Working for a Living

When I am in my car driving between 3 to 6 p.m., one of my guilty pleasures is listening to talk radio host Ron Smith of WBAL-AM. Ron is the Babe Ruth of talk show hosts—he combines being provocative and literate about a wide variety of subjects with being a non-partisan critic of the failures of both Republicans and Democrats. I call it a guilty pleasure because, although Ron is not mean spirited, some of his callers can be; and there are moments when you cringe as you listen.

After the stock market closes at 4 p.m., the amicable Jonathan Murray, Vice President of Investments for a large NYSE firm, comes on to give the “closing bell report.” Jonathan is a very good salesman, and he plays the part of the cheery optimist reassuring investors that stocks and bonds remain good investments.

He also plays the part of giving glib and seemingly plausible, expert explanations as to why the stock market moved how it did that day. The other day the stock market was down; oil was up; and not surprisingly, like many analysts, Jonathan incorrectly attributed causation.

Ron likes to banter with Jonathan, and Ron began to comment on how many people are being hurt by rising gasoline prices. Jonathan jumped in with a glib: “I know, I’m being hurt” type comment. He was quickly rebuked by Ron who pointed out that Jonathan was not exactly on the edge financially, and that for many families, rising fuel bills are literally causing them to go without other essentials.

As I listened, I began to reflect on how many individuals in this country no longer work for a living—for them the impact of rising fuel bills is a nuisance, instead of a frightening attack on their standard of living.

Our county was founded by revolutionaries who did not believe in wealth that was earned through privilege. In Europe, wealth could be earned and maintained if you were a member of the aristocracy or the church or if you were a merchant who was granted a monopoly by the crown.

In recent decades, the number of Americans achieving wealth or living through unearned means has skyrocketed. Here are just a few examples:

Politicians—When Harry Truman left the presidency in 1953, he had no personal savings; an Army pension of $112 a month was his sole income. He literally had to take out a personal loan from a Missouri bank to survive. In contrast, Bill and Hillary Clinton managed to achieve great personal wealth though their career of “public service” and have earned close to $110 million dollars since leaving the White House. As the saying goes “they came to do good and ended up doing well.” Career politicians have become America’s new aristocrats.

Subsidized Businesses—This blog has been covering subsidies to ethanol. Of course, ethanol subsidies are just the tip of the iceberg. There are subsidies for farm commodities, there are tariffs and quotas that protect domestic producers of steel, textiles and other goods, there are laws without which nuclear energy could not exist, there are laws which have granted cable companies monopolies, etc. These subsidies are little different in effect than the monopolies granted by the crown centuries ago.

Subsidized Professions—Lawyers who lobby for subsidies for businesses have jobs that would not exist without government subsidies, doctors whose incomes are enhanced because the AMA is able to hold down the supply of physicians, excess public school administrators who would not have jobs on a free-market, and professors who can’t teach or do meaningful research and yet who earn a good living are just a few examples of distortions caused by government grants of privilege.

The Defense Establishment—In their farewell addresses, Washington warned of entangling alliances and Eisenhower warned of the militarily-industrial complex. Both warnings have been ignored, and today both entangling alliances and a huge military-industrial complex have been a bi-partisan norm that threatens our liberties and our economic well-being. Millions earn their livelihood through this complex which has gone far beyond providing for the needed defense of this country.

Obviously, I could go on. The point is that as the proportion of Americans who depend upon government for their livelihood increases, the proportion of people working for a living shrinks and the vitality of this nation is drained away. As this happens, the American experiment at some point will become unsustainable.

Advertisements

9 Responses to Working for a Living

  1. Godfather says:

    Great Post!

    Godfather (theslowbleed.com)

  2. Kevin says:

    Though its not yet Friday, I want to give three slaps to politicians for recreating a system were wealth is earned through privilege.

  3. igli1969 says:

    I also listen to Ron Smith (since he first came on), when my schedule allows. I agree with your assessments of Ron himself, Jonathan Murray, and a minority of his callers. The latter tend to fall into the usual categories of the Good (knowledgeabe and/or resonable), the Bad (not too bright or fixated on one cause for all ills), and the Ugly (the venomous folks you mentioned).

    I think that it is amazing that it took the ruling class so long after the Revolution to reinstate their preferred system. Lincoln was the first to break the barrier the Founders erected; more of that wall was torn down by T. Roosevelt, Wilson, and FDR. After that, there was only rubble, and nothing could prevent the politicians from erecting whatever palace they desired. Most Americans don’t understand what is happening; many that I have discussed this with do not care, as long as they get the favors they want. (They get to be “Paul.”)

    Unfortunately, I believe (can’t say “think” as I have no demonstrable proof, but historical examples would tend to support this conclusion) that it is already far too late to slow, much less stop, our slide into full-blown authoritarian government. Our system is already more socialist than free-market, IMO, and government activities such as asset forfeiture, abuse of eminent domain, and the trashing of just about every one of the first ten Amendments to the Constitution lend weight to this argument.

    Chris C.

  4. E says:

    This phenomenon isn’t limited to government, ie Subsidized professions. One of my friends remarked, “Wall Street, for what it is, is designed to keep out people.” Another good friend, and brilliant director, made the same observation of Hollywood — “It’s one big club…” I personally know software engineers/talent who have had their business plans quashed by the big guys (those corporations who monopolize their space). It’s all one big game of Rich getting richer.

  5. Nobel laureate Friedrich Hayek warned that while it may take a very long time to create the conditions by which freedom can flourish, these conditions can be destroyed in a small fraction of the time that it took to create them. And once they are destroyed these conditions are not easily brought back.

  6. Frank v2 says:

    Dr. B,
    Many of us “working stiffs” don’t have the luxury of a nice pension plan or guaranteed income: we need to work to live and plan for our own retirement. Professions that create barriers to entry are intrinsically bad for the free marketplace, and in the long run, for its members. And clearly greed is a catalyst that breeds protectionism. It has been my observation that the more protectionism that is put in place, the more that sector becomes fat, dumb and happy. Just look at most of our government organizations. Once you land a job there, you are set for life. But employees, for the most part, become just a cog in the wheel, with little to no incentive to drive for improving the organization. After all, if you a nice comfortable lifestyle, why rock the boat? But most of us in the private sector don’t have that safety net. And to make matters worse, most of us have very little financial cushion, so we are living basically three paychecks away from financial ruin. We are living at the edge of personal chaos. But I like that. It makes me feel alive. It forces me to push myself and my firm for results. And if my company is successful, I will be rewarded. I think it is a pretty healthy relationship. I provide a service. I get paid for that service. And my skills need to be better than the next guys, because I am competing for the opportunity to be employed and provide a decent return on investment for the company. They owe me nothing other than for paying me for services rendered. As long as the ROI is appropriate, my odds of being employed there remain high. Should the relationship become inequitable for either party, it is time for us to part company.

  7. Frank,

    While I agree with much of what you have written, in coming years many who were productive (without subsidies or protection) will have their jobs threatened. During that difficult transition time all of us will need to respond with compassion and assistance. Without that compassion and assistance, it is certain that government will grow still larger yet.

  8. E says:

    Prof B,

    Could I ask you to write an article about the Commercial Real Estate? While we know there is a downturn in residential RE, I was hesitant to pass judgement on commericial RE. There’s an article in today’s Post about record vacancies in DC commercial leasing market. If this is a national trend, it could be problematic — commercial lessors who can’t get enough rent to cover their mortgages are apt to delay investments, which will prolong any recovery, in both retail and commercial sectors.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: