Sunday, October 22, 2006

Return to Deep Thought

Chaos & stress at work has cut down on my blogging time (looks like it may be looking up, we’ll see), but I finally have the time to finish up some house keeping rebuttals of Deep Thoughts rebuttal of my rebuttal on his series on Distributionism, which I think will clear the air of our butting heads over economic policies.

I think the outstanding issues between us are on concern about Gov’t programs, the niceties of upgrading your job skills vs “living Wages” and Corporations and policies regulating them.

Concern about Gov’t programs
I had questioned the wisdom of advocating and taking part in Gov’t tax incentives & training programs, which Deep Thought replied in part with:

Therefore, I think that supporters of Distributionism (as well as our allies in the realms of Libertarians, Objectivists, and fiscal Conservatives) should push for serious tax breaks for small business owners, even to make small businesses tax-free. I feel the same way about job training; federal job training has been around for a long time and will not vanish overnight.”

Well there is of course a difference between advocating something as an ideal policy and advocating something as a change in existing policy –with that in mind, having the goal of turning existing bad policies towards ‘less bad’ policies with the eventual goal of discontinuing them altogether, then I have no other objection to his position on such programs.

The niceties of upgrading your job skills vs “living Wages”
One Part I do have an objection to, I’ll get right out of the way:
But I must say, Van is a bit, uh, blithe about the whole idea of ‘if your job only earns you ¾ of what you need to live, get another job for the additional ¼ and look for the skills to get you out of it’. Ya’ think? Of course, where they are to find the time for further education while working at least 1 ½ jobs can be a bit of a puzzler, I suspect.”

No, I’m not blithe about it at all, only experienced. When my wife and I married and moved to the Midwest, we knew no one, and had no money, she was pregnant [we found out the day before our wedding - somewhere in between our engagement and marriage, God, ever the wry comedian, turned our plans to hold off on having kids for two years into a punchline ;-) ] which made our only source of income – her job as a flight attendant – very tentative, and I, having played in a band for the duration of the 80’s, had no marketable skills other than looking and sounding good on stage.

I had selling Real Estate in mind, and so while working as a minimum wage leasing agent I studied and passed my license exam and sold Real Estate in my ‘spare’ time. While I did pretty good, we soon both realized that my wife was completely unsuited to living on a commission only pay scale lifestyle. So I spent the next 4 years, the worst of my life, working in retail.

I tried several side jobs (which didn’t work out) while working my job and being Mr. Mom 3 days a week. I finally found a better paying sales job, but then discovered computers, and realized that THAT was what I should be doing. That meant taking a very difficult step down the pay scale ladder before being able to step up it again in a field I felt I could excel in.

Over the next two years I spent every waking moment available, studying, learning, taking exams, practicing and studying some more. I carried 500 page “Database Theory and Development” and programming, and then “Object Oriented Programming” language books around with me everywhere I went, on the off chance I’d have a moment to read or quiz myself. I carried them - to the movies (reading while waiting in line. Seriously. Hey if you’re going to become a geek, you might as well behave like one), at dinner, in between scrubbing the kids in the bath, at picnics and visiting friends, I carried one of “My Mistresses” as my wife called them, around with me, and when home if not studying, I was practicing on our new IBM PC (my taking us into debt to buy that PC is still a sore point between us!) until I finally was able to gain the skills and certifications I needed to get into, and rise up into a better paying line of work.

It was extremely difficult and stressful for all of us, but it was necessary because our income and condo were only ¾’s (at best) of what was needed for us to make ends meet.

I don’t say the comment “blithely” at all. My wife is currently working as an Lpn nurse at 1/3 of the pay she made as a flight attendant for TWA when that unholy mix of Corporate action and Political Intervention resulted in TWA vanishing, and all of it’s employees being double dealt into being laid off. She finished an 18 month crash course at the community college last year to earn a degree and become an Lpn, and while working she’s also back at college at nights working towards an RN certification, so she can get closer to the income she had enjoyed, and we relied heavily on, for 17 years at TWA.

I don’t say it blithely at all, and I have no stomach for anybody who whines about it being too difficult, that Gov’t should help them, hand them up, etc. My vision goes red, and my fingers threaten to smash the keys through the body of my laptop and into the tables finish when I hear people suggesting it can’t be done, or that Gov’t should step in and help. It is precisely BECAUSE of the programs that Gov’t has enacted to “step in and help”, that our taxes (directly and indirectly) cut into our income so much that it has become so difficult to have a single income household to begin with.

Deep breath. Deep breath. Deep breath…. Ok, I’m fine now.

