Basic Economics, Avatar: the Last Airbender

ByJohn Brown

How to not be duped by political blarney

Karl Marx was not a scientist. Nor was Adam Smith before him. They were philosophers. Theorists. Idea men. That’s what all economists in those days were. They had little tested knowledge, and so which economic system was best was all a matter of opinion.

But things are now much different. Nations and local governments tried the various theories. And we’ve seen the results. We now have a whole century of data. Furthermore, economists now are scientists. They use scientific methods and deal with tested knowledge. Sure, there are still controversies, just as there are in any science, but the basic principles of economics today are NOT matters of opinion.

For example, we know what happens when governments impose price controls in all their many varieties—rent caps, minimum wages, laws against price gouging, and medical care cost limits. These last few years we’ve seen a dramatic demonstration of what happens when they meddle with the prices of home loans. We know what happens when they impose tariffs or give subsidies to special groups like farmers or steel producers. We know what happens when they create barriers to people entering a market to compete, like they’ve done with immigrants. We know what taxes do.

The unfortunate thing is that many of these principles seem to be ignored by our politicians. And by those who vote them in. And so we can have a Congress pass massive health care legislation that will cause health care shortages just as similar laws caused shortages in other countries. This is how we have a president who in a recent speech to the U.S. Chamber of Commerce suggested, in good Marxist fashion, that it was business owners who kept the American workers down by hoarding all the profits. Has he not looked at the data which shows that huge profits invite more competition, which tries to get ahead of the leader by cutting prices, which allows the American workers to get more for less, thus raising their standard of living?

In the 1980’s and 1990’s India and China began to make fundamental changes to their economic policies, doing the things that have been proven to work. Suddenly, the economies of those nations started to grow. It’s estimated that 20 million people in India rose out of poverty in a decade. In China, more than a million people rose out of poverty EACH MONTH.

But this seems lost on a number of politicians. Don’t let it be lost on you. We have critical elections coming up. One of the best things we can do is educate ourselves about these basic economic principles so we can cut through all the political blarney. I haven’t found a better, more enjoyable book on the subject than Basic Economic Principles: A Common Sense Guide to the Economy by Thomas Sowell. Sowell is an economist and Senior Fellow on Public Policy at the Hoover Institution at Stanford University. His book is written for the general public and so foregoes dry charts and theoretical ho-hum for lots of real-life examples and straight-forward explanations. There are times when I wish he would have gone into more detail on a few subjects, but what he lacks in depth in a handful of areas, he makes up with breadth. Furthermore, the way he presents the topic was interesting enough to make me stay up late a number of nights well past my bedtime. 

Great family entertainment

Do you want some fun family entertainment that includes laughs, wonder, and moments of poignancy? Something you can watch and enjoy with the kids? Then let me recommend the animated TV series Avatar: The Last Airbender. This is NOT the movie Avatar by James Cameron with all the big blue people Nor is it the movie The Last Airbender, based on the TV series, which many fans disliked. This is the original. The one that millions love.

Through the miracle of Netflix, I started watching it with my girls a few months ago. And we’ve all been sucked in. It’s unlike any “cartoon” I’ve seen. In fact, you can’t call it a cartoon just as you can’t call The Incredibles or Lion King cartoons. This is great story telling. Furthermore, instead of it being a bunch of unconnected episodes, this series is telling a long story. It ran for three years on Nickelodeon and includes more than sixty 22-minute episodes.

The series follows the adventures of the main protagonist Aang and his friends, who must save the world by ending the destructive war with the Fire Nation. Aang’s world is divided up into four nations—Air, Earth, Water, and Fire. In each nation are “benders” who can powers with the element of that nation. So Air Benders can fly and create huge winds; Fire Benders can generate and throw fire; Water Benders can create ice and waves.

So it’s fantasy, and all of that is cool, but it’s the characters that we enjoy the most. We quote and laugh at some of their lines. And then there are the episodes with true dramatic moments.

Avatar has been nominated for and won many awards, including the Annual Annie Awards, the Genesis Awards, the primetime Emmy awards and a Peabody Award. It’s excellent entertainment.

