Rethinking our economy


Imagine you live in a town where everyone needs to have widgets. Because everyone needs to have widgets, there are about twelve different companies dedicated to making widgets. Since all these companies compete against each other and the supply matches the demand, the price of widgets is low. But then one company becomes innovative and creates a higher quality widget at a relatively cheaper price. As time goes on, only about 2-3 companies are left who produce the widgets. Since these 2-3 companies all produce equal quality widgets, they each claim they have to raise the price of the widgets because the quality is so high. While the owners of each company never talk to each other, they watch each other and keep the prices of the widgets about the same, slowly raising the price.

The workers, seeing their bosses make more and more money from the widgets, demand that they get a share of the profit. They go on strike until the bosses begin to share their profit with the employees via benefits and an increase in wage. The bosses, however, don’t want to give up their total profits, so they increase the prices of the widgets. The workers realize this and demand more money and benefits; after all, the cost of living in the town has gone up because the price of a necessary item (the widgets) has gone up. The cycle continues until the bosses realize that the widgets are going to simply cost too much.

Thus, the bosses begin to have the widgets produced overseas at a much cheaper price, but keep the price of the widgets the same. Because people in the town are now out of jobs (since the 2-3 widget producing companies are the only ones left and they’ve shipped the jobs overseas) they struggle to pay for the widgets. The bosses open stores in the town where people can buy the widgets and employ the people to work in those stores, though at a reduced rate and with no unionized labor; thus, the employees are at the mercy of the stores.

People begin to rise up against these bosses and demand the government do something. The bosses, realizing the government could bring an end to all their profit-making ways, contribute money to politicians. Two companies contribute funds to one politician while another company contributes money to another politician. Either way, whichever politician wins will owe his victory to one of the companies, meaning he won’t be able to come down against them. And even if he can, there are multiple politicians in the town; so long as the company can purchase the majority of them, nothing can be done to the companies. The town is then left without recourse to change the way things are.

What is sad about the above scenario is that it’s not hypothetical; I believe it adequately summarizes the United States’ economy post-WWII. Since WWII, more and more small businesses and small corporations have been consumed by bigger corporations. In doing this, we’ve moved from a three class system (rich, middle-class, and poor) to a two class system: Job creators and the employed. Some may not see the problem with having these two classes, but think on it for a moment.

A job creator has no reliance on the employed. If he opens his business in America he is typically leaving it open for skilled labor only. Even then, if he can ship it overseas to make money then he will do so. Thus, the employed are almost literally a dime a dozen, but completely reliant upon the job creators. Why do we value the job creators so much? Because we apparently base the strength of our economy on the number of people employed, or number of people who have jobs. But this is a false measure for the strength of the economy. Having a job is nothing more than being a wage slave – your income is completely artificial and in a bad economy, that income is cut. Thus, you may have a “job,” but that doesn’t mean the economy is healthy – we could employ all the out of work people in America and put them on minimum wage, but it wouldn’t mean our economy is healthy.

To go back to our analogy, let’s assume that a mid-level manager for one of the widget companies makes a comfortable salary because he’d educated. Yet, within 10 years the majority of the town has the same education, meaning there are others out there who are willing to work this manager’s job for less pay. He is then left with having to take a major pay cut or lose his job entirely. This is why being paid a wage isn’t always ideal, that same wage can be devalued in an instance even if the product you sell isn’t.

Instead, the real measure of a strong economy is how many people own capital producing property. This means that, in some way, they have control over their income through being part-owners in a business or complete owners in a business. In this case, one’s income is only reduced when (1) the demand for the product is reduced and/or (2) a better product comes along. Thus, to paraphrase G.K. Chesterton, the problem with Capitalism isn’t too many capitalists, it’s too few. Or, the problem isn’t that people own private property, it’s that too few people own private property. We are the town in the analogy where only a handful of companies ultimately run everything, meaning that capital producing private property is held by a few people. To liberals this is a social injustice, but to conservatives this must be understood as the destruction of the free market. In other words, the current system we have in our nation is not a free market system; it’s something that neither conservatives nor liberals can tolerate (hence the Tea Party and Occupy protests being so similar in their complaints, but different in their solutions).

The reality is we need a complete reformation of our economic system. The practical aspects of that can be debated and discussed by economists, but I believe the following philosophical principles need to undergird it:

