Daily Archives: July 12, 2011

Why buy local is a silly idea in practice.

So recently a friend of mine posted on Facebook a call to buy locally; that is not buy from chain stores, but at local, non-franchise, stores. The logic here is that money from local stores goes back into the community while with the larger Wal-Mart/Target/Best Buys etc. the money will go somewhere other than the community you live in, and thus to buy locally will help out your community while buying from the larger guys will hurt your community in the end. It’s not a terrible line of thinking, and it is seeing more steps into the future than most lines of reasoning, it’s just that in the grand scheme of thinking it is not the best line of thinking.
The problem with this thinking is that it assumes only the existence of a local economy that is separate from the national economy (which is at this point the same fallacy that believes that the economy in the rest of the world doesn’t affect us.)
Now what is the most obvious advantage to buying at those big chain stores as opposed to your local store? Price. The simple economies of scale allow for Wal-Mart, Home Depot and all the rest to sell at much lower prices than your local store. So you could spend $120 at your local store or $100 at your local Wal-Mart. You save $20. Now that’s $20 you’re either going to save, which puts you in a better position financially (if only marginally) or $20 you’re going to spend on something else you wanted. Now, no matter what you do with that extra cash you’re in better place. If you save it you’re more financially secure, if you spend it, it’s another amount of money going into circulation.
However it’s not just that more money is in the system. Money comes out of the system too. If you shop at Wal-Mart, Wal-Mart makes money. But they also have to pay a worker to be a cashier, stock the floor, manage the entire building. All those people get paid. Paid in money that, since they live in the community that the Wal-Mart exists in, goes back into the economy of the system. The problem with the original call to buy locally is that it assumes that once money leaves the community it doesn’t come back. This is highly incorrect.
The second problem with this line of thinking is that there aren’t secondary benefits to these big stores. This is incorrect. Ask yourself, why can’t unions get a hold in Wal-Mart? Because while they’re not offering golden parachutes to every low level employee, again, the economies of scale allow them to offer some pretty decent benefits. Benefits that a local store may not be able to offer. Benefits, like better medical insurance, which means more money to local doctors, dentists, and optimists. Better benefits like opportunities for promotion that simply are not available in a purely local store. If you’re a great worker at Wal-Mart you could get promoted to manager, district manager or even higher. If you’re working at some family business as a minimum wage employee, odds are no matter how good you are you will not reap the rewards nepotism will give out.

Oh but there is the advantage to employees to consider. Do employees do better when you buy only from local stores? No. Local stores are often family businesses, running shortened hours, hiring maybe at most a half dozen employees (yes there are exceptions, lots of them). There is less opportunity for flexibility of schedules, which means these are terrible jobs for students and people who have children or who need a second job to earn that little bit of extra money to start their own business venture or get out of debt so they can start living for themselves and not their creditors.
Also huge companies have more opportunities for training and advancement. More manager positions. More chances to grow. Yes lots of people will just do the bare minimum in their jobs, but that’s their choice. The opportunity for advancement is much greater in these companies than in smaller local shops which is certainly better for the employee. And if the employees are in a better position then that is work experience and education that they can use to get into better jobs, jobs which may have a great effect on the economy and help grow said economy.
But there’s another benefit. Yes stores that don’t adapt get put out of business by Wal-Mart. But that’s the way capitalism works, much like evolution. Adapt or die. With Wal-Mart, Target, Kmart (at least I’ve been told they’re still around), and Costco offering the low prices on generic crap that we all need, it allows stores that have the sanity to adapt to offer more specialty items. Think about this, most local stores offer the kind of items that you can’t get at those big chain stores…i.e. those big chains help to produce a wider variety of items for you.
Furthermore a hatred of big stores is silly for another reason. In the modern world of capitalism (I’m assuming here that Obama will be kicked out of office before he has a chance to drag our economy down to the point where the U.S. looks like a Mad Max movie) there is no such thing as a local monopoly. Even if Wal-Mart were able to drive everyone one of its competitors out of a town, which by the way is impossible, there are still numerous internet options to buy from that will all but guarantee that those Wal-Mart prices remain very competitive.

