The “Fair” Problem: Peanuts for Everybody

The most compelling argument against conservatism is that it is inherently unfair and discriminates against underprivileged classes of people.

To the left, the most compelling argument against conservatism is that it is inherently unfair and discriminates against underprivileged classes of people. We conservatives should take this criticism seriously, if only because seeking the best possible economic outcomes for the disadvantaged is an obvious moral and social good. Answering this criticism will also go a long way to having an honest discussion about these issues in America, because the question isn’t whether or not it is morally and socially desirable to help the poor and disadvantaged (it is). The question is ‘What is the best way to maximize fairness and minimize economic marginalization of underprivileged classes?’.

So let’s start by defining what we mean by “fair”, because the word “fair” is pretty loaded, with many different meanings depending on how it’s being used. In political terms, the best definition is probably “just or appropriate in the circumstances“. So what we are looking for is an economic system that maximizes economic justice for as many people as is possible and is appropriate to our ideas of civil liberties.

Unfortunately, what is considered “just” by the left is a bit different than what is “just” on the right. To the left, an equitable distribution of wealth would be just, so that the poor are not paid much less than those who are relatively wealthier. To the right, a distribution based on what is earned would be just, so that people receive an amount based on how much they produce. So, who’s right? Well, that’s a long and complex answer…

Peanuts For Everybody!

Our economy consists of literally billions of combinations of goods, services, and capital resources, so let’s start with an simple universe of goods: peanuts. Our goal is to achieve a fair and equitable distribution of peanuts that does not unduly benefit some individuals at the expense of others.

Our first goal is obviously to make sure that no one goes hungry, so we’ll distribute enough peanuts so everyone has enough to eat. Next, we will reward those who do more for society (doctors, scientists, etc.) by giving them a few extra peanuts beyond what’s needed to sustain themselves. Have we maximized justice in our society?

Everyone should have what they need, except, of course, all the people who we killed because of their peanut allergy. No problem. Instead of peanuts, we’ll provide these people cashews instead. Problem solved, right? Well, except for the fact that cashews are significantly more costly, and a can of cashews is roughly three times as expensive as a can of peanuts.

So obviously, it’s really not a fair distribution at all. What do we do now? Triple everyone’s peanut portions? Ignore the costs and consider only the utility of the peanuts (or cashews)? Bring yet another good to balance out the value? And what about people who don’t like nuts, because they aren’t getting any value at all in our economy? This is the fundamental problem with the pursuit of absolute fairness. Even in our ridiculously simplified economy, if we manage to find a solution that is quantitatively “fair”, there are still huge qualitative disparities in the actual value experienced by each individual.

Best of Intentions. Worst of Results.

When we look at real economies, the disparities between those who are able to participate in the market and those who have been pushed to the margins are much more complicated than the simple example with the peanuts. The regulations, welfare programs and wages (the peanuts of our example) don’t necessarily always match up with the various needs, wants, and issues facing the poor and disadvantaged.

After over fifty years of the War on Poverty, the poverty problem has only gotten more complex and widespread, with poverty increasing to levels that haven’t been seen since the 1960’s (www.census.gov). According to the Initiative for a Competitive Inner City (www.icic.org), about 32% of inner city residents are living in poverty. That is more than twice the official US poverty rate of 14.5% (www.census.gov). The civilian labor participation rate is at 62.6%, a rate that hasn’t been seen since 1977 (www.bls.gov). In St. Louis, the fastest shrinking city in the last 50 years, the employment population ratio (the percentage of working age citizens who are employed) is 61.5%. The unemployment rate in St. Louis is at 9.2%, and is staggering 15.7% among black citizens living in St. Louis (www.bls.gov). Unfortunately, these numbers are typical of every metropolitan area across the United States.