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  • The Drowned Cities by Paolo Bacigalupi

    ByJohn Brown

    The Drowned Cities by Paolo BacigalupiI just finished The Drowned Cities by Paolo Bacigalupi, and, holy cow, folks—this story rocked.

    It’s set in the future in the area around Washington D.C. which is the titular drowned cities. They’re drowned because the climate has gotten warmer, the seas have risen, and D.C. is half under water, permananetly flooded. It’s more like Georgia or Florida—gators, kudzu, the works. But this is not another dumb book about global warming. If it were, I wouldn’t be writing this.

    No, the United States has fallen apart. Up north there’s some alliance with money and power and the ability to keep those in the Drowned Cities out. South, who knows? West? Don’t know. But right around D.C. everything has gone to hell.

    It’s like Mogadishu, Somalia in the 1990’s (Blackhawk Down) with warlords fighting each other, tearing the place apart.

    It’s like Sierra Leone at the end of that decade with different factions butchering locals and forcing kids to fight as soldiers.

    Except instead of the U.S. or Europe or the U-freaking-N sending in peacekeepers to stabilize the situation, it’s China. And just like the U.S. in Somalia, the warlords send the Chinese peacekeepers packing. And so now it’s just chaos.

    Talk about a setting for a story. But Bacigalupi doesn’t stop there. He adds in genetically modified creatures. He starts the book with one named Tool. A creature that’s got the DNA of humans, mastiffs, tigers, reptiles and who knows what else all combined to make him smarter and stronger than humans ever could be—a monster that’s the ultimate killer, the ultimate soldier, the ultimate war machine. One that was bred to submit to a master, but something went wrong with Tool. And he was able to break free of that bond.

    Tool is trying to escape prison and death. But as mighty as he is, he’s weak and injured. And then two kids from a village run into him while in the jungle. He knows they’re going to reveal his whereabouts to the warlord searching for him. In his weakened state, Tool is only able to grab the small boy named Mouse.

    Mahlia, the girl, promises to bring medicine if Tool will only spare the boy. He knows she’s lying.

    And so starts a rich tale of the monster, the boy, and the girl: a tale that is filled with friendship, triumph, loss, heroism, cowardice, and earthy sci-fi coolness all set in the midst of a guerilla war. The beginning sucks you in. The ending leaves you breathless. Along the way you get to see into the character of all three plus some of the bad guys. In the end you get a story about sacrifice and love.

    If you liked A Long Way Gone, Ishmael Beah’s memoir of his time as a child solider in Africa; if you liked The Hunger Games, and not primarily for the romance; if you like person in jeopardy fiction or war flicks where a small group has to fight for its life, I think you will love this book.

    This is the second book set in the same world. The first was Ship Breaker. Tool, one of the most interesting characters I’ve come across, is in that one too. But you don’t need to read that to enjoy this. And I wouldn’t put this read off to do so. Go give The Drowned Cities a try. Three or four pages in, I suspect you’ll be completely lost in the wondrous tale.

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  • The Last Apprentice, Path Finder

    ByJohn Brown

    The Last Apprentice

    Revenge of the Witch by Joseph DelaneyMy wife is always telling me I need to write a young adult or middle grade adventure series. One that’s directed at boys.

    Not because we have something against girls. We have four daughters, and my wife is adamantly pro-woman. But she finds very few books for her sixth-, seventh-, and eighth- grade male readers. I haven’t done a count, but I’m pretty sure that most YA is targeted at females. And this isn’t just me. I remember visiting a Barnes & Noble in Arizona with my voracious-reader nieces a few years ago and riding the escalator to the YA section. They told me that they called it the “girl-book section” because they figured that basically 90% of it was indeed for girls.

    Anyway, I think writing such an adventure would be a blast. I can already think of a number of near future or fantasy settings that would rock. But the time constraints I have right now just won’t allow me to start another series. Nevertheless, we sat down the other day and listed out all of the authors and books we knew that had a more male focus.

    For about the twentieth time she told me about Joseph Delaney’s The Last Apprentice series. It’s about a boy who apprenticed to the county Spook who is someone that takes care of witches, ghasts, ghosts, etc.  Her students love the stories. She loves them. She has bought the first ten volumes for her classroom. Why the heck wasn’t I reading them?

    Well, for starters, I just don’t like books about witches. And the first book in the series is called Revenge of the Witch. I don’t know what it is. Witches aren’t as bad a zombies–I am SO bored with zombies; I just don’t get the appeal. But even if they’re better than creatures that make no sense at all to me, I just don’t like spooky horror all that much. I loved to be scared, startled, and filled with dread. But not with witches.

    Witches? The gals with pointy hats?

    No.

    But this was, as I said, like the twentieth time she’d brought it up. We were driving over to Logan (that’s the big city for us), and stopped at the library, and we went over to the YA section. Unfortunately, they didn’t have volume one. But I did see many other volumes on the shelf and figured I needed to see what the competition was doing. So I perused. A few night later we went to her classroom, and there was volume one. The one about the witch.

    I sighed and opened it and began to read. And when I finished chapter one, I realized I kind of liked it. It was like the old Life cereal commercials—hey, Mikey!—and I wanted to read more. And so I took it home, read the whole book, and was delighted with the story. I liked it so much I promptly borrowed volume two, Curse of the Bane, from my wife’s classroom and read it as well. And I liked that one so much I checked out the third.

    The story is about Thomas Ward, the aforementioned apprentice. In book one, he is forced to face down some witches. But it’s Alice, the girl with pointy shoes, who made the story for me. Adding her as a character transformed it from a run-of-the-mill booger man story, into something special. No, I’m not going to give you a peek at the plot. Just know that this is the book where Thomas starts his apprentice, has to deal with that new life (and I thought Delaney captured that so well), and makes some apprentice mistakes that he then has to fix.

    In book two, we get to meet Alice and Thomas again, but this time they have to face down a different creature. And again, while the adventure is all cool, it’s the interactions with Alice that put it over the top.

    Having praised the books, I will say that I think Delaney has something against priests and religion in general because he paints it all with a negative broad brush. It’s too bad. Not only is such a view inaccurate, but showing the good and bad could add so many delicious dimensions to the tale. Maybe we’ll see that in later books. But even if we don’t, book two was still a great read.

    I’m looking forward to book three. If you’re in the mood to try something new, something about a young man and young girl that doesn’t revolve around romantic smoldering, something that a guy would like to read, let me recommend you join me in reading the volumes of The Last Apprentice.

    Pathfinder

    Pathfinder by Orson Scott CardI was once in a discussion about religion with a friend who happens to be an atheist and fellow science fiction and fantasy writer. He’s a great guy. The blog posts he wrote about the passing of the woman he loved who was lost to cancer were poignant and wonderful–full of beauty. I read them and wanted to be a better man. Still, he and I disagree about God.

    I remember telling him that science fiction is the one genre that makes God more plausible than any other. At least, it makes my view of God more plausible.  Now, I do not want to talk religion in this essay. But it’s just hard for science fiction to leave the idea of creation and Adam and Eve alone. Witness the many stories over the years about these very things.

    Heck, even the recent movie Oblivion has references—are not Jack and Victoria much like Adam and Eve? Just think about it. Their paradise together as a team, the knowledge, the fall. The echoes are simply marvelous.

    Well, I just read another science fiction tale that provided a wonderful opportunity to think about these things. It’s Orson Scott Card’s novel Pathfinder. Now, the story isn’t about God. It’s not a biblical allegory. It’s not dressed-up doctrine. It’s a tale about a boy named Rigg with special abilities on a quest to find his real family and who he is. Along the way we meet some interesting people, especially one character named Loaf who leavened the whole tale. So there’s an interesting adventure and speculations about faster-than-light travel. But one of the chief delights for me was the questions and ideas this story raised in my mind about the creation of our own world—“Garden,” the name of the world, just begged for it.

    For example, a long-time staple of science fiction is the idea of terraforming—changing face of the flora, fauna, atmosphere, and climate of the planet to be hospitable to your species. If you believe in a God that is more a being of advanced technology than one of unknowable fantasy, doesn’t that present a new and interesting way of viewing the creation story? It does for me, and Pathfinder sparked ideas about this.

