For those of you who are new to Supply Side For Survival, allow me to introduce myself. I am the Economist's Apprentice, and it is my intent to offer net surfers a place where discussion of true economic principles is encouraged and appreciated. If you love liberty, this is your blog.
Recently an organization known as the Westboro Baptist Church has become notable for the cruel way in which they vocalize their opinions concerning homosexuality. Their intrusion into the most private moments of a family's life, namely the burial of a child killed in combat, for the purpose of spreading their message has ignited debate at kitchen tables and court rooms across the country concerning the limit of the First Amendment's protection of freedom of speech.
The above video is relatively dated, however, it is demonstrative of the attitudes and behavior of the Westboro Baptist Church's members. Strictly speaking, it is not their beliefs or even the expression of those beliefs that is troubling; what is far more despicable is the license that these protesters are given to impose their presence on others. The first amendment reads as follows, "Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances." No one is arguing that the Westboro Baptist Church doesn't have the right to hold fast to its hateful ideology, the federal government does guarantee you the right to be ignorant if you so choose. But, there are certain aspects of the first amendment which I do believe render the prosecution and ultimate banning of funeral protests, specifically, very much feasible.
Firstly, it is an error to say that the first amendment covers all types of speech at all times and all places. For instance, if I were to stand outside your house, on the street perhaps, and scream obscenities with a megaphone at 2:30 AM, would I be breaking the law? Absolutely. If not you, someone else on the block would certainly report the disturbance to the authorities and I'm positive that my plea of "but what about free speech" would go unheeded. Even if we abstracted away from the type of speech and focused only on the context, the theory of unlimited free speech remains indefensible. Assume that the same time of night and the same megaphone are involved, but change the substance of my ranting from obscenities to a simple recitation of the alphabet. The fundamental problem has not changed, there are people trying to sleep and my unwanted presence is reported. At it's heart, the problem is how to privatize time. When you're sleeping, it is a forgone assumption that you have the right to experience conditions which lend themselves to resting. Legally speaking, you have an expectation of privacy. When that privacy is violated, you are given recourse through our legal system. I might have freedom of speech, but you also have freedom of peace in your own home and therefore have the right to take legal action against those who would disturb you. While it is true that funeral attendees do not flatly own the cemetery grounds, they do "own" the remains being laid to rest. They "own" the experience of completing one of the oldest traditions humanity harbors. They "own" the last memories of their loved one. If everyone possesses unlimited rights, then no rights exist. Westboro's supporters are more than welcome to freely express their speech and opinions at a location where there exists no expectation of privacy such as the national mall or a city park. They are not welcome to express their speech and opinions where such action would serve to diminish the rights of a deceased soldier's family.
Secondly, and perhaps more technically, the section of the first amendment which I call the peaceable assembly clause offers prosecutors a clearly defined medium through which to end Westboro's disruptive and abusive practices. "Congress shall make no law... or the right of the people peaceably to assemble..." Representatives of the Westboro Baptist Church are in fact the opposite of shy with respect to the promulgation of their intent. Their purpose, according to their own testimony, is to pray for and celebrate the injury and death of our nation's brave soldiers. This is, in my opinion, the very definition of "intent to harm", which completely undermines the idea that Westboro protests are "peaceable". You would, rightly, not be permitted to break a business owner's window during the course of a protest just as you are not permitted to purposefully inflict intense emotional damage to mourners in order to establish a political point. Again, the fact that the Westboro Church has the right to express its beliefs bears reiteration, however, for true freedom to endure it is necessary to realize that its rights to speech are in fact limited. Finding the boundary between the rights of different, often conflicting, groups is never an easy task; fortunately, I believe that the solution is already before us, having been written down by a group of patriots centuries ago. If both the letter and the spirit of the first amendment are heeded and enforced, I have no doubt that this nation, this greatest, most generous, most accepting of nations will move forward into the grand future our founders envisioned and will leave the small individuals populating the Westboro Baptist Church far behind, a dysfunctional relic forgotten by history.
Lesson 5 Preview: Why everything you know about public choice is wrong.
Tuesday, October 19, 2010
Saturday, September 11, 2010
We Will Never Forget
For those of you who are new to Supply Side For Survival, allow me to introduce myself. I am the Economist's Apprentice, and it is my intent to offer net surfers a place where discussion of true economic principles is encouraged and appreciated. If you love liberty, this is your blog.
On this day, September 11th, nine years ago, the most merciful, accepting, and prosperous nation in the history of the world was savagely attacked by a group of individuals whose only goal was to create pain, panic, and fear. Words fail me, I am not able to adequately describe the infinite stupidity of those evil perpetrators who murdered thousands and scarred many more. They were a collection of small men, men who, except for their horrific deeds, the world would have certainly forgotten. And that would have been well, for not one of them was in any way worthy of remembrance. They will go down in history simply as a gang of useful idiots, idiots whose blind violence brought about their own demise and the demise of their terrorist compatriots.
On this day, let us all remember and honor the victims of Al Qaeda, those innocents who were never at war with anyone. Let us fill our hearts with love for our neighbors and our nation on this day. The world's most despicable elements conspired on 9/11 to break our structures; they could never hope to break our spirit. The American spirit is one of dignity, of resiliency, of strength in the face of great tribulation. We reached out our hands to the world, and certain elements of that world spit in our face in response. I would ask everyone who pauses to read this to take a moment to honor our murdered brothers and sisters. For my own part, I will continue to pray for the souls of those who were so callously denied life and for all those that loved them, that their pain might be lifted from them.
We must continue, we must be great in order to restore greatness. Tomorrow, on September 12, many of us will sit with our families and watch the Sunday football game, many of us will attend services at our nation's churches. Tomorrow, for most Americans, will be as every other Sunday has been. But, for few, those same familiar rituals will only be reminders of the bitterness that has haunted them for these nine years. If you know someone affected by the 9/11 tragedy, take this opportunity to thank them for their courage and renew your support for them. Through binding together as as Americans we will recover, we will restore our economy and suppress our enemies around the world.
Remember the police, the firefighters, and military personnel who make our nation safe. Remember those whose lives are dedicated to our nation's greatness, those who wake every morning to put on a uniform, pick up a rifle, and stand a post. Show them love, show them appreciation, remember always their sacrifices.
On 9/11, we were attacked. We did not know why, we only knew that we did not deserve it. Soon after, we vowed to bring the cowards who were responsible to justice, we have succeeded often in doing so but the work is not finished. I can think of no more fitting tribute to those who lost their lives than to punish their killers and then to declare the victory of freedom and peace over the philosophy of hate espoused by the followers of radical Islam. We will go on, we will defeat them, we will end terrorism, we will secure our nation, we will regain our strength, we will love those who were left behind, we will never forget.
On this day, September 11th, nine years ago, the most merciful, accepting, and prosperous nation in the history of the world was savagely attacked by a group of individuals whose only goal was to create pain, panic, and fear. Words fail me, I am not able to adequately describe the infinite stupidity of those evil perpetrators who murdered thousands and scarred many more. They were a collection of small men, men who, except for their horrific deeds, the world would have certainly forgotten. And that would have been well, for not one of them was in any way worthy of remembrance. They will go down in history simply as a gang of useful idiots, idiots whose blind violence brought about their own demise and the demise of their terrorist compatriots.
