Tuesday, June 10, 2014

intentional disruption

The Youth Economy. Disruptive and innovative, forces - or allows -
participants to change and adapt. Win or lose by luck as much as by art
or talent. The Mature Economy. Where accumulated knowledge and refined
craft ensure success. Resists disruption, seeks to limit randomness.
This distinction is observed in the choices some companies are making to
hire young people because they are more disruptive and offer more
potential for growth, while other businesses do well with older more
stable workers.

This distinction can be compared to the ecological idea of r/K
selection. R species (r for rate of increase) depend on the number of
offspring for survival of the species. They typically confront variable,
even random conditions, or need to be ready for unpredictable supplies
of food. K (from the German for Constant) invest in the health of fewer
offspring, and typically confront highly regular habitats and food

By analogy to r/K selection, we expect a high failure rate for
individuals and enterprises engaged in the Youth economy. We may
experience this as personal failure and with real distress, but failure,
if not death, is an intrinsic and necessary aspect of the r-selection
and what could be called the r-economy, and happens to people mostly for
extrinsic reasons. Although entry into the r-economy can be very
competitive, it can also be arbitrary, available to people who are in
the right place at the right time with the right idea (a mix of
extrinsic and intrinsic factors), providing rewards not to those who
conform to the norms and expectations of those who preceded them, but to
those who violate the norms AND have something special to offer. Since
very few of the ideas generated in this way are actually great, the
r-economy is a very dangerous environment, and its contestants depend as
much on a lucky break or unpredictable success as on talent and
adaptation. Further, even though being smart is one requirement, having
the family support, getting the education and connecting with the
opportunity can be largely a matter of luck. This has the surprising
result that competition is expected to be lower. In r-species it
generally is, though not less demanding. In people, it may be that the
randomness of the environment incites competitive behavior as a
compensation for uncertainty. The ecological term for this behavior is
opportunistic, although most young people in the r-economy would not be
described as having opportunistic personalities, as we understand this

Likewise, we predict a lower failure rate in the mature economy, however
entry into the K-economy is much more difficult and competitive.

Friday, January 10, 2014

Minimum Wage Alternative

What would happen if instead of setting a minimum wage, employers were
charged for the social services their employees need? They would be
motivated to provide closer to full time employment, and the benefit of
low wages would be eliminated. Might as well pay a living wage as pay
for the social services.

This plan would be fought tooth and nail, but it strikes at the essence
of the problem: employers like Walmart and McDonalds don't have a
motivation to voluntarily pay a living wage. Simply requiring it is a
blunt instrument, and dissociates the wage from the need. Making the
employers pay for the social services would link the wage to the cost of

Some politicians would prefer to lower the social services and thus let
the employers off the hook. But how many Americans already depend upon
social services, and are thus being supported by taxpayers? Shouldn't
their employers be expected to provide an adequate income? Let the
debate ensue!

When Is Too Much Wealth Disparity Too Much?

I called into Vermont Public Radio's Vermont Edition to ask Governor Shumlin this question:
Epidemiology has shown that wealth accumulation at the top of the income ladder, per se, is harmful to all members of the society. What in your opinion is the level of wealth disparity where the costs are greater than the goods, and we need to put a brake on wealth accumulation at the top?
Without addressing the principle, Governor Shumlin simply challenged the remedy, saying that wealth accumulation is not the problem. The problem, he said, is the deficiency of opportunity. In effect, we need to help everyone get on the ladder to prosperity, not limit prosperity at the top.

I wouldn't want to limit anyone's opportunity at the bottom of the economic ladder, and a degree of competition for the best jobs is healthy, provided that those who are not the top competitors are not forced into poverty.

What is our expectation? That there will be winners and losers? Or that we will all have a chance and some will do better than others? Why, I want to know, should healthy, willing-to-work people be forced into poverty because they do not choose the path, or are not admitted onto the path, of high income? Do we assume that there are enough high paying jobs for everyone, or do we assume that only some of us will get one of those jobs? Do we expect some people to be losers? Why? How is it possible for everyone to have a high income job? How can we all be remarkable? Can the Earth support high income jobs for everyone?

I'm circling around my question. I am plainly frustrated because I do not know how to ask it precisely. Are we saying that only those who are willing to build their lives at the expense of others are allowed to experience prosperity? Why do we reward the competitors when it means that others suffer? Why not build an economy where we have the choice to have a lower income that is not poverty, and let the ambitious pursue the higher paying jobs because those jobs are fun, not because they need the money? Why do we continue to allow the people with the highest pay get ever higher pay, while those with the lowest pay continue to get lower and lower pay? Wouldn't it make sense to arrange the economy so that people at the bottom can earn a secure and sufficient income? What is so valuable about the work of the people with the highest incomes that their incomes should continue to go up?

Why is it supposed that people need to be rewarded with ever more money, when for less money they would still be willing to do those jobs (think CEO's, bank presidents, investors)? Why is it supposed that money is the only reason people work? Why is it supposed that the work done at the highest incomes is worth that much to the rest of us and the economy at large? Why is it supposed that the work done by the highest income people is actually work that needs to be done? Is the work of people who invest to make money actually work that needs to be done? How does the law of supply and demand prove that the earnings of the richest represents goods to society? How is the worth of their work proven by the fact that they have produced that income, when we could equally say that a gang selling  cocaine also produces wealth? That a mob boss running a shakedown racket is rich too, but that the services are sociopathic at best? Why do we suppose that the work of the highest income earners is a benefit to society, just because we haven't yet recognized, and made illegal, its criminal structure?

Missing from Governor Shumlin's response is the acknowledgement that the most wealthy get more wealthy because the wealth is being drawn out of the pool of low and moderate incomes. Incomes, in real dollars have been decreasing for 99% of us for 30 years, while incomes for the highest earners have accelerated, so that they realize more than all of the growth in the economy. Missing from Governor Shumlin's response is the positive acknowledgement that the opportunity he seeks for low income people becomes ever more elusive as incomes in the upper reaches of the range become greater, and as the labor market grows ever more sharply divided between high and low incomes. Equal opportunity requires equal access to resources, which means that the wealth must be recirculated downwardly. It's a trade off, and the only remedy for it is to ensure that wealth is not hoarded at the top, but is recirculated downwardly. This is a purpose which can be achieved only through conscientious policy by government.