    The book also led me to think about life. First, Card has these characters called “Expendables.” They’re robots, but not really. They’re artificial intelligence. But not really. The way Card presents the expendables, you don’t think of silicon and steel and gears. You think of biology.

    You think of mosquitoes.

    You think about the fact that if we humans use intelligent machines, surely God must use intelligent machinery. So what kind of intelligent machinery does God employ? (Dude, that idea is just pregnant with stories!)

    Are viruses and bacteria machines? Are mosquitoes and beetles (please, let there be no mosquitoes in heaven)?

    The book prompts me to wonder. It prompts me to look at the life about me on our wonderful world with new eyes. It prompts me to think differently about some of my core definitions. In fact, there are some exchanges between a character and an expendable where they talk about the difference between humans and expendables and the definition of what it means to be human, especially given evolution.

    This is a book about an adventure, but also a book about ideas, which is as it should be. Science fiction is the one genre, more than any other, that marries character and plot with exploration of ideas. If you’re looking for an interesting tale that will make you think about our world differently, give Pathfinder a try.

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  • Awakening by Christy Dorrity

    ByJohn Brown

    Art is a huge part of what draws me to science fiction and fantasy. I still have the Hildebrant LOTR calendars I got back in the early eighties.

    On the web you can browse awesome work on DeviantArt.com and CGHub.com. But something that’s been around for much longer is Spectrum: The Best in Contemporary Fantastic Art. It’s an art annual released each year that highlights the best art produced that year in Fantasy, Science Fiction, Horror, and the Surreal.

    This year will mark the 21st year of publication.  Spectrum has become the broadest distributed art annual in the world. Having art included in Spectrum is top honors for artists around the globe.

    So why am I telling you this?

    Well, Devon Dorrity, the guy who helped me pull together my covers,  not only had his sculpture “Queen of the Seas” included in a past annual, but he’s just won a spot in this year’s annual with the cover he created for his wife’s book, Awakening. It’s a big honor.

    Here’s the description of how he put it together.

    For the book cover for Awakening by Christy Dorrity, Devon Dorrity selected the cover model, Shelbilee Lee, from hundreds of local models.  Jason Morrison, a photographer friend, was hired to do the photoshoot.  Devon purchased the wig, fingernails, and props from Amazon. Then Dennis Dorrity, Devon’s brother, did an illustration of the photo selected from the photoshoot.  Devon then composited the illustration and the photo together blending the two to emphasize the best of both pieces.  After applying various effects and custom color, the piece was finished.

    After the book’s publication, Devon submitted the cover to Spectrum with Dennis Dorrity listed as the Artist.  Dennis did the illustration that plays such a heavy role in the finished piece.  Devon was listed as the Art Director/Designer.  Spectrum announced in the end of March that the Awakening book cover was selected for inclusion in The annual.  Spectrum 21 will be released in November 2014.

    Awakening: Book One of The Geis is itself a clean young adult fantasy filled with Celtic mythology, magic, romance, and mystery. And it’s been getting great reviews.

    “Dorrity invites her readers to a céilí that will quicken the pulse of anyone with Ireland in their blood! AWAKENING will draw you deep into the mysteries of the Celtic worldview—and leave you wanting more of McKayla and her fascinating Aunt Avril!”
    – KERSTEN HAMILTON, author of Tyger Tyger and the Goblin Wars books

    “I thoroughly enjoyed AWAKENING, a captivating and unique debut novel that creatively integrates Irish dance.”
    – CHRIS NAISH, Riverdance member and Creative Director of Fusion Fighters Irish dancers.

    5 Stars! “AWAKENING is an exciting mashup of fantasy, action-adventure, and mystery, with a touch of romance thrown in for good measure.”
    – KATE MCCURRY, top 100 Amazon reviewer

    How many authors do you know who have unlocked the achievement of having someone from Riverdance plug your book? Awakening right now is free. If you like YA fantasy with a bit of romance, this is the perfect time to give this new author a go.

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  • Good Stuff! Mike Loades on Swords and Bows

    ByJohn Brown

    Mike Loades is an expert on medieval fighting. He brings energy and, not just bookish learning, but insights from hands-on use. I loved the five-part Weapons That Made Britain television series for which he was the host and chief consultant. And so I looked to see if there was anything else he’d done. I found he’d written two books, which I am so happy to have read.