On this day, let us all remember and honor the victims of Al Qaeda, those innocents who were never at war with anyone. Let us fill our hearts with love for our neighbors and our nation on this day. The world's most despicable elements conspired on 9/11 to break our structures; they could never hope to break our spirit. The American spirit is one of dignity, of resiliency, of strength in the face of great tribulation. We reached out our hands to the world, and certain elements of that world spit in our face in response. I would ask everyone who pauses to read this to take a moment to honor our murdered brothers and sisters. For my own part, I will continue to pray for the souls of those who were so callously denied life and for all those that loved them, that their pain might be lifted from them.
We must continue, we must be great in order to restore greatness. Tomorrow, on September 12, many of us will sit with our families and watch the Sunday football game, many of us will attend services at our nation's churches. Tomorrow, for most Americans, will be as every other Sunday has been. But, for few, those same familiar rituals will only be reminders of the bitterness that has haunted them for these nine years. If you know someone affected by the 9/11 tragedy, take this opportunity to thank them for their courage and renew your support for them. Through binding together as as Americans we will recover, we will restore our economy and suppress our enemies around the world.
Remember the police, the firefighters, and military personnel who make our nation safe. Remember those whose lives are dedicated to our nation's greatness, those who wake every morning to put on a uniform, pick up a rifle, and stand a post. Show them love, show them appreciation, remember always their sacrifices.
On 9/11, we were attacked. We did not know why, we only knew that we did not deserve it. Soon after, we vowed to bring the cowards who were responsible to justice, we have succeeded often in doing so but the work is not finished. I can think of no more fitting tribute to those who lost their lives than to punish their killers and then to declare the victory of freedom and peace over the philosophy of hate espoused by the followers of radical Islam. We will go on, we will defeat them, we will end terrorism, we will secure our nation, we will regain our strength, we will love those who were left behind, we will never forget.
Wednesday, August 11, 2010
Lesson 4: The Tools Of The Trade
For those of you who are new to Supply Side For Survival, allow me to introduce myself. I am the Economist's Apprentice, and it is my intent to offer net surfers a place where discussion of true economic principles is encouraged and appreciated. If you love liberty, this is your blog.
It has come time to abstract away from the current economic crisis plaguing the United States and turn our attention instead to the theoretical understanding of the most important laws of economics, the laws of supply and demand. Without literacy in economic theory, analysis of current events becomes impossible, therefore, from time to time, I expect I will cover many dimensions of pure theory in future articles. While these discussions will be relatively fewer than those concerning current issues, they are extremely important in the education of any up and coming economist.
The laws of supply and demand are widely cited but very rarely understood on a fundamental level. Most importantly, supply and demand are the forces responsible for the existence of prices. The laws yield this outcome through what we call an "auction" process, in which the two forces of supply and demand interact to create a mutually agreeable price.
Imagine that you are a car salesman and that you specialize in selling high end sports cars. When given the chance, it is obvious that you would always accept a higher price for your goods. If you say to a customer, "That car is $50,000", and the customer responds, "I'll give you $100,000", you might want to sell that person more cars wouldn't you? Formally stated, the law of supply states that there is a positive relationship between price and quantity supplied of a good. Graphically, a supply curve looks like as follows.
(Image from netmba.com)
Now, how does one determine a price from the above graph? Were it up to the car salesman the price would tend off to infinity. But this is obviously not the case, finite prices do exist, we simply cannot yet derive them because the above graph neglects the law of demand which is the other half of the price equation. The law of demand is simply the inverse of the law of supply. If you are a buyer looking for a high end sports car, you want to pay as little as possible because that is in your interest. If you say to the salesman, "I'll give you $50,000 for that car", and the salesman says, "You can have it for free", you would certainly purchase many cars from that salesman. Formally, the law of demand states that there is a negative relationship between price and quantity demanded of a good. Graphically, that law of demand is thus.
(Image from netmba.com)
With both supply and demand understood, the origin of prices becomes obvious when both laws are accounted for graphically.
(Image from tatulln.wordpress.com)
The space at which the two curves intersect is of utmost importance, for that particular spot is the point at which both buyers and sellers of a given product desire to execute a transaction. At this point, known as the "equilibrium point", the market will clear, meaning that producers produce exactly as much as consumers want to buy. So, in keeping with the above hypothetical example, if a market is in equilibrium then the buyer will want one car and the dealer will want to sell one at a price of $50,000. If the price were above the equilibrium point, the seller would want to sell more than one car but the buyer would not want to buy even one, leading to a surplus or a higher quantity supplied than demanded. Conversely, were the price to be below the equilibrium level then the seller would not want to sell as many cars as consumers would like to purchase, leading to a shortage or a higher quantity demanded than supplied. Such effects are illustrated below.
(Image from www.easonline.org)
It is through the auction process that the two conflicting laws of supply and demand yield harmony. Free markets are essential in that they lead to efficient outcomes through facilitating the auction process; without a system which leads to agreement between sellers who want an unlimited amount of money and buyers who want to pay nothing for a product there would only exist terrible shortages of desired goods or hindering abundances of undesired goods. Such was the reality of the former soviet empire in which the communist government attempted to set prices independently of market forces. The result of the government's effort to "make food affordable" by lowering the price artificially was to incentivize producers to produce little and to incentivize consumers to consume much, in other words, a shortage.
(Empty Russian grocery store, image from newsimg.bbc.co.uk)
It is tragic to think that suffering such as this might have been avoided were it not for the arrogance of socialism. Bureaucrats regulating the food industry in the Soviet Union believed themselves to possess more knowledge than an entire market which is only the amalgamation of countless thousands of individuals. Because they believed that they could name a better price than the auction system stemming from the free market, Russian officials doomed many of their citizens to starvation. It is necessary that even the most elementary laws of economics be understood by public servants of all nations; without comprehension of supply and demand the creation of sensible policy becomes dramatically impeded. Prices are real, they exist, and economic truth is elusive to say the least when they are ignored.
Lesson 5 Preview: Free speech or verbal assault?
It has come time to abstract away from the current economic crisis plaguing the United States and turn our attention instead to the theoretical understanding of the most important laws of economics, the laws of supply and demand. Without literacy in economic theory, analysis of current events becomes impossible, therefore, from time to time, I expect I will cover many dimensions of pure theory in future articles. While these discussions will be relatively fewer than those concerning current issues, they are extremely important in the education of any up and coming economist.
The laws of supply and demand are widely cited but very rarely understood on a fundamental level. Most importantly, supply and demand are the forces responsible for the existence of prices. The laws yield this outcome through what we call an "auction" process, in which the two forces of supply and demand interact to create a mutually agreeable price.
Imagine that you are a car salesman and that you specialize in selling high end sports cars. When given the chance, it is obvious that you would always accept a higher price for your goods. If you say to a customer, "That car is $50,000", and the customer responds, "I'll give you $100,000", you might want to sell that person more cars wouldn't you? Formally stated, the law of supply states that there is a positive relationship between price and quantity supplied of a good. Graphically, a supply curve looks like as follows.
