The Two Economies

Some are in a rush to
 “reopen the economy.”

The economy.
As if there were only one.

But there are two economies:

• the Essential Economy, and
• the Luxury Economy.

Yes, the Luxury Economy is paused.
And yes, it is losing money.

But the Essential Economy is still operating.

And what a lucky, lovely, life-sustaining thing that is.

Ordinary people—those who work in fields to plant or harvest crops, who drive trucks, who stock shelves or operate cash registers in grocery stores, who keep our lights on, who patrol our streets, who fight fires, who drive ambulances, who operate food kitchens, who are doctors and nurses in hospitals and clinics and nursing homes—ordinary people are, each and every one, nothing short of heroes.

Heroism pervades the essential economy, where amazing souls risk and regularly lose their lives just to keep our essential services working.

We haven’t closed that economy.
So there is no need to speak of reopening it.

Of course, there are people suffering in the Luxury Economy. A great many. Not everyone who works for the luxury economy lives in luxury, so please don’t misunderstand.

But if the Essential Economy creates enough food, housing, health care, etc. to sustain us, then the rest of it is just a dance we do because we are not making our nation more fed, more housed, etc.

If we’re not part of the Essential Economy, we’re the entertainment, amusing them and perhaps ourselves, while we wait for a handout. They’re creating all of the essential value. At best, we’re left to creating “optional additional value,” but by definition nothing we can’t do without, or we’d still be doing it.

So we’re operating at a surplus, not a deficit, and the reason we know that is that the essentials are being met even without our whole population working. We’re just bad at dividing up our collective surplus.

The things society needs to do it is still doing, to the extent we ever were. We’ve always been far from perfect at that, but that’s topic for another day. Right now my point is that the Essential Economy isn’t shut down, only the Luxury Economy is.

And so, you see, to speak of “need” to reopen “The” Economy is a slap in the face to the contributions and, frankly, to the sacrifices made by these heroes.

Let’s be blunt: The whining is about when we luxuriate anew, when profit-taking can resume, when we can start polluting again, when businesses can get back to exploiting within impunity.

These things we so urgently need to get back to are not needs. These are just things that some among us are used to doing because money makes them feel important.

But these activities are not what is important—if they are even good for us at all.

We in the Luxury Economy are likewise not what is important.

We matter as individuals. I don’t meant to suggest we’re expendable. But what qualifies as hardship and what is mere inconvenience is something we owe scrutiny. There are some in the Luxury Economy sitting comfortably on accumulated wealth as others are panicked, barely getting by, worried about keeping a roof over their head or where their next meal will come from. But that isn’t a collective wealth problem, that’s a problem with how we distribute surplus.

Also, many of the people sustaining themselves on amassed wealth think of themselves as virtuous, that they did the right things, that they are deserving of their comfort now. But we see now more clearly that if they earned all that wealth in the Luxury Economy, they’ve provided none of the value that is now sustaining them. They’re just lucky they are now sustained. They are asking for handouts right now, just like the rest of us. They differ only in being more smug, in their sense of entitlement to those handouts they need as much as anyone.

We often run on autopilot, indulging the presumption that things are as they are for good reason. But based on an unscientific survey of my friends, most of whom are on the prowl for yet another Netflix series to binge, my guess is that we have time on our hands, time that could be spent contemplating whether we should ge back to familiar routines or get busy finding new ones.

And so, just to sum up…

The fact that many of us have jobs that do not contribute to essentials is proof of our collective wealth. When we need food we go to work—but not to make food, because there is enough, even if badly distributed and poorly shared. No, when we need food, we go to work just to make money, a dance we do to feel worthy of surplus food and essentials made by a few.

We who do not create the true value, the essentials that are largely and miraculously and heroically still available even now should be thankful supply lines are moving and should be asking how we can help that, how we can assure they are properly paid for arduous, dangerous, and relentless work, how we can make sure their families are taken care of while they do this, and how we can make sure their health care is assured, not whining about when we can resume pointlessness again.

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If you haven’t read my essay Corny Economics, you might want to head there next. This post was intended as a sequel, but I tried to write this on the assumption that you might read them in either order. Otherwise, I might have here used the parlance of Corny Economics, replacing “Essential Economy” with “Corn Economy” and “Luxury Economy” with “Harmonica Economy”.

The 1920 photo by Lewis Hine titled Power house mechanic working on steam pump was obtained from Wikimedia, which identifies it as being in the public domain.

