Sunday, February 6, 2011

Economics of Spending and Saving

An economics text seems to describe the impact of spending and saving on economic well-being. The principles espoused in the text seem to suggest that spending and saving patterns can determine economic conditions such as employment, wages and inflation. Some of the principles suggested seem based on unfounded assumptions that are adopted in possibly misguided effort to more fully control economic outcomes and/or to be convinced that economic observations are understood. It seems that many of the concepts and systems are unnatural and, as a result, conflict with and harm natural processes. I certainly don't claim to be wiser than the writer or the economist referred to in the writing. However, I seem to wonder if the emperor is, somehow, less than fully dressed. I seem to have been less than successful in finding successful rebuttals of the ideas I suggest and look forward to same.

National Income
For example, the text seems to describe Keynesian theory as "breaking down a nation's income into flows of spending from all of its various spenders". Although "flows of spending from all of its various spenders" seems to refer acceptably to the sum of the nation's trade transactions, the term "national income" seems inappropriately applied to that sum.

In my less-than-authoritative opinion, income seems to deal with one aspect of a trade transaction: that which is received in exchange for something else. In the natural world, that would apply to both sides of a transaction, since both parties are receiving something for something else. Does "national income" refer to double the value of the transaction? If the sole two citizens of a nation exchange with each other an orange, is the national income one orange or two?

In my humble opinion, I understand the natural trade system to categorize both parties as suppliers. The concept of income seems more applicable to that which I understand to the man-made system that redesignates traders as suppliers and buyers. In this perspective, one party (I imagine, the one with the product) is selling and the other (perhaps the one with the promissory note or other legal tender) is purchasing. One totally might lose sight of the fact that this seems not to exist in the natural world. Whether the traders exchange each other's orange or a tractor trailer for $100,000 in promissory notes, they're both suppliers. Mankind, perhaps, lost sight of this somewhat after adjusting to the promissory notes/legal tender concept.

It seems that all the calculations based on this difference between income-producing trade and natural trade might be like following the remainder of a map's directions perfectly after having made a wrong turn.

Monday, January 24, 2011

Government Intervention In Labor (working copy)

Government Intervention In Labor
Government provision of labor protections such as minimum wage
By Pierre Belhomme
January 24, 2011. Revised January 26, 2011

Employment in the Free Market
The employment free market seems to consist of the trading of resources by community members in exchange for the assistance of other community members. An important employment free market principle seems to be that the amount of appropriate resources that should be traded for such assistance is determined by the intensities of the employer's need for assistance (demand) and the resource needs of the people who are willing to provide assistance to the employer (supply).

Setting Employment Prices in the Free Market
The self-interest principle of the free market would seem to suggest that potential employers would seek the lowest employment cost and potential employees would seek the highest possible pay rate. Presumably, their desire to consummate the deal would drive their offers closer together until they match. This seems suggested to be the correct free-market price.

This uncoerced, voluntary (and therefore, it seems "free") decision-making by the potential employer and potential employee seems suggested to be able to help determine employment prices even as market conditions -- the relevant circumstances of the potential employer and potential employees -- change.

Business Aversion to Government Intervention in Labor
Employers apparently reported aversion to government intervention in business beyond government’s enforcement of business rights seems to include government protection of labor interests such as minimum wage.

Rationale for Government Intervention in Labor
Perhaps government intervention in business for the purpose of providing labor protections such as minimum wage has developed as a response to some businesses inappropriately manipulating market and community circumstances in order to realize circumstances that favor the interests of those businesses. Businesses, for example, might seek to so disadvantage the circumstances of potential employees that workers would willingly work for wages lower than they otherwise might require. the free market guideline of setting wage prices at the lowest level required would find workers whose circumstance is so that they would willingly work for wages lower than they otherwise would.

Manipulation of the Employment Market by Market Participants
In our history, both employers and employees have seemed both willing and able to impact markets beyond their basic supply and demand roles by manipulating circumstance to create a set of circumstances under which rational reaction by others would favor the manipulator of the circumstance.

Regarding government intervention in employment marketplace dynamics for the purpose of providing labor protections such as minimum wage, perhaps market participants inappropriately manipulate market and community circumstances in order to realize circumstances that favor the interests of market entrepreneurs so that the free market guideline of setting wage prices at the lowest required would find requirements lower than would otherwise exist without that manipulation.

Free Market Adjustments to Market Conditions
It seems that participants in the employment free market are expected to react in their own interest to changing market conditions. The self-interests of market participants are expected to balance each other, creating what is referred to as market balance. For example, if an entrepreneurs' need for assistance increases and decreases, it seems to be suggested that the value of the assistance he seeks has increased. He is, therefore, generally expected to offer a greater amount of resources per person to entice others to stop what they're doing and assist him.

Importantly, here, the term "demand" seems to refer to unmet need.

Saturday, January 15, 2011

Government Intervention In Business
Government intervention in the free market system
By Pierre Belhomme
January 15, 2011.  Revised January 26, 2011

Free Market Fundamentals
American philosophy seems to value free market capitalism highly.  A primary free market goal seems to be to allow community needs (demand) and resources (supply) to direct trade and industry decisions.  This goal seems to be contrasted with that of other economic models whose trade and industry decisions are made centrally by sole or committee leadership.

The term "supply" seems used to refer to naturally-occurring resources which can include environmental resources as well as human effort. Seemingly, "demand" can be used to refer to general desire for resources and, at times, can refer specifically to unmet resource needs.

Advantages of the Free Market
Suggested advantages of this system seem to include the theory that market participants are more cognizant of their needs and of local resource supplies and can more quickly react to changing market conditions than central and sometimes far-removed decision-makers.

Motivation in the Free Market
One free market school of thought seems to suggest that the sole focus for free market decision-making should be each individual's self-interest whereas another school seems to advocate considering the interests of others and of the environment.

Although these two schools of thought might be considered mutually exclusive, in my perspective, they seem simply to be two important facets of economic decision-making. Of the two concerns, an individual's first concern might appropriately be the individual's own well-being. Perhaps, however, free market decisions that affect others and/or the environment should include the concerns of those parties.

Aversion to Government Involvement in the Free Market
U.S. market suppliers (businesses) seem reported to oppose government intervention in the free market because such intervention replaces appropriate, natural and healthy free market dynamics with government's vision of the marketplace, shifts market decisions away from appropriate local decision-makers and slows down market reaction time to changing market conditions.

Equality of Market Influence in the Free Market
The theoretical free market seems to assume that market participants have the same or similar influence on the market. In reality, however, market influence seems to vary widely among market participants where market participants with the most resources seem to have the most market influence.

Market Manipulation by Market Participants
Reports seem to suggest that some free market participants attempt to manipulate free-market decision-making beyond supply and demand "voting" to favor the manipulators' economic interests. These manipulators seem reported to attempt to alter natural circumstance so that the resulting circumstance invokes reflexes and/or decisions in other market participants that favor the manipulators' economic interests. These interventions seem to make the free market, essentially, less free.

Such market manipulation might be less desirable than government intervention because government intervention goals seem suggested to be community well-being whereas these market manipulators seem to exhibit and profess self-interested disregard for community.

Government Intervention as a Market Referee
Government intervention in business seems to include the role of referee in curtailing market manipulation and any other market activity that insufficiently provides for the interests and well-being of consumers and the environment.

A concern regarding such government intervention seems to be that the fallibility of humankind makes for a fallible market referree who might overlook significant infractions and punish appropriate free market activity.

In addition, human fallibility seems to subject human government to the tendency to expand beyond its useful purpose.

The Take-Away
It seems that government intervention in free market business might both foster and prevent community success. Therefore, regardless of its success in curtailing inappropriate free-market activity, its dependency on fallible administration creates its own hazards.

A successful community free market, therefore, seems to require market participant commitment to appropriate, seemingly logical principles such as concern for well-being beyond one's own. Unfortunately, the community seems to have traded in such principles -- and the apparent spiritual guidance from whence they seem suggested to come -- for human government. After witnessing the harmful potential of human government without such positive spiritual guidance, the community seems also to have rejected the human government they traded for.

It seems that the success of community business might depend on these choices. If so, perhaps community individuals, and therefore, the community as a whole might profit from revisiting individual choices regarding the foundation of their faith.