economics

Not merely inconvenient

Al Gore famously soft-pedaled global climate change as an "inconvenient truth." It was probably a wise choice for a title of time when climate change denial was more widespread and the media was still giving "equal time" to the "opposing side" of the "issue" advocated by people with lots of economic self-interest and no actual scientific evidence. The title "An approaching freight train of global catastrophe we're pointedly ignoring because it might endanger profit-taking," while technically more accurate, would have been dismissed as extremist, possibly un-American. 

We live in an age of inconvenient truths, disruptive realities we can't easily deny. Aditya Chakrabortty writes in The Guardian newspaper that Your new iPhone’s features include oppression, inequality – and vast profit

Over the past year, the US-based NGO China Labor Watch has published a series of investigations into Pegatron, another iPhone assembler. It sent a researcher on to the assembly line, interviewed dozens of Pegatron staff and analysed hundreds of pay stubs. Among its findings are that staff still work 12 hours a day, six days a week – one and a half hours of that unpaid. They are forced to do overtime, claims the NGO, and provided with illegally low levels of safety training.

The researcher was working on one iPhone motherboard every 3.75 seconds, standing up for the entirety of his 10.5-hour shift...

The Shanghai local government has raised the minimum wage over the past year; Pegatron has responded by cutting subsidies on things such as medical insurance so that the effective hourly pay for its staff has fallen.

Meanwhile, he notes, Apple sits on a bigger cash pile than the US government. Is economist Slavoj Zizek right that capitalism and democracy are headed for a messy divorce?  

How do we deal with the visceral hypocrisy of living with such extravagant privilege, as power and money that could be used for everyone's benefit gets concentrated in the upper economic stratosphere, far beyond the reach of the rest of the world?

Well, you could come up with elaborate justifications like "those are good jobs for that part of the world." Makes sense until someone places you on the assembly line, and you get a taste of the conditions endured by people who weren't born into fortunate circumstances. That's like saying that having only 10% of children die before the age of five is "pretty good for that part of the world" and therefore acceptable.

Alternately, you could do something about it. But what? Someone (please!) show me a leader who is advocating what normal people should be doing to redirect this train. I don't think my dutiful recycling, charitable donations, and thrift store aesthetics are really addressing the heart of the problem.

You could ignore it. That's what most of us do. To my great shame, I do it all the time, beguiled by my stupid phone, all the while knowing that terms like "inconvenient" are nice ways of saying Untenable. Unacceptable. Perhaps, in the lens of history, Unforgivable.

What if we lived in a percentage economy?

In some Scandinavian countries, if you get caught speeding, you pay a fine that's calculated as a percentage of your income

Reima Kuisla, a Finnish businessman, was recently caught going 65 miles per hour in a 50 zone in his home country—an offense that would typically come with a fine of a couple hundred dollars, at most, in the U.S. But after Finnish police pulled Kuisla over, they pinged a federal taxpayer database to determine his income, consulted their handbook, and arrived at the amount that he was required to pay: €54,000.

We can discuss why the United States hasn't adopted this sensible policy another time, but I can summarize the contingent who would fight it with the following character: $

Most commodities in the US are sold for a flat fee. We don't even haggle (with notable exceptions) for things that are commonly negotiated in other countries. Most people, I think, would say this is because we believe in fairness and equality. Everyone pays the same price, no matter who you are. 

Which is incorrect. In fact, everyone pays wildly different costs.

I live in the DC area, a very expensive housing market. As a result, I'm probably paid more than firefighters in some parts of the country; in order to be competitive, businesses and governments who wish to attract qualified professionals must pay them enough that they can live in the pricey local economy. That's just the free market at work. 

Let's say I want to buy a food truck. Because I kinda do. No, let's say I want an iPhone. The base model of the current iPhone costs $199, no matter who you are, no matter where you live in the US. Seems fair. 

But if you think of that $199 as a percentage of my income, then that's no longer the case. The phone represents a smaller fraction of my disposable income than it does for a firefighter who works in another part of the country. It requires less work to earn it. 

I tend to view consumer goods in terms of the time I must work to pay for them. A luxury that is the equivalent of a week's work is a real investment of my time. What if an iPhone cost a week's salary, no matter who you were or how much money you made? That would be fair, right?

I know... it's impossible, how would the market work?, etc. etc. Bah. Markets are consensual realities. They're massive multiplayer games. I don't buy the idea that they're as immutable as physics. We don't live inside them, they live inside us. 

I'm not a politician or an economist, so don't take this as a proposal. It's just an idea, with some interesting implications. What if all goods were priced in terms of a percentage of the buyer's salary? The guy driving the Tesla would be in that seat because he really, really wanted that Tesla - enough to forego other luxuries and devote his precious time to that goal. 

One outcome: some people would immediately move into jobs that had the lowest work/pay ratio possible. Low paying jobs would be very attractive because they would have equal buying power. There would be little incentive to work hard, other than people's natural desire to excel, to have pride in their achievements, and to be recognized. In fact, salaries would be obsolete. Only time would matter, and priorities. 

Crazy and utopian and unachievable... but fair, right?