Posted on September 1st, 2010 by by Brian Mayer

The Economics of Pride

I had an interesting conversation today.  I was waiting for a friend to meet me in Wrigleyville, and not wanting to pay for a seat in a restaurant I sat down outside on a public ledge next to the sidewalk and started to answer some work emails.  I struck up a conversation with a man who was also taking a free respite from standing and asked him how he was doing, where he was from, etc etc.  I assumed–correctly, as it turned out–that he was one of the many beggars who hang around Wrigleyville at night asking for money.  He did ask me if I could “help him out” about 1/3 of the way into our conversation, but other than this brief interlude we had a pleasant interchange, mostly consisting of small talk about origins and the weather.

I did, however–and this was to confirm my suspicions about his circumstance, but also out of curiosity–ask him what he did for a living, and he told me that he drives a forklift and works in warehousing.  “But I got laid off this year,” he said, and proceeded to tell me about his layoff and how he has been out of work for a year.  This started a conversation about the economy, how it’s bad for a lot of people, and I’m sure he’ll be able to find work soon.  Then he said something interesting, but first background:

I had recently had a conversation with a friend about minimum wage, one of my favorite thought experiments in humanitarian socialism and economic progress.  I believe, like many economists and social theorists, that the benefits of minimum wage are not justified by the economic cost; that is to say, minimum wage creates a barrier to employment by people whose skill sets are unemployable at that high a wage.  Yes–for some (un)skill sets and abilities, minimum wage is too high, and employers will rather outsource those jobs to foreign countries at those skills’ worth than pay too much for them here at home.  The result is people who can’t get jobs because no one will pay them as high as minimum wage to work for them.  I think that in a free market of labor with freedom of contract and competition, all jobs have a price.  Employers may like to pay workers less and less, but if they do that they will lose those workers to competitors at some price point where their added value to the company outweighs their compensation.  It is the same reason employers pay people more and more for better and harder work–because they acknowledge and require better skills at higher levels.  Certainly most people with good paying jobs are not having their wages reduced to the minimum wage level arbitrarily, so why would employers of people currently at minimum wage reduce wages lower than the worth of those jobs without a legal barrier?  Anyway, the economic argument against minimum wage is sound and is worth reading, but it is besides the point.

The obvious counter argument to this economic reasoning, however, is the belief that a minimum wage is necessary for sustenance and it is inhuman to underpay people for jobs.  This belief is supported by a belief in social welfare and the idea that with a job, one should have a base level of security.  Both arguments are good, but I obviously lean to the side of helping the economy as an engine for individual growth.  It doesn’t matter, because no politician could or would get rid of minimum wage because it’s a fairly established policy and would be deeply unpopular to overturn.

This discussion I had with a friend about minimum wage ended up coming to a proposed thought experiment where I had no money and was put on the street with no friends or family to support me.  The proposed “zero start” idea was created to challenge me to think about what I would do in this situation, a situation that I (or most people) have never been in.  My answer, at the time, was I would walk into every McDonald’s I could find once a day asking for a job.  Since Maslow’s hierarchy requires that I have an income, McDonald’s–a notoriously low-paying and low-satisfaction employer–would be a good place to start.  I would definitely beg, but I would beg for a fishing pole, not a fish.

Back to my conversation with John, the man I met on the street, whose employment status was known but whose homelessness status was not (I never asked).  He told me, unprompted, that “I could go get a job at McDonald’s but who wants to work at McDonald’s?”  I found that interesting.  Here I am, two weeks ago thinking about the first thing I would do as a desperate, homeless and jobless individual, thinking that in my desperation I would beg for a job at McDonald’s until I got one, and here John is telling me that, despite his joblessness he would not get a job at McDonald’s.  Who wants to, after all?

My first thought was, how desperate is John?  I would assume that his level of desperation is not yet at the point where he is seeking every available job possible.  After all, if you are truly desperate, then you have to take what you can get, right?  Doesn’t this make basic, logical sense–survival is the most important thing?

But if John is not desperate, and can easily get a job somewhere if he wanted, why is he begging on the street?  What is his game?  Without a job, is he really making enough money begging to support himself?  Does he want to be a beggar, and is this a better option in his mind than working at McDonald’s?

Clearly John is someone well spoken, with a skill set and a very personable demeanor, who doesn’t want a particular job, so instead of working somewhere he doesn’t want to work (which is certainly his choice), he is on the street begging for money.  This made me think of several things.

One, is Pride an economic factor?  Is there some model that accounts for peoples’ unwillingness to take jobs that they can take, but are too proud to take?  There must be, because I know friends I graduated with who could take a job at any retail store or restaurant, but refuse to do so because their college degrees render such jobs beneath them, in their opinion.  There is also the argument that “If I take a job like that, someone else will be out of a job who really needs it,” which is sort of hypocritical and assumes that people desperately seek any job offered to them, which is exactly what they refuse to do (pride, pride, pride).  Also, jobs are not zero-sum: the more people in jobs, the better for the economy, and the more jobs that are created.  If anything, they should be saying “With my education and skills, I will do exceptional work at a job like that, and make my employer enough money that they can hire someone else.”

Two, is John somehow violating a fundamental principle by choosing not to work?  It is his choice not to work, of course, just like it is my friends’ choice not to take a work at the Gap.  He clearly is taking care of himself and is still eating properly, shaving and brushing his teeth (this I all observed).  So are my friends.  He probably has some savings to make his situation not desperate–so do my friends.  What makes him different?  The fact that he is begging on the street.

So this is the conclusion I came to, and please tell me if I’m wrong.  He’s not begging on the street because he needs to be, he’s begging because he wants to be.  I have a problem with this.  I have always had a problem with begging on the street, mostly because of the uncertainty of the beggar’s circumstances, and the belief that donating to homeless shelters and jobless centers is a lot more effective of an investment in homelessness and joblessness.  John has taken the lowest job on the totem pole–something that isn’t really even a job–and turned it into a job with two tiers: those who choose to work at that job, and those who have no choice.  What about the people who can’t get a job anywhere, and have to beg? What about truly destitute people with no options?  What is left for them?

It seems that in the economy, even beggars are competing with each other.  And beggars like John, because of pride, are preventing people from taking a job like that who actually need it.  The cycle continues, even down to the lowest rung on the ladder.

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Posted on August 16th, 2010 by by Brian Mayer

A Pale Blue Dot


From Carl Sagan, Pale Blue Dot: A Vision of the Human Future in Space (1994):

From this distant vantage point, the Earth might not seem of particular interest. But for us, it’s different. Consider again that dot. That’s here, that’s home, that’s us. On it everyone you love, everyone you know, everyone you ever heard of, every human being who ever was, lived out their lives. The aggregate of our joy and suffering, thousands of confident religions, ideologies, and economic doctrines, every hunter and forager, every hero and coward, every creator and destroyer of civilization, every king and peasant, every young couple in love, every mother and father, hopeful child, inventor and explorer, every teacher of morals, every corrupt politician, every “superstar,” every “supreme leader,” every saint and sinner in the history of our species lived there – on a mote of dust suspended in a sunbeam.

The Earth is a very small stage in a vast cosmic arena. Think of the rivers of blood spilled by all those generals and emperors so that, in glory and triumph, they could become the momentary masters of a fraction of a dot. Think of the endless cruelties visited by the inhabitants of one corner of this pixel on the scarcely distinguishable inhabitants of some other corner, how frequent their misunderstandings, how eager they are to kill one another, how fervent their hatreds.

Our posturings, our imagined self-importance, the delusion that we have some privileged position in the Universe, are challenged by this point of pale light. Our planet is a lonely speck in the great enveloping cosmic dark. In our obscurity, in all this vastness, there is no hint that help will come from elsewhere to save us from ourselves.

