Posts Tagged ‘supply

18
Feb
10

The Trickle-Down Theory

Though it the term originated in the 1930s, the “Trickle-Down Theory” has come into increasing use over the past year (largely due to the global financial meltdown). Essentially, the theory holds that by cutting taxes on the wealthy and/or allocating wealth to the upper classes, the money they save will be spent on luxury items that will provide work and profits to the middle class, who in turn will buy products that provide work and profits to the working class.

Obviously, this theory is complete and utter tripe.

Firstly, the theory is based on the assumption that the items the wealthy buy will somehow benefit the middle-class. In reality however, when an oil tycoon buys a diamond necklace for his wife, he isn’t benefiting anyone. If he walks into a store to buy the necklace, is he somehow benefitting the clerk behind the counter? Of course not- her wages are the same whether or not he buys anything. The profits of the sale go to the diamond magnates who own the store. In short, the wealthy get wealthier- the middle class simply facilitates the process.

Now you might say, “Hey, doesn’t the oil tycoon’s purchase help the middle-class? Without customers, the store couldn’t operate and the clerk would be out of a job! And if the clerk is out of a job, she isn’t going to be able to spend money and produce profit for the working class!”. Now that’s partly true- but only partly. The clerk’s job does depend on the store being successful, however, let’s look at the big picture. If the store is already running, then it has enough business to provide the job. Whether the tycoon has a few extra thousand dollars isn’t going to make the slightest difference. Again, you might argue “But an increase in the demand for diamonds means that more diamonds must be mined, producing work and profits for the proletariat!”. Again, this is only partly true. Now if there was a massive increase in the demand for diamonds (and let’s face it, it’s not like diamonds wear out and need to be bought by the dozen), there would indeed be more work for the proletariat. There’d be more work, not more profit. The owners of the mines can simply increase the workload- they have no reason to increase wages. Unionizing? The majority of the world’s diamonds are mined in third world countries where (1) unionizers can be beaten, tortured, or killed and where (2) the general populace is so poor they’ll take whatever wages they can get. In short, an increase in wealth for the wealthy does not equate an increase in wealth for the entire social system.

Ok, maybe that isn’t entirely true. There are certain (rare) situations in which the trickle-down theory seems to work (which brings us to the second issue). Imagine a wealthy man decides to build a sports stadium- the advocates of the trickle-down theory will argue that this will provide jobs and profits for the local community. Now this will in fact provide jobs- as food vendors and janitors. Whatever extra money they have will be spent on things too insignificant to boost the community out of poverty. I wouldn’t call that “benefiting” the working class anymore than I would call a dew-drop in the Sahara a “water-supply”.

Now I’ve stated that the origin of the term “trickle-down theory” originated in the 30s- but the actual practice has been going on since the beginning of time. It’s what they used to do with hunting dogs. Sic them on rabbits and, after the dogs catches the prey, they wait patiently under the table while the master eats the meat. When the master’s done, he throws the scraps to them. Now it might work for dogs, but if you treat a human like an animal, then it is only a matter of time before he becomes one- and an animal and has no issue with ripping your throat out.

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16
Oct
09

War for Sale

War has plagued humanity since one caveman discovered that using a heavy stick got him what he wanted a lot quicker than his fists did. Since that discovery, humanity has come a long way in the development of weapons, from bronze spears to compound bows to cannons to nuclear missiles. Now of course, there is nothing wrong with this- be it saber-tooth tigers or serial killers, humans will always have something to fight. What is wrong with this, however, is that there are those who take advantage of this fact. I’d call them “human vultures”, but that would be an insult to the birds- after all, vultures don’t attempt to instigate, prolong, or exacerbate conflicts. You probably know these people as the “Industrial-Military Complex”.

Now of course, “Industrial-Military Complex” is a term often misused. Conspiracy theorists warp the definition to describe supposed shady corporations controlling the military, or vice versa. In reality, however, the term “Industrial Military Complex” is simply used to refer to companies and corporations that develop and/or sell weapons for combat (as opposed to hunting and recreation). Now is there anything wrong the research and manufacturing of arms? Of course not- every government in the world has a need to defend itself- to spend money and effort on maintaining a strong defense force is both right and natural. The problem is the Capitalist system allows for all forms of commerce, from advertising to research to fast-food to prostitution. Anything and everything can be produced and sold- including weapons.

