Saturday, November 12, 2016

The History of the World (Part Six)

Free Trade, Part One.

Our story thus far: After evolution or God or both coughed up H. sapiens (us), we spent myriad kyr (many thousands of years -- lookit me ma, I'm a wordsmith!) primarily preoccupied with killing each other, subsisting, and once in a great while, inventing something really cool.

Hunter-gatherers got tired of wandering around in search of three squares and invented agriculture (and beer). Once there was enough food and beer to go around towns became cities became civilizations and H. sapiens rose to the top of the food chain. The killing and subsisting continued, and, as mentioned, once in a great while someone invented something really cool.

Eventually, in the late seventeen hundreds, we hit a trifecta. The Industrial Revolution picked up steam, the USA was born, Adam Smith invented modern economics. Mr. Smith said that the best way for everyone to make a buck depended on three things -- the pursuit of self-interest, the division of labor, freedom of trade.

Now, this vastly oversimplified history of the world is about to get even worse.

That is, I'm deliberately giving short shrift to the first two and emphasizing the most important, freedom of/to trade. After all, the world in general, and the USA in particular, is somewhat preoccupied with the subject.

The pursuit of self-interest simply means that every Tom, Dick, and Jane has the right to figure out how they're gonna pay the cable bill without a king, or a master of any sort, assigning them a role to play in the economy or determining how and how much they'll be rewarded for their labors. A free man or woman should be compensated based on what service/product/talent they provide their fellow H. sapiens. A reasonably free market will easily determine the value of a good doctor, a good housekeeper, and everyone else.

When regulation is kept to a necessary minimum and the playing field is level, consumers will rule, consumers will win.

As to the division of labor, this can be summed up in two words, modern civilization. Do/make something you're good at and trade it for things you aren't good at doing/making. Simplify things dramatically via a reliable system of reward certificates (money). The result? The most prosperous era in the history of H. sapiens. Consumers rule, consumers win.

Which brings us to...

...Freedom to trade. If you’ve lost a good job because your job is now being done by someone in a foreign country, like Elbonia for example (H.T. Scott Adams) -crappy weather, chock full of primitive religious sects prone to killing each other, a corrupt government and/or any number of other possible combinations of factors that would keep you from vacationing there even if you had any damn money - odds are you might be a little cranky.  

I’m a little cranky because I lost a fairly decent job, a job that I thought would be my last, due to the effects of (ominous musical fanfare): The Great Recession. When this happened I was almost a thousand years old (in American years) and had all the wrong skills. I’ve been relegated to a crappy job, several part-time crappy jobs in fact, that required me to work eight days a week. Unfortunately, it wasn't because I was a greedy workaholic who couldn't ever be rich/secure/powerful/enough, it was because they didn't pay very well.

I had to work a lot of hours to get by; I literally limped my way, with a fractured hip, to a forced early retirement because I needed the diminished dough to get by before the rest of my damaged joints (rheumatoid arthritis) got any worse.

The reason I lost my job was because of/had nothing to do with free trade. I’m certain I could make a plausible argument linking the last recession (hopefully it was just a recession for you, for me, it was, ominous musical fanfare: The Great Recession) to free trade agreements. To bolster my case, I’m certain I could quote experts and statistics; I’m certain I could find some very official and complicated looking charts.

I’m equally certain I could make a plausible argument that proves free trade agreements had absolutely nothing to do with my personal experience of (ominous musical fanfare): The Great Recession. And I’m not even an economist.

[How to embarrass an economist. If they’re not rich (of course, most aren't), ask them why, considering what they do for a living. While they’re hemming and hawing you take your verbal kill shot. “And by the way, if economics is a science, why are you guys still arguing over what caused the Great Depression, you know, the one that hit about 75 years ago?”]

My point is that economics, which I find fascinating and worthy of study by the way, is a social science. This means cold hard facts are even harder to come by than they are in the hard sciences. We’re part of a global economy. Billions of people are pursuing their self-interest regardless of whether or not their government officially approves. This is human nature. This is reality.

[Insert relevant, ironic aside here. I live near a General Motors plant where the employees risk having their car trashed if it isn’t an official GM product. It was temporarily closed relatively recently because of an earthquake in Japan that disrupted the flow of components that GM manufactures or purchases -- in Japan. Ain’t that ironical?]

I lost my good job because of (ominous musical fanfare): The Great Recession. Economists will be arguing for generations as to what caused it as fervently as they argue about what caused The Great Depression.

More specifically, it might have happened because the company I worked for, that kept a huge Kmart warehouse clean, wasn’t competitive enough. And/or Kmart wasn’t competitive enough (hold your calls, I think we have a winner).


And/or Kmart decided that outsourcing housekeeping wasn’t such a great idea after all and decided to have people on the payroll do it. Which may have been because it was a concession to the union to get a contract signed, or just make the working environment less toxic, because the rank and file never did get over the establishment of quotas. Or, maybe they decided to assign “second tier” workers to do housekeeping since they’re bitter about the fact they have to hit the same quotas the much better paid first tier rank and file, who agreed to a second tier to keep their own wages considerably higher than local labor market norms...

Or, maybe I lost my job because of a variable, or a combination of variables, known or unknown, led to life jumping out from behind a tree and kicking me in the crotch. Which is how life, and the economy, in spite of our best efforts to generate a desired outcome, often works.

To be continued...

Have an OK day.

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