    The Longbow is not just a book about the longbow. It’s about its construction and how it impacted the development of armor, and types of armor, and the wood used for the bow, and how to make arrows, and what the various points were for, and how people trained, and then cared for the bows, and how it was used in war. And, again, the insights are not just bookish ones. He’s walked the battlefields. He’s used bows for years. He’s performed tests with them. It is a 80-page book that carries a monstrous bang for the buck and one of the best purchases I’ve made for my library. I loved it.

    MikeLoades_TheLongBow

    Of course, after that experience, I had to get his Swords & Swordsmen. This book is almost 500 pages long, and I was rapt reading each page of it. Instead of focusing on one version of this weapon, Loades discusses exemplars of various types of swords through time, starting with the sword of Tutankhamun in Egypt all the way through the swords of J.E.B. Stuart and G.A. Custer in the American Civil War. There are 15 chapters all discussing different eras and swords that provide a mountain of insight. The love Loades has for and the practical experience he has with the topic shines through on every page. Just as with The Longbow, you’ll learn about use, construction, the interplay with armor, and much more. Heck, I got the ideas for at least three novels reading this book. I loved it as much as I loved the first.

    MikeLoades_SwordsAndSwordsmen

    If you enjoy military history and arms and armor, you will love these books. Guaranteed.

    While you’re waiting for them to arrive in the mail, treat yourself to five hours of fascinating video below.

    Weapons That Made Britain E01 – The Sword

    Weapons That Made Britain E02 – The Longbow

    Weapons That Made Britain E03 – The Lance

    Weapons That Made Britain E04 – The Shield

    Weapons That Made Britain E05 – Armour

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  • Good Stuff! Lindybeige Rocks!

    ByJohn Brown

    I’ve been watching Lindybeige videos for a few years now. Lindybeige is the online name for Nikolas Lloyd, a smart, funny geek of the re-enactement, fencing, and RPG line. He’s got a youtube channel that is chock full of videos in which he makes witty and insightful points about ancient and medieval warfare, archaeology, dance, and anything else that takes his fancy.

    For example, have you ever seen folks pushing each other about with swords? Is that realistic?

    Interesting, what about pushing in a shieldwall?

    Food for thought, isn’t it? It makes me want to go read up on shieldwalls. Were they really as he concludes they were? But enough about history and conjecture. What about the truth? What about science? For example, if you believe in science, must you also believe in a certain approved list of theories?

    But surely that doesn’t apply to Global Warming Theory, which is now called Man-made Climate Change because the warming bit never panned out. No?

    Wow, and he even accepts the data on the warming. Okay, enough about the truth. Back to fantasy geekiness and weapons in fantasy worlds that make sense.

    I love this guy. If you’re a fantasy geek and haven’t yet begun to watch Lindybeige, you’ve got a lot of enjoyment ahead of you.

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  • “Like Diamond Tears From Emerald Eyes” by Eric James Stone

    ByJohn Brown

    Take a runty warrior and a slow-witted wizard who have been contracted by a veiled bride willing to pay diamonds to anyone who would fetch an oh so precious box from the castle of a dead wizard. A castle from which no adventurers have returned. Well, except for Thogar the Mighty. Of course, he’s now Thogar the One-Armed Madman. But let’s not quibble.

    At first blush you might think, whopee, another fantasy quest. But this isn’t another quest. This is an Eric James Stone quest, and it’s full of surprises.

    I was fortunate enough to hear Stone read his story at CONduit this May. He takes his listener on a ride full of humor and adventure. Then, if you’re like me, he will make your heart lurch. I loved this story down to the last line which is pure poetry.

    You can find it in issue 13 of Orson Card’s Intergalactic Medicine Show.

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12 Comments

  1. First off, Love the work in progress bar you have on your site! Even though it doesn’t really give me any specific details I still feel completely up to date. And its leagues above a Meandering guesstimation date.

    Economics and Politics; not the best combination for keeping people listening unless they already agree.

    As for Avater: the last airbender I totally agree. It won all of the awards for a reason. To bad for the horrible movie though.