(Image from netmba.com)
Now, how does one determine a price from the above graph? Were it up to the car salesman the price would tend off to infinity. But this is obviously not the case, finite prices do exist, we simply cannot yet derive them because the above graph neglects the law of demand which is the other half of the price equation. The law of demand is simply the inverse of the law of supply. If you are a buyer looking for a high end sports car, you want to pay as little as possible because that is in your interest. If you say to the salesman, "I'll give you $50,000 for that car", and the salesman says, "You can have it for free", you would certainly purchase many cars from that salesman. Formally, the law of demand states that there is a negative relationship between price and quantity demanded of a good. Graphically, that law of demand is thus.
(Image from netmba.com)
With both supply and demand understood, the origin of prices becomes obvious when both laws are accounted for graphically.
(Image from tatulln.wordpress.com)
The space at which the two curves intersect is of utmost importance, for that particular spot is the point at which both buyers and sellers of a given product desire to execute a transaction. At this point, known as the "equilibrium point", the market will clear, meaning that producers produce exactly as much as consumers want to buy. So, in keeping with the above hypothetical example, if a market is in equilibrium then the buyer will want one car and the dealer will want to sell one at a price of $50,000. If the price were above the equilibrium point, the seller would want to sell more than one car but the buyer would not want to buy even one, leading to a surplus or a higher quantity supplied than demanded. Conversely, were the price to be below the equilibrium level then the seller would not want to sell as many cars as consumers would like to purchase, leading to a shortage or a higher quantity demanded than supplied. Such effects are illustrated below.
(Image from www.easonline.org)
It is through the auction process that the two conflicting laws of supply and demand yield harmony. Free markets are essential in that they lead to efficient outcomes through facilitating the auction process; without a system which leads to agreement between sellers who want an unlimited amount of money and buyers who want to pay nothing for a product there would only exist terrible shortages of desired goods or hindering abundances of undesired goods. Such was the reality of the former soviet empire in which the communist government attempted to set prices independently of market forces. The result of the government's effort to "make food affordable" by lowering the price artificially was to incentivize producers to produce little and to incentivize consumers to consume much, in other words, a shortage.
(Empty Russian grocery store, image from newsimg.bbc.co.uk)
It is tragic to think that suffering such as this might have been avoided were it not for the arrogance of socialism. Bureaucrats regulating the food industry in the Soviet Union believed themselves to possess more knowledge than an entire market which is only the amalgamation of countless thousands of individuals. Because they believed that they could name a better price than the auction system stemming from the free market, Russian officials doomed many of their citizens to starvation. It is necessary that even the most elementary laws of economics be understood by public servants of all nations; without comprehension of supply and demand the creation of sensible policy becomes dramatically impeded. Prices are real, they exist, and economic truth is elusive to say the least when they are ignored.
Lesson 5 Preview: Free speech or verbal assault?
Monday, August 2, 2010
Lesson 3: Is Greece Keynes's Legacy?
For those of you who are new to Supply Side For Survival, allow me to introduce myself. I am the Economist's Apprentice, and it is my intent to offer net surfers a place where discussion of true economic principles is encouraged and appreciated. If you love liberty, this is your blog.
Congressman Barney Frank seems to have found the solution to all of America's woes. Some time ago, this most recognizable congressman took part in the following exchange.
(Original video found at http://www.youtube.com/watch?v=u1Mazjm_A5k)
Keynesianism... what is it? Students are told from elementary school through their collegiate studies that Keynesianism is what saved America from the ravages of The Great Depression of the 1930's, they are told that Lord Keynes discovered a guaranteed way to end recessions. We should not worry, our professors say, because, should a problem arise in the economy, our dear leaders will simply resort to Keynesian policies and all shall be well. What most of these teachers and professors fail to do, however, is to actually inform their students as to what Keynesianism is. This unfortunate situation certainly stems from the fact that most of those same professors in fact fail to understand Keynes's theories themselves. I dedicate this lesson to their enlightenment.
Keynes's approach to economics is based on a couple of major tenants, the first being that recessions are caused by a "general glut", and the second being that excess savings are harmful and slow an economy's recovery. In order to solve the looming crisis of the general glut, Keynes suggests that the excess savings amassed by the population be spent, via government intervention, in order to provide stimulation for an ailing economy. To understand why Keynes is misguided, to say the least, it is first necessary to understand what exactly is meant by the theories which drew him to his ultimately flawed conclusion.
A general glut is a concept that is simply bizarre. The idea driving the theory is that an increase in production will cause prices to fall, necessitating more production in order to make up for lost revenue because of the lower prices. The theory goes on to say that this process will continue ad infinitum. Strictly speaking, it is true that when supply increases for a given market the price for the good that market produces does go down, but, that is the point, this effect occurs in a given market. What the general glut theory suggests is that this effect can occur in all markets simultaneously. However, economic theory suggests that such an occurrence is impossible. What the general glut theory completely ignores is the central guiding principle underpinning all of modern economics, which is scarcity. If one producer buys all of a given resource, wood perhaps, to build houses, then at least in the short run a furniture maker would have no access to wood to pursue his work. Under such conditions, the market would see not only a large increase in the supply of houses forcing the price of housing down, but also a massive decrease in the supply of furniture which would cause the price of furniture to increase dramatically. Under the general glut theorem, both of these commodities as well as every other commodity in production would see their prices fall. However, because of competition over resources, as well as dynamic consumer markets which consistently seek out new goods whose prices are prime for bidding up, the general glut theorem is not so much a theorem as it is a myth.
Keynes is not correct, but, assuming that he were and that the general glut did exist, would his subsequent arguments then prevail? Keynes posits that private savings made in response to the onset of a recession only serve to further slow the economy and that those savings must be forcibly circulated so that investment might increase thereby alleviating the recession. I do not believe that Keynes had in mind actual seizure of the citizenry's assets, but I do believe he favored deficit government spending, which would eventually have to be paid for through higher taxes or a lower standard of living. This argument makes several assumptions which are obviously not tenable. First, as I previously mentioned, any deficit spending enacted today must be paid for tomorrow. So, even if the best case scenario is assumed and the economy is restored to its previous standards due to the introduction of stimulation, the following increase in taxes would certainly lead the people back into the recession from which they were just supposedly freed. But that is the best case scenario, the worst case scenario stems from Keynes's second flawed assumption with respect to government spending. Keynes implicitly assumes that government is efficient in the way it spends money, giving dollars to organizations that will help return the economy to growth. However, economic theories from the subset of economics known as "public choice" refute that assumption; additionally, observation of the U.S federal government's behavior over the past years makes the idea that government is efficient laughable.
Recently Senators McCain and Coburn released a document highlighting the 100 most wasteful stimulus projects. Here are a few.