This is a myopic view that suggests the greater lack of vision in a global economy. If more people are doing better it means they are in a better position. If we export a thousand jobs to some other country, we may have temporarily lost jobs here, but very soon those thousand new workers in that other country are going to have a lot more money to buy things (and that’s completely ignoring that the people who built the factory now have more money to buy things) and odds are some of the things they’ll buy are from the US from companies managed by the US. Now the only people who won’t benefit are those who don’t adapt and constantly learn and acquire new skills to make sure they are never out of a job. Notice that part of the problem right now is that it’s just not that the US economy is down, it’s that the world economy has slowed. There is no true local economy anymore there are only pieces of a large economy. It’s like saying that this cell or that cell in your body isn’t doing well. Either the body as a whole is healthy or it’s not, the individual cell isn’t what you need to worry about.
And if a local economy does hurt…guess what you can move, probably to a place that has a better economy (like most people seem to be moving to states with lower tax burdens as the latest census has shown us).
Now I’m not saying to avoid buying things locally. But there is no point in shopping somewhere else if those big chain stores will save you time and money. Buy locally or buy from a big store, it really doesn’t matter, it all helps the economy. So the only real question is… are you going to pay for more just to support a lie if it helps your local economy more?


Filed under Capitalism, Economics, Long Term Thinking, People Are Stupid

In which I refute the idea that capitalism can only be defended on New Age Grounds.

So I got an email complaining how capitalism might be fine for “pagans like you” who are “going to hell” but that Christians are not so heartless….apparently because mixed economies and socialism where everyone winds up destitute and under tyranny is such a caring and Christian goal. Part of me want to write a whole blog refuting the idea that capitalism only works with New Age ideals, but it seemed a little disingenuous. I shouldn’t put words into the mouths of Christains. They can defend capitalism on all on their own. And in that spirit I offer you the words of a Christian and capitalist, the Iron Lady herself, Margaret Thatcher in her wonderful justification of capitalism and democracy through the principles of Juadeo-Christianity. The speech is known as the Sermon on the Mound (that’s with a “d” not a “t”)

Taken from the Margaret Thatcher Foundation :
I am very much aware of the historical continuity extending over four centuries, during which the position of the Church of Scotland has been recognised in constitutional law and confirmed by successive Sovereigns. It sprang from the independence of mind and rigour of thought that have always been such powerful characteristics of the Scottish people, as I have occasion to know. [muted laughter] It has remained close to its roots and has inspired a commitment to service from all people.

I am therefore very sensible of the important influence which the Church of Scotland exercises in the life of the whole nation, both at the spiritual level and through the extensive caring services which are provided by your Church’s department of social responsibility. And I am conscious also of the value of the continuing links which the Church of Scotland maintains with other Churches.

Perhaps it would be best, Moderator, if I began by speaking personally as a Christian, as well as a politician, about the way I see things. Reading recently, I came across the starkly simple phrase:
“Christianity is about spiritual redemption, not social reform”.

Sometimes the debate on these matters has become too polarised and given the impression that the two are quite separate. But most Christians would regard it as their personal Christian duty to help their fellow men and women. They would regard the lives of children as a precious trust. These duties come not from any secular legislation passed by Parliament, but from being a Christian.

But there are a number of people who are not Christians who would also accept those responsibilities. What then are the distinctive marks of Christianity?

They stem not from the social but from the spiritual side of our lives, and personally, I would identify three beliefs in particular:

First, that from the beginning man has been endowed by God with the fundamental right to choose between good and evil. And second, that we were made in God’s own image and, therefore, we are expected to use all our own power of thought and judgement in exercising that choice; and further, that if we open our hearts to God, He has promised to work within us. And third, that Our Lord Jesus Christ, the Son of God, when faced with His terrible choice and lonely vigil chose to lay down His life that our sins may be forgiven. I remember very well a sermon on an Armistice Sunday when our Preacher said, “No one took away the life of Jesus , He chose to lay it down”.

I think back to many discussions in my early life when we all agreed that if you try to take the fruits of Christianity without its roots, the fruits will wither. And they will not come again unless you nurture the roots.