The most tragic aspect is the reversal of improvements made throughout the 1950’s and 1960’s in labor participation rates and poverty rates among minority groups, especially among black Americans. Since 2000, black poverty rates have been climbing steadily from a low of 21.2% in 2000 to 25.7% in 2012. Black employment population ratio is down to 53.0% as of 2012 (www.census.gov). Among blacks with less than a high school education and over the age of 25, the employment population ratio is at 31.3%, compared to whites at 42.6% (www.bls.gov).

Why are these numbers continuing to worsen despite over half a century of the progressive cultural socialist policies of the left’s War on Poverty?

What Goes Up Drives Labor Down

Since the start of the industrial revolution, cities have been the industrial centers of the world. The dense populations had been a ready source of the workers that manufacturing depends on. Until the middle of the 20th Century, the core of the United States economy was manufacturing and textiles. In 1965, manufacturing was 31.5% of the GDP of the United States. By 1997, manufacturing was only 19.7% of the overall GDP (trade.gov). And as of 2013, manufacturing was only 12%, a third of the 1965 level, of the overall GDP (data.worldbank.org).

With the decline of manufacturing and textiles, two industries which offered workers middle class incomes regardless of education, millions of workers found themselves unemployed as factories were shuttered one after another. Statistically, blacks have made up the majority of people living in major American cities, so they have unsurprisingly been the hardest hit ethnic group in the United States as manufacturing and textile jobs disappeared. In 1979, American blacks represented 23.9% of manufacturing workers. As of 2007, that number had fallen to a low of 9.8% (www.cepr.net).

This increase in unemployment has led to steep increases in poverty among blacks in general and inner city blacks in particular. So, what caused the steady decline in manufacturing and textile industries in the United States?

The Root of the Problem

Unfortunately, the answer to this question is obvious: the price of labor. In 1965, when manufacturing was still about a third of GDP, manufacturing wages were about $2.50 an hour, twice the statutory minimum wage of $1.25. By 1997, when manufacturing was less than a fifth of the GDP in the United States, the average manufacturing wage was about $13.00, climbing to $13.45 an hour late in the year as the minimum wage was increased from $4.75 to $5.15 an hour. By 2013, the average manufacturing wage had soared to $19.30 an hour, almost three times the minimum wage of $7.25 an hour.(trade.govtradingeconomics.com, data.worldbank.org, and money.cnn.com).

With minimum wage almost 6 times its 1965 rate and manufacturing wages almost 8 times its 1965 rate, foreign competitors emerged around the world, becoming competitive in productivity and technology but with a massive advantage in the cost of labor. As of 2010, the average manufacturing worker in India was paid a wage of $1.46 an hour (www.bls.gov), a rate 13 times less than the average manufacturing worker is paid in the United States, meaning a company can hire more than a dozen workers in most of the rest of the world for the price of one American worker.

So there are two possible solutions: (a) we wait another century for the entire rest of the world to catch up or (b) we begin the process of slowly letting the air out of the American wage bubble, and bring down the cost of hiring less experienced workers to put more Americans to work with the added bonus of reducing the cost of goods and services in the United States. Only one of these choices leads to prosperity in our lifetimes.

In upcoming articles, we’ll talk about how we can work on bringing the cost of labor down, improve employment, and why there is so much resistance to any of this happening.

Liberty is For The Win!


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The Long View

The debate between the ideological left (socialism) and ideological right (capitalism) had been ongoing for over 200 years by 1848, when Karl Marx wrote The Communist Manifesto. By the end of the 20th Century, the conflict had raged around the world and through time, causing real wars and killing hundreds of millions of people in times of war and peace. All of this bloodshed is between two economic political systems that claim to maximize human well being. So if you have ever wondered why people get so heated in arguments about socialism and capitalism, this is why.

Prior to 1848, the socialists believed in a consensual, egalitarian, and humanistic economic theory focused on small scale communities, where everyone shared productive responsibility and productive profits equally. While there were many attempts at founding permanent socialist communities, in the small and large scale, one of the best examples of the prototypical socialist community looked like New Harmony, Indiana, founded in 1825.

It’s all gone pear-shaped.

