Tuesday, September 04, 2012

Lifestyles of the Rich and Greedy

My mom is visiting from out of town.  We were watching a program about really expensive homes earlier.  well, she was watching it.  I was mostly listening to it and mopping my kitchen floor.

I didn't see what she remarked on when she said, "Shame on them, spending so much money on a room when there are children starving."

I had gathered enough to realize she was talking about a shiek or prince or someone who had tried to create a sort of "taj mahal" out of one room in his US home.  The price tag was $12,000,000.  My response was what my mom calls, "typical".  "Well, so what, as long as it's his money?  Most of the charities who are supposed to help starving children are ineffective at getting the money to the children without it falling into the hands of warlords, either. "  She ignored me.  In the meantime, I've thought of a few other reasons why, in fact, the shiek made a more moral choice by decorating a room in the US for $12,000,000 than if he had sent it or even hand delivered it to starving children.  

Let's look at it from start to finish.  First of all, what is a sheik doing in the US anyway?  Maybe he wants a second vacation home here.  Maybe he's an oil tycoon who wants to be here to provide state of the art customer service to some of the people who buy his oil.  He could be a foreign spy, but it's hard to figure out why someone would go around in a turban and making headlines for spending $12,000,000, if he was trying to be surreptitious.  

For whatever reason he's here aside from purely diplomatic reasons....in which case he probably wouldn't be investing in a dwelling here...he's trading with a gazillion people, some of whom may actually have starving children or at least know some personally.  The TV show reported that the sheik had imported workers designing the house from Iraq (I know this may bring up the issue of whether we should protect American workers from the work of those who are not American, but I will not deal with that in this particular post, except to say:  we shouldn't).  If he built his little cottage in the last decade or two, those Iraqis were quite likely to have or know starving children in their war-torn neighborhoods.  So in fact, by paying these workers, who were convinced working for him would be more lucrative than staying at home rebuilding the village or whatever, the sheik may have been indirectly feeding those children.  

Now let's consider the fact that he brought the Iraqis here.  I don't know how they got here, whether with the blessings of customs or not.  I don't think it matters very much to the argument.  Depending on how many he hired, they likely had to spend at least a week or two doing the work he had commissioned.  Maybe longer. During those weeks, they had to eat, drink, and sleep somewhere, and if they had promised themselves they weren't going to succumb to the secular delights of the Great Satan, it would have been difficult.  So I would guess at least a few of them went shopping for souvenirs, ate some Big Macs, maybe went to a baseball or football game, and likely even a strip club or two.  All these activities involve monetary exchange.  And by participating in that, his workers, and thus the sheik himself, are part of the mosaic of free trade that keeps children from starving, because it keeps people employed and economies flowing. 

You may be whining at this point, "But Kelly, there probably aren't even starving children where that rich sheik lives!"  To which I reply, "Exactly my point."  

Two huge factors that contribute to starvation or the absence thereof are:

1) the ability of people to exchange freely with each other and

2) the absence of tyranny.

If people aren't free to trade with each other, or if there are barriers to trading freely (including barriers like  corporations benefitting from government subsidy, thus making competition nil), jobs are lost.  Take the case where people cannot exchange as freely as they'd like because of prohibitive taxes or regulation.  Here in Michigan, a law was recently passed fixing the price of alcohol (like most government schemes, if regular people fix prices, they are arrested, but if the government does it we turn a blind eye).  So when I went to buy some rum recently, I was acosted at several different shops with signs that say, "This price is the state minimum".  The state minimum is higher than I wanted to pay, so since I only use alcohol for recipes anyway, no Michigan liquor store will likely get my business until, if, and when that law is overturned.  As I drive past store after store that advertises, "We sell at the state minimum!", I'm guessing that it's kind of hard for the store owners to prove to customers that they should buy at say, Frank's Liquor instead of Joe's Party Store.  Thus the owners and their employees have less control over how many customers they get.  They probably will eventually think of other ways to make up the difference, maybe stocking something a particular niche has a hard time finding, maybe making excellent customer service (home delivery of booze?) their badge of honor.  But the more rules and regulations like this, the harder it is for businesses to make a profit.  The harder it is to make a profit, the harder it is to pay people to work for you.  Once you close up and your workers are laid off, Mr. Liquor Store Owner, you are either penniless or pinching pennies until you can figure out what to do next to put food on your kids' table.  So you don't buy anything for awhile, the merchants you and your ex-employees don't buy from close up, and the problem grows exponentially, especially if the push towards more and more regulation and barriers to trade is a politically popular factor.  