And one other comment where I asked about what “capitalism failures are they? When?”, Deep Thought responded with “Uh…. The ones you just mentioned. Van just wrote that laissez-faire Capitalism “…ignores the fact that it will inevitably bring disappointment and ruin to many people, as well” and that this empowers demagogues to take advantage of that to undermine the rights and freedoms of people. That is what Belloc was discussing in the Servile State, Chesterton in What’s Wrong with the World, etc.

Well, there is not, cannot be, and never will be an economic system that preserves the rights of individuals and eliminates the downside of risk, that is a part of life, and as Deep Thought says he rejects the idea of Utopianism – well, attempting to establish a policy that eliminates the downside of risk in economic ventures - that strikes me as an attempt at Utopianism. Perhaps that is a slight exaggeration, but in terms of the principles involved, only a slight one.

At best, informed close associates or neighborhood investment clubs could be formed for the purpose of aiding each other – but even that would be Very risky to the relationships.

Clarifying My Premises
Since most, if not all of the rest of Deep Thought’s and my disagreements seem to revolve around our definition of Capitalism, this may be a good time to pause and define our terms. The short Oxford Dictionary defines Capitalism as “economic system with ownership and control of capital in private hands”. I would add my understanding of it to be a system which results from the Political recognition of, and defense of Individual Rights and the Property Rights which are essential and central to all Rights.

From that point of view, I balk at the idea of economics being seen as a tool to be used towards attaining Happiness. Economics is useful as a forecasting tool, and tool to help ward off policy errors that might intrude into the economy. I don’t consider economic policy to properly be a set of active policies at all, but only a warning system against the intrusion of bad law.

With that said, the focus of my comments on Distributionism may stand out more clearly; you’ll find me objecting to anything that either is, or can be used as a tool for putting intrusive governmental policies and laws in place that will violate Individual rights in the name of ‘economic policy’.

Also, to restate it again, I think Distributionism as Deep Thought sees it, is more a set of advisable economic practices for private individuals to voluntarily adhere to, than any kind of proposal for establishing a new Gov’t Economic ‘Policy’.

On Corporations and policies regulating them
Deep Thought and I also come to friction on the subject of Corporations. A corporation, a large one, almost by definition contains rank upon rank of middle managers, partially involved workers pushing papers, docs and policies here and there, and somehow around the fringes, they manage to contribute to the production of the corporate product and profit.

Undoubtedly it contains waste, but cumbersome as it is, it is an organization that has yet to be improved upon for most practical purposes. When an organization plan is achieved that is demonstrably more efficient than that of the gigantic Corporations, rest assured, the Corp’s will die, and quickly.

IMHO, one cue towards what may come to be their eventual replacement I think may be seen in, of all places, Hollywood!

Look at the credits at the end of a movie, either produced through a studio or an independent production, and you’ll see hundreds of names and companies that are involved in the production of the product, the movie; few or none of whom work for the Production company itself. They are brought into the project of ‘building’ the movie, as needed in real time, they work together as needed to contribute to the product, receive their pay (or percentage agreements), and separate again from the Production company – which itself may consist of two or three Producers and their secretaries, at the end of the project. Of these numerous people & ‘Companies’ (most of whom which are almost the pure definition of entrepreneurs and entrepreneurialism) they may work together this one time, and never again, or repeatedly over the course of the next several movies. The individual companies in these credits may even be working together on several different movies at the same time!

No predictions, but it’s something to keep an eye on. Our I.T. Dept’s partially approach this method, but only on the level of moving individuals in and out of positions, the departmental bureaucracy lives on. Because the Corporate body as it exists today breeds waste and inefficiency, I have little doubt in saying that they will one day cease to exist, as soon as it is figured out how to accomplish what they accomplish now, but better and more efficiently.

However I reject any notions of penalizing Corporations for their legitimate practices, or anything resembling Trust Busting, totally and completely. When you hear of such actions being proposed, you might want to consider, though not essential to the principle behind them it is instructive, are they designed to protect the consumer, or the competitors? Who benefits by passing laws that prevents a corporation such as Standard Oil, or Microsoft, from charging less for their product? Of course their success makes it more and more possible for them to push their economic weight around and cut better deals for themselves. What of it? To what purpose do you wish to make it possible for some companies to be successful at charging more for a product than the bigger ones are capable of charging less for?

As a side note, when Microsoft became a target in the 90’s of Anti-Trust laws over Internet Explorer (which those of us who were involved in the business at the time of the judgment against them, suspect as being the true initial pop in the dotcom bubble), the suit was instigated by AOL, Netscape, Oracle and SUN – the most closed systems, anti-software integrating, over controlling of ‘partners’ Corp’s in the business, who thought nothing of getting big brother involved in helping them to control the market where their own abilities were woefully insufficient. These are companies that actually practice every strong arm tactic, policy, and quest for world domination that Microsoft is only accused of. They hate MS because it achieves all that they desire and aren’t competent to do themselves. That scenario is, and always has been, the soul of Anti-Trust actions.