Founded by Robert Owen, a British industrialist and humanitarian socialist, the New Harmony commune initially grew rapidly, as Mr. Owen used his personal wealth to build the infrastructure of the town. Citizens contributed in building homes, planting crops, etc. All property, land and otherwise, and profits were owned in common. By 1827, the town was all but abandoned, after only 2 years.

Without the incentive of wealth accumulation, people began to consume more than they produced, living at the expense of others (the “free rider” problem). And this was the problem with so many socialist communities that have formed and failed in the past, remaining an intractable problem until Karl Marx changed everything.

In 1848, Karl Marx’s works marked a crucial shift in the ethical and philosophical landscape of socialism. He and Engels railed against the poisonous affliction of “profit motives” that are central to capitalism, but, unlike their predecessors, they took the socialist philosophy one step further. Their solution to the “free rider problem” was to do away with the consensual element of the philosophy and replace it with violence, cleverly relabeled as “revolution”.

Political power grows out of the barrel of a gun.”

What kind of violence? In 1918, Tzar Nicholas II of Russia, after having already abdicated the throne, was executed with his entire family, including five children, and several servants who had voluntarily stayed with the family. They were shot and brutally bayoneted until dead. The two or three that managed to survive the initial round of shooting and bayoneting were shot in the head while they lay on the floor, bleeding.

Thus the butcherous Marxist Bolshevik Revolution began, killing hundreds of thousands in the years to come, until some semblance of stability for a few short years under Lenin until his death in 1924. Then Joseph Stalin came to power, and the real bloody purges began. From 1922 to 1952, Stalin continued the cycles of oppression and “revolutionary reformation” in Russia ostensibly turning the country into a purified socialist power. As many as 62 million people died in work camps, of starvation, in war, and by execution as enemies of the state.

The pattern was repeated in Mao Zedong’s China, where violence and gross incompetence caused the deaths of an estimated 45 million people in a span of 4 years, as Mao attempted to transform an agrarian peasant society into a socialist egalitarian industrial power. As many as 78 million people died as a direct result of Mao Zedong’s attempts to improve the general well-being of the Chinese people.

“The road to hell is paved with good intentions.”

Even worse than the suffering and bloodshed caused by 20th Century socialist revolution, the real horror is that the transgressions of these socialist regimes would have been impossible had it not been for millions of complicit and devoted supporters of the ideologies and the governments that they spawned.

And when you consider how these individuals were able to rationalize barbarism, is it any wonder how easy western leftists dismiss complaints about western “democratic” socialism? Many of these leftists were born in the last 30 years and have never experienced a country resorting to walls and barbed wire around their country to keep their own citizens in.

This is the main obstacle to an honest dialogue about these deeply entrenched philosophies. Modern leftists see themselves as completely ideologically separate from the mid-20th Century leftists. In this way, they absolve themselves of the economic failures and barbarism of the socialism of that era.

Unfortunately, there is no absolution for the human tragedy caused by socialism, and its endless conflicts with anyone that didn’t submit to it. This legacy is established in the stone of history, and we on the right are justified in not letting those on the left disown that history.

At the end of the day, the difference between socialism and capitalism is whether or not people should be free to exchange goods and services consensually. If we, as society, truly value the concepts of freedom of association, freedom of expression, and personal liberty as a reality independent of governmental constructs, then the only legitimate economic choice is capitalism.

Liberty is For The Win!


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A Look at the Scoreboard

America needs to have a long, hard conversation about race, politics, and economics, but it isn’t possible with everyone sitting in two camps.

Americans need to have a long conversation about race, politics, and economics, but it isn’t possible with everyone sitting in two camps. One camp (the right) believes strongly that its ideology works best because cultures that have flourished and spread their influence around the world have employed political and economic ideologies of the right. The other camp (the left) believes exactly the same thing, except they believe in the political and economic ideologies of the left. Only one camp can be right.