But we must not profess the Christian faith and go to Church simply because we want social reforms and benefits or a better standard of behaviour;but because we accept the sanctity of life, the responsibility that comes with freedom and the supreme sacrifice of Christ expressed so well in the hymn:

“When I survey the wondrous Cross, On which the Prince of glory died, My richest gain I count but loss, And pour contempt on all my pride.”

May I also say a few words about my personal belief in the relevance of Christianity to public policy—to the things that are Caesar’s?

The Old Testament lays down in Exodus the Ten Commandments as given to Moses , the injunction in Leviticus to love our neighbour as ourselves and generally the importance of observing a strict code of law. The New Testament is a record of the Incarnation, the teachings of Christ and the establishment of the Kingdom of God. Again we have the emphasis on loving our neighbour as ourselves and to “Do-as-you-would-be-done-by”.

I believe that by taking together these key elements from the Old and New Testaments, we gain: a view of the universe, a proper attitude to work, and principles to shape economic and social life.

We are told we must work and use our talents to create wealth. “If a man will not work he shall not eat” wrote St. Paul to the Thessalonians. Indeed, abundance rather than poverty has a legitimacy which derives from the very nature of Creation.

Nevertheless, the Tenth Commandment—Thou shalt not covet—recognises that making money and owning things could become selfish activities. But it is not the creation of wealth that is wrong but love of money for its own sake. The spiritual dimension comes in deciding what one does with the wealth. How could we respond to the many calls for help, or invest for the future, or support the wonderful artists and craftsmen whose work also glorifies God, unless we had first worked hard and used our talents to create the necessary wealth? And remember the woman with the alabaster jar of ointment.

I confess that I always had difficulty with interpreting the Biblical precept to love our neighbours “as ourselves” until I read some of the words of C.S. Lewis. He pointed out that we don’t exactly love ourselves when we fall below the standards and beliefs we have accepted. Indeed we might even hate ourselves for some unworthy deed.
None of this, of course, tells us exactly what kind of political and social institutions we should have. On this point, Christians will very often genuinely disagree, though it is a mark of Christian manners that they will do so with courtesy and mutual respect. [Applause] What is certain, however, is that any set of social and economic arrangements which is not founded on the acceptance of individual responsibility will do nothing but harm.

We are all responsible for our own actions. We can’t blame society if we disobey the law. We simply can’t delegate the exercise of mercy and generosity to others. The politicians and other secular powers should strive by their measures to bring out the good in people and to fight down the bad: but they can’t create the one or abolish the other. They can only see that the laws encourage the best instincts and convictions of the people, instincts and convictions which I’m convinced are far more deeply rooted than is often supposed.

Nowhere is this more evident than the basic ties of the family which are at the heart of our society and are the very nursery of civic virtue. And it is on the family that we in government build our own policies for welfare, education and care.

You recall that Timothy was warned by St. Paul that anyone who neglects to provide for his own house (meaning his own family) has disowned the faith and is “worse than an infidel”.

We must recognise that modern society is infinitely more complex than that of Biblical times and of course new occasions teach new duties. In our generation, the only way we can ensure that no-one is left without sustenence, help or opportunity, is to have laws to provide for health and education, pensions for the elderly, succour for the sick and disabled.

But intervention by the State must never become so great that it effectively removes personal responsibility. The same applies to taxation; for while you and I would work extremely hard whatever the circumstances, there are undoubtedly some who would not unless the incentive was there. And we need their efforts too.

Moderator, recently there have been great debates about religious education. I believe strongly that politicians must see that religious education has a proper place in the school curriculum. [Applause]

In Scotland, as in England, there is an historic connection expressed in our laws between Church and State. The two connections are of a somewhat different kind, but the arrangements in both countries are designed to give symbolic expression to the same crucial truth: that the Christian religion—which, of course, embodies many of the great spiritual and moral truths of Judaism—is a fundamental part of our national heritage. And I believe it is the wish of the overwhelming majority of people that this heritage should be preserved and fostered. [Applause] For centuries it has been our very life blood. And indeed we are a nation whose ideals are founded on the Bible.

Also, it is quite impossible to understand our history or literature without grasping this fact, and that’s the strong practical case for ensuring that children at school are given adequate instruction in the part which the Judaic-Christian tradition has played in moulding our laws, manners and institutions. How can you make sense of Shakespeare and Sir Walter Scott, or of the constitutional conflicts of the 17th century in both Scotland and England, without some such fundamental knowledge?

