Tag Archive for 'free-market'

Global Warming: Markets or Socialism? Part III

Published by Colin April 10, 2008 in General, Essays and Politics. 2 Comments

Presuming that global warming is indeed a pending crisis caused by pollution, we began (Part I) by looking at the two approaches one can take to solving this issue - a socialist solution, where resources protected, controlled, managed, utilized and/or distributed by the state as common property; or a capitalist solution, where resources are homesteaded as private property and managed through economic law.

It was then argued (Part II) that we have been attempting to solve environmental problems with socialism for some time, and capitalism is the only way out of the mess we’ve created via unintended consequences. In fact, global warming is an unintended consequence of socialism.

“Don’t Crap Where You Live”
The primary problem with the socialist solution is that there is no incentive for a person to “regulate” themselves on common property. I have seen this, for example, in every single one of my employer’s company kitchens. No matter where I work, there is always problems with the cleanliness of the corporate kitchen. People leave out dirty dishes and make messes for others to clean up - no one is responsible because “everyone” is responsible.

Private property, on the other hand, is someone’s capital asset. They need it to make profit of some kind - that could mean money, but it could just as easily mean psychological, moral or charitable profit. The point is that it is an asset to them rather than a dumping ground - it has real value. There is a principle hard-wired into many of nature’s creatures: “don’t crap where you live.” Private property would force polluters to “crap where they live.” Allow what is public and common to be “where someone lives” and they wont “crap” there.

The solution is to use the natural state of man - self-preservation, territorialism, value maximization, to harmonize with nature. The atmosphere is no different than any other part of nature, in that no one will care about it unless someone is using it. As soon as it is homesteaded, private property laws will apply like anything else. Just like you can’t go and dump your trash on my lawn, companies and individuals won’t be able to let their carbon go to the atmosphere.

Ideas for Implementation
Let’s look at some practical ways we can introduce these ideas.

Use the Court System - The first step is to go back to where we were in the 1860’s - people were allowed property rights in the air they homesteaded for breathing, sunlight, rain, etc… Lawsuits over pollution damages should not be laughed at and should instead be upheld and huge fines should be levied. The next time someone blows smoke in my face, I should be able to sue them (even for a nickel) on principle. If just one of the biggest polluters, such as the US, actually enforced their constitution and prosecuted all their factories, autos and so on that are damaging everyone’s air, then it would at least be started.

Allow Airlines to Homestead Air Tracts - Another possible way of “propertizing” would be allowing Airlines to homestead tracts of air. They would jump at this because the efficiency of running Rhumb Lines makes certain tracts of air very valuable. The airlines running these routs would now have a vested interest in not polluting their own airspace, because moving to other airspace costs in fuel, time, wages, etc…The point is that airlines themselves would have an incentive not to pollute in their air and they would be sued if they polluted in some other airline’s air.

Allow “Airfills” for Extra Carbon - What if we simply allowed companies to homestead tracts of air for storing pollution and carbon. There would likely be a rush for them. These “airfills” would fill up pretty fast with pollution, no doubt, and there’d be less and less air to fill. Meanwhile, every unit of fill would drive up the value of clean air as it becomes more and more scarce. Now there is a profit motive for cleaning air! Air cleaning companies may arise and create technology to purify old “airfills.” Just like water now: there’s no problem with water in more capitalistic countries. The market consistently generates profit signals in producing water, using water, then cleaning it again. It’s not even hard to imagine this with air. Moreover, maybe that technology allows weather stabilization, or ozone rebuilding or some other unintended good?
Continue reading ‘Global Warming: Markets or Socialism? Part III’

Global Warming: Markets or Socialism? Part II

Published by Colin April 9, 2008 in Essays and Politics. 10 Comments

Last time we look at the two major philosophies we can use to solve global warming: capitalism or socialism. I believe that we have employed a socialist solution since the Industrial Revolution, and only a capitalist solution will get us out of the mess. Global Warming is a long-term problem that must be fixed by sustainable systematic changes, not by the whims of politicians or socialist elites.

