Future Beacon



An American Economics

by James Adrian


Introduction

      The various economic policies adopted by countries around the world have not served people well despite automation and other highly productive technologies, and despite an abundance of natural resources and our enormous capability to mine, transport and trade these resources. Hunger, homelessness and poverty are widespread. Recessions and depressions take place periodically. These scourges are not due to any lack of physical wealth or technological knowhow. They are due to our simplistic economic theories, brazen corruption, counterproductive incentives and monetary policies that are primarily intended to centralize economic power.

      Far from scientifically investigating and exposing these ills, the public is engaged in a great ideological divide between two imperfect visions of economic utopia - the socialist ideology and the capitalist ideology. Progress has been retarded by the widespread belief that the answer to all of our economic problems has already been found by the half of the population who is thinking clearly.

      There are variations within both camps. The economic system known as free enterprise is still with us but has also given rise to capitalism. Like socialism, capitalism does not safeguard opportunity for the working poor. Upward mobility has been diminished by measures intended to protect established businesses from new competition. Socialistic desires range from extending safety net benefits to the middle class, to state ownership of companies. What unites the variations within each camp is the psychological basis of their belief system.

      Our defective economic policies are also affected by the power motive - the desire to be the only person making final decisions; or lacking such power, being a member of a group or class that decides everything of importance. When the power motive is pursued vigorously, economic policy tends not to serve the general population. Although only a small fraction of the population is deliberately trying to satisfy their need for power over others, the harm it does to the economy is routine and devastating. It has devastated nations throughout history. Finding solutions to this problem for the sake of better economics, or for any reason, could bring enormous benefits to humanity.


Economic Theory and The Great Divide

      Each side of the great divide emphasizes a valid feature of human nature. Overwhelmingly, Americans exhibit a high regard for both the cohesion of social groups and for individual initiative. These two conspicuous and economically important features of human nature have persisted throughout recorded history. We rely on the initiative of individuals, and we also rely on the cohesion of groups who cooperate to achieve goals held in common by their members. Showing initiative indicates an ability to take personal responsibility. It is opposite to depending on others entirely to decide what must be done. Cooperating with others to achieve goals indicates a capacity to interact socially and take other points of view into account. It is opposite to the compulsion to control every outcome oneself. A high regard for both social cohesion and initiative is what the vast majority of citizens value. These two aspects of human nature need to be consciously and intelligently integrated into our economic system. We need to invent more team efforts designed to enhance the options, resources, knowledge and skills of individuals, and we need to stop creating disincentives and obstacles to individual productivity.

      This integration will form the basis of a third economic vision that is more tolerant of objective investigation and more supportive of doing what actually works.

      Whether economists are helping us to improve our lives seems quite doubtful. The debates within their ranks do not inspire confidence. I recommend reading ECONOMIC ANALYSIS OF SOCIAL INTERACTIONS by Charles F. Manski, not necessarily to come up to speed on this particular issue, but to appreciate the sorts of questions being investigated and the reasoning being used. You can read it on line here at http://www.nber.org/papers/w7580.pdf?new_window=1 or download the PDF here at http://www.nber.org/papers/w7580.

      Let's acknowledge that economics is not yet a science in the same sense that physics and chemistry are sciences. This is so in part because of its radical complexity. The economy is not a phenomenon of nature that operates independent of human motives and beliefs. Compiling data about a trajectory is fully meaningful to an astronomer, while compiling the data of economic transactions can invite conclusions that are open to interpretation. Econometrics, as it is called, is essential; however, it must be integrated with what we know about the hopes, rights, capabilities and options of the people who make every-day economic decisions. In other words, econometrics must be integrated with the facts and evidence we have obtained from sociology, political science and psychology. This is something that economists are beginning to do, but the process seems to be a long way from deciding such things as whether reductions in the average initial investment required to attempt a typical sole proprietorship helps create jobs; or whether there are fewer entrepreneurs among people who suffer from depression or dependent personality disorder.

