Cogito Ergo Sum | Ipsa Scientia Potestas est | What I cannot dream of, I cannot comprehend.
Here's a two-and-a-quarter-minute clip of Milton Friedman explaining why no one in the world knows, no one in the world has ever known, and no one in the world can ever possibly know, how to make an ordinary commercial-grade pencil.
Grasping the point of this explanation is as fundamental as anything you can ever learn about the nature of the economy and modern society.
Contrary to what we believe, magic is nothing special, nothing magic about it. Stripped bare by the scientific method, there is really nothing to it.
Knowledge
However, why is it special to so many to us? Because we believe in it. Faith can be a very powerful tool. You can probably do a whole lot more things that you ever can, based on just faith alone. Not necessarily a bad thing then.
Truth
If we do not believe in it, the magic will not be invoked. Only when we believe in it, will the magic come alive.
Faith
Firstly, we need to define what is called poor. Materially, if you are worse off than other people, if you are having lower standards of living compared to other people, than you can be said to be poor. Trickily, this assumes that there is a basis of comparison. That is, there must be someone who is definitely living a better life than you. If everyone had the same kind of living standard, then the concept of 'poor' would not exist.
In the concept of poor, we need not talk about the idea of money here, even though the system of money has a tendency to enlarging the rich-poor divide. In a society with no concept of money, and that everything is based on trade, then everyone should have something that everybody else wants. I said should have, because, your goods can either be in high demand or in low demand. If your goods are in high demand, everyone will want to trade with you, and you would get to enjoy a whole lot of stuff through trading. If your goods are in low demand, then nobody wants to trade with you, and you will enjoy nothing but your homegrown stuff. That isn't so bad, if you are self-sufficient that is.
But we are greedy people, for we are not contented what we already have, we want to have what other people have too. Now, in a society that does not have the concept of money, what happens then, is violence and oppression. Since nature endows different amount of strength and muscles to all of us, there would be some who would use this strength to force others to give their share. Perhaps that was how landlords appeared in the first place. You might be forced to become a servant to other people, and your life would clearly suck in comparison to the person you serve.
We can perhaps try to correct this with a governing body, whose self-professed goal is equality of opportunities and wealth. So this particular government will take back all the wealth and redistribute in equal proportion to everyone. But how should we divide this? For you cant distribute to everyone exactly the same portion of food. There will be some people who needs a bigger portion of food. And then there is a problem of who should get which piece of land, because all property assets are unique by virtue of the fact there are all in different locations. And how best to justify the approportionation of wealth? Furthermore, the incentive to work hard is lost, because what you sow is not reaped, for it is divided into many little pieces and distributed. If everyone thinks like that, then progress as whole for the society is slow. In comparison to another country, we would appear poor. Besides, the logistics required to coordinate to entire society by human means likely to be astronomical.
Even in a democratic society, where it is claimed that everyone is equal with equal voting rights, there is still paradoxically, the inequality between the majority and the minority that is always present in any voting system. Any decision would then benefit only the majority but not the minority. If the decision involves on how best to divide up wealth, then we can imagine there will be people who would become worst off. It is the same issue for a society that follows the Utilitarian approach. More often than not, we will end up sacrificing the few to achieve benefits for the society as a whole. In such a sacrifice, it remains to be seen if you are the few that have been made worst off compared to the others who have benefited.
Here, we have moved off from materialistic well-being to, well, psychological well-being. I do not know if we can be psychologically poor, because this is an extremely fuzzy issue. If we remain in the easily quantified domain of materialistic well-being, than I think, we can conclude that the poor is an inevitable feature that one can encounter in any society.
However, this is not an excuse to not to show care and concern for the poor. What we can try to do, is to narrow the gap between the rich and the poor. We can transfer wealth in a one-time event that gives them the benefit and the opportunity to enjoy the latest fruits of labour of the society. Accessibility to technology, should be enlarged to the poor so that that they are able to benefit. And that means, creating more supply of the particular technology, decreasing prices of the technology. Also, the people living in poverty might not be that up to date with the knowledge of the latest progress of the society. So, attempts should be made to educate them on the benefits a particular technology will bring.