The Earth is the only world known so far to harbor life. There is nowhere else, at least in the near future, to which our species could migrate. Visit, yes. Settle, not yet. Like it or not, for the moment the Earth is where we make our stand.

It has been said that astronomy is a humbling and character-building experience. There is perhaps no better demonstration of the folly of human conceits than this distant image of our tiny world. To me, it underscores our responsibility to deal more kindly with one another, and to preserve and cherish the pale blue dot, the only home we’ve ever known.

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Posted on August 4th, 2010 by by Brian Mayer

Moving Forward

Today, the U.S. District Court for the Northern District of California decided that Proposition 8 to the California constitution violated the United States constitution.  This decision marks one more step in the historic–and seemingly endless–march for gay rights in the United States and the world.

California has long been a center of gay activism and progress in the area of gay rights.  San Francisco was the first city to elect an openly gay city supervisor, Harvey Milk, in 1978.  In that year, California’s Proposition 6, also known as the Briggs Initiative, which would have prevented gays and lesbians from working in the school system, was defeated.  However, gay marriage was still not valid or recognized in California.  In 2000, California passed Proposition 22 which constitutionally defined marriage as being only between a man and a woman.  In 2008, the Supreme Court of California overturned this amendment, legalizing gay marriage in California for several months until the November election, when Proposition 8 was passed which overturned the court’s decision.

Time and time again, the courts have upheld the rights of homosexual couples to marry, and time and time again, populist movements have put an end to this basic human freedom.  Today, a Federal judge issued an invalidating ruling, meaning that in California, for the time being, the only hope for defeating gay rights is in the Supreme Court.  (For you constitutional purists out there, the reason we have courts in the first place is to provide guidance on law and prevent unjust laws when we don’t know any better.)

Today California once again joins the ranks of the few states in America that extend this privilege to homosexual couples:  Massachusetts, Connecticut, Iowa, Washington, DC, New Hampshire and Vermont.  We will see soon if the Supreme Court upholds today’s ruling.  In my opinion, there is no valid argument–constitutional, moral, religious, or otherwise–against allowing homosexuals to marry to the fullest extent of equal protection under United States federal law. The only valid constitutional argument from a Federalist perspective is the separation of powers and the States rights doctrine.  This is certainly a valid argument to make, but keep in mind that if the Supreme Court had consistently strictly upheld the States rights doctrine when it came to matters of equality, segregation would still be legal.  Interracial marriage would still be illegal.  Plus, we have the Fourteenth Amendment for a reason!

It is important for Americans of all races, religions and orientations to remember that our ancestors also faced opposition to their basic human rights and freedoms.  Indeed, the past four hundred years of history in America has been a story of groups gradually winning the right to be viewed as equals.  In the struggle for gay rights, we see a similar endurance and persistence that has occupied every civil rights movement in our history.  The same endurance that led blacks to freedom, that led women to the ballot box and that even led Jews to Israel.  There is no doubt that, like these movements of the past, the movement for gay and lesbian rights in America will succeed.  The decision today in California is a vital step on the road to justice.  The more the opponents of this movement try to hold the country back, the louder its drive for justice, and the sweeter the victory.

It is easy for Americans to forget, being as secure we are in our citizenship and our persons, how hard it was for our parents and grandparents to fight so it could be this way.  Think about the progress we have made as a nation in just the last century–but also think about how much further we have to go, not just in terms of gay rights but in terms of many basic human rights, worldwide, that we take for granted.

If you are interested in the legal thought going into today’s decision, check out the text of the ruling here (http://scr.bi/awBcpr).  There is also a great article by the plaintiff’s lawyer, Ted Olson, in Newsweek called “The Conservative Case for Gay Marriage” (http://bit.ly/9ZYdU4).  Olson explains quite eloquently that the fight for gay rights is not just a gay issue or a liberal issue, but an American issue.

