation and follow the excellent advice of the Hitchiker’s Guide to the Galaxy. Don’t Panic.

Tom Liberman
Sword and Sorcery fantasy all About Freedom

Mexico, USA, Cars, and the Complexity of the Protectionist

Posted on by

protectionismThe recent election in the United States brought an avowed Protectionist to power and this raises interesting and complex economic questions. As a Libertarian I’m opposed to such policies.

I will not pretend that economics is a simple or easy to understand discipline. Nor do I even hope to convince those who agree with a protectionist agenda. I only hope to show you the situation is more difficult to understand than you might think.

At issue is the manufacturing of cars in Mexico. In the last twenty years building small cars in the United States has become an unprofitable business. When NAFTA was passed protectionism in North America was largely abolished. If you produced your goods in Mexico, Canada, or the United States then other countries are forbidden protectionist policies like tariffs, taxes, or other means. Free trade. If you can produce something more cheaply than the people in a neighboring country then you were allowed unfettered access to that market.

This means economic hardship for some and prosperity for others. If making a car in the United States cost X and making the same car in Mexico cost Y then manufacturers have a decision to make. In the last twenty years that decision was largely to move facilities to Mexico for production of small cars. The vagaries of economics made manufacturing them in the United States less or not at all profitable. This meant the loss of certain jobs. And that’s what Protectionists talk about the most. Yes, there is a loss of jobs.

However, let’s examine the likely outcome if the United States propped up the manufacturing of small cars through tariffs and other protectionist ideas. Japan and other car making nations would have gone to Mexico, as they have done and continue to do. They would then have been able to offer cars at a significantly better price than the U.S. companies could match. The only way to save those jobs would be for the U.S. to provide increasingly aggressive tariffs or to cut wages dramatically. Thus people in this country would be paying far more for cars or earning less, all to support jobs. That’s reality. That’s the inevitable outcome of protectionism.

Protectionists paint jobs going to Mexico and businesses moving plants to Mexico as a terrible thing. As stealing jobs from U.S. citizens. Movement of manufacturing to where it is best performed certainly saves consumers money but in the long run saves jobs as well. The jobs supposedly saved through protectionism come at a terrible cost and only delay the inevitable.

Imagine Protectionism comes to rule the day in the United States. Manufacturing comes back to the United States. What will be the result?

You will pay more for the same car until propping up the difference in price becomes unsustainable and the plant goes out of business anyway. The United States will produce goods at a higher price than everyone else in the world, meaning only we will purchase such products. Our global competitors will slowly take all our markets and in the meantime we’ll be paying more for everything. Businesses will eventually go bankrupt in increasing numbers and job losses and unemployment will rise as an inevitable result.

All to artificially preserve unsustainable jobs.

Protectionists wail about how manufacturing is going to other countries but the reality is the number one employer in the United States, besides the government, is Wal-Mart. They employ nearly six times more than the runner-up, McDonald’s. The main reason? Manufacturing performed in China. When Ford and Chrysler move plants to Mexico it actually creates wealth in this country. It creates jobs. Just different ones.

Protectionism has an allure. Be aware of the long-term dangers it presents.

Tom Liberman
Sword and Sorcery fantasy with a Libertarian Ideology
Current Release: The Gray Horn
Next Release: For the Gray

My Goal is 100% Unemployment

Posted on by

unemployment-is-goodYep. That’s the world I want to live in. A world where no one has to work.

Now it’s important to define what I mean by work. Work is what we do to make money. Not labor we perform. I’m a big believer in doing things, achieving things, building things, and general accomplishment. I think those are the things that make us happy. That being said; I think the general idea of unemployment is completely backwards. Economists, real ones and the armchair version that posts on Facebook and comments sections of news articles, are all wrong. Completely and totally wrong.

100% unemployment is the goal we need to seek, not 5% or whatever economists call healthy. We need machines to do all the work. We should be thrilled when they take away our jobs.

Imagine a world in which machines do all the labor and people are free to do as they please, that you have eighteen hours a day to be with your family, to be with your friends, to pursue your hobbies. What would you do? Work? No. Achieve at a never before seen level? Yes.