Now the issue here should be obvious- if a corporation creates a products (a fighter jet, for example), it isn’t enough to simply have a  supply of the product- you have to sell it; to sell something, there must also be a demand. As you can imagine, a fighter jet isn’t exactly cheap- selling it is going to make you a massive profit. Of course, you’re going to need someone to sell your fighter jets to, and let the facts be faced, people aren’t going to wake up one morning with a sudden urge to buy one. So now you have two options: (1) scrap trying to sell fighter-jets and sell something else or (2) create a demand for fighter-jets (and whatever other weapons you might be selling).

Now let the facts be faced; people who feel secure don’t attempt to fortify their houses or stock up on assault rifles. People only raise the drawbridge when they feel threatened– either by violence or the fear of violence. Of course, it is in the interests of those selling the weapons to promote either (1) violence or (2) fear (which, incidentally, is the definition of “terrorist”). How does one go about doing this? There are a number of ways. You could make sizable campaign contributions to “hawk” (pro-war/pro use of military action as a first resort) politicians. You could make sizeable campaign contributions to politicians in hope to buy their sympathies. You could advertise- try to convince the public that they live in a dark, scary world filled with monsters they need to protect themselves from. You could attempt to- through any number techniques- disrupt the attempts of peace negotiations (after all, the more war, conflict, and violence there is, the more weapons people will pay for).

Now this obviously isn’t right. To feed off of fear and conflict and escalation is- frankly- sick. War is and always will be a tragic but often necessary event in human history. To incite, encourage, prolong, or exacerbate violent conflict for profit is perhaps the height of immorality, and yet by the Capitalist standard the industrial-military complex is not an abomination but simply free trade- the production and exchange of goods for capital (money).

Now my message here is simple. War is being sold to you- don’t buy into it. Don’t be frightened by stories of monsters under the bed when you have the real monsters trying to scare you into buying their automatics and Kevlar. Don’t be imprisoned by paranoia.

Be brave.

26
Aug
09

Vox Populi… (Part 1)

It has been said that “the customer is always right”. That seems to make sense- after all, in a Capitalist society, supply-and-demand (with the emphasis on the “demand” part of the equation) is the driving force of the economy. Companies, corporations, businesses, entrepreneurs- everyone caters to the consumer. Naturally this sounds like an excellent system- the people demand a product or service and the companies develop and create it. Simple, efficient, and like most things in the Capitalist system, deeply, deeply flawed.

It has also been said that “the voice of the people is the voice of God”, essentially an earlier, Roman version of “the customer is always right”. The problem with that phrase however (and indeed, the entire supply-and-demand theory) is that humans are far from divine. Supply-and-demand looks great until we look at the things we demanded over the past ten-thousand years or so. Slaves, narcotics, war, segregation, excess, genocide, nuclear arms- just to name a few. Let’s use war to study the issue a bit more. Humans love war- we can’t get enough of it. Since the dawn of time we’ve been trying to find quicker and more efficient ways of clubbing each other. Obviously with such a massive demand for war, there are those who- like the good Capitalists they are- make a living off of conflict. They sell mercenaries, arms, guns, knives, mines- anything and everything to anyone willing to pay for it. Naturally, this only intensifies the horrors of war, it perpetuates the violence and weakens the chances of peace and diplomacy. If guns are used to slaughter minorities, or if grenades are pushed into the hands of child soldiers- who cares? If weapons are demanded, then they are supplied- the voice of the people is the voice of God!

Now obviously we can see that this is horribly wrong. Now I am not attempting to argue that any demand is wrong- humans have, after all, basic needs. Catering to humanity’s baser appetites doesn’t satisfy them, it only creates a greater hunger. Regulations? Regulations are an interference with the free market system- a form of “corruption” as Milton Friedman is attributed with saying.

Is supply-and-demand such a great idea? I submit that we cannot have our every whim met, that to supply every human demand would be the equivalent of granting a three year-old’s every wish. Anyone even remotely familiar with human history can tell you that we as a species have a difficult time figuring out what’s good for us.

Quite simply, we can’t always get what we want.