Thursday, September 22, 2011

The Theory of Evolution of Society

What if we had to do that last 2 centuries over?  What if today's society had to conquer the frontiers, industrialize the nation, fight the Great War, confront the atrocities of the Holocaust?  Could we do it today?  20 years ago I would say yes, 10 years ago I believe we could have made it through somehow, today...I just don't know.

We're changing in fundamental ways as a society.  There is still an abiding decency at the core of us, most of us.  There is also a lethargy, an unwillingness to do for ourselves and others, to challenge those things we know are wrong because it's easier for it to be someone else's problems.

We've discussed these symptoms before and the cause is a constant topic, but today, we're going to step through some examples of my theory and see if we can't better illustrate causation. 

Entitlements -

For some members of our society, entitlements have pushed them into making a living more as breeders than producers.  Instead of children, they give birth to livestock that produce SSI checks, food stamps, and other handouts.  The safety net, instead of being used as a stepping stone is being used a market for falsely disabled children.  One example is a woman in Western PA who has 8 children, all of whom now test for Mental Retardation.  She receives SSI money for their care, but turns the care of them over to the state public schools instead of private care.  She has no involvement outside keeping them in her home.  (If they were gone so would be the money).
Now, let's follow these children, who, while certainly challenged, given a loving supporting environment would stand a chance in this life.  Instead, they have no chance.  The state will babysit them for a time, then turn them loose on the world to have their own children and repeat the only cycle of life they know.  (That is, if the mother doesn't turn the females out first to breed more live stock for the SSI farm she's started).

So, here the social safety net that we're so proud of, instead of supporting it, encourages a type of abuse of the system that is self-replicating and is growing at an unsustainable pace.  Government statistics available via the SSA Policy Center show that the growth rate of SSI and SSDI payouts greatly outpace the Cost of Living Adjustments over the past 20 years.

In this example, the financial costs while staggering, do not even come close to the human tragedy here.  This breeder (mother isn't appropriate) is stripping her children of any chance of a future.  Instead of pushing for her kids to succeed she rejoices in their failures because for her, it means more money.  She has turned her offspring into farm animals, slaves, stock.

Corporate Welfare -

Corporations respond in a similar way to people to the concept of money for nothing.  In many ways, without the demand to innovate necessary in competitive markets they become just as stagnant as the breeder in my previous example.

Starting and running a successful small business is hard.  Better than 50% of small businesses fail within the first 5 years according to research at the Small Business Administration.  Those that do succeed are forced to compete for customers.  They do this through offering innovative products or an innovative product delivery system or simply competing on price.  Ultimately, however, unless they continue to innovate, improving product, service, delivery, or price then they too will fail.  What then happens when instead of competing you receive assistance from an omnipotent source?  If you remove market forces, if you remove the threat of failure, then you are in essence discouraging continuing product, service and price innovation.  If you then erect barriers for future entrants in the field you further weaken the motivations for a business to improve upon itself. 

Consider this in the light of highly subsidized and regulated industries such as health care, health insurance, green energy, energy production, law, accounting.  What marks these fields?  Costs have far outpaced available capital.  While some technological innovations have come about, price and delivery innovations are unheard of.

Compare that to a less regulated, subsidized field such as personal computing.  Moore's law still stands after 25 years.  Processing power continues to grow in leaps and bounds while price, service and delivery innovations have continued to expand the markets. 

Would this have happened if the government had mandated that every American buy an Apple II in 1985?  PC Makers would have gone out of business and with a mandated stream of customers innovations from Apple would have been slow.  Barriers to entry would have kept newcomers like AMD, ARM, nVidia and Intel out of the Personal Computing space. 

It's happening again in the area of banking and investing.  The government continues to encourage lending to grow the economy.  People need more and more money to overcome the barriers Government has erected to enter business.  Banks are hesitant to take risk for so little reward.  With interest rates near 0% what good to risk your money when you have so little to gain from it...and, if you resist long enough the government will back your loans and you risk nothing!

To be continued....

No comments:

Post a Comment