But I go further than this. The truths of the Judaic-Christian tradition are infinitely precious, not only, as I believe, because they are true, but also because they provi
de the moral impulse which alone can lead to that peace, in the true meaning of the word, for which we all long.

To assert absolute moral values is not to claim perfection for ourselves. No true Christian could do that. What is more, one of the great principles of our Judaic-Christian inheritance is tolerance. People with other faiths and cultures have always been welcomed in our land, assured of equality under the law, of proper respect and of open friendship. There’s absolutely nothing incompatible between this and our desire to maintain the essence of our own identity. There is no place for racial or religious intolerance in our creed.

When Abraham Lincoln spoke in his famous Gettysburg speech of 1863 of “government of the people, by the people, and for the people”, he gave the world a neat definition of democracy which has since been widely and enthusiastically adopted. But what he enunciated as a form of government was not in itself especially Christian, for nowhere in the Bible is the word democracy mentioned. Ideally, when Christians meet, as Christians, to take counsel together their purpose is not (or should not be) to ascertain what is the mind of the majority but what is the mind of the Holy Spirit—something which may be quite different. [Applause]

Nevertheless I am an enthusiast for democracy. And I take that position, not because I believe majority opinion is inevitably right or true—indeed no majority can take away God-given human rights—but because I believe it most effectively safeguards the value of the individual, and, more than any other system, restrains the abuse of power by the few. And that is a Christian concept.

But there is little hope for democracy if the hearts of men and women in democratic societies cannot be touched by a call to something greater than themselves. Political structures, state institutions, collective ideals—these are not enough.

We Parliamentarians can legislate for the rule of law. You, the Church, can teach the life of faith.

But when all is said and done, the politician’s role is a humble one. I always think that the whole debate about the Church and the State has never yielded anything comparable in insight to that beautiful hymn “I Vow to Thee my Country”. It begins with a triumphant assertion of what might be described as secular patriotism, a noble thing indeed in a country like ours:

“I vow to thee my country all earthly things above; entire, whole and perfect the service of my love”.
It goes on to speak of “another country I heard of long ago” whose King can’t be seen and whose armies can’t be counted, but “soul by soul and silently her shining bounds increase”. Not group by group, or party by party, or even church by church—but soul by soul—and each one counts.

That, members of the Assembly, is the country which you chiefly serve. You fight your cause under the banner of an historic Church. Your success matters greatly—as much to the temporal as to the spiritual welfare of the nation. I leave you with that earnest hope that may we all come nearer to that other country whose “ways are ways of gentleness and all her paths are peace.” [Applause]

Anyone know of any Jewish, Taoist, Hindu, Buddhist or other defenses of Capitalism?

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Filed under Capitalism, Thatcher

Economics explained very poorly in a short period of time

Oh look at what our friends at MoveOn have come up with! I love this new style of saying things really quickly with pretty, pretty pictures so you don’t have time to analyze a point, consider it, and critique it for validity before moving onto the next point (and I mean love sarcastically, in the sense of I despise this base form of propaganda that is designed under the idea that if they say it fast enough you won’t catch the lies). This is what happens when you mix the lessons of Goebbels with an ADHD generation.

So let’s take this slowly.
Okay the economy has doubled in size…but the wage thing is a little shaky. Median income in 1980 was 37.4K, in 1990 it was 40.8K, in 2000, it was 44.9K, and in 2003 its 43.3K (that’s adjusted for inflation in 2003 $’s)

(Now you might wonder why I use the older report and not a new one…well, when I did some research I found that the new reports, read since the Dem’s took over Congress under Bush, the numbers suddenly changed and showed absolutely no growth, not that figures changed from inflation but that the upward curve for median income suddenly flattened. It gets really flat after Obama comes in. Now either voting in Democrats is so harmful to the fabric of time-space that it literary erases gains in the past, which may very well be the case, or a line about “in the state of Denmark” comes to mind. If you really want it here’s the most recent “report” )
Also yes we’ve eaten a lot of those gains in the last few years. Might be because of recession. Is it fair to judge the growth of the last three decades by the lowest point since that growth (at the very natural recession that comes after a boom cycle)? Not really. Now 1980 was the worst part of Carter’s reign and we’ve gone up in real dollars 6 grand a year income. I don’t know about you but if I got a 6K raise I would not consider that nothing.
And here’s another fun one