The Socialist Nature of the Problem
Presuming Global Warming has been caused by air pollution, we have noted that this is a natural consequences of having the air as commons. Governments have prevented air from being seen as property as early as the 1860’s. As the Industrial Revolution took off, people living near factories began to go to the courts with nuisance lawsuits when their health and property were adversely affected. And they won - that is, until the government stepped in to stop these “frivolous” lawsuits in the name of both national industrial competition and streamlining of the justice system. Frank Bubb outlined this back in 1970:

Air and water pollution caused by industry obviously fall into the category of public, rather than private, nuisance because it often affects thousands of people. And since it affects the people in a given area relatively uniformly, no private individual is allowed to sue. The only thing left is government prosecution, but government has typically been the “partner” of industrial polluters until now.

Why does government prohibit private suits for public nuisances? The official reason is to prevent a “multiplicity of suits”, but the reason underlying that is to prevent the hindrance of industrial expansion by making industry pay for its pollution or stop polluting.

Pollution has reached its present destructive level largely because people whose rights have been violated have not been provided a legal remedy, and because the monopolistic nature of government prevents them from turning elsewhere for a remedy. It is as if the government were to tell you that it will (attempt to) protect you from a thief who steals only from you, but that it will not protect you if the thief also steals from everyone else in the neighborhood, and further, that it will prevent you from protecting yourself.

Now that the pollution problem has literally thrust itself into people’s faces, they attack the profit system and demand that government “go after” industry. To continue the above analogy, it is as if people were to respond to a rash of thefts by attacking the character of everyone who enters the neighborhood and by demanding that the government lock up all such strangers.

In other words, a “commons” has been created which the government has no idea how to distribute, protect or even use. They have attempted to distribute it socialistically, and it has reaped the consequences we have today.

Government has made the air into a virtual “free” good, protecting it as though it has no price and essentially banning the instruments of valuation. It should be no surprise that people have treated it thusly, overusing and exploiting it.

The Capitalist Solution
Capitalism accounts for the tragedy of the commons by de-commonizing it as everything else throughout history has been - through private property. We only have the tragedies because the natural selfishness of man has been hindered by the artificial preservation of commons. Because of examples like the Industrial Revolution, we now have no legal precedent and no laws regulating property rights in the air and it’s been trashed by pollution.

There is a solution to the problem of the atmosphere being polluted (or eroded as in global warming’s case) - and it isn’t going to change by mere taxes and cap trades. The commons will still exist - it will just be all the more ripe for the picking when the tax and trade structures are either corrupted or the bodies that force them are dissolved. Thus a non-private property solution is short-term at best.

We don’t have a shortage of cows precisely because the commons in cows was homesteaded. We don’t have a shortage of potatoes because they were homesteaded. We do have a shortage of fish stock, and, more importantly, massive destruction and pollution of oceanic habitat because it has been legislated and preserved as commons. When any good is kept as commons, there is no self-interest in preserving it. In many places there is even a government led tax system meant to wisely distribute fish resources (similar to Global Warming proposals) which has completely failed.
Continue reading ‘Global Warming: Markets or Socialism? Part II’

Global Warming: Markets or Socialism? Part I

Published by Colin April 8, 2008 in Essays, Politics and Philosophy. 11 Comments

While global warming no longer seems to be the issue of the day (that is, I am not hearing about it every five minutes on cable news), there is still much fear and trepidation about what exactly we are to do about it. I have decided to proceed as though Global Warming is a significant problem and that it is man-made, or at least significantly so, despite yet being convinced of this last point. I want to take a look at what kind of approaches we have open to us in the event of such a dire scenario.

Philosophically, we generally have two structures to work with - a capitalist/market-based solution or a socialist/collectivist solution.

The Socialist Solution
A socialist solution holds the collective good (as defined in units as small as a single company’s union, a state, nation or even a global community but no smaller than two), above everything as principle. Global warming, like global anything (hunger, disease, war, etc..) is best solved through collectives owning and distributing (by force against the individual) the solutions to these problems through central planning. If a threat is seen as dire, a collective-wide plan will be established by popular elites and experts to deal with the solution in the spirit of utilitarianism. Compliance will be mandatory for all individuals who are part of the collective. This solution includes anything that follows these principles - carbon taxes, carbon caps, mandated alternative energies, subsidies to energy corporations, etc…

Socialism declares that people are not educated, motivated or otherwise able to make the best decision for themselves so the collective, on their behalf, will help them comply which what the collective deems is in their best rational interest. Moreover, people’s greed and selfishness creates exploitative relationships between people (virtual masters and slaves) and also between people and resources.