• $554,763 for the Forest Service to replace windows in a closed visitor center at Mount St. Helens
• $762,372 to create “Dance Draw” interactive dance software
• $62 million for a tunnel to nowhere in Pittsburgh, PA that even Governor, Ed Rendell called “a tragic mistake”
• $1.9 million for international ant research
• $1.8 million for a road project that is threatening a pastor’s home
• $308 million for a joint clean energy venture with…BP
• $89,298 to replace a new sidewalk that leads to a ditch in Boynton, OK
• $3.8 million for a “streetscaping” project that has reduced traffic and caused a business to fire two employees
• $16 million to help Boeing to clean up an environmental mess it created in 2007
• $200,000 to help Siberian communities lobby Russian policy makers
• $39.7 million to upgrade the statehouse and political offices in Topeka, Kansas
• $760,000 to Georgia Tech to study improvised music
• $700,000 to study why monkeys respond negatively to inequity
• $193,956 to study voter perceptions of the economic stimulus
• $363,760 to help NIH promote the positive impacts of stimulus projects
• $456,663 to study the circulation of Neptune’s atmosphere
• $529,648 to study the effects of local populations on the environment…in the Himalayas
(http://coburn.senate.gov/public/index.cfm/pressreleases?ContentRecord_id=20532b9f-f9ae-46d7-b2bf-0f01cd75d90d)
It must be recognized, even if the general glut theorem were to exist, the solutions to the supposed problem that Keynes offers are not worth the paper they're printed on. Keynesianism is, fundamentally, socialist non-sense. Lord Keynes did not end The Great Depression, the American people regained their prosperity in spite of him, not because of him. Keynesian policies go against the elemental liberties of the American people to keep the money they have earned by the sweat of their brow and to have a government which protects them from threats, not inflicts threats upon them. To Representative Frank, I would say only that I feel sorry for a man who is so enamoured with the idea of holding power over his fellow man and neighbor. If Mr. Frank is listening, I entreat him to understand...it is Keynesianism that is the disease, not the cure. America was built by free individuals exercising their right to self determination, not by Keynesian theoreticians deciding they know how to better use the resources earned and saved by the people. Keynesianism is a lie, Keynes is a liar, and as for Barney Frank, perhaps he should think about moving to Greece. After all, if Keynes was so insightful, Barney should be able to find a great job and lots of wealth for himself in Greece.........right? Wrong. Greece today is failing because they have followed Keynes, they are not floundering because they have deviated from him. The proof as they say is in the pudding, and it looks like Greece made a mess in the kitchen. I, The Economist's Apprentice, am proud today to proclaim the death of Keynesianism. Let it rest in peace and be forgotten.
Lesson 4 preview: The tools of the trade and a few applications too.
Congressman Barney Frank seems to have found the solution to all of America's woes. Some time ago, this most recognizable congressman took part in the following exchange.
(Original video found at http://www.youtube.com/watch?v=u1Mazjm_A5k)
Keynesianism... what is it? Students are told from elementary school through their collegiate studies that Keynesianism is what saved America from the ravages of The Great Depression of the 1930's, they are told that Lord Keynes discovered a guaranteed way to end recessions. We should not worry, our professors say, because, should a problem arise in the economy, our dear leaders will simply resort to Keynesian policies and all shall be well. What most of these teachers and professors fail to do, however, is to actually inform their students as to what Keynesianism is. This unfortunate situation certainly stems from the fact that most of those same professors in fact fail to understand Keynes's theories themselves. I dedicate this lesson to their enlightenment.
Keynes's approach to economics is based on a couple of major tenants, the first being that recessions are caused by a "general glut", and the second being that excess savings are harmful and slow an economy's recovery. In order to solve the looming crisis of the general glut, Keynes suggests that the excess savings amassed by the population be spent, via government intervention, in order to provide stimulation for an ailing economy. To understand why Keynes is misguided, to say the least, it is first necessary to understand what exactly is meant by the theories which drew him to his ultimately flawed conclusion.
A general glut is a concept that is simply bizarre. The idea driving the theory is that an increase in production will cause prices to fall, necessitating more production in order to make up for lost revenue because of the lower prices. The theory goes on to say that this process will continue ad infinitum. Strictly speaking, it is true that when supply increases for a given market the price for the good that market produces does go down, but, that is the point, this effect occurs in a given market. What the general glut theory suggests is that this effect can occur in all markets simultaneously. However, economic theory suggests that such an occurrence is impossible. What the general glut theory completely ignores is the central guiding principle underpinning all of modern economics, which is scarcity. If one producer buys all of a given resource, wood perhaps, to build houses, then at least in the short run a furniture maker would have no access to wood to pursue his work. Under such conditions, the market would see not only a large increase in the supply of houses forcing the price of housing down, but also a massive decrease in the supply of furniture which would cause the price of furniture to increase dramatically. Under the general glut theorem, both of these commodities as well as every other commodity in production would see their prices fall. However, because of competition over resources, as well as dynamic consumer markets which consistently seek out new goods whose prices are prime for bidding up, the general glut theorem is not so much a theorem as it is a myth.
Keynes is not correct, but, assuming that he were and that the general glut did exist, would his subsequent arguments then prevail? Keynes posits that private savings made in response to the onset of a recession only serve to further slow the economy and that those savings must be forcibly circulated so that investment might increase thereby alleviating the recession. I do not believe that Keynes had in mind actual seizure of the citizenry's assets, but I do believe he favored deficit government spending, which would eventually have to be paid for through higher taxes or a lower standard of living. This argument makes several assumptions which are obviously not tenable. First, as I previously mentioned, any deficit spending enacted today must be paid for tomorrow. So, even if the best case scenario is assumed and the economy is restored to its previous standards due to the introduction of stimulation, the following increase in taxes would certainly lead the people back into the recession from which they were just supposedly freed. But that is the best case scenario, the worst case scenario stems from Keynes's second flawed assumption with respect to government spending. Keynes implicitly assumes that government is efficient in the way it spends money, giving dollars to organizations that will help return the economy to growth. However, economic theories from the subset of economics known as "public choice" refute that assumption; additionally, observation of the U.S federal government's behavior over the past years makes the idea that government is efficient laughable.
Recently Senators McCain and Coburn released a document highlighting the 100 most wasteful stimulus projects. Here are a few.