      Economics can be a rigorous science capable of proving or disproving assertions about the economy if all of the relevant factors are taken into account. It can be a more meaningful and appreciated science if it concentrates on economic issues that are actually confronting citizens and their representatives.

      The test of an economic system is whether it offers individuals and partnerships practicable opportunities to become more productive and thereby more prosperous. The entire economy suffers when the working poor are prevented from becoming more productive. Any policy or practice that reduces the ability of a typical worker to accumulate productive knowledge will adversely affect the productivity of the society as a whole. Cooperative action that tends to aid entrepreneurship is not an oxymoron. Lawful cooperative action is fully within the capabilities of the private sector and can be effective without preemptive, costly and excessive government control; however, penalties after the fact for unfair business practices must be certain, severe and timely. Little is gained if an ultimately just system stops upward mobility by making the smallest businesses unaffordable.


Corruption

      The motivation of our representatives needs to be unspoiled by the motive to be reelected. We cannot expect any elected group of representatives to disallow reelection unless those currently in office are exempted. If this is done, the expensive process of lobbying for special favors will be done to a lesser extent. As a result, future law will not continue to favor large established enterprises to the disadvantage of smaller or newer ones.

      Without the prospect of a long-term incumbency, how much money is an election effort worth? Disallowing reelection will help cut the cost of election campaigns. The bidding war is likely to be less intense. Since we will need more candidates, we are likely to get more inventive in promoting them more economically. As the Internet becomes accessible to a greater fraction of the population, the cost of debates and promotion can be substantially reduced.

      There are further consequences to eliminating reelection. The fact that each elected official is likely to return to his or her chosen occupation can only make their decisions more reasonable. They would not be permanently apart from typical citizens in their problems and aspirations. We should also consider the likely increase in the number of citizens willing to participate in political matters. There are many who would express an idea or opinion, or would help solve political problems if they were not laboring under the certain knowledge that people without extraordinary connections cannot hope to be heard, much less elected.

      Without the artificially high cost of getting elected and the temptations offered by wealthy lobbyists, our representatives will soon discover all of the straightforward ways there are to expose, deter and remedy corruption in general.


Monetary Policies

      It seems preposterous that one hundred cities would have themselves a full-blown recession all at the same time. It is obvious that there is some sort of common influence or control that accounts for an otherwise impossibly improbable coincidence. Sales of all locally produced services and the availability of loans and the creation of business activities based on initially secret ideas do not vary in lockstep unless somebody or something is orchestrating a widely felt influence. A central bank or a few large banking services do not need to centralize economic control to the extent that has happened in the United States and many other countries


Homelessness

      The economic priorities of our legislators are such that homelessness is allowed to exist while some expensive government benefits are not means tested. The political motivations that bring this about are mysterious and perhaps sinister. In recent decades, vagrancy laws have not been enforced in most U. S. cities. It is important to have vagrancy laws for the protection of the homeless, for the protection of the public at large, and for the reputation of the United States as a responsible and caring nation.

      The homeless is a diverse group. Some are mentally incompetent, some are fugitives, some are disabled, and many are simply destitute. Their status needs to be addressed individually. If a homeless person is not wanted for a crime or a misdemeanor, that person should be evaluated to discover any possible incompetence or disability. People who are homeless because of poverty should be afforded a safety net. Financial assistance should allow them to at least live indoors, be well fed, and have access to medical care.

      Unmitigated vagrancy should be considered a violation (not a crime or a misdemeanor) and should result in a fine. Repeated violations should result in some period of incarceration.

      In any city, it should be impossible to find people who are forced to sleep in public places.


Contact

      This article is a personal opinion. Please feel free to write to me directly for more information or to make suggestions or comments. My email address is jim@futurebeacon.com. You can also go to my contact page to get my full contact information. Suggestions, questions, additional information, critiques, and opposing opinions are very welcome.