Sunday, September 30, 2012

They Took Our Jobs!

They took our joooobs!
Tom Woods's remarks in a recent Mises Institute lecture brought to my mind the gaggle of grousing South Park denizens who, whenever anything threatens their income, complain that, "They took our jobs!" Regardless of the causes and their own actions, these citizens ascribe all guilt to some thieving tormentor who has robbed them of their God-given livelihood.

Never mind whether society actually needs their wares or crafts, whether they could have differently saved or invested, if they could have changed careers or locations, and so forth, these people cry, "They took our jobs!" The obvious implication is that someone must make up for their loss, and hence Tom Woods's perspicacious comments reminded me of their demands.

It is terrible to see your expectations and plans fall out beneath you, but that's only because your expectations and plans were at odds with everybody else's expectations and plans, and a market correction is precisely that, it is the realization of precisely this problem: that there has been this lack of coordination. So why should everyone else have to suffer to pay for the stimulus to make some people whole. Why would that be socially desirable for everyone? A market correction is the way individuals say through their buying and abstention from buying that the previous array of prices was too high and we want to see them lower. Who is the government or the federal reserve to second guess that?

And the people whose lost in the bust are going to be in the forefront, demanding stimulus to re-inflate a tire with a large hole it, but other individuals have interests too, and those interests do not necessarily lie in ensuring that some arbitrary asset once again reaches some arbitrary price level. [1]
What strikes me most about Woods's words is the word arbitrary. No good has a fixed value but rather, as Woods has said in tidy summary of the Austrian science of human action known as praxeology, "The very act of choice... implies cost." [2] So why should any given good have its price inflated higher than what customers will freely spend for it, or reduced to lower than what is worth to its owner? Why would any good be deemed special? Why would any group of workers buying or producing that good be deemed special? Besides, the value of the good is never fixed for either the producer or the consumer.

For the producer, the price might be lower when he has streamlined production or  it might rise with rising costs of materials or from the pressure of a wily competitor. For the consumer, his resources, needs, and wants can vary from time to time, thus his willingness to pay a given cost can vary. Customers and producers adjust to these fluctuating variables, supply and demand, in a free marketplace, buying and selling goods if and only if they think the exchange gives them what they want at that time.

If the iPad costs $500, some people will pay for one and some won't. If Apple profits from selling the device at $500, then that means the iPad is worth $500 to enough people with $500. Both parties win.  If Apple sells too few to profit, they must either charge more for it, or construct it with fewer resources so they can charge less and thus sell more of them. Where does government or Federal Reserve or any third party get the authority (legal or moral) or knowledge to tell Apple how much it costs to make an iPad (by way of telling them how many people to employ and/or how much to pay them or how many they can sell) or how much it should profit from the sale, or the consumer what the subjective value of the gizmo is to him?

Apple is but one example, but why should any industry, that is, the employees and entrepreneurs of any industry, be prioritized? Why ought the price of steel remain high to benefit steelworkers when efficiencies might make it cheaper to the benefit of people who purchase steel? In any of the following examples, why is one party more important than the other? How could any of the following statements be justified?
  • The price of automobiles must be kept high by means of bailouts enabling the company to employ more costly workers, to protect auto workers at the expense of those who buy automobiles. 
  • The price of grain must be kept high through subsidies, to protect farmers at the expense of those who buy food. 
  • The price of American goods must all be kept high by protective trade tariffs, to protect Americans who sell goods at the expense of Americans who buy goods. 
  • The price of houses must be kept high through stimuli to protect home owners, real estate salesmen, and construction workers, at the expense of those who want to buy houses or to rent. 
  • Companies must be bailed out to protect shareholders, at the expense of those who do not speculate with their savings. 
  • Why should spending be encouraged through low interest rates, at the expense of those who save?
To justify any such assertion is not only to plan the economy, but society.

[2] Woods, Thomas E. Jr. The Church and the Market. Lexington Books. 2005.

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