Deep Thought opines “And if a corporation is large enough, it can enter new markets and use its economic resources to do the same to more and more fields of transaction. Think this is loopy? Look at Standard Oil; in the 1880’s began a decades-long practice of coercing shippers to give them discounts and to increase shipping prices for competitors. Soon their control of transportation allowed them to literally dictate oil prices to oil producers in America, demand further discounts on their own shipping costs and ‘rebates’ (i.e., kickbacks) from the artificially-high shipping costs they demanded for their competitors, and other such actions. Using this clout, they also gained very effective control of steel production and, eventually, railroads. This was an especially good idea – by controlling the steel industry, Standard controlled the cost of railroad tracks and cars. By controlling oil, they controlled the cost of fuel and lubricants of the railroads. When they moved into the railroad business it was a foregone conclusion that they would dominate it shortly.”

To which I say - Good!

As long as the Corp gains NO legislative/regulatory political power, and uses no PHYSICAL force; and threatening to no longer do business with a company, or convince other members of their supply chain to not do business with their company DOES NOT qualify as Physical Force – it is negotiation, though hardball, true, it is still a legitamate part of the process of making agreements.

What is the principled difference between such hardball tactics on the part of Corporations, and your trying to wheel and deal at the local service station by saying “Look I’ll let you put a set of your top tires on both my and my wife’s car, but if I do, I want you to throw in a alignment check and road hazard on all the tires of both cars, for free, other I’m taking my business across the street to Big Bob’s place and you and your mechanics will not see any more of our regular business”?

In any essential principle, there is no difference, and any interference or intervention in that negotiation, is a violation of the Individual Rights of both parties, and of the principle of the Individual Rights of all.

Again, who is it that such laws are intended to protect, consumers or competitors?!

Analysis by economists then and now agree; Standard Oil began as more efficient than its competitors, which allowed it its initial rapid gains. Once it reached its height, however, its efficiency began to drop. In the end it was less efficient than its (few remaining) competitors (or, in some ways, no more efficient than the others).” Well some economists then and now may agree, but it might be helpful to mention the many who do not, Henry Hazlitt, George Reismann, Milton Friedman, Thomas Sowell, Walter E. Williams, Richard Salsman, Andrew Bernstein…. The list can go on and on.

So, I have no problems with a monopoly of efficiency – after all, a more efficient competitor will eventually come along. But I have issues with coercive monopolies. I have yet to meet a Conservative who likes coercive monopolies, but I also rarely find a Conservative who will admit that large firms can establish a coercive monopoly almost as easily as a government can. The result? I prefer small firms to large ones.”

I’ve consulted at massive corporations, large companies, and smaller firms, and I too far prefer smaller firms to larger ones. But I DON’T want to have having anything to do with politicians or judges in attempting to reduce (or increase) the size or scope of any private business venture.

For those who do advocate having their congressmen restrain capitalism’s excesses, may want to consider that it was a republican, a business ‘friendly’ conservative, who created the first Anti-Trust law, the Sherman Anti-Trust act in an attempt to get competitors to ‘make nice’, completely blind to the fact that he wasn’t just forcing business’s to make nice, he was driving a serious fracture into the pediment of Property Rights, and Individual Rights. It paved the way for all the destructive policies and programs of Teddy Roosevelt, Wilson, Hoover and FDR. It has laid the foundations for making it conversationally respectable for politicians and judges to consider whether or not private individuals have a right to retain ownership of their property, when others want to use it “for the common good” to make more money for themselves and the cities tax receipts.

And for the record, if Mom & Pop shops can out maneuver, and deliver more valuable services for less than Wal-Mart and the other big corporations can – then I am thrilled for them, and root for the fall of the wasteful Goliaths.

The subject of Wage Slavery sent Deep Thought into an explanation which included “Face it – public schools suck. They are more and more divorced from providing a practical education while they continue to tighten their focus on indoctrination. The result is a populace less and less able to actually become entrepreneurs, forcing them into a spiral of jobs that pay too little for them to live one, resulting in debt resulting in…. Well, you get the idea. The end result is an entire class of people who cannot do that most basic of things – be self-sufficient.”, to which he will get absolutely no argument from me. The latest part of my series on the slide of modern philosophy into the dumper, What never was and never will be (I’m still recovering from re-reading Descartes, Rousseau, Hume, Kant & Hegel, I need a bit more of a breather before getting slimed again by diving into Marx & the deconstructionists’) traces the slide of Education from a process of making one fit for Liberty, into the muck of drowning children in a drudgery of training for skills in ‘basic minimum competency’.