The “drop caps” effect I used is a modified version of the helpful advice from Chris Coyier’s article Drop Caps at css-tricks.com, which I found in a Google search. He suggests it’ll work across multiple browsers, and it looked to me like it should. I used it in a span tag, since my use was a one-off and I didn’t want to fuss with style sheets. And I liked the color enough that it influenced some of the other design, and that in turn led me to the idea of working the entire piece in vary sizes and colors, so I evolved the article from there. I had been looking for a visual way to make some of the points clearer and this was one of several things that catalyzed the final result.

I find I often write text to fit visually, I don’t just mark things up after-the-fact. I change the lengths of sentences so that in plausible line-breaking on various browser settings, I expect it to look good. In cases where I am looking for a particular break, I experiment with reshaping windows and watch for widowing and often just replace spaces with non-breaking spaces ( ) so that if a line break occurs, it has substance and semantic units fall, perhaps more raggedly, in meaningful units.

Tax Policy and the Dewey Decimal System

I’ve been thinking about the question of how to equitably distribute tax burden in society.

100’s  Philosophy
200’s  Myths & Religion
300’s  Social Science
400’s  Language
500’s  Science
600’s  Technology
700’s  Arts & Recreation
800’s  Literature
900’s  Geography & History

It may help you to know I'm a serious fan of the Dewey Decimal System not just for its ability to classify books in a library, but for the underlying philosophy that led to its categories. I don't even 100% agree with the categories that resulted—I just like the thought process Dewey went through in order to arrive at the categories.

Melvil Dewey conceived of an ordered series of questions that primitive man must have asked as he evolved socially, intellectually, and culturally from a cave dweller to a citizen of civilized society.

100’s  Who am I?
200’s  Who made me?
300’s  Who is the man in the next cave?
400’s  How can I make that man understand me?
500’s  How can I understand nature and the world about me?
600’s  How can I use what I know about nature?
700’s  How can I enjoy my leisure time?
800’s  How can I give my children a record of man’s historic deeds?
900’s  How can I leave a record for men of the future?

When trying to wrap my head around a conceptual space, particularly one that involves a series or evolution of steps, I sometimes find myself reaching for Dewey's list of questions to use as a kind of conceptual scaffolding while I try to devise something better to use. And that's what I found myself doing in this case.

One's economic life, it seems to me, follows a structurally similar evolutionary path to the one Dewey describes. Admittedly, some go to college and some don't. Some start families and some don't. So the details will differ. And even for the shared issues, we might each confront them in a different order. But that was true for Dewey's system, too. So use your imagination and you'll quickly see where I'm going.

We start life with our parents taking care of us, asking questions like this:

Hey, Mom, where‘s my lunch money?
How can I afford an iPod on my tiny allowance?
How am I ever going to afford college?
How can I get a job that pays enough for me to live on my own?

Finally we break free and set out on our own, struggling at first to become self-sufficient:

How can I afford an apartment?
How can I make enough money to buy groceries?
How can I afford to buy new clothes?
How can I pay for transportation to and from work?
How can I afford to pay my college loans?

It's a good feeling to get these items under control, but it's not enough. Yes, paying for the basics is good, but we're still at the point of being hand to mouth, with no margin for error. We still have to plan for contingencies. If we can't handle those, we're only kidding ourselves in our belief that we're self-sufficient:

Heat costs how much? How will I ever afford that?
Hey, my car broke down. I was supposed to budget for that?
How can I afford that medical treatment?
Wait a minute. I can't afford to be unemployed. What now?
While still repaying college loans, I have to re-educate myself?
What if I'm unable to work later in life?

If we're lucky, we do eventually rise above it, but often it takes a long time. Ideally, though, once the above items are mastered, we start to have surplus income and can finally turn our attention from needs to wants:

How can I repay those who have been helping me?
How can I make enough money to afford an iPhone?
How can I make enough money to afford cable TV?
How can I afford to go on a vacation?

At this same time, we may begin nesting:

How can I afford to buy a house?
Can I afford to have a family?
How can I afford to feed, clothe, and house my family?
How can I survive the loss of a job without putting my family at risk?
Can I assure my children go to college?

Or our world may expand in other ways:

How can I help my friends?
How can I afford to contribute to charities?
Can I employ others by by starting my own business?

My point here is to portray life as a continuum from helping ourselves to helping others. And finally now with that in mind I can make some of the points I wanted to make.

