Sunday, October 14, 2012

Prosperity as a function of coersion

Reading the current issue of The Economist this morning was pretty weird. The main theme, true progressivism, makes a call for something that purportedly does not exist: A conceptual structure for a new economic paradigm, one that is capable of supporting realities faced by individuals, organizations, and states in our time. Hmm. I do that, but no one seems to care. I will just continue to consider issues based on my Model Economics approach with the idea that someone with some clout in the market for economic ideas recognizes it and gives me a tap on the shoulder.

Meanwhile here are some answers to the question that may call attention to solutions. True progressivism is an interesting phrase. I am reading Amity Shlaes' "The Forgotten Man". Nothing there but thinly-veiled contempt for progressives of all sorts. I learned of such contempt for thinking people from a recent conversation from a young "tea-partier". This is borne of a vague call for return to a more amenable state. It cannot be that of Hoover. More likely it is to the time or Reagan. Not a man of ideas, but an expert in the sure quip. He ruled the world out of a mastery of the catalog of popular cinematic dilemmas of the time. He understood the outcomes and the words that made them happen. I remember the day. But the questions of that time and this were swept under the carpet, where they continue to fester, though some have emptied out into the street, as it were. Famously Wall Street, but infamously Main Street. Our crisis has been long in coming.

The unstated argument is that we do not need more ideas. This is not a time conducive to thought, or so it would seem. The same young man that informed me of a successful local purge of an educator who was found to be a "Marxist". It was not clear in the discourse just what a Marxist was, though the man was clearly of that persuasion. As a result, he lost his employment and I guess was run out of town. I mentioned to my new young friend that in the context of the early stages of the Industrial Revolution and in the overwrought behavior on the part of commercially-supported thugs of that Age, much of what Marx said made sense. He assured me that I should never let that opinion be known or I too would be found wanting. My prospects would be dire indeed.

Just a thought, but what if in the vast array of that man's work, the scholar in question, an idea or two exists that could shed some light on our dilemma? Would be it possible that we could make use of a notion thus tainted? Perhaps we could use it, but indicate that it came from another source, perhaps the sainted Adam Smith. Better yet, someone not known for thought at all. Perhaps a neighbor. Such an idea, fully untainted, could be taken into the fold and embraced. Problematically, the idea would suffer from the ignominy of newness. Also, your neighbor is likely not from the famous philosophy school. Rats!! It probably wouldn't work on that count alone.

By the way, what ever happened to the famous philosopher profession? People in position to make a difference seem to have become politicians, listening to the radio a good deal.

One of the main problems with prevalent market structures is that they are dependent on coercive markets. This is to say that economic security if not general progress is dependent on the existence of markets that extract resources from and require participation in markets whether they want to or not. Such markets, based on their fundamental nature, sustain economic activity and support growth and concentration of wealth through force. In such cases, there is a lack of infrastructure supporting alternatives. There may be incomplete supply networks for necessary items. There may be regulations that make use of the goods or services illegal or impractical in spite of their native benefits.

Coercive markets, it can be said, provide economic security and consistency from their very nature. If people must pay, they will pay. Such compliance and the consistency that it seems to provide serves as justification for a lack of options that might otherwise exist. President Obama made a comment that infuriated members of the right-wing, particularly from the extreme right. They were infuriated because of the unfortunate way he made his case in saying "you didn't do that" with regard to infrastructure, when it almost sounded as if he meant to say that business people did not create their own enterprises. His original point is a good one. Commercial success, real commercial success, requires some government support at some level. Roads? Public networks? Airwaves? Commercial codes? Courts of law? Policing functions? Electrical sockets? Private business could not exist without some combination of these and many more.

We can classify markets in three categories with regard to coercion. The first is "necessary", non-elective, organic markets. Such markets involve the exchange of necessities, food, basic clothing, shelter, possibly transportation. This would include items that are needed to support income-producing. From a budgetary or financial planning standpoint, such necessities may not be high end solutions, but items and services at a basic level.

The second would be coercive markets, where the purchase of necessities involves limited options, excluding other options that may be more preferable. In a sense, such markets involve outdated choices, limited options where substantially better alternatives would be preferred if it were available. The point is that the market is very narrow, is in some way mandatory, and it capable of extracting adherence, even compliance from the people at large. Some of these are de facto monopolies; others are certified as such.

Elective markets are the third category. These are markets for services and things based totally on preferences. Such markets may be somewhat large as in sports and entertainment markets (though keep in mind that many sports markets are Congressionally-mandated monopolies). Elective markets may be small and, indeed many of them are, such as esoteric markets for unusual, elective items that do not appeal to most consumers. I know of a young man that jokingly aspired to distribute "a bassoon to every home". This, of course, will not happen. Many elective markets are local and limited prospects are a function of geography. Production and delivery of crafts and home-grown produce may be limited by geographic and population factors regardless of their uniqueness and desirability. Only a few customers buy as a result of such limitations.

The really interesting question is one of the elective markets. Will they hold up were coercive markets to fall prey to competition and to productivity gains? Can transactions not motivated by force serve as the basis for an economy? Can enjoyment fuel consistency as does desperation? The famous dictum of marketing is this: Will the dogs eat the dog food? In the current case, we would ask, will the dogs eat the dog food simply out of enjoyment? Will they pay to go to a show?

The point is, again, that we do not have a production problem. Rather, commercial interests often need to be reigned in as hounds at bay. Overproduction lurks at every corner. Heaven forbid that inventories should be found and not used. There is a legend that a unsold mountain comprised of Apple's Macintosh predecessor, the Lisa, lies at the base of my community's landfill. This the result of some extra-market deal with the devil to make the overage go away. What's a little junk in the back yard anyway?

The story of Nikolai Tesla's inability to bring his ideas to market in his time is that he offered a way to provide electricity universally directly from the ground. J.P. Morgan is held to have asked where the usage meter would be placed in order to submit a bill for the service. Tesla's response is to have been that no such device was required, as the answer lay at everyone's feet. Thus, Mr. Morgan directed his efforts famously to Edison, who knew how bread was to be buttered, though he wasn't a shadow of the intellect of Tesla.

This raises the "music teacher" problem. How to make a living following your love and your talent? Become an employee of the state. Teach school, where property tax is pooled in support of an activity that no one would otherwise pay for. It is not the same thing, but close. Even that system is straining at the bit; schools are shedding themselves of the artistic function in lieu of standardized test scores. In our stressed times, the argument seems to be making itself. We all must do what we must do and not what we want. We cannot make something of ourselves, we must betray our better selves to participate in coercion to one extent or another. Ronald Reagan would have an instant example or metaphor from the movies. I can think of "Joe vs. the Volcano".

Think of this. If we were not all "chained to a desk, doing something [often poorly] because that was where the money was", wouldn't we be better off doing what we were good at? For one thing, if we had more time on our hands, wouldn't we go to see more of what each other did? Wouldn't generalized freedom from the grind prove to be a self-fulfilling prophecy? Wouldn't we want to see each other's "stuff"? If we had the money, wouldn't we pay to see it?

The argument to be made is that of the "full enjoyment society". In part, that is our solution. Growth, maturity, and decline is a reality of modern economic life. We don't let organizations die, though, and we are little aware of the ways that they kill their competitors before they get a chance to start. We need to be an Age where we acknowledge and foster talent wherever it can be found. Most importantly, we need the expression of that talent in new markets and in new sectors of society. Competition will eradicate the dead spots if we let it. In the place of corrupt commerce and unproductive employment, we should encourage high productivity and foster non-coercive markets. We do not have a production problem. It is time that we stop acting as though we did.


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