Thinking About Wages and the Cost of Living

One of the problems that seems to exist among contemporary politicians—and even economists—is that they tend to view the world through a very narrow lens. The will often focus on a single economic issue without realizing that our economy is a very complex creature of its own that involves many moving pieces. This sort of narrow-sightedness often results in the creation a number of different false dichotomies where instead of actually solving problems, the public merely becomes distracted.

One example of this problem is the constructed dichotomy that exists between thinking about workers’ wages and thinking about the average person’s cost of living. As has been seen throughout the country—usually in more densely populated areas—some policy makers will fixate entirely on raising the minimum wage while failing to even consider which of their policies directly increase the cost of living.

In less densely populated areas, many policy makers will focus on keeping the cost of living low while completely neglecting the conditions necessary for the common man to earn a living wage. The problem that has clearly come to exist is that we cannot focus on one without thinking about the other—designing good policy must simultaneously engage a real consideration for both wages and the cost of living.

Raising the minimum wage alongside raising the cost of living for low-wage workers functionally does nothing for their quality of life. Lowering the cost of living while alienating the working class from earning a livable wage also does nothing. Unfortunately, in today’s incredibly polarized political climate, it seems there are two parties who have each become fixated on achieving their agenda before creating solutions that actually work for the people.

If we want to really lower the cost of living for the average individual, there are a number of factors we are going to need to consider. We are going to need to eliminate sources of artificial scarcity, lower taxes, enable competition, and combat forces that are trying to unnecessarily drive up the costs of life’s most basic necessities.

If we want to really raise wages for the average individual, there are a number of things we are going to need to consider as well. We are going to need to combat inflation, promote unionization while still allowing the right to work, work to evolve the job market, and enable the average individual to increase what they can offer a potential employer.

We cannot simply pick and choose some goals while fundamentally ignoring the others; true prosperity will require a lot of hard work. It will require an ability to view the economy as a comprehensive whole where the people who enable its functioning are made a priority—and never a political afterthought.

 

 

 

-Andrew Paniello

August 31, 2017August 31, 2017 by relativelyfreepress

Why Local Businesses Will (Eventually) Win

In a world where globalization and conglomeration have been dominating industries everywhere, it can be difficult for small business owners to have much hope that they will be able to compete. But—slowly and surely—there are many reasons to believe that the world will begin shifting back to using much more localized models. If presented with the opportunity to compete, local businesses are the ones that will win out in the end.

Local businesses drive down the cost of production

            In the status quo, many small businesses are being pushed out by retail giants such as Wal-Mart, but as the world becomes more globalized, the advantage these retailers have will—eventually—begin to diminish. Companies such as Wal-Mart are able to offer the lowest prices possible because their mass utilization of foreign labor markets makes it so the additional cost of shipping around the world is less than the capital advantage of using foreign labor. There currently exists a major gap between the wages demanded by laborers in the United States and the wages demanded by laborers overseas, but as the rest of the world is able to catch up in development, this gap is closing.

As the labor gap continues to slowly close over time, it becomes increasingly less rational to pay for something to be made overseas. Once there is no longer an extremely affordable foreign population to exploit, the competitive advantage will shift to companies that produce their goods and services as close to the end consumer as possible. Localizing and specializing businesses, it seems, simply makes sense over time.

Local businesses are better for the environment

Not only does the production of a product nearer to the consumer save on shipping costs, it also decreases the product’s total carbon footprint. As businesses continue to shift to greener operation models—both out of material necessity and for the perceived marketing advantages these models create—they will realize that if they actually want to be green, then they cannot be exerting the amount of carbon and externalities produced by shipping around the world.

All businesses have an active interest in performing their operations sustainably. Even if this interest is out of nothing more than pure selfishness, a business that seeks to continue its operations will eventually need to do so in a way that people will accept and in a way in which it is able to sustainably keep reusing its resource. Because—if not for moral reasons—sustainability makes simple fiscal sense, the shift to greener models is something that will undeniably demand localization in the long-run.

Local businesses are better at specializing

            Though different cultures around the global will certainly continue to converge as the apparent size of the world “shrinks”, differences between these cultures will inevitably still continue to persist. Companies that have a more accurate understanding and appreciation for the traditions, cultures, and norms of those who live immediately around them will eventually win out. Though multi-national conglomerations can certainly research and try to emulate these local adaptations, they will always—at the very least—be a step behind the local companies that are actually producing the local culture itself.

Furthermore, many individuals simply decide to buy locally because they prefer the specialized niche appeal that only a small business can provide. For these reasons—eventual cost advantage, environmental necessity, and local specialization—it seems the future will indeed be one in which the small business will prevail.

 

 

-Andrew Paniello

August 5, 2017 by relativelyfreepress

The Need to Break the Moral Stalemate

 

In the long-run, both producers and consumers have an active interest in each other’s well-being. Producers need to be able to produce something that will someday be consumed, and consumers can only demand to consume that which is actually being produced. The relationship between the producer and consumer, it seems, is a constant dialogue—but when both parties feel too inconvenienced to change themselves for the better, eventually, something will have to give.