Regarding Guilds and Unions, I personally don’t think that anything other than a professional organization for specific artisans is going to be successful, but with Deep Thought’s clarification: “When you can join any union, no union, or drop out of a union when you wish it means that the unions are forced to do what they are designed to do – help workers. If they do a lousy job, people leave them. If they try to wring concessions from management that makes the business less competitive, they are going to go away pretty quickly when the other unions and the independents oppose them.”, and also his statement that “The goal of Distributionism is to use the voluntary actions of individuals to ameliorate these negative effects in a manner that not only remains Capitalist, but has competitive advantages.”, then I’ve got no further argument against his presentation of Distributionism, and I look forward to again reading Deep Thought to help me get deeper into my thoughts.

As my current thrill ride through the world of Capitalism smoothes out, I’ll be back to my regular (?!) postings ASAP.


Anonymous said...

Interesting thoughts on corporations. I'm working for a successful small one that has just been acquired by Very Big Money indeed...which had just acquired our main competitor a few months prior. The bean counters have begun to shovel more money into our company, but require more accountability, and that's fine.

I fully believe, however, after 3 years of fattening, they will begin trimming the fat and making us look lean and profitable in order to sell us to another. Our company is a front-runner on new health care techniques, and won't be going anywhere as long as diabetes and obesity continue to ravage the human landscape, so it's like ocean-front property to our capitol investors.

I think it's all good, and all smart, as long as human benefit is still being served by our efforts. But there is this niggling, nagging thought about healthcare and the corporate approach to it, that gives great pause. I some days think that a self-organizing groundswell may just coalesce into something better than a cold, and almost macabre, approach to healthcare as an "industry."

In other news, I saw for the first time this morning, a company that promotes itself as a "turn-key outsource sales team and marketing department." I think that's brilliant, and right in line with your post.

Where do you see the main difference between subsidiaries and permanent outsourcing for ongoing production? Not just one film, but an ongoing supply of product. Where does the QA and continuity come from? relying on the outsource's core values? Or is QA even another outsource? Hmmm.... kinda fun to think about.

Of course, after a long bout of divestment, will the chickens'll come back home to roost again? and will the corporate cycle revive/repeat itself...?.

Van Harvey said...

Hey Joan, glad you stopped by!

My guess is that the main difference is ownership. I've seen the attempts of corp.’s to foster "ownership" among it's employees, and it really comes over as just a pittance of an incentive, which is a little bit insulting but still is nice to have, but which no one really puts any serious effort into, at least not because of the brib... er, incentive, that was offered.

When you bring in a "turn-key outsource sales team and marketing department." if that turnkey is actually Owned by that team, instead of just incentivized into a bland sense of 'ownership', I'll bet they have a serious sense of incentive to produce. It would be interesting to see how that actually works out.

The bizarre irony of Hollywood is that since its start, it has always been one of the purest bastions of Capitalism in America! What the Hollywood productions offer are multiple independently owned and profit seeking operations working towards a single goal, the movie, which is set by the Producer/President, which is what their true function is.

Which is also why, as you pointed out, it isn't the complete answer - it isn't sustained production of a product, but only a single project. Corporations suffer bloat and inefficiency, because somewhere in either the very nature of the corporate structure, or our current ability to implement it, there is waste and inefficiency built into it.

That much I can see, sadly, I'm not the genius that can see what the remedy for it is. When that person does come along though, you can be sure that the current structure will be swept away by it.

My guess is that the 'cure' will come in some way that allows a true flattening of the org chart, whether that solution is computer based or through some new design of the organization, I’m pretty sure that the upshot of it will be that it allows each person to do exactly what they are suited to do, and will free them from being forced to waste time and effort on doing tasks that detract from their proper purpose in the Corp.

In fact I’d say that it is the imposition of tasks which do not pertain to a person’s true function that stands out as the current stamp of Corp culture, whether that Corp is bloated or lean and mean, that feeling is certain to be prominent among its employees. Apart from the separation of Dr., Nurse & Patient that Insurance and Gov't policies, regulations and red tape have imposed, that ever present burden of endless charting, forms, procedures and disconnected tasks are almost certainly a major factor in what has gone into making the Health Care 'Industry' into the mess it is.

It seems to me that the more efficient operation is one where the people either own, or feel personally close to the owners and their customers - the easy image that comes to mind for healthcare is the old "Marcus Welby M.D." private practice. Not to glamorize the old system where a patient would have to travel and wait for every x-ray and test needed, but the more distance inserted between either the workers and the owners, or the customers and their money (via insurance or gov't paying for them), and multiple unknown faces and dept's between the patient and the caregiver, then care and efficiency naturally fade away.

Anonymous said...

Hey! I caught you looking in on your blog. Heh.

Anonymous said...

Dang! I thought my job kept me busy!

You gonna do anything with this blog?

Van Harvey said...