What about the Losers?

Originally titled Austin, the Portland wannabe, this entry has morphed into an In Related News type column (with a tip of the hat to Dan Carlin) because Common Sense 113, What about the Losers asks the same questions that were being asked by Jeff Ward when he interviewed Austin Mayor Will Winn on Our Little Show a few months ago.

At the time, I was screaming at the radio "It's because Austin desperately wants to be Portland!" but I think the answer will take more explaining than that. Probably quite a bit more.

First, let's deal with Dan's assertion that we live in a capitalist system. This is important because Dan's point is quite valid; in a capitalist system the growth of the markets should be robust enough that even the least ambitious, least able to compete amongst us can be provided for charitably from the fat left on the table. The problem is, we don't live in that system.

Ask any economist and they'll hem and haw and finally explain that we live in a managed market system, a hybrid market managed from the top down with central controls placed there by government to ostensibly protect the investors/users/general population from the dangers of an uncontrolled market.

What those dangers are is anyones guess, because hindsight has shown that the failures of the stock market can generally be traced back to interference in the market by the Federal government, or by it's monetary arm, the Federal Reserve (before the Federal Reserve the fluctuations in markets were probably an offshoot of the legalized theft that is Fractional Reserve Banking. I'm leaving that discussion for another time because this thing is almost a book already) Most of the other markets haven't so much failed, as they were never allowed to fully bloom before being stifled by state and local controls placed on whatever resource or talent the market formed around.

But the controls do serve the purpose of keeping the markets in check (whether the controls are professional licensing, health inspection, zoning and planning, or just the good old Securities and Exchange Commission) Keeping the markets in check being indistinguishable from slowing growth.

So we don't really live in a capitalist system, and it's been getting less and less so for more than a hundred years now. We do still live in what is largely a meritocracy (which is better than the alternatives) but it's a far cry from the kind of capitalism that most laissez-faire capitalists dream about, and the profit margins are getting leaner all the time.

If there's limited profit (what it means to be lean) then there's limited fat to provide for those marginal types on the fringe of society. And no amount of exhortation to buckle down and provide for them from outside is ever going to result in their getting more of what they need. Like a parent telling a child to be good and share, if there's only one toy, the toy's owner gets to play with it.

Globalization (Dan's second point) was occurring whether we drafted and joined GATT, NAFTA, CAFTA, et al, or not. I would actually offer up the observation that the agreements appear to have been drafted to favor the staid multi-national corporations after the wilderness had been tracked by more nimble entrepreneurs.

[much like the stock tech bubble was burst just in time for established corporations to wade in and take over newly created tech industries. But it would be very black helicopter of me to say that, wouldn't it?]

So blaming the state of affairs on these agreements suits me just fine. I just wouldn't waste time kicking the scapegoat of Globalization (whatever that means) for the fact that you can't make $30 bucks an hour doing tech support for (insert giant corporation's name here) anymore. As Dan rightly points out "they have smart people in India too" and they'll work for much less. Any corporation bent on reducing costs is going to outsource work in those sorts of circumstances, globalization incentives in place or not.

It's not globalization's fault, because that's only part of the big picture. There's also the consistent devaluation of the dollar (generally referred to as inflation) by spend-happy congressmen bent on buying their way into re-election at the top end of the government chain (not to mention crusading Presidents with Foreign Dragons to Slay) These actions reduce the purchasing power of the dollars you have left after your job was outsourced to India.

On the other end of the government chain, you have cities (like Austin) that have activist governments bent on achieving various goals, either for the enrichment of the powerful within the city, or to satisfy the security/comfort demands of the citizens, or both. In Austin, the government has used zoning, licensing, and control of the water/wastewater and road system, as well as what's known as an Extra Territorial Jurisdiction (ETJ) to limit growth and prevent what city planners refer to with distaste as sprawl. The predictable results have been growth outside of city controlled areas (leading to congestion and a mad dash to toll all roads that lead into Austin) and a steep climb in real estate values within city boundaries.

