Category: Economics

Let’s Celebrate Labor and Those who Make it Possible

Today as we celebrate labor day we should make a fair assessment of the true value of labor and also the proper relationship between labor, management, and the ownership of the productive resources.

The role of labor in the production of wealth should be acknowledged and respected. It is the laborer who trades his time, energy, and knowledge with the owner of resources to create wealth, and in return the laborer is rewarded with whatever compensation he can demand through his unique knowledge and skills. The more that a laborer knows, or the more specialized his skills, the more he will be able to demand.

This relationship between laborer, and owner, is not one-sided with the owner exploiting the laborer in order to get wealthy. Yes, there are always those few individuals who will treat people less than fair and honorably, not respecting the value of the laborer, but these individuals do not, and cannot, make up the majority of businesses and business owners. A business cannot long remain profitable if he does not have a workforce that is satisfied and productive. And a workforce will not long remain productive if they feel exploited or if they can find better employment elsewhere.

In a free society every individual has the ability to leave a bad employer, to leave employers that take advantage of their workers and not offer a fair trade of value, and find employment with a company who offers workers better conditions and compensation. Often those workers who cry the loudest about exploitation are those who are getting compensated what they are worth, but fail to understand what their true value is, for if they offered more value then they would be able to find better employment with their services being in demand.

The laborer can also seek to improve their skills and knowledge in order to make themselves more desirable and employable and thus increase their earning power. If a laborer has desirable skills and knowledge they can make greater demands, receive fairer compensation, and create better working conditions for themselves.

Just as the employer has the right to refuse employment, the laborer has the right to refuse to work. But like the employer who will not get paid if he offers no product or service of value, the laborer should expect not to receive compensation when no value is given in the form of their labor.

Both the employer and the laborer need each other. The employer provides employment opportunities by identifying a market need, engaging resources to satisfy that need, and assuming all risk in relation to changes in the market conditions or poor execution.

The laborer provides the labor, skills, and knowledge to put the resources together to create a marketable product or service. The laborer exchanges their time, ideas, and sweat equity in exchange for an agreed sum of money, which the laborer receives whether the owner realizes a profit or a loss.

In mutual exchange, the employer compensates the laborer for their time and knowledge before any profits have been realized. The employer, or owner of the productive resources, gives to the laborer a portion of his wealth before the owner receives compensation for it himself. The owner assumes all risk and loss of property in the event that profit is not realized. The laborer assumes no risk other than the loss of employment should the business fail, but will be compensated for all labor regardless.

On this labor day enjoy the time off from work to relax and enjoy the fruits of your labor, but also remember that your ability to provide for yourself and your family is part and product of someone else’s effort, time, and property. In order to live in a free society we need to remember that we all need each other. The only way we remain free and wealthy is to recognize the ways in which we benefit from a free exchange of labor and resources. Make sure you thank those who take risks and provide jobs the same as you do those who labor.


Purpose in Working for Others

I listen to a lot of entrepreneur podcasts and read a lot of business/entrepreneur blogs on line. One thing I find in all of these sources is a negative attitude toward having a conventional job and being employed by somebody else. Those who have decided to run their own businesses seem to look down on those who have chosen the path of working for someone else as though to have purpose and meaning we all need to start our own businesses. I find this attitude insulting and demeaning.

There are many reasons a person would choose to work for somebody else and not start their own business. As an employee I do not have to worry about hiring and employing others. I may make hiring and employment decisions, but I am not ultimately responsible for seeking employees, giving them pay and benefits, and providing for them. I am also not legally responsible in all the ways that an owner of a business is for following certain laws concerning employment and the consequences of violating those laws.

As an employee I do not have to invest my own capital in the business, nor take the risks with my money that a business owner has to. I get paid up front before anything is sold for my time. The business owner on the other hand has to invest large chucks of his own capital just to produce something and tie that money up until he ultimately makes a sale which could take weeks, months, or years depending on the type of business and investment project. I don’t have to wait, I put my time in and get paid every two weeks.

I can walk away from the business at the end of the day, on weekends, and on vacation. I get a break. The owner hires other people to take care of the business while I am out so I don’t need to worry. An owner never really gets a vacation. They have to constantly be monitoring business conditions both internally and externally to make sure they are reacting to changing conditions as quickly as possible.