  1. There is no utopia. Any system we developed will have inherent flaws to it, corruption will still exist, and injustices will still happen. The goal is to create a system that minimizes these realities and does all it can to delay them. Within the system there should be a series of checks that allow for penalties when corruption is found, but we should acknowledge that corruption will never be completely eradicated. There will always be the rich and the poor, the have and the have-nots, Peter will always make more than Paul, there will never be economic equality, and so on. The goal is to lessen these realities, not eradicate them.
  2. Any economic system we develop must value human beings as people with inherent rights. In other words, they cannot be part of the collective as they are in Communism, nor can they be means to an end as they are in Industrial Capitalism (or Objective Capitalism). The primary motive in any economy cannot be profit; while it must be a motive, it cannot be the motive. The primary motive needs to be the betterment of individuals and the local community.
  3. We must allow for the free market, but in a true sense of the word. The free market is the best way to value human beings because it allows them to make something of themselves. But the free market must truly be free; when left unregulated or free from government involvement, eventually the free market collapses. When only a handful of companies control the market, it’s not a “free market.” Thus, the government has the obligation to protect the free market, by limiting the growth of certain companies, or by ensuring that in corporations that are necessarily large (such as car companies) the overall power of the company is in the hands of the many and not the few (more on this later). At the same time, this means the government must keep their hands off small businesses and let those businesses develop within reason. It means the government’s job is to protect and support the ownership of private property, not make it more difficult via taxation. Thus, the system cannot be socialist, but it cannot be capitalist (as presently understood) either.
  4. In necessarily large corporations, the power within the company must be divided. While we need leaders and people who are visionaries, as a company grows, so too must its ownership. This simply means that the workers ought to get a share of the profit via direct profit share, not through wage increases. In many ways, this makes all the workers types of owners. On big decisions, such as moving the company or the like, everyone should be allowed to voice their opinion. While this allows for corporations, it takes away the power of the corporations and especially of those at the top – the richest people in the corporations still don’t have enough money to influence elections. It also lowers the gap between rich and middle class (which is a problem). While the owners and CEOs will still make quite a bit of money, in having to share the profits of the company with the workers, that gap is reduced. Furthermore, when people know that working harder will bring in a higher profit bonus, most people will be motivated to do so, which makes for better products put out at a faster rate, which does make for a better economy.
  5. The government must regulate the market to protect the free market. That is, they must protect the market against monopolies and de facto monopolies (when 2-3 companies rule an entire region). In cases where a monopoly become inevitable – such as an energy company – the government holds the job of regulating the cost and preventing the cost from getting too high. They also hold the responsibility to ensure that in large corporations the workers are given a profit share and treated as co-owners.
  6. The government must watch its regulation and not peddle when some companies fail. Failure is a good thing because it allows for learning and growth. While painful it is a necessary part of an economy. Thus, if a company is about to fail, let it fail, even if it’s a large company. The temporary pains won’t destroy the economy, but the government getting involved and ruining the free market will destroy an economy.

The goal in all of this is really to respect and protect the dignity of man. The most important point that I did not include is that we must have a moral society. We must drop the moral relativism that we’ve bought into and realize that objective moral values exist, naturally so, and that when we abandon them there are negative consequences to be had. While the above points would make for a better economy, what would ultimately help the economy is for people to realize that acting ethically allows for a more sustainable economy. Acting ethically may cap a business owner’s income to a few hundred thousand instead of a few hundred million, but it will allow for a stronger economy for everyone else and still give him enough money to live comfortably. But we have to be willing to do what is right and that requires us to reject subjectivism when it comes to ethics.

Thus, if we wish to fix our economy and overhaul it, the first step has to be an ethical one. It has to be a commitment to doing what is right and encouraging others to do what is right as well. The economy we have today was founded in the 60s and 70s, the self-love and individualistic ethos. To fix our economy we have to fix our social ethic, I’m just not sure anyone is willing to do that.

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Should a President Violate the Constitution?


Yesterday President Obama hit the hornets’ nest as far as illegal immigration is concerned. He announced that for illegal immigrants under the age of 30 who entered our nation before they were 16 years old (generally by a parent or adult) would not be threatened with deportation. How can the President single-handedly pass laws and forgo the legislative branch? Well, he can’t, but being the executive branch he can choose not to act on certain laws. Thus, the law hasn’t changed, but the enforcement of the law has changed. While people want to act as though Mr. Obama is ruining our Constitution by doing this, the reality is this has happened quite a few times in our nation’s history (it happens most-often when a president involves us in a police action without consulting Congressional support for a declaration of war). Regardless, the frequency of when it happens or even if this is the first time in United States history that a president has so boldly forgone another branch of government (those of Cherokee ancestry are currently thinking of another time when this happened) is quite irrelevant; what matters is if Mr. Obama is right or wrong in his action.

I must state emphatically that the Constitution divided the branches of government for a reason, thus it is best to follow those branches in almost every situation. The aforementioned link to Andrew Jackson and his usurping of the Supreme Court is a perfect example of why the branches ought to respect each other’s authority. But what about when the branches are wrong? What about when both Congress and the Supreme Court rule that slavery or segregation are ruled as okay within the parameters of the law? Wouldn’t we argue that the Executive branch has a moral obligation to the citizens of the nation to find some way to usurp the two other branches? I would argue that when neither branch will support what is naturally right, the third branch always has the obligation to do all it can to usurp the other two branches so that what is naturally right is recognized.

Now again, I haven’t made a case for what Mr. Obama did (yet), so before jumping ahead to leave a comment it’s best to keep reading – this post is more about Natural Law vs. the Constitution than it is about what the President said (although what he said provides a great backdrop).