• $554,763 for the Forest Service to replace windows in a closed visitor center at Mount St. Helens
• $762,372 to create “Dance Draw” interactive dance software
• $62 million for a tunnel to nowhere in Pittsburgh, PA that even Governor, Ed Rendell called “a tragic mistake”
• $1.9 million for international ant research
• $1.8 million for a road project that is threatening a pastor’s home
• $308 million for a joint clean energy venture with…BP
• $89,298 to replace a new sidewalk that leads to a ditch in Boynton, OK
• $3.8 million for a “streetscaping” project that has reduced traffic and caused a business to fire two employees
• $16 million to help Boeing to clean up an environmental mess it created in 2007
• $200,000 to help Siberian communities lobby Russian policy makers
• $39.7 million to upgrade the statehouse and political offices in Topeka, Kansas
• $760,000 to Georgia Tech to study improvised music
• $700,000 to study why monkeys respond negatively to inequity
• $193,956 to study voter perceptions of the economic stimulus
• $363,760 to help NIH promote the positive impacts of stimulus projects
• $456,663 to study the circulation of Neptune’s atmosphere
• $529,648 to study the effects of local populations on the environment…in the Himalayas
(http://coburn.senate.gov/public/index.cfm/pressreleases?ContentRecord_id=20532b9f-f9ae-46d7-b2bf-0f01cd75d90d)
It must be recognized, even if the general glut theorem were to exist, the solutions to the supposed problem that Keynes offers are not worth the paper they're printed on. Keynesianism is, fundamentally, socialist non-sense. Lord Keynes did not end The Great Depression, the American people regained their prosperity in spite of him, not because of him. Keynesian policies go against the elemental liberties of the American people to keep the money they have earned by the sweat of their brow and to have a government which protects them from threats, not inflicts threats upon them. To Representative Frank, I would say only that I feel sorry for a man who is so enamoured with the idea of holding power over his fellow man and neighbor. If Mr. Frank is listening, I entreat him to understand...it is Keynesianism that is the disease, not the cure. America was built by free individuals exercising their right to self determination, not by Keynesian theoreticians deciding they know how to better use the resources earned and saved by the people. Keynesianism is a lie, Keynes is a liar, and as for Barney Frank, perhaps he should think about moving to Greece. After all, if Keynes was so insightful, Barney should be able to find a great job and lots of wealth for himself in Greece.........right? Wrong. Greece today is failing because they have followed Keynes, they are not floundering because they have deviated from him. The proof as they say is in the pudding, and it looks like Greece made a mess in the kitchen. I, The Economist's Apprentice, am proud today to proclaim the death of Keynesianism. Let it rest in peace and be forgotten.
Lesson 4 preview: The tools of the trade and a few applications too.
Sunday, July 25, 2010
Lesson 2:How To Make A Free Education Cheaper
For those of you who are new to Supply Side For Survival, allow me to introduce myself. I am the Economist's Apprentice, and it is my intent to offer net surfers a place where discussion of true economic principles is encouraged and appreciated. If you love liberty, this is your blog.
Lesson 1 recap: America faces a crisis the likes of which she has not seen in decades, and many causes of that crisis have been identified by both the old and new media. However, what all of these causes have in common is that they might all have been avoided were the majority of voters residing within the U.S properly educated in economic theory and philosophy. This lapse in the education of so many Americans is due in large part to the unionization of America's educators; union members are self interested as are all human beings, however, the alliance of the unions with the left has created a situation in which there is no check on the union's ability to secure that which it desires. Not wanting to lose that nearly unlimited flow of resources, the teachers unions have actively sought to eliminate the enemy of socialist thought, which is economic science, from the classroom. As a consequence, policy after policy is enacted with far too few truly understanding the ramifications of those policies. In an effort to secure their existence, the unions have put in jeopardy the existence of many other institutions, not least of which are the U.S banking system and the U.S treasury. Through failing to educate, teachers expect to benefit; such a system cannot last, and the current crisis is the harbinger of that system's downfall.
Begin Lesson 2
Solutions. A word with three syllables. The shortness of the word is deceiving to say the least. At the individual level, a solution to a problem may take days to formulate. A single bankrupt person might spend hours on a phone speaking to a bank representative only to realize that the resolution to his problem might take months or even years of disciplined saving and sacrifice. The broken education system will not be repaired in one day or even one presidency, but just as a debtor who is forced to sell his house must necessarily take active steps to survive even though he knows it will be long before he feels the benefits of his actions, the process must begin at some point. Therefore I, with admittedly little hope of being heeded, urge our current policy makers to immediately begin drafting legislation aimed at abolishing government run public schools and replacing them with a voucher program.
Many might ask why not simply remove government influence from education entirely, however, it is beyond doubt that an educated populace is necessary for the continued growth of an economy. While I might be accused of trending normative, I posit that growth is a good thing. Growth alleviates poverty, growth makes a society better. Therefore, to maintain innovation and growth by extension, I wholeheartedly believe that Americans must educate and continue to be educated.
It only remains to be seen how this goal can be accomplished, the economic weight of the current system is crushing, the current U.S school system might be compared to a black hole into which money is poured, forever removed from the universe. It is here that a voucher system becomes absolutely necessary. A school voucher, by definition, is as follows, "A school voucher, also called an education voucher, is a certificate issued by the government which parents can apply toward tuition at a private school, rather than at the public school to which their child is assigned." (http://www.google.com/search?hl=en&defl=en&q=define:voucher&sa=X&ei=ggtNTJXgCoOKlwef_eX1DQ&ved=0CBIQkAE) While the difference between a monolithic public school system and a voucher program might seem superficial, the difference is actually profound. The difference is choice. Under current law, if a school is failing, public school parents are not permitted to send their children to a neighboring school. If a government school is teaching a student certain moral, or immoral, values of which a parent disapproves, it is difficult to remove the child from the situation. Vouchers, given the necessity of education, are freedom enhancing. Before the economics of vouchers are covered this central philosophy must be understood.
But with respect to the economics of vouchers, two aspects stand above all others as noteworthy. The first is the theoretical foundation of vouchers which demonstrates the effects of vouchers on a given market. The second is a breakdown of the cost of private education vis a vis the U.S public school system. The first aspect deserves an entire lecture dedicated to it in and of itself, so, in the interest of keeping this lesson focused, I will concentrate on communicating the statistical superiority of a voucher system here and cover the economics of vouchers at a later date in an appendix to this lecture.
In the year 2000, the average expenditure on a single student for one year in the public school system was $8,923 in terms of 2008 dollars. (http://nces.ed.gov/fastfacts/display.asp?id=66) I use data for public schools from 2000 because 2000 is the latest year for which my research yielded reliable data on private school costs. It would be incorrect to compare public and private schools using data taken from different years. Therefore, in keeping with statistical rigor, the average cost of putting a student through a year of private schooling in the year 2000 was $3,267. (http://www.cato.org/pub_display.php?pub_id=3231) So, even if the taxpayer were still stuck with the bill after the enactment of a voucher program, they would probably be much happier regardless as the average cost of putting a student through one year of private schooling is approximately one third the cost of one year in a public school.
As an aside, while I was unable to discover any aggregate descriptions of private school costs nationwide beyond the year 2000, I researched tuition costs at several specific private schools from several states. It is clear that the expense gap between public and private schools remains as public education has only continued to increase in cost ($10,041 for one year in terms of 2008 dollars as of 2007)(http://nces.ed.gov/fastfacts/display.asp?id=66) and these as well as many other private schools come in well below.