The poor is definitely a feature is any society, but I think we should share the fruits of labour by the society with them. Not a constant stream of support, that causes people to lose the incentive to improve their situation, but by giving them the opportunity to know about it, and to use it.
Consumers reign king these days in the market. They hold alot more power than we know. What they demand, they get. It is the latest evolution of the democratic vote. In fact, using consumers, we can affect how we want firms and businesses to behave. Take the hottest example now, the case of green products. In the past, producers did not internalise the externalities, caused by the huge smoke stacks, pouring industrial waste straight into the lake backyard, etc. But then, consumers did not see the social costs yet, so why should producer care?
But now..now thats a different story. Every firm is fighting to show that it is clean and green. Why? Because consumers are slowly aware of the social costs to these externalities. And consumers are the first ones to internalise these costs once they are apparent. Guess what happens next? Consumers who are wealthy, affluent, and knowledgeable, start to choose green products over unclean products. Well, you would be stupid not to change your strategies, if you were a firm. Large quantities of environmentally conscious consumers can put you out of business, if you pollute the Earth indiscriminately.
So...conclusion? I've just shown how the free market can respond to externalities, without alot of expenditure to alter the price mechanism. All it takes is to correct the information asymmetry. Second conclusion, is that only a wealthy country can have this system of correction in place. If a country is poor, consumers would be too busy worrying about their stomachs than about their environment.
There are problems however, when international trade is brought into the picture. In countries of the less affluent, firms may revert back to the lower costs, pollutive production methods. And they would charge a lower price, creating price discrimination, and problems of dumping. If a firm can produce its goods more cheaply in another country, than it is likely to shift its production to that country. This so far, is the biggest problem encountered in the environmentalist protection. In this case, if we do not want to impose tarriffs, then we must rely on the largest consumer in the world, to demand that these firms behave themselves even in other countries. If US consumers boycott goods that are not 'green', then export firms would again find the incentive to use green production methods again. The most optimisitic point here is that firms would probably bring green technology to other countries.
The free market is powerful indeed. But like the democratic society, it fails though, between the majority and minorities. In this case, the minorities would the poor who have little money votes to make a difference. But the consumers are definitely king. No doubt about that.
As I was reading the article by RJC for their GP Prelims, I was struck by how Africa was rich in resources and yet have remained poor. The first article insinuated that Western powers of collusion were at work, exploiting the resources of Africa with very little in return.
Well, we can analyse this a bit furthur. Why is some countries, being resource rich, are still poor, while other countries are rich, even though they may or may not have the resources? First of all, having resources does not gurantee that a country will become rich. Factors of production have a tendency to fall into control in the few of the rich in the country. These minority of capitalists, then hire workers at cheap rates to extract whatever resources out of the ground. And the resources are being priced cheaply. There are lots of diamond mines in Africa, yet the African people do not seem to be getting any richer. Probably, raw materials, while they absolutely essential for production, are not exactly pretty. Crude oil is close to being unusable, diamond that is just mined looks just like another rock, gold veins hidden in rocks is muddy, and does not look that appreciable. It is only through value-adding, such as polishing and refinement, that these resources become really expensive.
Furthermore, if such resources have to be sold at higher prices, then, production of goods around the world would quickly ground to a halt. If crude oil is already expensive, then what about refined oil? If raw diamonds and metal are already like $70 per 100 grams, then what are the refined ores and diamonds? Close to a million dollars per 100 grams? It is the sad sad truth that the global wealth is built upon the cheap resources. If raw resources was already expensive to begin with, than the final products would be really really expensive. And then there would be hyper inflation, because the food is so expensive, due to the expensiveness of cooking oil, electricity would come at astronomical costs, and alot of people would be spending in millions of dollars in one go.