First, it should be obvious that the first and most important thing each of us can do to help society is to eliminate society's need to help us. If we are not self-sufficient, we cannot help others.

I mention this because I've sneakily omitted taxation from the above lists of questions. This is because I want to make a point about where taxation is appropriate. It seems obvious to me that presently we tax people before they are able to help themselves. And I just don't see the point of that.

Taxing lower income people delays the time in their lives at which they can be self-sufficient. It also introduces inefficiency into the system: The entire process of taxation expends societal energy that is simply lost productivity. Taxing our weakest members is silly since they'll just turn around and ask for the money back—and the process of getting that money back to them will use up some of the money. Our tax revenue should come only from genuine individual surpluses.

And by surplus I don't just mean that people should have a few dollars left in their paycheck to go to taxes. I mean that everyone should try to fill a savings account with $100,000 for emergencies. If they haven't got that, and most people don't, then they aren't ready for the kinds of major expenses life is sure to dish out—unemployment, illnesses, accidents, retirement. Once they've provided for those, then they can begin generating a surplus.

They should be filling that account before they get to the point where they are allowed to pay taxes. Paying taxes should be seen as a privilege, a status symbol, something people aspire to do as part of their personal growth.

Of course, that might not leave a lot of taxpayers. What a burden that will be on those who are able to take care of themselves. Darn. That's awful. We hear all the time about how the economic system is not a zero-sum game, and how it's possible for someone to get rich and for others to do well. Fine, let's see it played out.

If the wealthy want to be taxed less, they should arrange for society to enrich as many others as possible, in order to have friends who share the “burden” of taxation. If enough people make a decent enough wage to achieve a surplus, it won't be so lonely at the top. If instead the present trend continues, concentrating the wealth in an ever-shrinking portion of the population, those few wealthy should expect to pay a steep price for membership in that elite club, because the rest of us can't afford to help pay the taxes until we can afford to take care of ourselves.

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Click here for more information
about the Dewey Decimal System.

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Author's Note: Originally published February 17, 2009 at Open Salon, where I wrote under my own name, Kent Pitman.

Tags (from Open Salon): taxes open call, jobs, retraining, unemployment, illness, accident, rich, wealthy, wealth, low-income, poor, tax burden, wealth redistribution, income redistribution, medical emergencies, retirement, tuition, college, education, finances, politics

Whatever Should Be, Should Be

A technical standard is a very precise document that is used as a reference for how something should work in the technical world. I spent several years of my life working in this arena and I’d like to relate a peculiar thing I learned in that time.

I learned that the word “should” means “don’t have to.”

I was receiving comments one day from a colleague who had read some text I’d written. He had drawn a red line through a number of sentences I’d written and I couldn’t figure out why. “Why did you do that?” I asked.

“Those sentences don’t say anything,” my colleague explained.

“Of course they do. They tell you what you should do.” I protested.

“Or what? What happens if you don’t. Is it a requirement?”

“No, it’s not a requirement but—”

“Ok, then. Now this phrase over here uses ‘shall.’ Because of the use of ‘shall,’ the user has to do something. It’s in the imperative mode, and so it’s a requirement. And this one here, with ‘must’—another requirement. But the rest of this stuff over here uses ‘should,’ so that’s not a requirement. Nothing happens if the reader ignores your advice.”

“He’s supposed to at least try.”

“But he can decide not to. So from a requirements standpoint, there’s no difference.”

“Right,” I admitted.

“So ‘should’ really just means ‘doesn’t really have to,’ ” he emphasized in triumph.

“Right,” I admitted sadly.

“So take out the text. It has no meaning.”

Although it is routine for Libertarians and Republicans to speak of self-reliance and financial independence, it is never the case in a modern capitalist society that the wealthy have achieved anything on their own because by definition the entire society is based on the consent of others to indulge an economic system in which such wealth is even possible.

I speak of the modern capitalist society because certainly in times past, when the world was underpopulated, there were vast wildernesses available for conquest, and it was theoretically possible to find a place in the woods where one lived without contact with civilization on one’s own. Although even then, it was common to take with one the tools of civilization, such as clothing and weapons, as well as society’s more abstract fruits, such as health and education. The likelihood that a human being, left alone in the wilderness with none of this would survive very long is vanishingly small. So probably even then, and certainly now, we are all beholden to society for our success.

“If you want to make an apple pie from scratch, you must first create the universe.”
  —Carl Sagan

Since at least the time of the New Deal and the Great Society, we as a nation have tended toward acknowledging the importance of the role of government in protecting our weakest members.

Nor is this mere charity on the part of government. Government derives its power from the consent of the governed. For example, simple mathematics tells us that it cannot be the case that the majority of the population has above-average wealth. That means that the majority of people, upon agreeing to participate in capitalistism, have agreed to take a financial position that is less than average. The theory is that by allowing some to get rich, others will benefit, and the wealth of the country will improve.

It should be easily seen that if large numbers of people are failing to see their basic needs met, while a few profit in a manner that is grossly out of proportion, such a society cannot long stand because at that point the social contract permitting the accumulation of wealth has been violated. A government that draws its power from the consent of the electorate will naturally find it in its own best interest to assure that the price of success on the high end is that basic human needs are serviced on the other end.

The stronger among us must therefore always remember that their wealth is a benefit provided under a contract made with all of society, that the wealth will be used for the betterment of all. Well, not every dime of it. If we required that all the money a person made went to charity, that would be like not giving a person the money in the first place.

And yet, many suffer now after the failure of companies from which a tiny number of individuals have seen handsome profits. What must those who have profited do? What is the moral obligation of the well-to-do in the present times? Is there a special obligation on the part of those who have directly profited from the situations that have bankrupted others?

Well, let’s not speak of obligations, shall we? How rudely pushy of us. It’s true that some may be cast from their homes or have nothing to eat, but really—must we be so rude as to speak in the imperative? If someone made an enormous profit, that’s their money. They have earned their right to do with it whatever they wish. So let us avoid the impertinence of imperatives and speak in a more polite way. Because this matter certainly calls for politeness. Let’s just offer polite advice and they’ll know what must be done with that advice.

They should care about the fate of the poor. Whatever else they do, they should make it their business to assure that their enrichment does not come at the expense of others.

There. That’s it. Just some advice. Nothing pushy. Not a requirement. Just a request that they try.

I feel better now, knowing we all share a clear understanding of what should happen.

“No man is an island, entire of itself...any man’s death diminishes me, because I am involved in mankind; and therefore never send to know for whom the bell tolls; it tolls for thee.”
  —John Donne

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Originally published Dec 17, 2008 at Open Salon, where I wrote under my own name, Kent Pitman.

Tags (from Open Salon): politics, class, class warfare, contract, social contract, breach, rich, wealth, wealthy, well-to-do, strong, poor, weak, weakest, obligation, duty, imperative, shall, should, must, modal, semantics, polite, politeness, rude, rudeness, profit, proportion, proportionality

Redistributing Burden

McCain's near-spastic surge of emotional hotbutton issues is hard to follow, but among the spread spectrum of ideas he's been frequently hopping between is his allegation that Obama is a “socialist” seeking to “redistribute wealth.”

Get More: Comedy Central,Funny Videos,Funny TV Shows

A number of people are already doing a pretty good job of shedding sunlight on McCain's confused use, or cynical abuse, of the term “socialist.” For example, Stephen Colbert recently interviewed Brian Moore, socialist candidate for US President in the 2008 election. In the interview, he asks Brian Moore whether Obama could pass for a socialist.

I wanted to make a different point, though... that is, if you're done watching the video. Hello? Is this microphone still on? Ah, there you are. I thought for a moment I'd lost you. I should know not to put myself in deliberate competition with the likes of Colbert, especially to illustrate what I don't want to talk about!

What I really wanted to talk about is the notion of redistributing wealth. I want to suggest that's a bad paradigm for viewing the question, and suggest a way to reframe the discussion. I want to discuss “redistributing burden” instead.

To start, let's look for a moment at the process of summarization. There are a lot of ways to summarize an issue, even something that seems so simple you can just count it up. Depending on what you count or how you count it, the answer can be different. For example, we have a Senate and a House of Representatives in part because one of them counts up what states think, and one counts up what people think. It was believed by our founders, and I think they were right, that sometimes one of these is the right way to count, and sometimes the other. But the point is that they're different, even though they're at some level both counting up the same thing, that is, “how much will the nation has on an issue” or “how much need the nation has.”