Name Variety State Cost
Holy Cross Academy High School Florida $2,800
Iverness Christian Academy Pk-12 Florida $3,560-$4,290
Hampton Christian Schools Middle/High Virginia $4,943-$5,938
Grace Christian School Pk-12 Virginia $4,968
Adventure Christian School Pk-8 California $4,600
Escondido Christian School Pk-8 California $4,875-$5,075
American Christian School Pk-12 Oklahoma $4,200-$4,700
of Bartlesville
Rejoice Christian School Pk-12 Oklahoma $4,590-$5,200
Penobscot Christian School Pk-8 Maine $1,560-$4,260
Vineyard Christian School Pk-12 Maine $1,500-$3,600
School Websites
http://www.holycrossacademy.com/Registration%20and%20Tuition.htm
http://l.b5z.net/i/u/10072803/f/Tuition_and_Fees_2010-2011.pdf
http://www.hamptonchristianschools.com/admissionforms/10_11/pricelist2010.pdf
http://www.gcswarriors.org/
http://teacherweb.com/CA/AdventureChristianSchool/Homepage/apt1.aspx
http://www.ecslions.org/Tuition%20Rates%2009-10.pdf
http://www.acsb.org/PDF%20docs/Tuition%20Schedule%20%282010-2011%29.pdf
http://rejoiceschool.com/index.php?nid=21529&s=ms
http://www.penobscot-christian.pvt.k12.me.us/TuitionandFees1011.pdf
http://www.vineyardschool.net/images/admissions/2010_Enrollment_Forms.pdf
Freedom and choice are the answer. Collectivism broke the education system and only returning the system into the hands of the millions of consumers who utilize it will repair it. Parents need the freedom to instill their own values in their children, not the values of the education "czar", congressional liberals, or unionized "educators". It is necessary that children have an education because without one their freedom is limited in ways too many to tabulate, however, while this is true, it is important to understand that many who support bureaucracy run schools use the same defense of their arguments. But, it must be noted, those who make use of the "necessity" defense while simultaneously promulgating the virtue of state schools commit an elementary error. To believe in giving children an education through public schools is not to be noble, but is simply to be confused. This is so because such a statement presumes that it is possible to receive a quality education from a public school and, given the flat or falling trend of SAT scores over the past years, it would seem that that is not the case. (http://nces.ed.gov/programs/digest/d09/tables/dt09_146.asp)
However, hope for our nation's education system yet remains. Unlike the "public schools because of necessity" argument, the necessity argument coupled with school choice for children through vouchers satisfies the requirements of logic. If the people of this amazing nation are able to rally themselves and vote into power lawmakers who understand the need of the people to be left free to make schools compete for their business, then parents will see reduced costs, students will see better teachers, and governments will see mercifully deflated budgets. The question posed by unionized education finds its answer in the principles laid down by our nation's fathers; individuals, when left free to choose their own destinies, are capable of creating marvels beyond the imagination of bloated, over-intrusive government agencies. When liberty is assured, knowledge derived from education reigns supreme.
Lesson 3 preview: Keynes....................... A General Theory on why Greece is so successful?
Lesson 1 recap: America faces a crisis the likes of which she has not seen in decades, and many causes of that crisis have been identified by both the old and new media. However, what all of these causes have in common is that they might all have been avoided were the majority of voters residing within the U.S properly educated in economic theory and philosophy. This lapse in the education of so many Americans is due in large part to the unionization of America's educators; union members are self interested as are all human beings, however, the alliance of the unions with the left has created a situation in which there is no check on the union's ability to secure that which it desires. Not wanting to lose that nearly unlimited flow of resources, the teachers unions have actively sought to eliminate the enemy of socialist thought, which is economic science, from the classroom. As a consequence, policy after policy is enacted with far too few truly understanding the ramifications of those policies. In an effort to secure their existence, the unions have put in jeopardy the existence of many other institutions, not least of which are the U.S banking system and the U.S treasury. Through failing to educate, teachers expect to benefit; such a system cannot last, and the current crisis is the harbinger of that system's downfall.
Begin Lesson 2
Solutions. A word with three syllables. The shortness of the word is deceiving to say the least. At the individual level, a solution to a problem may take days to formulate. A single bankrupt person might spend hours on a phone speaking to a bank representative only to realize that the resolution to his problem might take months or even years of disciplined saving and sacrifice. The broken education system will not be repaired in one day or even one presidency, but just as a debtor who is forced to sell his house must necessarily take active steps to survive even though he knows it will be long before he feels the benefits of his actions, the process must begin at some point. Therefore I, with admittedly little hope of being heeded, urge our current policy makers to immediately begin drafting legislation aimed at abolishing government run public schools and replacing them with a voucher program.
Many might ask why not simply remove government influence from education entirely, however, it is beyond doubt that an educated populace is necessary for the continued growth of an economy. While I might be accused of trending normative, I posit that growth is a good thing. Growth alleviates poverty, growth makes a society better. Therefore, to maintain innovation and growth by extension, I wholeheartedly believe that Americans must educate and continue to be educated.
It only remains to be seen how this goal can be accomplished, the economic weight of the current system is crushing, the current U.S school system might be compared to a black hole into which money is poured, forever removed from the universe. It is here that a voucher system becomes absolutely necessary. A school voucher, by definition, is as follows, "A school voucher, also called an education voucher, is a certificate issued by the government which parents can apply toward tuition at a private school, rather than at the public school to which their child is assigned." (http://www.google.com/search?hl=en&defl=en&q=define:voucher&sa=X&ei=ggtNTJXgCoOKlwef_eX1DQ&ved=0CBIQkAE) While the difference between a monolithic public school system and a voucher program might seem superficial, the difference is actually profound. The difference is choice. Under current law, if a school is failing, public school parents are not permitted to send their children to a neighboring school. If a government school is teaching a student certain moral, or immoral, values of which a parent disapproves, it is difficult to remove the child from the situation. Vouchers, given the necessity of education, are freedom enhancing. Before the economics of vouchers are covered this central philosophy must be understood.
But with respect to the economics of vouchers, two aspects stand above all others as noteworthy. The first is the theoretical foundation of vouchers which demonstrates the effects of vouchers on a given market. The second is a breakdown of the cost of private education vis a vis the U.S public school system. The first aspect deserves an entire lecture dedicated to it in and of itself, so, in the interest of keeping this lesson focused, I will concentrate on communicating the statistical superiority of a voucher system here and cover the economics of vouchers at a later date in an appendix to this lecture.
In the year 2000, the average expenditure on a single student for one year in the public school system was $8,923 in terms of 2008 dollars. (http://nces.ed.gov/fastfacts/display.asp?id=66) I use data for public schools from 2000 because 2000 is the latest year for which my research yielded reliable data on private school costs. It would be incorrect to compare public and private schools using data taken from different years. Therefore, in keeping with statistical rigor, the average cost of putting a student through a year of private schooling in the year 2000 was $3,267. (http://www.cato.org/pub_display.php?pub_id=3231) So, even if the taxpayer were still stuck with the bill after the enactment of a voucher program, they would probably be much happier regardless as the average cost of putting a student through one year of private schooling is approximately one third the cost of one year in a public school.
As an aside, while I was unable to discover any aggregate descriptions of private school costs nationwide beyond the year 2000, I researched tuition costs at several specific private schools from several states. It is clear that the expense gap between public and private schools remains as public education has only continued to increase in cost ($10,041 for one year in terms of 2008 dollars as of 2007)(http://nces.ed.gov/fastfacts/display.asp?id=66) and these as well as many other private schools come in well below.
