(Let us delve, oh my long-suffering and indulgent readers, into the realm of real economics, an area of study much neglected in the utopian groves of academe. It’s almost as if our isolated professariat, protected behind the great bulwark of tenure as they are, have become afraid to get their hands a little dirty discussing economics in any but the emotionally satisfying but ridiculous terms of various strengths and and flavors of marxism. -PB)
Can’t Fight Human Nature
The bottom line is this: We are, most of us, potential freeloaders and it is only fear of the wolves prowling outside the door that keeps us working as hard as we do. For my part, if I could find a job that paid as well as Emergency Medicine but required less work, I’d jump on it like a bum on a quarter. It’s not that I don’t like my job because I do. It’s just that taken as a whole, the fun only outweighs the crappiness of much of it if we put a decent salary in the scales. Two hundred thousand a year? A great job but not perfect. Thirty thousand? I’m not getting paid enough to do this shit. In this the Hamburger flipper and I are kindred spirits. We have to ask ourselves every day and every shift if it’s going to be worth it. The burger flipper however, has less to lose by falling into the bosom of the state and having all of his needs provided for by someone else. That’s why disability is so appealing to many of my patients but not to me. The crappy monthly subsidy they would receive as well as the modest benefits allowed by our welfare Social Justice system are not too much less than many of them could achieve on their own with the effort they are willing to expend. Some are just lazy, some sincerely believe that they are incapable of upward mobility, and some are categorically unable to breath and chew at the same time but for whatever reason, work has no appeal quite like leisure supported by somebody else, especially the modest leisure ambitions of the poor and lower middle class which involve, short of winning the lottery, fishing, hunting, eating, watching television, booze, weed, sports, and the other simple pleasures of life. Three week vacation to Italy? Not even on the radar screen. The key concept here is that every one of us has a price at which he will eschew work, or at least work that we must do to live and not a hobby masquerading as a job.
So you see, cradle-to-grave welfare Social Justice of which free medical care is only the first step wouldn’t work for me at the price the nanny state is offering. But that’s the seductive appeal of the European model for people who are not willing or able to make much more than what the nanny-state promises. The huddled masses yearning for the secure bosom of the mammary-government will give up the freedom to enjoy the fruits of their own labor to eat somebody else’s fruit. The problem is that we’re never as frugal with somebody else’s fruit as we are with our own so the natural progression in the self-fulfilling prophecy that is socialism (a word from which even socialists now run screaming), dictated as it is by immutable human nature, is an easy progression from a sense of gratitude to entitlement and then to demands for even more of somebody elses’s fruit. Eventually the ante is upped enough where even productive citizens would be crazy not to take their share of the fruit. People are lazy, not stupid.
Providing the fruit however only works as long as there are enough suckers to pay taxes. Eventually the tax burden, especially in a progressive tax system, makes the economic incentive to expand your little corner of the economy, creating the goods and services that are the wealth of any nation, next to nothing. If I am taxed at 90 percent for any income I make over a certain amount allowed by Your Sweet Lord, the Gubmint,’ the extra money I make for seeing a few more patients or working an extra shift is minimal and not worth getting out of bed except that I can go fishing instead. Your desire to see a doctor, in fact the heart-rending pleas of the baby-boomer hordes about to descend locust-like on the medical care crops will fall on deaf ears. No economic incentive, no production. The money for free medical care, not to mention for every other new right discovered by the Trailer-Park-Ghetto-Academia Axis, has to come from somewhere and it will come from increased taxation. In due time, this excessive taxation will have a deleterious effect on the ability of the productive sector, the little understood, much maligned engine that produces of all the little things in life you enjoy, to continue to create the wealth necessary to make everything free.
Many years ago I worked for a Wood Products company that was considering buying a plywood mill in the former Soviet Union. They quickly dropped the idea because after seventy years of communism (socialism’s retarded cousin) the mill was like most factories in the Soviet Union; a bloated, inefficient, poorly-run concern employing mobs of redundant, low-payed workers making a shoddy product that you couldn’t give away in the West. This particular mill made a third as much plywood with a thousand employees as a typical American mill can make with only fifty. And it was plywood of incredibly poor quality, stuff that even the most dishonest contractor would reject out of hand, and they wasted prodigious amounts of wood doing it.
A typical American plywood mill has one modern computer-controlled lathe that can peel a log down to about the diameter of a broomstick. Veneer, the strip of wood coming off a spinning log and what makes the layers of plywood, is money. The more veneer you get from a log the more plywood you can make at a lower cost. The ex-Soviet mill had five nineteen-seventies era lathes, most of which were broken at any given time, that could only peel a block (a log) to about eight inches in diameter. This valuable piece of the tree was then chipped and used to fire the boilers. American mills occasionally produce large peeler cores but only if the price of dimension lumber (e.g., two-by-fours) that can be sawn from the cores exceeds the value of the veneer. We certainly don’t burn money as hog fuel.