Again, it’s important to distinguish the idea of work from the idea of accomplishment. If I didn’t have to work I wouldn’t sit idly eating food. I’d go to the gym more often. I’d write more novels. I’d play more video games. I’d play more Dungeon and Dragons with my friends.

The question on your lips is one with which I’m familiar. Who would make the video games? Who would get the food?

It would be a combination of automated robots and people who like doing those things. There are many tens of thousands of people out there working on video game projects because they enjoy it. They release them as Open Source Freeware. Just as my novels would be free for all to enjoy. Farmers largely enjoy their labors. They love growing the food and knowing it is feeding people. It gives them great fulfillment, as well it should. Sure robots would do a lot of that but there are plenty of people in this world who love  doing things. Not necessarily working but achieving.

When people are free to achieve all day long why would you imagine productivity would go down? I’m going to write about the End of Money tomorrow but for the moment imagine you don’t have to make money to survive. Would you just sit around all day doing nothing? Perhaps a few among us would do so but I think the vast majority would use that free time to pursue productive ends. They would learn new languages, gather with friends to make music, improve their bodies and minds.

Imagine a world with 100% unemployment. I do.

Tom Liberman

Zack Hample and the Baseball Game at Fort Bragg

Posted on by

Fort-Bragg-BaseballThere are a lot of people angry at a man named Zack Hample this morning because he attended a baseball game held at Fort Bragg.

The game was held on July 3rd as a tribute to military personnel and they and their families were given tickets. Hample is an avid, to understate it, collector of baseballs. He’s traveled all over the United States and collected over 9,000 of them from various different stadiums. He was eager to get a ball from this unique event and presumably paid someone to get their ticket. He was offering $1,000 for such a ticket.

People are angry that Hample got a ticket, attended the game, and collected a ball. They argue that he “stole” the seat from a military person and thus the ball as well.

I disagree. Whoever sold their ticket to Hample got something more valuable than a souvenir, $1,000 presumably. We don’t know what Hample ended up paying but we do know that whomever sold him the ticket wasn’t much interested in baseball or the souvenir. I understand that there was a child somewhere who is interested in baseball and would have loved to get a ball. But there was also someone interested in a thousand bucks.

No one forced the soldier to sell his ticket. From reading the comments on Twitter the soldiers were told not to give or sell the tickets to anyone except active duty military personnel and family. Yeah, good luck with that. There are going to be plenty of soldiers who got tickets who have no interest in baseball. There are going to be plenty of them, like me, who have no interest in souvenirs. They should be able to sell their ticket to the highest bidder. I’m willing to bet that many soldiers will sell tickets and other items they got at the game. That’s their business.

That’s life.

I certainly understand people don’t like it. I’m just suggesting that such people are living in a fantasy world.

Hample wanted a ball and was willing to pay for the opportunity to get one. A soldier wasn’t much interested in a ball or the game and sold him the seat. Two adults completing a transaction.

Was there anything wrong with Hample attending the game and getting a ball?

View Results

Loading ... Loading ...

Tom Liberman
Sword and Sorcery fantasy with a Libertarian Ideology
Current Release: The Gray Horn
Next Release: For the Gray

The Student Athlete Compared to the Student

Posted on by

student-athlete-payThere is a profound difference in the nature of a so-called student-athlete and a student and I think many people fail to realize it. Why does this come to mind? Because a fellow named Don Yee, who happens to be the agent of Tom Brady, wrote an opinion piece over the weekend suggesting, among other things, that Clemson and Alabama college football players should refuse to play in the National Championship game.

It’s an interesting piece and talks about the inequality of the financial situation between players and virtually everyone else. I wrote a blog on the same subject back in June of 2013 that echoes a number of the points Yee makes. Yee focuses on race and I largely disagree with his assessments in that regard but it’s not the topic of my blog today.

While reading the passionate comments under Yee’s post I found a common thread. The idea is that the student-athletes should be more than happy with the opportunity to attend college without cost. The students would very much like this arrangement for themselves.

People equate the student and the student-athlete to make this argument. Gosh, lots of kids go way into debt to pay for college is the common thought. The reality is that the two are virtually the opposite of one another in an economic sense.