Name Variety State Cost
Holy Cross Academy High School Florida $2,800
Iverness Christian Academy Pk-12 Florida $3,560-$4,290
Hampton Christian Schools Middle/High Virginia $4,943-$5,938
Grace Christian School Pk-12 Virginia $4,968
Adventure Christian School Pk-8 California $4,600
Escondido Christian School Pk-8 California $4,875-$5,075
American Christian School Pk-12 Oklahoma $4,200-$4,700
of Bartlesville
Rejoice Christian School Pk-12 Oklahoma $4,590-$5,200
Penobscot Christian School Pk-8 Maine $1,560-$4,260
Vineyard Christian School Pk-12 Maine $1,500-$3,600
School Websites
http://www.holycrossacademy.com/Registration%20and%20Tuition.htm
http://l.b5z.net/i/u/10072803/f/Tuition_and_Fees_2010-2011.pdf
http://www.hamptonchristianschools.com/admissionforms/10_11/pricelist2010.pdf
http://www.gcswarriors.org/
http://teacherweb.com/CA/AdventureChristianSchool/Homepage/apt1.aspx
http://www.ecslions.org/Tuition%20Rates%2009-10.pdf
http://www.acsb.org/PDF%20docs/Tuition%20Schedule%20%282010-2011%29.pdf
http://rejoiceschool.com/index.php?nid=21529&s=ms
http://www.penobscot-christian.pvt.k12.me.us/TuitionandFees1011.pdf
http://www.vineyardschool.net/images/admissions/2010_Enrollment_Forms.pdf
Freedom and choice are the answer. Collectivism broke the education system and only returning the system into the hands of the millions of consumers who utilize it will repair it. Parents need the freedom to instill their own values in their children, not the values of the education "czar", congressional liberals, or unionized "educators". It is necessary that children have an education because without one their freedom is limited in ways too many to tabulate, however, while this is true, it is important to understand that many who support bureaucracy run schools use the same defense of their arguments. But, it must be noted, those who make use of the "necessity" defense while simultaneously promulgating the virtue of state schools commit an elementary error. To believe in giving children an education through public schools is not to be noble, but is simply to be confused. This is so because such a statement presumes that it is possible to receive a quality education from a public school and, given the flat or falling trend of SAT scores over the past years, it would seem that that is not the case. (http://nces.ed.gov/programs/digest/d09/tables/dt09_146.asp)
However, hope for our nation's education system yet remains. Unlike the "public schools because of necessity" argument, the necessity argument coupled with school choice for children through vouchers satisfies the requirements of logic. If the people of this amazing nation are able to rally themselves and vote into power lawmakers who understand the need of the people to be left free to make schools compete for their business, then parents will see reduced costs, students will see better teachers, and governments will see mercifully deflated budgets. The question posed by unionized education finds its answer in the principles laid down by our nation's fathers; individuals, when left free to choose their own destinies, are capable of creating marvels beyond the imagination of bloated, over-intrusive government agencies. When liberty is assured, knowledge derived from education reigns supreme.
Lesson 3 preview: Keynes....................... A General Theory on why Greece is so successful?
Saturday, July 24, 2010
Lesson 1: Of Picket Lines And Lost Generations
Firstly I would like to introduce myself, I am the economist's apprentice and I started this blog for a very specific purpose, to spread economic truth in these times of economic insanity. It is my intent to discuss not simply current events, but the day's news in the context of the eternal economic principles which have guided humanity since the very first barter transactions all those thousands of years ago. Today our nation faces a crisis which threatens not only her most prominent citizens, but a crisis which looms over those who have the least, and yet so much, to lose. To save America, this nation which has brought freedom and success to countless millions, we must hold to the philosophy which made us great; capitalism built our nation once and it will renew it now. However, these precious principles have to be understood and then passed on or true recovery may not manifest for many years. The loss of these principles is in fact why we now find ourselves in need of a recovery, therefore, for the first lesson, I feel it is appropriate to discuss how exactly our philosophy of greatness has been forgotten.
Unions, for many, bring to mind security and togetherness, a particular form of Americanism from which there must be no deviation lest there be a terrible gnashing of teeth. For many, the sight of a picket line encircling a place of business or occupying the street outside of city hall is an inspiring spectacle. Ah yes, those many fine citizens might say, let the will of the common man be done! Let the man to whom these hardworking, decent people are enslaved be punished for his ill-treatment of them! Most of these individuals would most likely never pause their mental objections to the employer long enough to realize that without that same employer the opportunity for the picketers to become employees would never have existed. That much is true, but it is a superficial observation. What is more compelling is the difference between the idealistic onlooker, silently cheering for his supposed brethren down on the line, and the economist. The onlooker most certainly sees a victim, but only one, which is the group of striking workers. However, the economist sees three. The workers are victims, the strike imposed by the union denies them the opportunity to produce and, as wages are defined by productivity, they necessarily lose. Even if the union "wins" and concessions are made such as a nominally higher wage, the union still might lose if the employer refuses to higher any more union workers. As the union population ages and retires, a company very well may simply choose to contract with non-union workers as a substitute for the higher cost workers. Ultimately, union numbers dwindle, leaving them rather more vulnerable and far poorer than even before. The employer is certainly a victim, without his employees his income drops as surely as theirs does. And finally, and least obviously, the patron suffers. But how is that so? He does no work for the company, he does manage, he does not produce, so how is it that he suffers?
Imagine three teenagers are interested in starting a yard service. None are experienced and are therefore risky to hire, but, for the right wage they are able to find reasonable business. On average let us say that they are paid $10 per hour for their services for a total of $30 per hour. It is a wage that is freely offered and freely accepted, no coercion ever occurred. However, because the young entrepreneurs are so cheaply priced, it soon becomes apparent to consumers that it is in their interest to hire them as opposed to workers from the local yard work union. Losing business never makes anyone happy, least of all union bosses. Less business means less workers and that means less dues. And so, armed with the power to vote, a mass of union workers descends on the town hall of Anytown USA and demands that a law be enacted to require union membership for all new yard workers. Afraid of the union's power to persuade potential voters, the sitting politicians of Anytown quickly draft a law proclaiming that all yard workers must join the union and can, therefore, only charge union prices, say $20 per hour. Now, should a family wish to hire a lawn service, they must make a choice. Either hire three inexperienced teenagers at the cost of $20 per hour for a total of $60 per hour, or higher a single more experienced worker who can work alone for $59. Under conditions such as these, not only are three teenagers denied the opportunity to gain valuable work experience and income, but the town's consumers of lawn services are terribly hurt; they might have paid $30, now they must pay at least $59. That is nearly a 100% increase in their yard budget, under the rule of a free market, the same family might have gotten their yard mowed and then gone to the movies, but because of interventionism through unionization, the average family's budgetary discretion has been severely curtailed.
The value of a union is refuted easily enough through understanding economic theory. In fact, it must be emphasized that the crucial factor in refuting a union's value is in understanding economic theory. And it is this point, this fundamental point, which has brought our economy to the brink of collapse. Knowledge of economics is kryptonite to unions, every union boss whether he admits it or not understands that, if the underlying properties and effects of unionization were widely known, his very "industry" would be at stake. And, normally, the bitterness of the unions toward economic science would have little net effect on the propagation of knowledge as long as freedom of speech remained intact, however, if those whose job it is to propagate knowledge are themselves unionized a fundamental conflict of interest arises. Telling a union member to teach a room full of students about why unions are inefficient would be like an oil rig worker advocating for solar panels, and yet this is the situation that exists. Teacher's unions have brought much hardship upon America's education system, making it effectively impossible to fire sub-standard teachers and weighing down our school administrations with layer upon layer of cumbersome and expensive bureaucracy. Stated frankly, teacher unions represent teachers, not students. And so, to save their own positions, teachers in our nation's public schools have taken to either misrepresenting or completely ignoring the science of economics. In fact, upon researching the absence of economics from our nation's classrooms, I found that reports from our own Department of Education do not even list economics as a possible major for students on a 2009 report concerning the SAT (http://nces.ed.gov/programs/digest/d09/tables/dt09_145.asp).