Theoretically the Russian mill was a progressive factory. No one could be fired and everybody had all the benefits that could be offered by the Motherland in that now forgotten dark freeloader empire. But they made crappy plywood that no one would buy unless they were forced which is the modus operandi in a command economy. Most of the workers stood around doing nothing for most of the day, absenteesim was high (but irrelevant if you see my point) and when the time came to pay the piper, the plant (and the whole country) had no value and could not honor its obligation to ensure a worker’s paradise built on the equitable distribution of goods and services by a central committee. Folks, they were selling the mill. And they were desperate to sell it which is not exactly a ringing endorsement of the progressive principles upon which the factory (or the empire) was run. Without incentive, and surely their was no incentive at this plant to even show up much less do quality work, there is no possibility of progress. A factory, and a society, cannot support a mob of time-servers and malingerers for more than a generation or two, particularly in the face of external pressure from more advanced societies, that is, ones that are maybe less “progressive” but more entrepreneurial.
Now consider another large socialist state, General Motors, which at one time I understand used to manufacture automobiles but now is primarily concerned with supporting a large dependency class and for who the production of automobiles is merely a sideline. The unions to which GM is a prisoner, with the best of intentions but now obvious short-sightedness, have contributed mightily to running the company into the ground. For many years, when times were good and Japanese cars were rinky-dink pieces of junk, the management of GM could afford to cave to union demands offering lavish benefits to its employees. People were still buying and the costs could be distributed into the high volume of increasingly poor-quality automobiles being built by employees who slowly, oh so slowly, began to resemble their more progressive comrades in various worker’s paradises around the globe.
Now, the high quality automobiles are being built in Alabama and South Carolina in mostly non-union shops. The benefits aren’t as good but the jobs are there and sustainable for an industry where competition is fierce and an extra thousand bucks per car for benefits to people who haven’t actually worked for the company in forty years makes all the difference. The ripple effects of this kind of sustainable enterprise spread throughout the South. Birmingham, Alabama is a thriving, growing city. Flint, Michigan, once the center of the American automobile industry, is a crime-ridden ghost town for which the joke among real estate agents is that they will cure AIDS before you can sell a house in that depressed market.
Not to mention that the pressure from wages and benefits has forced both Mercedes-Benz and General Motors to invest heavily in automation, technology who’s purpose is to reduce payrolls and expensive employees.
Is this fair? Not the right question because fair’s got nothing to do with it. Since we were talking about plywood mills, I’ll have you know that one of the last non-automated steps of its production occurs on what is known as the “lay-up” line where, for fifteen bucks an hour (good wages in my rural Lousiana Parish), workers fit irregularly shaped shards of veneer (“core”) between two moving ribbons of continuous veneer (“face”) before the entire assembly moves to the press. (Come on, you guys have looked at a sheet of plywood, right?) The person who invents a practical automated lay-up line can patent it and be set for life because the competitive edge provided to Georgia Pacific of not paying those salaries will let them eat their competitors for lunch…until everybody gets an automated lay-up line and then everybody can coexist in a state of uneasy parity until the next breakthrough.
And yet, despite the drive to shed jobs, the result is not a nation of jobless ex-plywood workers clogging the soup kitchens. Progress may be heartless but the net effect, the increase in the material prosperity of a nation by increasingly efficient production of valuable things (either goods or services) spurs new growth in sectors of the economy that the aparatchik running the Soviet Plywood mill couldn’t even imagine. Even in the Wood Products industry for example, although the low-wage menial jobs are almost gone, there is an ever growing demand for someone, anyone, who knows his way around Programmable Logic Controllers, the computerized nervous system of a high tech factory.
Finally, let us consider the United States, one of the largest economies in the world and whose business should be business, not attempting to directly provide for all of the needs of its citizens. We don’t even need government programs to encourage work or even to discourage freeloading. People will find their own way but only provided that there is an incentive to keep the wolf from the door. An economy that diverts large portions of its scarce resources to not only support but encourage the non-productive is not a viable concern for too long; the length of time the ponzi scheme can continue depending of on the momentum you have going into it as well as the willingness of lenders to extend credit. But you can’t support a growing number of eaters on a finite pie. The pie has to get bigger or everybody gets a progressively smaller piece. One day the shieks of Araby and the Mandarins of China will decide that supporting your demented granny’s right to that free fourth heart cath is not a good credit risk and then we’re all screwed.