The student is paying a fee for an education. He or she must get good grades to be allowed into the school and even then pays for the commodity of an education. The school charges this fee and then provides teachers, buildings, cleaning staff, and many other items in return. The student is the consumer and the college is the commodity.

On the other hand, the student-athlete is being paid to play football. The school is the consumer and the player is the commodity. The school’s representative all but begs the athlete to come to that school rather than sell his services to a rival. The player then provides entertainment that generates a large amount of revenue for the school, coaches, and many others. The payment the player gets is an education, exposure for a future career, and various other things.

These are fundamentally different. We cannot compare the student with the student-athlete because they are essentially opposites of one another from an economic perspective.

In the meantime, the student-athlete has noted that coaches are getting paid a lot more than they were twenty years ago. The student-athlete has noted the total amount of revenue generated from the games has gone up by a tremendous amount but their salary remains the same. They want a raise and who are we to tell them they should be “satisfied” with their current rate of pay? That they are “greedy” for wanting more? Would you tell a co-worker those things? Of course not.

Should they get a raise? That’s not my business. It’s between the schools and the student-athletes but I certainly think it’s their absolute right to ask for a raise and not perform if they don’t get. Likewise the school might fire them and give the scholarship to someone else. That’s a labor negotiation which is exactly what is happening.

On a happy note, things are actually moving toward a much more equitable state. The student-athletes in the Power Five conferences now receive a stipend of several hundred dollars a month, access to as much food as they can eat, and their families no longer have to pay out of pocket to attend Bowl Games (trips which can be quite expensive, particularly for low-income households). The horrific system where scholarships were revoked if a player got injured or failed to perform has been abolished.

The NCAA and the colleges seem to have recognized the inequities that the system engendered and are working to fix them without going to a purely professional system wherein each player is negotiated with separately.  These are good things. A reasonable pay increase for the players without destroying the nature of the system. A win/win.

It makes an old cynic proud.

Tom Liberman
Sword and Sorcery fantasy with a Libertarian Ideology
Current Release: The Girl in Glass I: Apparition
Next Release: The Gray Horn

 

What is the Work Week?

Posted on by

standard work weekThere have been a number of stories in the news this week about something called the Work Week.

We had Jeb Bush suggesting that people need to work more (he “clarified” suggesting he meant part-time workers need full-time jobs, but honestly, that’s not what he meant). A number of people are advocating reducing the Work Week to 32 hours.

The problem seems to me that there is a total disconnect between what the work week means and what people think it means. I aim to rectify that.

The Work Week in the United States is generally defined as Monday to Friday from 8:00 a.m. to 5:00 p.m. with an hour for lunch. There are many permutations but largely the perception is that people work 40 hours a week at their jobs.

This is, of course, absolute bollocks! There continue to be a number of jobs where people work while at their office and leave work behind when they leave. These sorts of jobs a becoming an increasingly smaller part of the whole. With our phones, tablets, home computers, and other technologies we work wherever and whenever work needs to be done. The idea of a standard work week is utter nonsense for a growing number of people in the United States and other countries in this Information Age.

One of the metrics by which we measure how much work is done is called Workforce Productivity. The problem is that hours worked no longer has meaning in the equation. That hasn’t stopped people from trying to use that particular equation to calculate how productive we are. Productivity goes into many other economic equations defining the health of a nation. If one of the key measurements is no longer valid then I wonder about the entire equation. Are economic decisions being made at the highest levels of government and business that have no basis in reality? In my opinion, yes.

The reality is that people who work in Information Age jobs work far more than they report working. They are on their phones working for ten minutes here and ten minutes there. They are not in the office but they are working. While it’s possible people over-report time away from the office working I’m of the opinion that most people under-report and by a fairly significant amount. This throws all productivity measurements into disarray.

If we want to get a true indication of productivity we must accept this new paradigm for workers.

If we continue to follow outdated and mathematically flawed models we can only make bad decisions.

The idea of the Work Week is dying and we must accept that. Work can be done from anywhere, anytime.

Do your Over Report or Under Report your Working Hours?

View Results

Loading ... Loading ...

Tom Liberman
Sword and Sorcery fantasy with a Libertarian Ideology
Current Release: The Black Sphere
Next Release: The Girl in Glass I: Apparition – Release date: late August 2015