    -Rehcra

  2. The aftermath of the subprime lenders debacle or BP’s mismanagement have been felt worldwide. The problem isn’t that these companies are putting profits ahead of everything else, it’s that they’re being dishonest to themselves and in their reporting to shareholders by cutting corners for short term benefit. Ultimately, that works well for the current management who can hope to walk away before the proverbial hits the fan; it works badly for everyone else left to pick up the pieces. Business needs unbiased oversight as much as nuclear weapons – they both stand to ruin lives.

    As an American who lives abroad I am often infuriated by the right wing rhetoric back home that obstinately refuses to allow progress. Labelling anyone who disagrees with the status quo as a communist may get one side of politics all fired up, but to the rest of the world we just end up looking churlish. Stepping beyond the propoganda and rhetoric is easy – but it takes stepping outside the US with our eyes open, living in other progressive countries, and seeing for ourselves.

    But then, it’s easier to buy the party line and believe the rest of the world has fallen behind us, that change is bad, or that the American way of life is the best in the world. After all, if we didn’t, what would it make us?

  3. Thanks for the recommendations! I always look forward to these posts. What age group is Avatar: The Last Airbender aimed at? My oldest is 5, and he’s easily scared. But I’d love to have a fantasy themed show I can watch with him.

  4. He’ll be fine. It’s not scary. It’s aimed at middle-grade. I have an 8 year old watching it and she loves it.

  7. If folks are turned off by my thoughts on politics then I suppose they’ll have to be turned off. If they have information to share, I’m happy to hear it.

  8. Not sure how to respond to this or what specific thing your post is taking issue with. I lived in a progressive European country for a few years. Does that mean my views suddenly have clout? The review of the book highlights that economics is not about philosophy anymore. If you have economic studies to share that shed light on something in the post you take issue with, then please share them. If your issue is that I said the President made a statement in good Marxist fashion, please show me how he’s not suggesting that the government allocate goods and services instead of letting prices take care of that coordinating.

  9. I don’t think any of your remarks are inappropriate, John. But they will offend plenty of people. Plan on it. Any time you venture a personal opinion, there is bound to be somebody who gets annoyed. At this point, the kind of people who get offended at the idea of fiscal responsibility deserve to be offended.

  10. Firstly John, I’d like to say I’m a fan. Servant of a Dark God is on the same shelf as my books by Brandon Sanderson, Kate Forsyth and Raymond E. Feist.

    Secondly, I’d like to apologise for the length of this post. This is the shortened version, honest.

    My science major taught me that even in empirical studies, interpretation plays a major role.
    At a recent lecture I heard ~2% of climate scientists say the jury is out on climate change (although if you think about it, if 2% or even 4% of a jury said ‘not guilty’, that jury would be telling the judge ‘throw the book at him/her/them’).
    Unless these scientists are researching on different planets, the difference must be how they interpret their data, and which data they choose to analyse. [Yes, analyse with an ‘s’. I’m Australian. No promises about the rest of my spelling 😉 ]
    Let me put it this way. I think of economics as applied sociology: http://xkcd.com/435/
    Before anyone points out the obvious, I am of course at least as guilty as anyone else.

    I have not read Thomas Sowell’s book, only drawn on some undergraduate classes and some quick research. I note Sowell considers welfare as promoting poverty. For an example of alternate economic views, Wikipedia links to academic studies which contradict this position (for example http://www.u.arizona.edu/~lkenwor/sf1999%28poverty%29.pdf). But as you did not make note of this in your summary, it may not be relevant.

    As for whether it is good economics to let money pool in the hands of the rich, we must consider marginal propensity to consume (MPC) (1). MPC is the portion of new income that an individual will spend when their disposable income increases. People with low income tend to have a higher MPC than those with a high income (2). If you have lots of money, you are less inclined to spend any extra you receive. So if you want lots of cashflow in your economy, you want to give it to those with little money.
    Therefore, in an economic sense, President Obama would be correct in stating that allowing the rich to hoard profits is harmful.
    This isn’t about government allocation of goods, this is about the government regulating anti-competitive practices and helping people lead happy lives.