Notice how the only incomes that seem flat lined are those of single income earners (mostly young and single people) but dual income earners seem to be doing really really well. Hmm…does the dropping rate of divorce over the last three decades mean anything to you? Oh, yeah. Maybe people who have families and are earning money for more than just themselves are more driven and more dedicated to providing for their families. Now I won’t go psycho-Christian on you here and demand everyone get into marriage and have 2.5 children, but perhaps the lack of wage gains might have something to do with the more antisocial overtones of my generation and the increased rates of divorce and staying single. Just maybe.
So Robert’s first point is an out and out lie.

Point two.
Let’s blame the rich. Yes the rich benefit from economic gains more than the middle class…maybe because they put up the capital. They took risks in putting up all the money. It paid off. Yeah they did better, but they worked for it. So the top 10% makes 20% of the income. How much should they make? If you have the top 10% only making 10% of the income then that would mean we’re in a perfectly socialistic system otherwise known as hell on Earth. Think about Ancient Rome where the top 10% earned 90% of the income…20% for the top 10% (i.e., the salaries of the top 35 million people are double the average) sounds about right. Keep in mind also we’re in a recession. That percentage changes probably at the height of a boom. Oh and they have 40% of the wealth. Duh. They invested money. In things. That’s why they’re doing well they had the foresight to invest. And as most of the wealth in the nation exists in the stock market and in the value of companies, what a shock that most of that wealth is held by people who own stock. Just shocking. But this idiot is making having things they earned seem like a bad thing.

I would like to point out once again, that economist Thomas Sowell has proved that most people acquire wealth over time and that if you’re in the middle class you will likely be in the top 20% in terms of wealth by the time you retire. (And if the government didn’t have a death tax you could actually give that wealth to your children or charity and help distribute it to the worthy and give them a head start, but the government wants to take that wealth and give it to the least worthy).

However keep this little bit of class warfare in mind.

Point three
Having all this money give rich people power to lower their taxes. Okay…well let’s take a look at some of the biggest donors to politics. Follow this link.
Hmm…it would appear 11 of the top 16 donors give to Democrats. 53 of the 100 also give to the Dems. Top Donation organizations seem to also skew to the left.
And I love that statement “before 1980 the top tax rate was over 70%” (in case you’re wondering you had to make over $250,000 to get that rate). No discussion of how that’s literally highway robbery. No discussion of how it’s is beyond immoral to take 70% of what a person earns, or how evil that is, or how in the good old days redcoats would be shot (and if they were dead or violently beaten to death) for taking far less than that. 70 percent. Do you think the government is entitled to 70% of what you do? That only 30% of your work, 30% of your life, belongs to you? No. So why should it be different just because someone makes more money.

Oh and since Reich likes pretty pictures try these two:

It would appear to me that even though we cut taxes in the 80’s we took in more money (although this does not appear to be adjusted for inflation, so the growth is probably steeper than it should be) and

Gee, it would appear that if you lower taxes you still take in the same amount of GDP, this is called Hauser’s Law. http://www.hoover.org/publications/hoover-digest/article/5728 In other words if you lower taxes GDP will more or less go up to compensate, and if you lower taxes GDP goes down (yeah, this is trickles down). And admitting that correlation doesn’t necessarily mean causation, when did the economy start it’s just to double, about 1983 when according to this chart there was a major cut in the top tax bracket. Now that would only mean something if there had also been an economic boom when Kennedy dropped it from 90% to 70% but that didn’t…oh wait did. But that’s just two data points, and I’m probably reading too much into that.

Also notice that Reich’s implication is that the tax rate itself is too low…not, you know, that there are too many loopholes and ways for his Democratic donating cronies to get out of paying taxes. No. That couldn’t be it. It must be the rate itself. I know this because Obama and the Democrats keep coming up with a major tax rate increase and not a list of thousands of loopholes to eliminate (not that the GOP is much better on this, but still, I do believe they had a plan about a flat tax with no loophole for the corporate side). Now if you want to talk about getting rid of all the loopholes I’m there with you, but neither side is really talking about that.

