Common Cents

The wealth of nations

Ralph Murphy

(5/2019) Protest movements such as the French inspired "yellow vest" group have been active in street demonstrations there and abroad since last November. What initially was described as an unlikely outrage at a peripheral diesel tax increase did take on a clearer political agenda as other groups became involved. It draws light on a non essential service group that seems to perceive self value amid a fund draw down to their activities as again the sourcing and need to levels wasn’t justified by their labor efforts. They aren’t missed in the markets.

With close scrutiny to the demonstrators’ demands the issue seems more closely linked to wealth distribution than its actual creation. That is a common problem as it was for many years supported by theory that translated to political policy, which simply allowed spending but had little or no regard for its creation and that is only possible to exchange value with a sale of a good or service. Fundamental production requirements such as capital, training, and resource availability that are arbitrarily blocked, capped, or redirected by a governing control authority can lead to successful redress in effective protests. Loud bemoaning of perceived social injustice without links to actual sales probably would cost producers if accommodated at high cost to most others.

Culture links tied to social programs can vary widely between geographic regions, and even to local issues but there generally is consensus on a legal authority’s mandate to implement or enforce the laws. While laws are generally intended to support social stability when applied to economics specifically there can be costly usurp of production earnings that might make its venture capital owners simply quit.

What seems to be needed is accord there are universal or natural laws as espoused throughout the ages from Greek to Oriental and modern western social philosophers as Plato or Lao Tzu or John Locke that also support conventional systems and provide goods or services according to a predictable design. They’re inherent in nature and provide a paradigm or blueprint for action of an identifiable product that requires the same production needs no matter its point of location. The systems can be accessed with training, interest, or resource availability if the entrepreneur is given the chance.

Social systems are very compatible with natural science ones which often use their services for output. The problems in much of the developing world and also more advanced ones included religious edicts that reflect systemic needs or denials for a good or service and not a broader guiding force in an assessment of its impact on totality. Here in America it’s relatively easy to apply a marketable idea for sale based on demand that generates wealth, and that is again the only way to do so. Elsewhere as in a caste system it can be almost impossible. There were real historic issues as to intrinsic lack of ability for a given community to advance based on family precedent or other social measures that didn’t reflect testing patterns of the applicant’s abilities and inhibited that type of advancement.

If there is social permission to statute and the resources and training are otherwise available and the consumer reflects sales interest wealth can be created. Redistributing it after is a domestic concern but shouldn’t be confused with meeting the systemic requirements that vary with the good or service. That involves a free flow of resources as capital or labor movements within a competitive framework as the key and requires a sense of community that bands to unique culture. It almost always involves a federal authority that protects them from external interventions. Not one that enables them.

An issue now of relatively serious concern is the labor market or component to supply needs as it is a cost concern of almost every producer. There are different types of labor obviously to include unskilled where no real training is required and lower skilled where common skills such as reading or writing may be more focused but unique demands minimal. Almost anyone can do those type jobs and the wages tend to be lower as the investment effort minimal and they can be easily replaced.

Salaried employees tend to reflect higher training requirements and are a component of supply cost. Economists refer to needed production costs that can vary between cycles as variable input cost, not to be confused with the required physical capital that accommodates the workers known as a fixed cost and are usually multi use. The capital owner generally takes his earning from profits not the variable input market so would be more vulnerable to demand and price changes which obviously means a less stable return.

Labor and other variable inputs are flow phenomenon that depend on other suppliers but provide the unique output at a point in time and can be subject to vast variance though some sales are very predictable. Inelastic goods tend to reflect survival needs while elastic demand more fleeting wants closer to social trends. Politics linked to the inelastic demand groups, which are routinely more predictable and consistent than the fads. Conservative groups are closer identified with the inelastic service providers though Liberals do respect the need for them on reflection.

The problems facing many domestic producers or especially retail outlets to include major department or grocery stores like Walmart, Home Depot or Safeway and others is they can or have to access foreign labor markets that meet the minimum skill requirements. They foreigners also seem to gravitate toward what would be yellow vest groups if they were actives linked to mass transit or infrastructure and that disturbingly to the Department of Homeland Security that that regulates them.

There are serious cultural differences with them that crudely translate to host concerns of these beneficiaries. Their rotation is high and they seem to reflect broadly different domestic norms. Local authorities have to watch them and influx sourcing challenged as the assimilation if any is testy especially if they’re able to bring family as well. Their access to need for leverage wasn’t clear but the outsourcing as foreign nationals likely on visa was or is apparent. It’s generally more stable to use locals for that type work if it’s needed as they are more in touch with other cultural standards that the outsourcing simply disregards.

Protests for social injustice tied to lack of opportunity especially in legal restrictions are far easier to justify than those linked to relative wealth. The esoteric interests or abilities of those groups may not be marketable in a given product environment though applicable elsewhere. Movement of variable resources within a competitive framework shouldn’t be inhibited nor artificially propped by a governing control authority unless its determined a clear or quantifiable threat. The host governing authority should block threatening social players as systemic or non systemic attacks, but if a good or service can be domestically produced and the resources and interests available the good or service should be allowed to be provided demand and conventional wealth then created.