The Capitalist Solution
A capitalist solution holds individual rights above everything as principle. Global warming, like global anything (hunger, disease, war, etc..) is best solved through the voluntary cooperation of individuals all acting in their own self interest as determined by their own priorities. In the same way you don’t have to compel people to defend themselves from hordes of Hunns, you should not need to compel people to defend against a global catastrophe such as the worst prognostics of global warming.

If the threat is seen as dire, people on all levels of the world will act voluntarily - they won’t need to be forced. Individuals will cut down on their carbon use. Corporations will invest in earth-friendly technology. Insurance companies will start assessing risk. People will readily give up money, time and energy to preserve themselves in the face of such a threat.

Any other industry-wide, market-wide or even global-wide crisis is dealt with in this manner. Consider global sickness and disease: the market produced and built healthcare systems (through insurance and risk management) purely out of self-interest. Look at the crisis of financial accountability - the market creates independent standards and audit commissions to self-regulate. Even the global problem of standardizing communication and media devices - all done by people acting in self-interest without government.

Thus, if there is a disconnect between industry leaders and the more extreme global warming predictions, it’s not because of bottom line self-interest, but clearly because business leaders have not been convinced of the problem. The other option is that there really isn’t a major problem, but we are presuming the worst in this article.
Continue reading ‘Global Warming: Markets or Socialism? Part I’

A Teacher’s Utopia: Unregulated, For-Profit International Schools

Published by Colin March 6, 2008 in Essays. 10 Comments

The following account is purely anecdotal and details the personal encounters of my wife and I as we researched and interacted with the most exciting opportunity for teachers we could imagine.

My wife has been dissatisfied with the public school system almost since she entered it upon selecting her major in college. Much of the school work was pointless, and more about tolerance, diversity and political correctness than actually educating children. The cost (fortunately she had scholarships and grants) would have equaled about two years salary - and very little of it, aside from the classroom experiences and behavior management instruction, was helpful.

By the first six weeks, she was discouraged with the obvious failings of the system. After the first year, she was heart-broken at the monolithic mediocrity which kept struggling students behind and smarter students from reaching their potential. By the start of this, her third year, she was completely drained and depressed about her career, feeling powerless to help, and ashamed that she was slipping into the mold of, in her words, “the typical teacher who no longer cares.”

The Utopia Revealed
On our last trip to Europe one year ago, we were at a concert dinner in Salzburg and met a women who told us about “international schools” in countries all over the world. This woman was genuinely excited about the experience she had (and if she were not raising kids, would still be teaching) in Taiwan. We looked it up and were amazed what we found. In the last year, we have been researching these schools, which culminated in a three day conference last week in Seattle.

These aren’t just any schools - they have a special benefit from the government: to be left alone. The degree, of course, varies considerably, but whether it was only in part or in totality - the defining characteristic of these schools was that they were more unregulated than their public and private counterparts. The other feature common to all of them: no teacher’s unions whatsoever.

What this meant to us, when we had a chance to meet with dozens of these schools last week, was this:

  • The level of education, and particularly innovation and dynamic instruction, was the highest we’ve ever seen.
  • The success of the students was unparalleled, with almost all of them going to the best universities in the world.
  • the parents were active and involved in the education, while respecting the teacher’s specialized skills.
  • the facilities were top-notch, and constantly updated to reflect the best the market could offer.
  • the pay was outrageously high, competitive and negotiated on merit, with bonuses for skills and performance.
  • little or no taxation (in almost all cases except Europe), with 30-70% of a paycheck able to go into savings.
  • housing and transportation were often included.
  • private health care and retirement were also included.

These actions aren’t happening because of benevolence on the part of anyone, but because “greed” and selfishness are allowed to operate. Parents are “greedy” for the best education for their kids. School owners are “greedy” for money and success. Teachers are “greedy” for using their skills to benefit children, and earning acceptable pay. These things happen because the market is allowed to operate and individual people can create, organize and distribute goods and services in the most fair, effective and efficient way possible.

Costs and Benefits
This must cost a fortune, right? A lot of money is clearly required to bridge the gap between the crumbling schools, outdated textbooks, lack of media and low teacher pay in American public schools, correct? Actually, these schools cost much less per-pupil than American public schools. This is true even of heavily regulated American private schools. But without almost any regulation - the international schools have been able to provide high quality instruction at a fraction of the cost. Even with less money coming in, a director of a for-profit International School in Kuwait assured me it was, “very profitable” (his emphasis).

