Apples and Oranges

There’s a economic problem in our country no one seems to know what to do about. Americans consume more than we produce. AKA we have a big trade imbalance.

In the simplest terms it goes a little something like this hypothetical. Americans make 100 apples per year and China makes 100 oranges per year. One apple is worth one orange. The thing is Americans eat 55 apples and sell the rest to China while China eats 45 oranges and sells the rest to America. So every year we rack up a deficit of 10 fruits a year. This deficit compounds on itself year after year and build a pretty big debt to China.

So, how to fix this?

Sell more apples to China and eat less oranges. Right? Chines people want more apples. After all some Chines still don’t eat enough.

Two problems though. Americans are used to eating 110 pieces of fruit a year, so which group of people end up eating less? As soon as we have a policy that takes away fruit from a given group, that group will be very loudly upset. The second problem though is even more complicated. China doesn’t really have the infrastructure to get more fruit to more people. They’re still building roads and trucks and buildings that support the ability of Chines people to consume more. So even if we stopped consuming as much and shipped more fruit to China AND the Chines people were given more cash to buy the fruit, the infrastructure to get the fruit to the buyer wouldn’t be there. And with more cash in hand the Chines people would just bid up the price of fruit (inflation).

So what happens when the Chines infrastructure is built up to the point that they are able to consume just as much as Americans? If more people in China have the real capability to buy more fruit then they will start wanting to cash in on the loans they have given the Americans all these years. With more buying power in the hands of the Chinese and less available credit in the hands of Americans, Chines people will be able to out bid the Americans for the 200 pieces of fruit available on the market.

We will see this effect in one of two ways, or maybe a little of both. Americans will see a decrease in wages or their wages will be worth less fruit. This may be the underlying cause of the inflation and stagnation seen in America during the ‘70s and ‘80s. Except in that case the scenario was played out with Japan and other maturing economies in the east. As Japan built into a full capacity infrastructure, Japanese people gradually were able to out bid Americans for goods, and since American productivity wasn’t rising fast enough to cover out debt payments we lost the bidding wars.

So what do we do? We can either eat less fruit, make more fruit or squeeze out more efficiency in the fruit making and consuming process.

Hopefully we’ll figure out a way NOT to go back to the inflation/stagnation we had in the ‘70s and ‘80s. HOPEFULLY we can get more efficient by consuming less energy while we make and consume the things we make and consume. Higher fuel efficiency, more renewable energy and so on. Hopefully we find ways to produce more goods with less inputs. Fewer people and less raw material to produce more goods. And Hopefully we can find ways to live fulfilling lives without needing to consume more. This may mean some consumption taken away from the rich in order to keep improving the lives and opportunities of the poorest. And almost definitely means finding fulfillment from things like family, spirituality and maybe just a simple apple.

The Inverse Law of Socialism and Capitalism

Since free market capitalism took hold in our society, there have been a couple of trends notable in our economy. Starting as small examples of business ingenuity or rare government insight, these trends have grown into international macro-economic movement. That is, private business tends to be more successful if they take care of the social welfare of their employees and the members of their community, and the government tends to be more successful in the application of social and economic programs if done through the channels of the free market.

They’re many striking examples of this law in action already. The purpose of making this an established law is to give a framework of thought when we, as private citizens or as a community, take on the endeavors of our day rather than starting programs in a traditional way, then after partial failure patching the problem with these general ideas.

Private business tends to be more successful if the business devotes part of its resources to the social welfare of its employees and its community. Taking on the social welfare of employees has obvious benefits. First, programs such as health care benefits, daycare, and other such devices are perks that give a business an advantage in obtaining and retaining employees. Also these kinds of benefits help employees stay healthy and keep them from having as many stresses from personal life get in the way of productivity. There is also a “good will” factor. If a business’s employees feel like their company is taking care of them, then they will be more likely to want to take care of the company, i.e. be more productive and put more thought and creativity to the task at hand.

The other half of this part is slightly more abstract. Businesses who give resources, whether through direct action or giving some product or money, to social causes in their community tend to be more successful. Most of this phenomenon is due to the personal “feelings” of those involved. The leaders and employees of a given company will feel better about there work since at least part of the proceeds go toward the betterment of their community. When someone feels better about his or her work then they will be bore productive. Also the people who do business with the business at hand will either know of these charitable actions or be able to feel the charitable character of the company and its personnel and thus want to continue to do business with them.

Public sentiment has something to do with this phenomenon. If the public is aware of a company’s charitable character then there will naturally be better public sentiment toward that business, if the company at hand enjoys good public sentiment then either more people will want to buy from that business, as in the case of a retail establishment, or the public wont be as quick to make rules restricting that business, as in the case of a manufacturer.

