Government Intervention
in Eestablished markets

here is a systemic problem in the free market that causes it to remain in a quasi-emergency state. It is possible that intervention into the economy by the government at the lowest level would eliminate this condition. By "lowest level" I mean ... the creation of government controlled companies that compete directly in the free market with the private sector with the goal of setting the price floor in any given market. Such companies would not exist in new and volatile markets where entrepeneurial skills are dominant but rather in well established markets which are predominantly settled. Such companies would serve to stabilize that particular market against the aforementioned systemic problem ... which is ...

Driving the economy as if at war

We don't normally live in an emergency situation. If we did, civilization would come to its end in short order. We endure emergencies of all sorts, but they are never permanent. In general we live in the "normal state", i.e. neither ecstatically happy nor horribly depressed ... neither at very fast pace nor very slow. We exist normally in our base metabolic state.

At work, we can function at double speed for a short span of time or at twenty percent faster for a longer time. We can also work at ten percent increased speed (over the base metabolic rate) for a very much longer time. Work, at much slower rates, is also possible ... but if we slow down too much, we become psychologically disfunctional. We are creatures of movement and purpose and cannot act against our natures for extended periods without suffering.

In the average work place, we have safeguards against working too slow. This is called "the boss". His job is to make sure that you don't sit around doing nothing on company time. He is also employed by the company to try to get you to work an increased speed. Thus, if you could be made to work faster (without error), the company would clearly make more money. The antidote to this speedup tactic (that would take you out of the base metabolic state) is called "the union".

There is a constant tension between union and management that is obviously normal given the present economic condition.

But this daily tension is not what I am concerned about though is does have some bearing on the problem. My concern here is the tension between companies that pressures them into an unnatural "pushing state" where each is struggling mightily just to stay alive in the free market. Why? Why is it necessary to live as though each day was an emergency when, in fact, no emergency is occurring?

The trouble is that the base economic rate is not fixed in any way by competition ... it is fixed by the base metabolic rate ... which in turn is controlled by the above-mentioned dynamic union-management tension.

Unionism is fundamentally dead in the United States

It died after President Reagan dismissed the air traffic controllers though this dismissal was not the cause of the demise of unions. The real cause was the rise of conservatism and the concomitant philosophical belief that unions are communistic and therefore "Un-American". Hence, one of the two pillars which stabilize the base metabolic rate ... is gone. Companies can now press their staff to work at paces exceeding the base rate on a regular basis ... and ... if they can't get that increased rate (maybe they can get a 10% increase instead of an expected 20% increase) ... they send the jobs to other countries where there is not a hint of control ... where people ARE willing to be slaves.

Businessmen have a fundamental delusion. I call it the Loving Slave Syndrome. This means that it is possible to obtain literal slaves who will work for nothing ... competently ... (thus maximizing profit to its extreme) ... and ... will worship their master as a god ... with genuine "love". Yes, Virginia, it is sick ... but it is true. They actually think that this is possible ... in America. The antidote in the United States, in the past, has always been a "strike" or some sort of defiance among those who remember that they are not slaves but rather free, independent and fundamentally equal entities.

What compels a business to push so much? It is this. If you don't push your employees as much as possible ... somebody else will push their's ... and you will be driven out of business in the "free market" by your competitor's cost cuts. The free market, by its nature, forces a "war footing" for all businesses which participate in it. This pushing is counter-productive except in the case of new markets where business mechanisms are not established. Thus, in the steel industry or airline industry, etc. ... there is no reason to be on a war footing ... but in the computer industry, there is. Whatever is unsettled must be fluid ... whatever is established must be solid. I think this should be clear enough to anyone who has read this far.

If unions cannot be revived, there is another antidote that may work.

Fixing the "base economic rate"

Suppose that the government establishes an airline company. The government pays for start up and the employees operate it ... for their own profit. This will give them an incentive to do competent work. All that the government must do is set ... by law ... the price per passenger mile for this one company as the lowest allowable price for any carrier operating in the United States. Secondly, this employee owned and operated company would be required to supply ... only ... the basic services, i.e. it would have only no frills flights to major cities ... nothing special at all.

Now, because their cost per passenger mile is by law the lowest allowable, they can work at their own pace (as slow as they want) ... and ... because they derive their pay from ownership of the company, they can work as hard as they want also. Thus, the above-mentioned dynamic tension is governed by the employees own feedback. They have no competition except at the lowest end, i.e. they have to perform well enough to draw passengers to their limited service.

Because the lowest fair has been set by the government mandated company, all other companies are relieved from the low end competition of their free market competitors ... which is what forced the "war footing" mentality.

Summing up ...

The employees in the government mandated company aren't going to kill themselves with overwork because the government sets the lowest possible fair ... which is all they get per passenger mile. Their wages are pretty much fixed. They can get higher wages by working harder and more competently to attract more passengers to their no frills service ... but that's all they can do. This company would then function at the base metabolic rate ... in principle.

The other companies are in no danger of being driven into bankruptcy by cutthroat competition because the lowest rate is fixed by law ... so ... they will have the cash to operate ... because ... the government has set that rate to keep the government-mandated low end company in business (they can't go out of business in principle).

All free market companies may profit by giving better services than the low end company which, by law, can't compete at the high end ... and ... may push their employees according to the Loving Slave Syndrome as before ... but ... do not have to push as hard since they are not in danger of going totally out of business. For instance, airlines are now threatened with bankruptcy by increased gas prices ... this wouldn't be a factor if the low end company were in existence because the government would set the per passenger mile rate for that low end company so as to keep them solvent. Then, since the high end companies can't, by law, undercut the low end price ... they can all comfortably raise their ticket prices to compensate for increase fuel costs.

Another benefit is that WalMart couldn't push other companies out of business by outsourcing product creation to China as they do now. WalMart exists in a settled market ... distribution. It was settled in the 1800s by the likes of Sears and Montgomery Ward. At present, WalMart is taking the short term road to profitability by buying stuff from China and selling it in America at very low cost ... because Chinese work like slaves for a pittance. In the long run, American businesses are destroyed and we become a nation of "burger-flippers" instead of manufacturers of quality products. WalMart ships US jobs overseas. I don't blame them. They are doing what the market dictates ... and I go there to buy at the lowest price. But I know this is no good in the long run. If the government made a dying K-Mart into an employee owned, low end company at fixed low end rates, WalMart would have to pay the Chinese more for their stuff and so, would buy less from China and more from US companies in a more favorable mix of products. The Chinese would get more money per unit piece but would sell less and their economy would slow down a little (which is what they presently want anyway).

Ebtx Home Page