Teachers in the US are accustomed to union - and some feel that the union is providing them a wage that they couldn’t otherwise get on the market. They think the union is protecting them from being run over by the size and power of their employer. While this may be the case for teachers unworthy of even the low pay currently offered - the philosophy of wages: “equal pay for work of equal value,” is a detriment to more qualified teachers who are stuck in a pay schedule that values them almost purely based on their time in the system, not quantifiable results or success.

Remember, the benefits listed above were achieved without unions. Education is a tremendously valuable skill on the market. However, I suspect it is no coincidence that as the primary, secondary and post-secondary system becomes more controlled by government, the value of education continues to drop (hence a college degree now is worth the same as a high school diploma from 1960, etc…). These salaries and benefits are being offered to qualified teachers because they can demand it with their skills and merits. For example, my wife received three job offers and turned down several second interviews that may have led to more. If she wanted to make a career out of it (which she doesn’t because she wants to raise our children first) she could literally retire at about 45 with enough money to travel the world, buy a small estate or live on a yacht.

In fact, the demand was so high that these schools actually interviewed me (not a teacher) and collected my resume so they could get me a job with a company near the school, or on the school’s support staff. Many of the schools achieved their unregulated status by being company-sponsored schools in “free-trade zones.” One school which offered my wife a position, would shop me out to Intel, IBM and HP and assured me I would likely make even more money than her. Some schools were so unregulated that they said they would train me and I could substitute teach in their secondary school. No special license, no years of education and debt - but the same qualifications as any job: on-the-job training, specialized instruction and gradual increasing responsibility.

We Don’t Need The Regulators
All parties involved in this country are dissatisfied with public education: the teachers, the administrators, the parents and the politicians - wringing their hands in frustration as government interventions with the best of intentions fail to stop the downward slide of public education. But education, like all other goods and services, does not need to be centrally planned. The selfish interests of all parties can find common ground (and common profit) if the government would stop trying to help, and instead would get out of the way and allow these people to meet each other’s needs.

The Minimum Wage I: Economic Analysis

Published by Colin October 24, 2007 in General and Politics. 9 Comments

The minimum wage is a popular and well-thought-of piece of legislation which many people believe is only helpful - or, may have some drawbacks but is more helpful than not. Fortunately, the minimum wage can be looked at objectively by examining how general economic law works as well as socially, by examining what kind of affects the minimum wage has on real people. This two-part article is designed to look at the minimum wage at a fundamental economic level and then for its broader impacts on society.

Removing Morality
For the first part of this article, a pure economic analysis, we must put aside anecdotes and emotional arguments. For example, “but he’s a waiter and deserves minimum wage!” is not a valid point right now, because we are going to look at pure economic law and effects. If the reader comes into this analysis unwilling to engage the material for what it is, then the reader should be honest with himself and admit that he does not want his preconceptions on the idea to be challenged.

Many times, this results from not taking a moment to remove the subjective morality or “fairness” ideas that one brings with them into an argument. Besides, we will deal with these entirely in part II - so just hold your horses.

Wages as Prices
What is a wage anyway? Often, people don’t make the connection that wages are just another price in the massive global market of good and services. Just like a new bike has several components and interactions on the market that determine it’s price, so to does a person’s time and skills - their labor - fetch a price based on these same phenomena.

We only separate out wages into a special category because in modern society, this price has a significant impact on the seller (the employee is selling his labor; the employer is the buyer of labor) because his livelihood, status and often his access to opportunities are dramatically affected by the price he can fetch on his labor. But those are moral considerations, and you promised not to go there until next time, remember?

We have to understand that a price on a wage is reached when there is mutual consent - the employer wants the labor more than he wants the money from the wage and the employee wants the wage more than he wants his time. So if a price can be reached, then it is because both parties believe that they are better off.

People have to trade this way because there is scarcity - not only are material goods finite, but time is finite as well. So demand and supply can’t shoot up into infinity. If it were so, we could legislate a minimum wage as high as we liked and there would be no consequences. However, because things are finite, there is a limit to how high we can raise a wage through legislation.

How Wage Prices Are Determined
Jobs and wages do not come about by employer generosity (or, on the contrary, greed). That is, companies don’t just provide jobs for kicks and don’t pay wages as charity. They actually have a demand for labor in order to get something done - the end result of which is likely for their profit (either financially or maybe idealistically [they need labor to build a free hospital in Sudan]). If they don’t think this way then they lose money and go out of business (and provide no jobs by the way).