Prices of these resources are cheap, because of their abundance, and because the few who control the vast tracts of land that contain the resources. Thats how they can gain a profit. Sell in bulk and sell it cheap. Here lies the paradox; we all know gold is expensive because it is scarce, we all know oil is expensive because it is going to run out soon, we all know diamonds are expensive also because of its scarcity. But that cannot be, because the raw resources are being sold cheaply. So what is going on? Well, value-added refining by labour is one. Probably, queens saw how brilliantly the diamonds shone and instantly fell in love with it. They become willing to pay a high price of it. Price after all, reflect consumers valuation of the good. If the queens are willing to pay for it, which smith would sell the diamonds at a cheaper price? After all, the smith did spend a real lot of time carefully polishing it. Cutting diamond is a real skill that can be difficult to master. Another possibility is the sheer abundance of the raw resource. If metal can be mined indefinitely from the many mines controlled by the capitalist, then to the capitalist, supply of that metal is quite big. Possibly close to infinite for him. To him, he is likely to make profit by selling the metal at a comparatively low price. Low price as in lower than the market price for the refined metal. Furthermore, production is big, because the capitalist has many mines, and many labourers. Large capacity for production, and the ability to pay lower wages to workers, is how this particular capitalist stay in business.
Resource rich countries do not naturally have the tendency to become wealthy. Factors such as a large human population, a strong government, and environmental factors also come into play. Naturally, Africa is hampered in becoming wealthy, because of its environmental factors. I have observed, that if human beings lived in countries of milder environment, then their tendency to become wealthy grows. This is because each person is not occupied the whole day on how to purely survive another day. Thus such people have more time to accumulate wealth and power, and this is how wealth creation and a wealthy society starts. The ability for Man to tame his environment is also essential. It is noted that fire is a relatively cheap technology to stay warm, but fans and motors are a relatively high end technology to stay cool. It may be an explanation how ancient powers of civilisation starts in Europe, in China, and Russia. And then a strong government counts, because that is how a society stay together. A government that thinks of only itself, with its rampant corruption, is not likely to help a country to grow.
Lastly, if the country possesses a large population of people that are determined to succeed, that we have a population that is likely to make itself more skilled, and this becomes a huge potential for growth, as is clearly evident in the meteoric rise of China and India. It may be pointed out that that was how the United States of America first became a power itself. Most of such Americans were Europeans that migrated there in search of resources. And then, they struck gold. Stuck in a far country with little to count on except the promise of gold, this is probably how America succeeded in the first place.
Herein lies the heart and soul of nations.
Their right to remain free men,
Their desire for peace,
Their courage to seek out truth.
Here lies the the Sword of Shannara.
Just finished reading the Sword of Shannara, some epic fantasy tale, the first book in a long series of 12 long stories, despite the fact the A levels are pretty close, and that I should reading my notes instead. Was thinking that truth sometimes, is both terrible, and beautiful. Truth given to some people, would destory entirely, to the point that sometimes they will never get their will back. Truth can also be an elegance in its own right, showing a unexpectedly differenct perspectives that you can never considered, possibly giving the object in light a symmetry that you might not have seen previously.
Truth therefore is just like the mythical double-edged sword of knowledge. Like any other aspect of swords, they come with it the power to defend, and the power to invade and destroy. There might come a time one day, or maybe in the past, that you have found the need the sheath this sword, cover its brilliance from lesser mortals, to prevent what might be devastating effects.
So often, we cloak ourselves in illusion, carefully craft walls around ourselves, that when the truth comes, we are left naked, heart and soul stripped bare. The phrase "without wax" or the word "sincere", comes from the Latin phrase "Sine Cera". Literally meaning without wax, Spanish Renaissance sculptures were patched with wax to cover their flaws. Hence, a sculpture that was authentic and flawless, would not need patching with wax, thus the term. It has come to mean sincerity, after all, we do not expect to be sincere if we hide ourselves behind walls.
We do not have to be flawless, to understand that the fact, and also to understand that most of us spend most our lives patching ourselves to appear flawless, is quite a heavy truth. A truth that alot of people will not survive the ordeal. However, if we do survive the ordeal, we find ourselves now suddenly capable of penetrating the illusions and masks put up by other people. To accept other people, we have to accept ourselves. With acceptance, comes the understanding. In turn, understanding begets trust. And trust with the basis that most of us are likely to build whatever relationships on.
So...have you accepted yourself in entirety?