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Posted on August 3rd, 2010 by by Brian Mayer

Notes on Friendship (and Facebook)

I found this article the other day, and it isn’t that recent article by today’s terms (read: 6 months ago) but it is still relevant.

First and foremost, I found it particularly interesting how Deresiewicz tied the history of friendship to our latest foray into “faux” friendship, seeming to trace a line directly from Plato to today in a highly critical view of what we’ve “done” to friendship. But he mischaracterizes the root cause of the problem–it is is not Facebook or MySpace that made us who we are, just like it wasn’t the invention of writing that made people write 10-page long letters. Could not a monk in Ireland lament in 1350 that his ability to write 10-page long missives to his clerical compatriot in Kiev hampered his ability to maintain a close friendship based on conversation and personal intimacy? Certainly Jefferson and Adams did not maintain their letter-writing friendship at the expense of their conversations, but it allowed their friendship to grow and be maintained when distance hampered their communication.

Point being, Facebook may be a technology that enables briefer, less intimate intercourse, but it is not Facebook’s fault that we use it for that. Indeed, Facebook is the latest technology that allows us to do what we seemingly want to do more than anything else–perceive the illusion of friendship without doing the work necessary to create and maintain a Platonic one. But what’s wrong with that? Certainly the telegraph-writers were a proud and noble breed for quite sometime after mobile telephones were commonplace. Certainly there were some horseback riders riding bareback long after the invention of the saddle. But technology clearly enabled some to communicate and ride horses better and more efficiently. We might lament the loss of the agrarian culture, but there’s a reason most of us live in cities. Maybe we are naturally short-focused, uninterested, shallow, petty friend-whore-mongers and Facebook is the first tool that allows us to be what we want to be??

This article to me seems pretty nostalgic, ironically posted on an online forum where comments range from “Good article! XOXO” to “Make me your Facebook friend!” But it does address quite well the changing social relationship of friendship, and it doesn’t lie when it observes that “We haven’t just stopped talking to our friends as individuals, at such moments, we have stopped thinking of them as individuals. We have turned them into an indiscriminate mass, a kind of audience or faceless public. We address ourselves not to a circle, but to a cloud.”

However, like the saddle and the steamboat, maybe that cloud is ultimately an improvement in our lives, not as a social change bound to undo us, but a critical change in the patterns of friendship that stretches, as the author observes, back to Plato. Yes, our world would look much more different today if the typical Tweet was 5,000 words long and every Facebook message ended with “And thus justice is more profitable than injustice,” but it would look different without the millions of improvements to our lives that we don’t even consider. If anything, Facebook has allowed old friends to reconnect in adulthood, new friends to be made around the world, and networks to be created–certainly not close, intimate cliques like one might find in the comraderie of a small town, but diverse networks with people from different backgrounds and experiences, bringing the whole world closer together. These rapid connections have smoothed relations between people and even nations, substituting physical rivalry and enmity for petty online squabbles. Think about being at war today with a country like France, with millions of Facebook users to exchange bickering “fighting words” with. Think about being Facebook friends with an enemy soldier. It sounds absurd. But at the same time, it gives you an idea of the closeness created by an “arbitrary cloud” of “friends.”

I would say in response to this article that Facebook may claim, or want to be, a space for friends, but it is not. I know who my real friends are and who my online relationships pretend to be. I know that the Facebook feed is not a real representation of what my friends are doing–but that’s OK. It’s ok to fantasize and explore new relationships from the safety of the internet. It’s ok to experiment with dialogue in short, opportune bursts instead of long, vulnerable missives. And it’s ok to openly court friends in places one has never been able to do so.

At the same time, when it comes time to find the real world and find real friends, people haven’t had a problem doing that. If anything, technology has given us more leisure time to spend time with friends. Having multiple close friends is not a bad thing, nor is having hundreds of online friends. Just because the word “friend” has been diluted, doesn’t mean the concept of friendship is any less real.