The ramifications of this policy are astounding, students leave high school with only the knowledge necessary to perhaps balance their own personal check book. Students living in the age of liberal mob rule are being released to the world without the slightest idea as to, not only how, but why a business thrives or fails. There exists amongst students no appreciation for the precious liberty afforded them through the principles of capitalism, for these unfortunate individuals, economics, politics, liberty, and success are unrelated or even not worthy of their attention. But nothing is more necessary; economics is defined in many different ways in many different texts, I define it as the the science of wealth creation, as the philosophy of well-being. Our nation is at stake, either we teach and disseminate the same economic ideals which built America into what it is or we will fall.
And so I end the first lesson as I plan to end every lesson; America needs the help of every thinking man, woman, and child. I personally appeal to all those concerned to educate themselves, their families, and friends about this science which I have come to love and appreciate. Without this knowledge, without a deep passion for enlightened liberty, the teacher's unions, the IRS, the EPA, President Obama, the countless list of "czars", and so many more will continue to picket line our nation and our children; unionization of our nation's teachers is why we are here, it is because the only thing that those educators have taught their students is apathy. They have not taught the truth, they have failed in their appointed tasks. While they have stood year upon year at the picket line, how many generations have we lost?
Lesson 2 preview: The problems in the education system are apparent, but what are the solutions?
Unions, for many, bring to mind security and togetherness, a particular form of Americanism from which there must be no deviation lest there be a terrible gnashing of teeth. For many, the sight of a picket line encircling a place of business or occupying the street outside of city hall is an inspiring spectacle. Ah yes, those many fine citizens might say, let the will of the common man be done! Let the man to whom these hardworking, decent people are enslaved be punished for his ill-treatment of them! Most of these individuals would most likely never pause their mental objections to the employer long enough to realize that without that same employer the opportunity for the picketers to become employees would never have existed. That much is true, but it is a superficial observation. What is more compelling is the difference between the idealistic onlooker, silently cheering for his supposed brethren down on the line, and the economist. The onlooker most certainly sees a victim, but only one, which is the group of striking workers. However, the economist sees three. The workers are victims, the strike imposed by the union denies them the opportunity to produce and, as wages are defined by productivity, they necessarily lose. Even if the union "wins" and concessions are made such as a nominally higher wage, the union still might lose if the employer refuses to higher any more union workers. As the union population ages and retires, a company very well may simply choose to contract with non-union workers as a substitute for the higher cost workers. Ultimately, union numbers dwindle, leaving them rather more vulnerable and far poorer than even before. The employer is certainly a victim, without his employees his income drops as surely as theirs does. And finally, and least obviously, the patron suffers. But how is that so? He does no work for the company, he does manage, he does not produce, so how is it that he suffers?
Imagine three teenagers are interested in starting a yard service. None are experienced and are therefore risky to hire, but, for the right wage they are able to find reasonable business. On average let us say that they are paid $10 per hour for their services for a total of $30 per hour. It is a wage that is freely offered and freely accepted, no coercion ever occurred. However, because the young entrepreneurs are so cheaply priced, it soon becomes apparent to consumers that it is in their interest to hire them as opposed to workers from the local yard work union. Losing business never makes anyone happy, least of all union bosses. Less business means less workers and that means less dues. And so, armed with the power to vote, a mass of union workers descends on the town hall of Anytown USA and demands that a law be enacted to require union membership for all new yard workers. Afraid of the union's power to persuade potential voters, the sitting politicians of Anytown quickly draft a law proclaiming that all yard workers must join the union and can, therefore, only charge union prices, say $20 per hour. Now, should a family wish to hire a lawn service, they must make a choice. Either hire three inexperienced teenagers at the cost of $20 per hour for a total of $60 per hour, or higher a single more experienced worker who can work alone for $59. Under conditions such as these, not only are three teenagers denied the opportunity to gain valuable work experience and income, but the town's consumers of lawn services are terribly hurt; they might have paid $30, now they must pay at least $59. That is nearly a 100% increase in their yard budget, under the rule of a free market, the same family might have gotten their yard mowed and then gone to the movies, but because of interventionism through unionization, the average family's budgetary discretion has been severely curtailed.
The value of a union is refuted easily enough through understanding economic theory. In fact, it must be emphasized that the crucial factor in refuting a union's value is in understanding economic theory. And it is this point, this fundamental point, which has brought our economy to the brink of collapse. Knowledge of economics is kryptonite to unions, every union boss whether he admits it or not understands that, if the underlying properties and effects of unionization were widely known, his very "industry" would be at stake. And, normally, the bitterness of the unions toward economic science would have little net effect on the propagation of knowledge as long as freedom of speech remained intact, however, if those whose job it is to propagate knowledge are themselves unionized a fundamental conflict of interest arises. Telling a union member to teach a room full of students about why unions are inefficient would be like an oil rig worker advocating for solar panels, and yet this is the situation that exists. Teacher's unions have brought much hardship upon America's education system, making it effectively impossible to fire sub-standard teachers and weighing down our school administrations with layer upon layer of cumbersome and expensive bureaucracy. Stated frankly, teacher unions represent teachers, not students. And so, to save their own positions, teachers in our nation's public schools have taken to either misrepresenting or completely ignoring the science of economics. In fact, upon researching the absence of economics from our nation's classrooms, I found that reports from our own Department of Education do not even list economics as a possible major for students on a 2009 report concerning the SAT (http://nces.ed.gov/programs/digest/d09/tables/dt09_145.asp).
The ramifications of this policy are astounding, students leave high school with only the knowledge necessary to perhaps balance their own personal check book. Students living in the age of liberal mob rule are being released to the world without the slightest idea as to, not only how, but why a business thrives or fails. There exists amongst students no appreciation for the precious liberty afforded them through the principles of capitalism, for these unfortunate individuals, economics, politics, liberty, and success are unrelated or even not worthy of their attention. But nothing is more necessary; economics is defined in many different ways in many different texts, I define it as the the science of wealth creation, as the philosophy of well-being. Our nation is at stake, either we teach and disseminate the same economic ideals which built America into what it is or we will fall.
And so I end the first lesson as I plan to end every lesson; America needs the help of every thinking man, woman, and child. I personally appeal to all those concerned to educate themselves, their families, and friends about this science which I have come to love and appreciate. Without this knowledge, without a deep passion for enlightened liberty, the teacher's unions, the IRS, the EPA, President Obama, the countless list of "czars", and so many more will continue to picket line our nation and our children; unionization of our nation's teachers is why we are here, it is because the only thing that those educators have taught their students is apathy. They have not taught the truth, they have failed in their appointed tasks. While they have stood year upon year at the picket line, how many generations have we lost?
Lesson 2 preview: The problems in the education system are apparent, but what are the solutions?
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