So it is with wealth and burden. For some things where money is involved, wealth may seem an inverse measure of burden. That is, if you have a lot of wealth, you have less burden. But the problem with that is that it sounds like it's all proportional. Wealth uses words like “more” and “less.” People who claim they have no wealth at all are rarely sympathized with, even though the use of the word is probably correct, but rather they are quibbled with. “What are you talking about? You have a family. Isn't that a form of wealth? You live in the richest country in the world. Isn't that a form of wealth?” (Given our debt burden, I'm not sure I'd call this the richest country in the world, by the way, but you still hear people say it.)

Sometimes the word wealth is a relative measure. We cannot all be wealthy because we don't all live in Lake Wobegon (“all the children are above average”). It's a necessary fact of relative wealth that for some people to have it, others don't. Now, it's certainly true that there is another kind of wealth, an absolute kind, that says that if you have more than you need to survive, you're also wealthy. And that kind of wealth we could theoretically all have at the same time. We just don't. We have many people who have enough to survive, and more, while we have many others who don't have enough to survive, to care for their families, to address medical issues, etc.

So when it comes time to pay the nation's taxes, the question is what the burden is on them to give up a little of their money to help with that cause. The answer is pretty plainly right now that there are people who are barely getting by, if at all, who are being asked to pay money they don't have in order to help with that. For example, for Sally making $30,000 to pay $3000 in taxes while Bill making $1,000,000 pays $100,000 might seem a simple issue of scale. Both pay 10%. But the $3000 that the Sally is giving up might have been just enough to afford some critical expense, perhaps a health care plan. While at his income level, Bill is at no serious risk of not being covered by a health care plan. So it's not that there is a proportional burden. Sally's basic needs are not met and Bill's are. It might not even be the case that Sally's needs were met with no taxes at all. $30,000 is not much to scrape by on, especially if she has a family. But I'd argue Bill could still manage to raise a family even if he paid $103,000 dollars in taxes, so that Sally had to pay none. Or even if he paid $130,000 dollars in taxes, so that ten Sally's had to pay none.

I hear murmurs of “he's redistributing wealth” but that's my point. I'm not necessarily redistributing burden. At least, I'm not creating a burden on anyone that didn't have it; I'm just removing it from someone who did. If Sally pays no tax, so keeps all $30,000, she's not made rich, she just fails to be quite so impoverished. And if Bill pays only 3% more in taxes, which is $30,000, he's not impoverished by that. He's just slightly less rich. Before the change, 10 people might have been struggling and 1 surviving (well). After the change, 11 people might be surviving. That's a big benefit. The mathematics of burden redistribution are very different than the mathematics of wealth redistibution. Speaking in terms of wealth rather than burden can muddy things a lot by focusing on things that don't matter at the expense of things that do.

“But,” I hear you protest, “she doesn't have to pay taxes and he does.” Not so, I claim. She pays a tax. She is poor. Being poor is a tax. (On another day, I can perhaps even explain that might be quantifiable. But today you can just assume I mean that being poor is no fun, and that Bill won't trade places with her if he has the chance. So saying Bill is enduring an inequity in this arrangement is disingenuous.)

And yes, we can argue where the line is between rich and poor, but we should not argue that there is no such line. Surely there must be some amount of money beyond which if you have it, you're set. Just as surely is some amount of money below which if you don't have it, you're in bad shape. The precise amount may differ with time and geography and other factors, but we shouldn't let that uninteresting fact distract us from admitting that are real effects worthy of discussion.

And please note well—I'm not saying that the wealthy need to just give all their money to the poor. The capitalist system is about the hope that the opportunity to get rich will cause people to work hard for that goal so that others will benefit. But we need to watch that in fact the others do benefit. If we allow the one person (or a small number of people) to get rich at the expense of the others, then capitalism hasn't done what it set out to do. Those who have succeeded under our system need to remember that this is a society in which the populace, by majority vote, chooses how we run things. And if that group gets things to the place where a majority of voters think they're not doing well, they should expect that such an unhappy majority has good reason to start pulling plugs on the process. That's what I think is in play right now, and what will continue to be in play until a basic fairness to the original premise that we should all benefit to a reasonable degree from the success of the few.

A bit of enlightened self-interest on the part of the rich would go a long way just now. Holding firm to the “it's mine and you can't have it” line is not going to serve the rich well when talking to people headed for the ballot box.

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Originally published October 30, 2008 at Open Salon, where I wrote under my own name, Kent Pitman.

Tags (from Open Salon): politics, economy, wealth, burden, needs, basic needs, health care, food, redistribution, redistribution of wealth, redistribution of burden, income redistribution, tax, taxes, taxation, regressive tax, tax fairness