To the contrary, when Iraqi workers can come here temporarily to work and buy the souvenirs and hotel services and experience the things they want to tell their kids about when they get home....being paid well buy another temporary resident who has lots of cash to spend....and when the shops and hotels that provide what they want can do so without too much taxation, regulation, or skewed competition (has the government mandated that to keep their work visas the Iraqis have to stay at government approved hotels, for instance?), the economy goes well, and everyone in the area benefits from that.  Jobs are more plentiful, which cuts the need for aid like unemployment or food stamps.  I think it's because we live in a country which has experienced relatively little restraint on trade for at least the last 200 years that our standard of living is higher than others.  Even if someone is "poor" here, their dwelling, posessions and access to provisions would make their home seem palatial if viewed by a poor person in the third world.  

You may object that some communist countries have kept hunger at bay in a planned economy (which by its nature has a lot of barriers on trade; essentially the government is the only provider of services).  "No children are starving in Cuba," you might say, for example.  I would argue that places like Cuba thrive only as much as they replicate free market principles.  They trade a lot with other countries, they benefit from  the relatively good economies in the region (Mexico, Dominican Republic, and other Western countries that trade with them).  They also have prices in capitalist countries to use as a yardstick to set their own subsidy levels, and prevent over- or undersupplying the population in whatever goods they are pricing.  

And of course, in the USSR and in China, children did starve at least at one point; and that brings in the factor of tyranny.  

In the early years of the USSR, "kulaks" in one of the republics, Ukraine, proved stubborn about giving up their farm and livestock property.  So, Josef Stalin, who had recently taken the reigns of the nation, had it taken by force.  The basic agreement was, give us your stuff, we'll then have a big pile of stuff, and we'll divide the stuff equally among everyone so no one has more stuff than anyone else, while everyone has enough stuff.  But in the case of the Ukrainian kulaks (peasants who owned a little bit of property), the government punished them by overseeing a trickle and eventual disappearance of the stuff supply.  The Ukrainians were isolated, unable to farm their land, unable to sell anything they still had, and very soon began to starve.  Nikita Khruschev, who at the time was a high official in Ukraine, admitted in his memoirs that he knew cannabilism had occurred in some cases in the area.  

Other instances of politics leading to starvation include the warlords of Africa who have often kept money and food that concerned Westerners send,  instead of distributing it amongst the poor and even starving in their countries; the famine Nazis caused in Holland, and the famine that accompanied China's "cultural revolution".  

I attended a medical conference a couple of years ago where a Chinese American doctor described the last two cases, giving some personal glimpses into the Chinese experience from people he had known who survived it.  It was his opinion that no famine has been caused solely by natural forces; they all have political beginnings, and so far, nothing I have read or heard since has debunked this.  The dust bowl that impoverished millions of Americans had its start in the agricultural policies of the government and subsidized farmers in the US plains states; it wasn't just a big gust of wind and a natural drought.  If trade is allowed to flourish unhindered and un "helped" by government, such things appear to be rare if they occur at all.

So, by participating in a flourishing economy, the sheik did his part to help our economy move along as it should.  Yes, the Iraqis eventually went home, but it didn't hurt us that they were here temporarily; some designers and architects and construction workers may have grumbled that they didn't get a crack at the jobs the Iraqis did, but in the meantime, the Iraqis consumed goods that kept area businesses going....ostensibly some of which may be expanding later and need construction workers, designers and architects to hire.  That keeps us several paychecks away from having starving children in the US.  

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