Government-Run… Competition?

In a USA Today article I read of a faltering “green” energy manufacturer that needed government subsidies.  According to the journalist these subsidies ensured competition in the “green”  marketplace.  Me?  Head smack!

While she’s at it she could point out a few other manufactures that could have used government subsidies to remain, shall we say, competitive:

• Steam engine locomotive manufacturers
• Analog computer manufacturers
• Typewriter manufacturers

She did get one thing right.  Real and true competition is at the heart, not only of real and true capitalism, but also of progress.  It edges out old and inferior technologies in favor of better, and more efficient ones.  But these better technologies arise due to the allure of profit, and not because they were propped up by your tax dollars.  

The hard truth of this is just another one of those harsh realities that plagues man’s existence.  And more times than not, feel-good attempts to alleviate the suffering of a few, while ignoring the long term consequences borne by the many, end up causing more pain than it alleviates.

In short here’s a good rule of thumb when it comes to government “investments” into celebrity causes.  Politicians should never be trusted to invest anyone’s wealth except their own.  That a politician desires to invest your hard earned money into some scheme, rather than his own, ought to be a red warning that the investment is a for sure loser.   While yes, it might be a winner for his political aspirations  or he might simply be using your money to shore up some company that’s threatening to suck his own personal investment into a corporate black hole, it is always a safe bet to assume that you are not figured into his interests.

Many a credulous patsy has fallen prey to the charms of a charismatic politician with promises of Utopia.  Don’t be one of them.  Think!

Islands, Economics and Currency

The laws of economics are much like the laws of gravity. If you drop a space shuttle, gravity will have the same effect on it as it does a pebble. With that in mind many times I attempt to simplify economics by thinking of it in smaller terms. So you guessed it, I reduce things down to an island with only a few inhabitants.

On this island let’s say that there is no currency, only bartering. Let’s also say that you are a maker of furniture. Now, desiring fruit, you go to the farmer and begin negotiating the purchase of some apples. So it must be determined how many apples, say, one chair, is worth. A factor that will arise quickly in this negotiation is the farmer’s lack of need of furniture. This would reduce the “demand” the farmer has for your chair and as such will reduce the number of apples he may be willing to exchange. But, he may need a new plow. So perhaps you could go to the blacksmith and trade your chair for a plow and ultimately get more apples for your chair.

It’s easy to see that the absence of a currency is awkward. Furthermore, all the extra time spent trading takes time away from the thing that you do best: build furniture. This results in less furniture for the island to enjoy. Now while that may be a good thing for you on the short term—less furniture means higher prices for furniture—the islanders as a whole have to live with less furniture and so have a lower standard of living.

There’s another factor that will also change the dynamics of your situation considerably. That factor is competition. This comes into play if you’re not the only person on the island that makes furniture. But for now I must honor my post limits. (300ish words)