Point four
Huge budget deficits… because we’re not bilking the rich enough. We’re not taking in enough money thus we’re going broke. That’s it. That’s what I always think when my bank account is going low: I don’t have enough money coming in, rich people should give me more money. Not you know, maybe I should cut back on spending. No, that can’t be it. Or let’s look at something…

Around 1980 government expenditures were at about 21% of GDP, this is a problem when you’re only taking in about 19% of GDP, and then the expenditures went up…why? Because Regan thought defeating the Soviets was worth cutting some deals with the Democrats (you’ll have to make the call on whether you agree, I’m sure he thought spending would be lowered by future generations so I’ll give him a pass since he did destroy the Soviet Empire). Then you’ll notice that spending really starts getting cut under a GOP congress from 1994 until 2001. And as bad as Bush’s spending was you’ll still notice he kept it under 20% of GDP until he decided to become a Keynesian (which is why I would love to see him up on treason charges) and drove up spending with a Democratic Congress. But look at that nice little spike Obama and a Democratic Congress brought. Could our deficit problem be that we’re spending more than we’re taking in. No it must be that we’re just not taxing people enough. (In case you’re wondering between federal, state and local governments, government spending was about 42% of GDP…I don’t know about you but I really think we should try and get all government spending down to less than 20% of the economy).

And don’t you just love how he uses the thing about the children bullshit. No one from the Democratic Party can complain about the state of education when it is the Democratic Party which is beholden to the Teachers Union, which is unquestionably the greatest threat to public education in existence.

Point Five
Union vs. Non-union. Public employee vs. Private. Native Born vs. Immigrant.
This is all bad according to Robert.
The petty class warfare of point two good. The war of people who earn money vs. those who don’t is bad. If that line of thought makes your brain hurt, I understand.

And it’s not that people are fighting over the scraps. It’s that people are tired of having their money go to people who haven’t earned it (Union employees, public employees, and Illegal Immigrants—Americans don’t have a problem with legal immigrants, only the criminals who come here and expect free health care, free education for their criminal children, and the right to vote without bothering to become a citizens, yeah we have a real big problem with them, might be because of this thing called reason and justice).

Point Six
This one isn’t even connected with the suggestion of logic that the others were.

And let’s see why the middle class doesn’t have the ability to borrow money. Could it be because the government forced the banks to make loans to people who couldn’t pay them, ruining the banks and destroying their lines of capital to make loans with? Not in Robert Reich’s world, otherwise known as fiction.

And it’s because we can’t buy shit that we have unemployment. Not because businesses are so afraid of doing anything lest Obama and his Democratic colleagues tax them to death if they’re even moderately successful. Not because this administration is openly hostile to business. Not because expansion under ObamaCare would mean death to most businesses as no one can logically meet all of those requirements. No that can’t be it.

Then there’s that odd conclusion. “The only way we can have a strong economy is if we have a strong middle class.” I’m not going to argue with the conclusion, because it is correct…it’s just that nothing in this video reaches that conclusion. Nothing. It would be like me lecturing for 20 minutes on Shakespeare’s sonnets then saying “Thus we can see that Einstein’s theories on gravity are correct.” The conclusion is true, but not because of what I was talking about.

So exactly how are going to get a strong middle class. I would recommend defense of private property. A legal climate open to investment and entrepreneurship, tort reform, improve education (i.e., get the government and unions out of it), cutting the federal and state government by at least 20% (preferably 50%), and destroying all trade tariffs.

Robert Reich offers no suggestions at how to create a strong middle class. Now like a good propagandist he does suggest a few things in a roundabout way. Tax the rich. Reduce the power of individual to donate to the political process. Have the government spend more. Defend unions, hire more public employees, amnesty. And further encourage a meaningless materialist culture where people just mindlessly buy shit (often that you don’t need). Hmmm…been there, done that, didn’t work. But it would be hard to know that with how fast he went trying to hide the flaws in his line of thought.

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Filed under Budget, Capitalism, Debt, Economics, Equality, Evils of Liberalism, Government is corrupt, Government is useless