Thursday, 15 May 2008

What does this all mean then?

After such a long tale, I should at least give some conclusions, there are several, so here they are, as I see them:
- Government controlled economies cannot cope with a complex trade world that constantly evolves in which offer must match demand in a more dynamic and efficient way. Furthermore this type of systems tend to be despotic and limiting of peoples desires to express freely and make choices that affect their lives freely (and without being flooded with possibilities as demonstrated in Alex's post)
- Free markets are more dynamic and efficient, but the cost of that is that increase in demand is met by a greedy principle to match it (profit maximization is what drives corporations), and a decrease in demand has as impact that it will result in closure of businesses and if not always permanent at least transitional loss of jobs and their corresponding social consequences.
- Corporations will always act in self interest to maximize profit and return benefit to the shareholder, only when it suits this purpose will they ever show any social concern. Government should be the main driver of common welfare.
- In today's age of global trade, knowledge based economies and unbounded communication and exposure capability supported by internet, skilled individuals hardly need to be backed up by a corporation. What does a Google engineer need Google for? Secure his or her payment? If Google considers this person worth receiving a big salary, the free engineering market will secure him, via projects where this person's skills are required, that exact same salary, or more, because this person would be able to claim for himself the profit that Google makes on them. Power to the people means power to the individuals to contribute directly with their skills to the economy, without the need for Government or Corporative backing.
- Efficiency of a market cannot be an argument for making it free when it is obtained at the cost of fairness. It is not fair that you should only be allowed to get complex surgery if you can afford it. A human life is worth the same regardless of that person's income, and if you subvert this logic you're hurting society beyond repair.
- Resource limited or resource intensive markets cannot be made free at the cost of exhausting that resource, appropriate regulation and taxing are required. Taxing pollution and other economical externalities of free markets cannot stay in the nice theoretical papers of economists it needs implementing and enforcing now, against all corporative interests.
- Government incentives to corporate spins-offs or start-ups rather than mergers and acquisitions should be put in place. For example do not tax the first or provide optimal credit possibilities and tax heavily the second. Anti-trust laws must be enforced and not wavered as is often the case, bowing to corporate interests.
- Power to the people also means the power to influence corporate behaviour by our collective consumering patterns. Consumering passes the right message, it tells the corporation what you believe in. So use it responsibly and as informed as possible. The traditional power to the people by influencing government will always apply and requires involvement and information. Where there is a human need, it will be met with an offer in some magical way.
- Any change, but in particular a change in economical paradigm must be brought about, in any place of the world, in a sustainable way, that considers the specificities of the local populations, culture, anxieties, and current in place economic processes, and most importantly its impact on the environment and resources. It may require time, but it's always better not to rush and make each step securely. Try a solution and reverse if evidence shows it ineffectual or counter-productive.
- Gigantic corporations are as likely to become inefficient as massively government controlled economies. The trade off between scale-economies and the loss of flexibility and corporate dynamism means the consumers stand to loose, not only the gigantic corporation will not be able to adapt to market demands as foreseen in the free market model, but they are likely to abuse of scarcity power, and accumulate undistributed wealth. Besides in the world of internet, scale-economies can be obtain by smaller enterprises coming together to purchase together.
- Markets where competition cannot be guaranteed because of scarcity power (for example limited bandwidth for mobile phone operations), than the government should detain and explore or make available at production cost the limited resource. It should not be privatized and owned corporately, this is not at the best interest of the consumers and citizens, who ultimately own the resource as it pertains to their country.
- Government should not discard its responsibilities to provide universal welfare and solidarity to citizens under the false pretense that it will be better administered by private enterprise. That's why we pay taxes for. Citizens expect tax policies to be applied under the principle of fairness, and balanced redistribution of wealth.
- Financial markets where enormous corporative profit is obtained is not fairly taxed compared to consumer and workforce markets. In particular speculation investment involving vital resources as food should be more heavily taxed or even discouraged by law as its consequences are often inhuman.
- News editors and journalist have as much power in today's society as the judicial system and should therefore be regulated under a similar state funded but independent institution and not be confused with entertainment, or state/corporative interest based opinion making.

Most of all when it comes to pointing fingers we're as much to be blamed for injustices we witness as any body else as we've allowed it to happen under our noses, and we should come together to denounce them.
Eventually other ideas will occur and I'll post them in the future, this is the main message I wanted to pass with this series of posts. Once more, if you had the patient to read, you have my admiration. Thanks.

Some of the literature I've been reading about these subjects:
  • The Undercover Economist, Tim Harford
  • The Silent Takeover - Global capitalism and the death of democracy, Noreena Hertz
  • Freakonomics, S.Levitt & S.Dubner
  • Cheap? The real cost of living in a low price, low wage world, David Bosshart

1 comment:

bruno said...

My wife and I are actually going to travel around to see beautiful, musical people without face surgery, in the hash and wild landscape of Cape Verde, for the next 3 weeks. In the meantime have good readings. Hugs.