Anyway that’s what I’m thinking. I really enjoyed the article, but as a commentary on today’s friendship the author makes some bold claims that aren’t supported by the way in which we actually use social networking.

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Posted on July 1st, 2010 by by Brian Mayer

Mongolian Economics

So being in Mongolia has been a bit of an affirmation of Friedman economics for me, not that I had such a problem with them before but Mongolia takes the models to such an extreme that it provides a willing test subject and performs very well.

We pulled into Ulaanbaatar (UB) by train at about 6 in the morning and we got off with a bunch of Mongolians from the north (we were the only car coming from Russia, read: Westerners), who all got off with various barrels and boxes and other goods they were presumably bringing to market. UB is a giant, sprawling city that has literally grown out of nowhere since independence in 1990. The Soviets built some housing and some government buildings, but post-1990 the city has been a conglomeration of impromptu homes from immigrants from the countryside. Our guide, Ganz, met us at the train station and we right away got something to eat and then started our 5-hour drive to the south desert to spend the night in a yurt with a nomad family. Ganz explains to us that the city has doubled in population in the last 10 years, and in the next 10 will double again. More interestingly, he says that 10 years ago there was no word in Mongolia for “traffic jam”–in other words, the growth of the conglomeration has outpaced the construction of infrastructure. We leave the city and less than 10 minutes outside of it there is an open steppe…literally miles and miles of empty land with an occasional yurt (look it up on Wikipedia…Mongolian yurt) and herds of sheep, goat, cows, horses, and even camels, every once in a while. The massiveness of the land compared to habitation is hard to describe. In a 5 hour drive from the biggest city in Mongolia, we passed 2 villages on the road (there’s only one paved road from the city south), and saw maybe 5 people apart from that. In a country of 3 million people, 1.5 million live in UB and the rest in a countryside stretching 600,000 square miles—thats 2 people per square mile. So you can imagine how empty most of the land is.

When we’re in the car during the 5 hour trip, I start asking Ganz about the land, how people buy land, what the role of the government/taxation is, etc. Of course I’m thinking summer home/real estate. He told me that no one owns any of the land, except in UB where you have to have permits to build. I asked him if I could build a fence anywhere I wanted on the land, and call it my own, and he said theoretically I could, but no one does that. Why not? Well, 30% of Mongolians still are nomadic herders, and move 4 times year with the seasons to herd their flocks and provide meat, dairy, skins, etc for their needs and sell to others. The economy of Mongolia in 1920 was 95% herding and 5% other (manufacturing, etc), but the Soviets, to their credit, started a centralized system of education, governance, and industrialization which led to 30% of herders today, and within 10 years probably 15% of Mongolians will be herders. To encourage the “Traditional” Mongolian lifestyle, the government subsidizes herding, essentially, by not requiring the nomads to pay taxes. As a result, a fair number of herders still exist, but they still, if they can, go to UB or another city and pitch their yurts on the outskirts looking for jobs. You can see in UB, the further outside the center you go, the higher the ratio of temporary (yurt) housing to permanent housing, as it is apparent that the city is a very new, very fast growing, conglomeration as people move in from the countryside to find jobs.

So I had a couple questions for Ganz, some of which he answered and some of which he didn’t. First, I wanted to know how much land cost in Mongolia, and his answer suggested that it didn’t cost anything, but you have to pay taxes if you have permanent claim to any land. I figured that in a place where land was a nearly unlimited resource, it essentially had no value, and no one felt that they owned any land except in places, like UB, where land was in competition. In other words, within the same country you can see the extremes of land ownership and value (the city) contrasted with the extremes of non-land ownership and value (the countryside), based on the same basic economic principle. Foreigners can go to Mongolia and pay the government $50/year per hectare to “own” land–although the government only allows “leases” for foreigners. The government thus extracts revenue on the valueless land (is this right?) through taxation. So that was interesting.