While it may be tempting to hurl statistics back and forth, so many factors can affect statistics, and speculation abounds as to why certain classes of people suffer while others succeed. Arguing about these factors will get us nowhere, so we need to establish an objective case that can’t be dismissed out of hand. In short, we need to prove our argument the old fashioned way: democratically.

As it turns out, once framed democratically, it’s a fairly simple case to make.

ARGUMENT
Given that any population of people in a community will tend to grow geometrically over time; and given that people don’t leave a city unless the reasons they have for leaving are better than any reason they have for staying. It follows then that, in the long term, people vote with their feet. If the population increases, then obviously the citizens believed that staying was better than leaving. If the population of a city decreases, then a significant number of citizens believed that leaving was better than staying.

DATA
The time frame of this study is 50 years (basically two and a half generations), which is more than enough time for a significant amount of change (positive or negative) to be attributable to particular ideological (political and economic) cause. So, let’s look at our initial conditions, the populations of the 20 largest cities in the United States in 1960, by population:

top 20 cities 1960

Only five United States cities had a population of over one million, the lowest of which being Detroit, MI. The political party that controls the mayor’s office reflects both the political climate of the city as well as the political philosophy of government. In the case of our study, the political control is the one thing that is different in these cities. In the last 50 years, the control of these cities breaks down like this:

top 20 cities 1960 political control* Texas Law prohibits partisan party politics in mayoral candidates, so these numbers may change.

Notice that 8 of the 20 cities have had unbroken Democratic control for 50 of the last 50 years. A year for the last time a Republican politician held the mayor’s office was not included in these cases. These cities of unbroken Democratic Party domination will serve as an effective control. We know the initial conditions, and we have 50 years of political influences, so here are the results reflected in the changes in populations, in order of worst to best, along with the number of years a Republican administration was running the city:

top 20 cities 1960 population changes

ANALYSIS
Of the twenty most populace cities in 1960, only eight have had an increase in population. Every single one of those eight cities had a Republican administration in the last 50 years. Of the five best performing cities, four have had Republican administrations in the last 15 years. The three cities with the largest population growths, more than double population increase, had strong Republican influence in the last half century.

Of the five cities that had a population of at least 1,000,000 citizens, only four remain above that mark. Three of the five cities have had their populations decrease by a combined total of over 2,000,000 citizens. As of 2010, there are eight cities that have a population of at least 1,000,000 citizens, with the four cities newly over 1,000,000 citizens all being predominantly Republican (or right of center) politically.

Of the 8 cities in our control group (cities with 50 years of unbroken Democratic Party control), not a single one had an increase in population over the half century of this study. Of the twenty most populace cities in the United States in 1960, twelve cities decreased in population by little as 11% (Boston, MA) to as much as 57% (St Louis, MO). The four worst performing cities had a population decrease of between 50% to 57%.

CONCLUSIONS
After half a century of Democratic Party dominance of 12 of the most populated cities in the US in 1960, people have conspicuously elected to go somewhere else. Conversely, cities where Republicans have significant political influence have continued to prosper and grow for the last half century.

It’s long past time that the American left conceded that their political and economic policies not only don’t work, but people actively flee the cities in which their political and economic theories are left unchallenged and uncompromised, as is clearly demonstrated by the data. It’s time to abandon broken Utopian political theories and face the economic realities of the 21st Century.

There is room at the political table for people who care about the poor and the elderly. There is room at the political table for those who want to solve the real problems of racial discrimination and the serious economic disparities facing minority groups in the United States. There is no room for people who cling to ideologies that have demonstrably failed to deliver on their promises of equality and opportunity.

It’s time for the truth!

Liberty is For The Win!


We just checked, and it turns out that fighting for Liberty isn’t free, because it requires time and energy to research, prepare, and propagate this message for you. Please drop just a dollar a month into the proverbial tip jar and become a Patriot Patron. Of course, don’t forget to like, subscribe, and share. Keep this fight for Liberty going! – @LibertyIsFTW