Some might argue that if we hold Natural Law above the Constitution then the point of a Constitution is nullified. If any judge, president, or congressional body deems a law wrong and can simply act against it, then why divide the powers? The reason, however, is that the Constitution is itself already an outpouring of Natural Law, so when the application of the Constitution comes into conflict with Natural Law, one is not acting against the Constitution per se. The Constitution is constructed in a way that most applications of the document are consistent with the document. However, when the intent of the Constitution is violated then those sworn to protect the integrity of the Constitution have the duty to uphold it, even if that means they are unfaithful in other aspects (i.e. if two branches decide to outlaw Islam, then the other branch has the obligation to usurp the other two branches; to be faithful to the intent of the Constitution, which is to prevent tyranny, the Constitution must be breached).

In other matters we have no problem with people acting against the Constitution. For instance, what if tomorrow Congress decided to detain anyone who looked like an Arab in the name of national security? What if after many challenges the Supreme Court ruled that this law was fitting with the Constitution because it’s “reasonable” considering the security threat? Would the power of the Constitution – a document made by man – trump the moral law of God? All except legal positivists and the strictest of deontologists would argue that the Executive branch (the President) would have the moral obligation to not enforce the law.

Thus, there are cases where the President is not only justified in violating the Constitution and the separation of powers, but is under a moral obligation to do so. The question presented to us now is whether or not Mr. Obama found himself in that situation when he made his declaration.

Make no mistake, I absolutely support President’s goal. For all his failures – enough to prevent me from voting for him (and no, I’m not voting for Romney either) – I really do support many of his attempts at immigration reform, though I find them incomplete. I think this latest attempt ultimately has good goals. The fact is that those brought into this nation when they’re not of a legal age of consent, are raised as Americans, contribute to our society, and consider this place their home have no reason to be deported. Though they lack a piece of paper saying they’re citizens they’re citizens in the realist sense of the word. That they were brought here against their will shouldn’t relegate them to moving to what is, for all intents and purposes, a foreign land.

Wherever one stands on the immigration debate, one must admit that moral culpability plays a major part in whether or not one is punished for a crime. If a five-year-old is forced to steal from a vendor because an adult tricked him into it, then five-year-old isn’t held accountable. While there are typically some punishments when one unwittingly commits a crime, or is forced into a situation where a crime is committed, the full force of the law is typically withheld. In the case of someone brought into this country at a young age (below 16) who are subsequently raised in our communities, our schools, learn our language, and essentially become American, how is it that we’re to punish them for a crime they aren’t morally accountable for? In other words, the current law on the books is wrong and needs to be changed because it’s depriving people who are practically citizens from their rights; a better law would be that at the age of 18 they’re granted a permanent visa and can apply for citizenship.

The problem with the above is that our Legislative branch never got the chance to take this issue up. Now, most certainly it would have died in the Republican-controlled House, especially during an election year when the base has to be pandered to. Likewise, there’s not much the Supreme Court could do to fix the situation. Thus, it would be up to Mr. Obama to fix this situation (as this is a human-rights violation and not something petty). Some might point out that the DREAM Act was killed in Congress, but this was an entire act that had some problems with it; a standalone aspect of the bill could have been reintroduced to Congress.

The second problem with what Mr. Obama has done is with the timing of this act. Even if the DREAM Act shows that Congress wouldn’t work to fix a law that is seriously flawed, Mr. Obama only chose to implement this policy when it came to light that this election would be tight and that the Hispanic vote would play a vital role. In other words, he didn’t do this because he has a deep-seated belief that these young immigrants have a natural right to stay in a nation they have made their own, nor did he do this because he believes that God calls us to be kind to our neighbors; rather he did this because he really wants to win the election and Hispanics are the current pawns he needs in order to win.

If one is to violate the Constitution, then one must do so from deeply held moral beliefs; a president, judge, or congressperson who violate the Constitution must be willing to lose their job or go to jail for their belief. The conviction in what is good and right must be that strong; it can’t be done simply to win a political game.  If it’s just for a game and not real moral reasons then what promise do Hispanics hold for after the election when they’re no longer needed? If one’s moral ambition cannot extend beyond one’s political ambition, then one is stuck following the Constitution. The reality is, Mr. Obama should have done this long ago knowing full-well that he could be impeached for such actions. Yet, he should have looked at the consequences and simply not cared, believing that what is right is far more important than any political office; but that’s just not what happened.

Thus, Mr. Obama could have been justified in what he did, but he’s not. The ends are justifiable because they seek to correct a major flaw in our immigration law. The means, however, are horrid and negate the ends. He should have sought Congressional approval first (even though it would have been an exercise in futility, at least he would be giving them a chance). Likewise, he should have done this last year or the year before, not now that it’s become apparent he desperately needs the Hispanic vote in order to win. That is what it means to be a principled president. While we need presidents who are practical, we need those who are practical with their principles and have a budging point, a point where they’re willing to be forced out of office rather than violate what is right.