On the other hand, laborers are not slaves by nature - they only want to trade their time if it benefits them. In most cases, this is to seek a wage that provides at least their basic subsistence and usually a little more than that - again this is profit.

These two parties meet somewhere above the employee’s minimum value on their time and somewhere below the employer’s cost for what the labor produces. The price is driven down by the scarcity of demand - the less demand for labor, the lower the price that laborers will have to set for their abilities. The price is driven up by how talented, experienced, educated, hard-working, skilled and so on the laborer is. The more talented the laborer, the more objective value he has in the market.

What a Price Floor Does
If then, a wage is just like any other price, than a price floor (a minimum price allowed) is going to have a universal effect. If we legislate that gas, for example, must be at least $5 a gallon to help those poor oil companies, then a lot of people are going to go without gas, simply because they can’t afford it (other will have to cut back significantly in other areas to pay the increased price). It might elevate all the profits from gas for just a little while, but the customer base is going to shrink a lot more than it normally would. So you may have the average customer paying more for gas, but you will have so few of them that, in time, the gross profit is going to actually be less. Neither of the parties benefits.

Say it’s a price floor on wages now. The minimum wage is $15. It’s not just a matter of everyone currently making $5.15 getting a whopping raise. Rather, many of the employee’s customers (employers) can no longer afford their service. In fact, so many employers would be unable to buy labor at that rate that over time, the net profit on labor is going to go down. In fact, the scarcity of jobs is going to rise so much that those employees still left will make less money because supply and demand have been adjusted against them. There are less laborers to compete, but there are even less jobs, so all parties lose.

Raise the Sea - Float All Boats?
Many think of the minimum wage (and price floors in general) like a sea of water that carries boats with it as the water level rises. But employees are not floating - that would imply that their value is totally subjective. Rather, they have anchors, made of all the talents and skills, which hold them to the bottom. The anchors only get longer as more talents and education (and the like) are gained by the employee.

Realize that each employee is a unique combination of skills, experience, training and talents - no two are alike. They earn a unique price for their labor on the market. We’ve already established that someone working for $8 is not making that because their employers likes them “eight dollars worth” or is generous or mean, but $8 is the price that his labor can fetch on the market. What happens then when the minimum price allowed for labor rises above $8? Objectively, our $8 man is drowned because it’s not like his talents and abilities (which got him the price in the first place) increase along with the wage floor. No, we have raised the water level over his head, and drowned those least able to swim.

Tomorrow we will cover the social aspects of a minimum wage and take into account what kind of effects this has on working people and their families. This is the realm where most of the support for a minimum wage comes from.

UK Cancer Patients Dying in Line

Published by Colin August 22, 2007 in Current Events. 13 Comments

The Telegraph has reported that the UK now has the lowest cancer survival rates in Europe. To blame?

Cancer experts blamed late diagnosis and long waiting lists.

How long are people waiting? According to Scotland’s Daily Record, cancer patients who are labeled as needing “urgent” treatment are waiting between two and seven months before being taken care of.

Cancer patients are still waiting up to seven months for treatment. Patients are supposed to be treated within 62 days of urgent referral. But figures out yesterday showed only three areas in Scotland were meeting those targets every time. In the worst cases, sufferers were kept hanging on for 220 days.

The figures, for the first three months of the year, show 85.4 per cent of patients across Scotland were seen within 62 days. The target set two years ago is 95 per cent.

Note, the target is still two months and change. This is not for routine cancer treatment but “urgent” treatment. Fortunately for the remaining population, as people slowly and painfully die of cancer, the wait should get less by sheer mathematics.

On a more serious note, we are actually talking about literally hundreds of thousands of people needlessly dying per year waiting in line.

The power is in the math - per 100,000 men diagnosed, 21,500 of them will die in the UK system who would have survived in America. For women, 10,200 per 100,000 would die. Consider that in the US alone, 1.4 million people will be diagnosed this year.

Much like the American Education predicament, where the US spends double or triple on per-pupil education with worse results - the UK is spending three times the amount that Poland is on care for comparable results.

Which country had the best rate of survival - the most evil, greedy, selfish nation on the planet of course* - the United States.

*sarcasm intended.

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