    I agreed wholeheartedly with your summary when you pointed out that governments seem not to do their research when trying to make their policies a reality. I wonder if my government, also struggling with the health care system, is working to emulate France (3), or whoever has the best system now…

    What is all this telling us? Well, I am with your recommendation 100%. We need to educate ourselves and use the limited information we possess to make the best decisions we can.

    As for economics having no room for philosophy, whatever happened to ethics?

    Thank you for providing a forum to express this. I hope I have not bruised anyone’s psyche too deeply. I also hope no one is planning to bruise (or puncture, maim, poison, etc.) me too deeply. An opinion was invited and mine was given,
    Like you stated earlier, if someone can’t sit with my political views, they are free to stand up and find a chair they like better. Unfortunately, I doubt I have time to discuss this further myself. I guess it’s a good thing I’m posting where I am. This discussion can continue without any contribution from or to me. The same cannot be said for my next essay.

    Respectful Regards

    (1) Bernanke, Olekalns and Frank, Principles of Economics (2006) [textbook]

    (2) Cervantes-Godoy, D. and J. Dewbre (2010), “Economic
    Importance of Agriculture for Poverty Reduction” in OECD
    Food, Agriculture and Fisheries Working Papers no. 23 [journal]

    (3) http://www.who.int/whr/2000/media_centre/press_release/en/

  11. Heath,

    These are precisely the kinds of comments I love. Thanks for taking the time to post.

    I think your comments on MPC makes a lot of sense. However, forcing those that make profits to share all those profits with others eliminates the incentive to make the profit in the first place. Which then removes some or all of those profits. Which then dries up the cash stream or keeps it artificially low. People want that service, which is why they were willing to pay the prices stated to begin with. But now they can’t get it because it’s not worth the time of producers to provide it. Furthermore, because the opportunity attracts fewer entitites, prices stay higher.

    If instead, you let the companies keep the cash they’ve earned, what happens? If they get to keep the cash, then they usually do not distribute it all to their owners. Most of it is kept in the company. Because there’s even more profit to be made they will try to increase production which requires them to purchase more equipment and/or increase labor. It also attracts other companies to move or expand operations to get some of the profits. Jobs are preserved and created. So the cash still flows through the system, but in this case it creates jobs. Futhermore, it creates incentives to continue generating the profit. As more companies compete, prices usually drop. This makes the product or service cheaper for the consumer. Finally, it gives incentives to allocate resources to delivering this product or service that people want.

    The intent of helping those poorer than ourselves I think is a good one. But using a method that removes the incentives of production seem to actually work against that. I think it’s stunning how many people rose out of poverty when India and China made the reforms they did.

    I think a better approach in many cases is for the individual to seek out ways to help and places to send money and time. And the help will be sent to the causes people place the most value on because each individual will be prioritizing their causes.

    This is not to say that I think that a government can never do a better job, given all the pros and cons. For example, I think it’s probably best for the government to maintain a military and fire department etc.

    But the thread of Obama’s comments on this matter from his campaign until now haven’t been about weighing each case. He talks about forcing an allocation of wealth from those who have more to those who has less as a general principle. And it is this general principle that has been shown in the last century to not allocate resources as effectively and raise the standards of living of a nation as an economy that uses prices and individual choice to allocate the resources.

    Also, I know some people think the rich just sit on piles of money. But actually they put that money into investments. Some of those savings or investments are in the banking system, which lends money to small and large businesses and individuals wanting homes etc. Some of those investments are in companies. Some in bonds (so the US government, companies, and local municipalities can get the cash they need to do things for the public good). The cash doesn’t sit in a pile somewhere. And even if it is in a bank account, it’s being lent out.

    So the cash flows through the system either way. It flows through when government does the spending. But when individuals and individual companies are allowed to make the decisions on where it goes, and let prices self-regulate so they can provide accurate information to consumers and producers, the funds are allocated more efficiently, although not perfectly, to the products and services valued most. The incentives to produce remain, increasing the overall cash flow and getting the resources to where they’re wanted.

  12. Dannyboy, true. Civil disagreement is always welcome on my site. I don’t expect everyone to agree with me. Therefore I see no reason not to post something just because someone may disagree. If someone gets torqued about something, then they can be torqued as well on my site. Just as long as they keep it within bounds. 🙂

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