I say predictable, because this is the same formula that Portland and other cities modeled after Portland have used to limit growth and encourage compact city centers. The problems with this model have been documented in CATO studies, which I have perused often enough that I end up in a screaming match with my radio when the Mayor is interviewed.

Traffic congestion, homelessness and poverty. All of these are attributable side effects of limiting road construction, driving up the cost of housing, and diverting public funds to programs (such as light rail and subsidized housing) that do not produce the benefits promised. When you couple that with multi-national corporations outsourcing employment to countries where three generations of a family live under the same (small) roof; and the devaluation of the wages that remain, you have the recipe for the near unavoidable disaster which looms on the horizon.

Hello, interesting times. The ancient Chinese guy I was just talking to mentioned you.

So, what about the losers? What's the solution? A lot less government, and a lot less government interference. It's what will occur whether we head that way voluntarily or not. We might as well plan for it.

On the local end it's going to mean relaxing building restrictions at the city level and perhaps relying upon the licensed professionals to do their job without the city looking over their shoulder (an architect can dream, can't he?) it means privatizing road ownership (road construction, contrary to popular belief, is already mostly private) so that real maintenance costs can be established and funded. Privatized mass transit systems (London's seems to work just fine)

On the Federal end, who knows? Can Washington be reasoned with? Considering the battle in California over medical Marijuana (a clear states rights issue if I've ever seen one) I'd have to say it looks like no. Can the out of control bureaucracy be brought to heal? That remains to be seen, but also doubtful.

[I'd be interested to see what would happen if the states insisted on payment of federal debts in Constitutional money; precious metal coinage. I think the Fed would have a hard time winning that battle in court]

So the real question is "will the Federal government survive the collapse of the dollar?" (which appears to be underway right now. It's been slow so far, let's see how long that lasts. And yes, I'm being serious. When have you ever seen the USD trade at parity with CAD? I've never seen it, till now) I don't think it can be avoided. If, by some machination of events beyond the average persons comprehension collapse is avoided, and the federal government continues, there's no telling what it will look like. Better to not worry about events beyond our control.

As for the plight of the losers, I've been rolling this idea around in my head for years now. Since we don't use real money anyway these days, and since the banks can create money out of thin air when they need it, why can't we do the same thing for that portion of society that would do without necessities if they aren't extended the equivalent of credit.

There would need to be a standardization or nationalization of accounts, so that each person would have one account (and only one account) into which his electronic funds are transferred when he works, and from which funds are drawn when purchases are made. But rather than having a lower point at which no more funds are available, as in today's bank accounts, the loser hits the point where the cash card becomes a charity card. Businesses would be given direct tax write offs for extending charity, and charity would be limited to strictly defined necessities (such as utilities, food, etc.) If you want a large screen TV, sorry you'll have to do without. If you became productive again, then after a set period of time your charity card would once again convert to a cash card, and you could purchase whatever you wanted with it.

Not a libertarian solution, but a solution all the same.

I can see several of my AnCap acquaintances bristling from all the way over here. So, why should I care if the losers do without necessities? If I don't want to give them charity, I don't have to. And that's true, as far as it goes. This post is already too long, but I thought I'd touch on the issue of haves and have-nots (or winners and losers) because it's the have-not / have quotient (and the correlative societal highs and lows of money and status) that defines whether a society can continue to function peacefully or not.

Too high a number and the have-nots are emboldened to take what they want from the haves; and not all of us are or want to be Joe Horn. Too low a number, and human nature takes over correcting the trend turning haves into have-nots through natural laziness.

So obviously, it's in the haves best interest to act in advance of the outset of violence, by not allowing the number to get too high; and the easiest way to do this is to keep the low end of the have-nots from falling too low. Put whatever conditions you want on the charity that makes you happy (after all, this is an exercise in "what if?") Sterilization of the lowest portions of society so as to prevent a blossoming of their ranks through reproduction, in the event that they go on charity status. Repayment of charity before cash status is returned. Whatever.

Just remember that the more draconian the penalties, the less effective the charity will be at mediating violence. Which is the point of offering it in the first place, if human decency isn't enough of an appeal to move you.

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