Public works and government social programs tend to be more successful and more efficient if they employ the free-market private sector to accomplish the goals of the program. There have been many examples of the government employing the private sector to accomplish its goals; roads, bridges, canals and other large scale construction being the most common. And recently there has been a sometimes-successful movement towards “privatizing” the programs of the government. The United States Postal Service and some of the states Medical programs are good examples. In all cases the more the private portion of the programs are open to competition, the more efficient and successful the program is. There have been many smaller instances of this phenomenon including opening up such services as, motor-vehicle departments, child foster-care, and public transportation. All of these examples were funded by the authoring government but outsourced to the competitive private sector to the great benefit of all involved. In many cases, such as Fresno Counties Foster Care system, the act of privatizing some, or all of the program transformed it from something that caused only pain to those involved, to something that actually helped those involved in the way it was prescribed to do.

This is a success; we need to implement the idea in other aspects of our economy, especially the governmental side. As a nation we have failed some of the most important jobs prescribed to our government. We have done well with some very important aspects of our government. None rivals our military; we have the best University system in the world, the best postal service, the best highway system, and a few others. Some or all of each one of these programs are open to real competition or run by the private sector.

We need this kind of competition in all of our government services. The most grievous case is our K-through-12 school system. There must be a way to open our schools to real competition so that our young children can enjoy the kind of top-quality education our universities provide to the rest of us. Other services that could benefit from outsourcing are; the accounting and financial oversight arms of government, all the various paper movers like people in the social security office and the IRS, social services like social workers and public housing administrators. These could all benefit from the motivations of the free market.

Some notable exceptions to this rule would be; the fighting arm of our military and intelligence offices, police services, and the actual lawmakers in the three branches of government such as, law-makers, judges and executive office holders and their cabinets.

Additionally, business leaders of all stripes (if they haven’t already) would be wise to make sure some of the fruits of their business are going to the health and welfare of their employees and community alike, as this has proven time and time again to help business to be successful.

Limiting the role of government to health, safety and opportunity.

The most efficient economies throughout history are the ones based on free market capitalism. This form of economy has proven to produce more goods for more people than any other. However left unfettered, this form of economics tends to benefit only the very fittest, and people who start out with opportunity, leaving the rest to depend on the good will of those at the top.

This is where the Government can participate in the economy; only where it can provide more opportunity for the widest group of people possible. The only exception to this is places in the economy that would be more efficient if every member of the society contributed, such as roads and various insurance programs, or where it is in the best interest of the people to have the absolute tightest oversight, such as the military.

For instance, Government can give an education to those who otherwise would not be able to afford it, thus give those people a real opportunity to participate in a free market economy. Government should not be in the business of providing services that do not give a wide section of people an opportunity to make for themselves.

Examples of government providing opportunity are; Roads, this provides all people a chance to travel and move goods and services from one place to another without having to be in any particular class or income level to do so, thus giving everyone a chance to go where they can make for themselves. Schools, if this service were implemented with greater efficiency and equality that it would ensure, at the very least, everyone has an opportunity to get a good education, which is an absolute prerequisite to participate in a competitive free market economy.

Examples of government programs that do not fit under these categories are; social welfare programs that are designed to raise the standard of living for their beneficiaries, i.e. programs that would provide money for people to get cable TV, telephone service or cars; tax breaks and subsidies for select members of the economy as this only serves the interest of the beneficiaries and usually leads to overproduction of a product to the detriment of maximum efficiency in our economy.

Opportunity Economics

Everyday billions of dollars are wasted on welfare. Everyday the top 1% of our world get richer while the rest of us struggle, some of us don’t even get by.

We’ve tried survival of the fittest with absolutist lese fair economics, but we can’t just let everyone who’s not “fittest” starve. We’ve also tried every kind of socialism and communism we can think of; over and over it doesn’t work because people just don’t produce enough and innovation goes down the tubes.

Socialism or Capitalism? Conservative or Liberal? When should the government get involved in our lives? At what point should we put it on our government (and use our tax money) to help out those who don’t have much? What should we use the government for?

These are the questions that we talk over, argue over on the radio and TV, and fight over in campaigns all over the world.

What should be the guidelines to answer these questions?

It’s time to use a guiding principal to come up with the answers to these questions.

Too many times we bring innovative ideas to the floors of congresses and parliaments all over the world and the “other side” either waters them down or they prove to be ineffectual because they're based on outdated theories of how the system should work.

Communism doesn’t work because it denies the opportunity of success to those who want to work harder for more. Lase fair Capitalism doesn’t work because so many people are stuck barely surviving, they never get the opportunity to get ahead, let alone truly find success. But where is the right place in the middle?

If we defined the goal for our government, when it comes to our economy, as one that would provide real opportunity to succeed for the highest number of people, we could have a real guideline for our policies. The government doesn’t provide opportunity to people by giving handouts, and letting people sit at home and watch cable and still live comfortably.

Society as group (our government is part of that) can provide real opportunity for all of our citizens by giving them the tools to succeed in our economy. Some of these tools we partially provide now, i.e. education and relative safety at home and from abroad. But, and a big “but,” some of the things all people need to succeed in our economy are, a healthy body (health care), a healthy mind (mental health care) and a place to start (access to capital) let alone the fact that we don't do education and personal safety very well. These are few. We could probably make a long list.

If we concentrate our resources on making these things available to everyone, without letting people feel entitled to everything for nothing, a much higher portion of people could contribute to our economy to their fullest potential.

One can only imagine what riches that would bring all of us.