We spent the afternoon and night with the nomad family, who spoke no English but Ganz translated. One of them asked at what age in the US do we learn how to ride horses, which I found amusing–horses, to Mongolians, are like cars in the US, it’s a right of passage to be a good rider. The kids in the countryside start riding at age 5. The business of this nomad family was herding, like all other nomads, although, as Ganz explained, they are more successful than most. They have an above-average number of animals (2 or 3 hundred) and sell surplus meat, dairy and wool, making money to buy provisions, more animals, and a cool satelite TV hookup in their yurt which gets 18 channels. They have 3 children, 2 of whom talked to us about wanting to move to the city when they finish school and get a job in UB…their parents support them. The only reasons the parents haven’t done it is because they have no skill set outside of herding that they could sell in a labor market, like many of the unskilled laborers who go to UB every year to find jobs. This family also supplements their income from hosting tourists like us. So for herders, they have an above-average income. What I found interesting was that their “lifestyle”–which you could really call a job–existed, as Ganz said, for them and for their own. They did not have ambitions toward stable production, or a desire to make five times as much money staying in one place, settling down and doing a western ranching model. I asked Ganz why, and didn’t get a straightforward answer, but my guess is that with the government subsidizing nomadic herding, there’s no reason for people to do anything to cover expenses aside from their basic needs. The greater needs of the economy aren’t being met.

Which brings me to my ultimate surprise: In this country of 5 million animals for 3 million people, 70% of meat is imported! That tells you that Mongolia isn’t producing at the capacity it should, and it has ultimately to do with the unwillingness of people with a herding skillset to setlle down in a production-oriented industry like ranching. Why is this? Ganz told me that some farmers, in particular, have started to adopt western crop models and have been increasing their yields and their wealth–clearly the stationary farming model is more productive. Why haven’t herders realized the stationary herding (ranching) model? Certainly, if I told my ranching friend in Montana that he could move his ranch to Mongolia for one tenth of the price, hire ten times as many herders and quadruple his profits, he would jump at that opportunity. Why hasn’t a clever nomad decided to undertake such a ranching model? And spare me the romance of the noble nomad, loving the culture of the herd and embracing glorious Mongolian culture. Clearly most herders or their children, when given a choice, choose to move to UB and get a job.

I haven’t figured out the answer yet, but Ganz speculated that eventually there will be ranches and the herding model will stabilize. It helped, he said, that two years ago there was a giant animal blight and 20% of animals in Mongolia died–he said it was a tragedy, but ultimately proved that nomadic herding is unsustainable and helped to move people to establish sustainable careers. Ganz is a bit right wing, and has his own tourism business with 8 employees and makes, by his estimation, a middle class wage. His parents were nomads, but he went to the city after school and learned English, eventually becoming a tour guide. He’s quite the Reaganite as well, which is humorous. His Uncle makes and sells ornate jewelry and is pretty good at it.

When we came back to UB, we discovered the raw growth of the city–how traffic laws aren’t enforced because no one understands them, how the biggest building in UB is still empty because they built it crooked and couldn’t install an elevator, how everything is either Soviet-era ugly or under construction, but there’s a beauty to the city in its spontaneity.

Ganz estimates that by 2020, only 5% of Mongolians will be nomadic herders, a complete reversal from 100 years ago. This, I believe, is the ultimate affirmation of the idea that efficiency in the economy will be reached despite the attempt to subsidize a different economy, because people ultimately adapt and move toward different industries. I guess the biggest mystery to me, right now, is why these “unskilled” nomads don’t adapt herding to a sedentary model, where they can still herd but can make five times as much money doing so. Perhaps, when the romance of moving to the big city subsides, many former herders will take their education and go back to the countryside, creating a new “traditional” ranching economy that is more efficient and will ultimately bring more wealth to themselves and the economy.

These are not coherent thoughts but just my rants and musings. Anyway, what do you think?

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