Chapter 4 — Economics

According to an early passage in the Bible (Gen 3:19) “in
the sweat of thy face shall thou eat bread.” Man’s efforts to
provide food and other necessities for himself has
arduous labor throughout history, and even today billions
people throughout the world engage in a daily struggle for

Probably the most idyllic life can be found in the South Sea
islands, where warm climate, low density population, and
bountiful ocean and lands provide fish, coconuts, and
fruits practically for the taking.

Isolated for centuries, the people’s wants and desires are
minimal, and they live a simple life little removed from nature.

Elsewhere, the struggle for existence has usually been
associated with ownership and control over land, leading to
over territory and development of legal systems to deal
private ownership of land.

Henry George, a 19th century American economist, expounds
his book Progress and Poverty that all wealth eventually can
traced back to ownership of the land.

In modern times, several economic systems have arisen to
deal with man’s need to earn a livelihood — capitalism,
socialism, and communism. Unfortunately, in most cases,
none of
these has successfully resolved the problem of equitable

distribution of the fruits of labor, or the equally daunting task
of motivating people to labor in the first place.

Communism is by far the most idealistic system, with the
motto “From each according to their ability, to each according
their need;” where goods are held in common. However,
human nature has doomed almost all communistic ventures,
early Christianity to communes and the modern
states — none of which evolved beyond socialism — and
the “dictatorship of the proletariat” to survive.

An exception, the Kibbutzim of Israel, have lasted for over
60 years as successful communes, though recent reports
that the younger generation is reluctant to continue with this
way of life.

Socialism is less ambitious, and strives only to have the
means of production in collective or government hands, and
for democratic management.

Sweden is thought of as the exemplar of socialist countries,
but the creation of a welfare state, in addition to its
socialistic means of production has dimmed its appeal as a
model. For the Swedes, it seems to be satisfactory, but
countries, notably India, have abandoned socialism in favor

Capitalism, per se, comes in various degrees of purity, with
the equitable distribution of wealth in reverse proportion
closer one practices laissez-faire capitalism.

Countries and areas where labor unions are the weakest or
non-existent are those that have the highest difference of
standards between the very rich and the very poor.

Labor unions originated in Europe, and are an attempt to
equalize the bargaining power of the capitalist/employer
that of the individual employee, who has nothing to sell
his skill and his time.

They have been reasonably successful in doing so in Western
Europe and the United States, but they have created a new
by their very nature of being a legalized monopoly.

Unscrupulous union leaders have in a number of cases de-
democracized their unions, and after winning early victories
decent wages, working conditions and benefits, are left with
a program to press for higher wages and benefits, even if
members are already doing quite well in comparison to

One of the biggest drawbacks to labor unions from a
management viewpoint is its accompanying job descriptions
work rules.

Thus, rather than being able to use their workers as best
suits the changing needs of the enterprise, management
constrained by the terms of the labor agreement in utilizing
their employees.

Particularly government workers unions, especially in the
field of education, are demanding and getting benefits far in
excess of reasonable compensation for their expertise,
productivity, and hours of employment.

On the other hand, capitalists in the private sector have
had a generalized lid on worker incomes by transferring
service and manufacturing jobs to lower wage countries,
to countries closer to practicing laissez-faire capitalism.

Short-term, this has caused many families to become two
income families to maintain some semblance of the good life.

Long-term, and we are thinking in hundreds of years, the low
wage, non-unionized workers may pressure their employers
to grant
them better wages and benefits, and thus improve the
standard of living.

Much as “free trade” is trumpeted by the media, businesses
and government, the actuality is that numerous limits and
prevail. For example, the tariffs governing trade between
NAFTA countries — Canada, the U.S., and Mexico — are two
books thick.

The EEC, the European Economic Community, is similarly
saddled with restrictive regulations.

As for GATT II, which has yet to be approved, (1994)
anything that took 27 years to negotiate can hardly be called
“free trade.”

The U.S. Constitution covers free trade in several clauses,
such as (1) “all duties, imposts, and excises shall be uniform
throughout the United States,” and (2) “No tax or duty shall
laid on articles imported from any State,” etc.

Peter Kann, publisher of the Wall Street Journal , calls for
the free movement of goods and people world-wide; I doubt if
idealistic dream will ever occur.

Given the widely divergent levels of economic standards and
cultural diversity and values, I do not forsee the day when
poverty-stricken people of Asia, Africa and South America will
free to immigrate to the countries with more advanced

There is no doubt that capitalism, free private enterprise
with the prospect of profit, is a powerful motivator of people,
but it leads to wide discrepancies between rich and poor
moderated in some manner by government and other workers.

With millions of people in the most advanced nations
unemployed or on welfare, we are a long way from achieving
economic system where the people have adequate
purchasing power
to create and sustain full employment of the workers and
means of production.

In theory, this is imminently possible, because of the
truism that “human wants can never be satisfied.”


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