I think owning a business can be rewarding and meaningful, but at the same time I think being an employee for a good company, that treats you fairly, and pays you well, can be just as rewarding and meaningful and without a lot of the headaches of owing a business.

Entrepreneurs provide necessary services and innovation to the economic life of any economy and they are the ground breakers that bring new products to market. They provide jobs and economic growth that is healthy and needed. But the world also needs employees. If everybody was an entrepreneur where would all these businesses go for people to help them run their businesses.

No person can run their business on their own. Only very small businesses that wish to remain small can be run by a solopreneur. For the most part every size business needs employees to run and grow their business. Not everybody has the initiative, ambition, or desire to run their own business, and that’s o.k.

I can be just as creative and entrepreneurial working for somebody as I can running my own business. I can choose to improve myself and advance within the company I work for or find a different employer where I can have the opportunity to attain the position I wish. I can have some say in how I do my job, input into making improvements, and in the right position a say in how money is invested.

Whatever we do for a career, whether working for somebody else or starting our own business, we can find purpose and meaning. We can take the level of risk we choose, and we can find growth opportunities and chances to express ourselves. The world needs all kinds of people: leaders, followers, innovators, and initiators. Whether you want to grow your own business or grow within somebody else’s business the value you get from your career has to come within you.

Consumerism and Keynesianism

Many today believe that our selfish, consumerist society is a product of capitalism. That capitalism promotes a constant desire for consumer goods, that it encourages constant consumption, and that it can never be satisfied, thus constantly creating new markets for capitalist goods. I propose that it is not capitalism that is to blame for our selfish, consumerist society, but is the fault, and program of the Keynesian, crony-capitalist, mercantile system that we actually live under.

Capitalism – true laissez faire capitalism – is supported not by consumer spending alone, though this is obviously an important component, but on savings and investment. No products can be create, and no needs satisfied until something is created. Products cannot be created without investment. In a true capitalist system, without government interference and manipulation, the only means to gaining investment funds is through individuals being willing to invest their savings, or surplus, income. In a true capitalist system savings comes before investment and is the fuel that helps grow business.

In the Keynesian, crony-capitalist model, it is spending or consumption that drives an economy. The Keynesians believe that savings is equated with hoarding and is bad for the economy when the economy is sluggish. The Keynesians wish to stimulate the economy either through encouraging individuals and businesses to spend, in times where they would otherwise save, by lowering the interest rate to a point where there is no benefit to savings and spending is encouraged through cheap credit.

This encouragement to spend is part of the reason we live in a consumerist society. Demand is artificially encouraged through low interest rates and high rates of liquidity through the printing of massive amounts of fiat currency. As money floods the market the value of money drops and also the desire to hold money, or save, as one must spend the money before it loses value. Banks lend and people spend. The system becomes perpetuated not on real wealth creation, but on money printing and artificially low interest rates. The system is so corrupt that more of the same policies must be continued in perpetuity in order to keep the entire system afloat until all real resources and assets are spent, at which time the entire system will come crashing down.

True laissez faire capitalism on the other hand depends on a stable money supply, one that cannot be easily inflated or manipulated. It depends on people saving their excess revenues and investing it in business and new enterprises. It is based on a solid foundation of real and sustainable economic principles where people have the opportunity to build wealth, and thus businesses have consumers that are truly capable of affording their products without going bankrupt.

In a true capitalist system prices are stable over the long run and there are periods of short term deflation where new innovations and growth create cheaper production processes that in turn help to drive prices down. The Keynesian system seeks constant inflation ever driving prices up and decreasing the buying power of the consumer.

True capitalism enriches individuals and makes society wealthier. Keynesianism, or crony-capitalism, increasingly makes individuals poorer and more reliant on the corrupt system that is at the heart of the Keynesian enterprise. In capitalism, entrepreneurs are constantly innovating making better and cheaper products while in the Keynesian system big, uncompetitive industries are protected in the name of stability and new enterprises are regulated out of the market.

Capitalism is not to blame for our problems. It was responsible for the greatest growth in human wealth and productivity in human history. Keynesianism is the greatest threat to human freedom and prosperity. It is control of the economic means by a controlling elite. One brings wealth and prosperity, the other stagnation and poverty.

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