In the status quo, there exists a sort of moral stalemate. While consumers are being pushed by producers to consume only that which is being produced, producers are simultaneously being pulled by consumers to produce only that which will be consumed. This sort of moral stalemate has come to exist because both sides feel as if they would be overly burdened to change, and when this happens, it becomes difficult to achieve the material change that we need. But such a need will continue to persist, nevertheless.

If even for nothing other than their own selfish interests, producers and consumers generally want to do what is in the best interest of their humanity. However, when the individual actor (or even the industry giant) compares herself to the whole body of collective human beings she is a part of, it seems that her actions alone on the margin could not possibly be enough to make any real change.

From the producer’s perspective, it seems that even if an organization were to take it upon themselves to be the most moral and sustainable producers they could possibly be, they would eventually fall out of the market because their consumers would abandon them for the lower prices of their (less moral) competitors. From the consumer’s perspective, it seems there is no marginal reason for an individual to change her behavior (and demand the production of something morally superior) because she realizes that any positive consequences that even could be yielded would eventually be muted by the consumptive habits of the rest of the masses. From both perspectives, both the producer and consumer can rationalize their entrenchment in an unsustainable status quo because they believe they could not possibly make a difference, even if they tried.

But is this unsustainable, inefficient, and objectively irrational status quo something we, the people, ought to openly accept? After all, it does seem to be true that if consumers were to collectively demand producers to be more moral, they would have a dually rational incentive to do so. Furthermore, if producers were willing to supply what is to be consumed in a more a moral way, consumers may eventually come to demand it. Both sides are in a position where if they were to take the initiative to change, they would eventually be better off.

If producers and consumers—suppliers and demanders—could freely push our collective society towards an objectively better world, it seems highly irrational that (unless they were all truly moral nihilist) they would actually not want to do so. But perhaps our survivalist instinct has kept us naturally greedy humans only oriented upon the present, and utterly negligent of the future we all will have to someday face.

Nevertheless, the path forward does, in fact, seem abundantly apparent. As citizens of the human race, we ought to ask ourselves: if we aren’t working to better ourselves nor our humanity, then what are we even doing here? Such a question—as loaded and unanswerable as it may be—is something that will not go away. We, the people, will have to act with the interest of both ourselves and others in mind.

 

 

 

-Andrew Paniello

August 3, 2017 by relativelyfreepress

Demanding Positive Change in the World

            It seems that one of the problems we have as consumers is that though we often know what we want the world to be like in theory, we rarely know how to establish such a world in practice. We can consistently criticize the system, the corporation, the government, and all others, but at the end of the day, we continue to consume what they produce for us and rarely have the audacity to actually demand something different. It is so easy to spot injustice in the actions of others and the institutions that contain us; but what it is more difficult—and frankly, more necessary—is demanding something that is indeed more just.

However, if we—the consumers—actually do want real change to exist in our world, then we are going to begin by taking some responsibility for what it is that we demand and what it is that we consume. It is one thing to criticize the oil and gas companies for their apparent acts of destruction and overconsumption, but if we do not actually change the way we act as consumers ourselves, then there will never be any real change or any sort of movement in any positive direction. Beyond our energy industries, the same can be said about our political systems, our distribution systems, and every element of our market economy that we—the consumers—have the direct ability to control.

Say’s Laws of Markets—an economic principle established in the early 1800s suggesting that supply creates demand—is, by itself, both an incomplete and incorrect way of interpreting markets that dangerously diminishes the role of the consumer. Though, in a vacuum, consumers will indeed generally demand only that which can be reasonably supplied, what this particular principle fails to realize is that demand is also what dictates supply. It would be foolish for suppliers to simply create something the market is not demanding and blindly hope that supply will somehow be spontaneously generated out of thin air. Rather, what must be realized on both sides of the economic equation is that supply and demand are constantly interacting, and constantly generating feedback.

Simultaneously, both of these things are true: consumers are constrained by the fact that they can only demand by what can be supplied, and suppliers are constrained by the fact that they can only supply what will be demanded by the market. In a (relatively) free market, both parties are ultimately accountable to one another, and ultimately, both parties have the ability to manipulate the actions of the other.

As individuals participating in the demand side of the economy, we—the consumers—ought to ask ourselves: what, exactly, are we demanding? Are we demanding corporations produce our consumables in a sustainable way? Are we demanding corporations create something that will benefit not only themselves, but for society as a whole? Are we, the people, actually demanding the creation of a better world? Or are we simply criticizing the status quo from our ivory towers and hoping that a better world will somehow be supplied on its own?

The principles of supply and demand, though perhaps oversimplified at times, have consistently demonstrated themselves to be true. If there exists an unsatisfied demand in the market, eventually, it will be supplied. As conscious consumers, we can immediately create a better world for ourselves and for our posterity. If we demand those in power to supply something better, eventually, positive change will follow.

-Andrew Paniello

July 13, 2017July 21, 2017 by relativelyfreepress