Sunday, September 30, 2012

On poverty and hunger

The biggest confusion around poverty and hunger is they are treated as social problems. No one had bad breadth until someone invented mouthwash. No one was poor, before money was invented. If we think about them from economic perspective, they are easily solvable problems. I don't think we today don't have means to feed everyone on the planet. The problem is it is not profitable to do so. And why is it not profitable? Labor is cheap. Hence doesn't have money to buy stuff. It is a vicious cycle.

The perfect competition if it ever existed in capitalistic society, it existed in labor markets. Everyone who owns any means of productions, knows that it is not always  profitable to produce more to make more money. You need to produce only as much as is necessary to maximize profits. The problem with labor is, that too much of labor is essentially too cheap. The only way to survive is to work more, save more if possible and charge as less as possible. 

So the solution is very simple. All that labor needs to do is reduce its supply, to get better wages. Now the question is how does labor reduces its supply. Lets just take automobile industry as an example. Let all workers of automobile industry create a new company, lets call it India Automobiles Worker Association. This company provides labor to all automobile companies. Now if this company feels that prices of things have gone up but their "salaries" or whatever terms of contract they had with the automobile companies are not working out, instead of stopping work or protesting, they can simply stop sending 10% or some number of workers less to one or more factories, effectively creating "shortage of labor".  The assumption is that the money from 90% of the workers is enough to feed the whole 100% in the short term. Technically this should cause increase in wages for workers and then the rest can start working. Just like companies stop production to stop prices from falling, all we need is some workers stop work to stop wages from falling. It is a perfectly capitalistic mindset at play. 

All we need is corporations of labor, which can manage their own supply to get best price for themselves. Sometimes our own good is based on good of others. If traders can have unions, industries can have unions, why can't labor have unions. Why should labor union be restricted to a factory. If labor is treated as a commodity, then why can't labor organize into bigger and bigger units and manage their own supply to compete with rest of the economy. Why should labor be employed? Why can't you buy labor from a company in number of hours of work you need and it should be totally up to that company to send whichever person they think would fit the bill. 

According to me, assuming interdependence, labor corporations owned by labor which divides its income among all the owners irrespective of if they are employed or not and manages its own supply to maximize income for all its owners are the best solutions to decreasing poverty and hunger in the world.   These labor corporations can merge to make bigger corporations or divide if it is not possible to align interest of everybody, just like regular corporations. They can sign deals with food suppliers or schools and ensure food and education for themselves by operating as one, instead of fighting among themselves. Just like greed of individual can be good for all (capitalism), greed of all can be good for each one of them (communism).  But all doesn't need to be all, just the economic group for which it really makes sense. I call it capitalistic communism.

Less jobs is actually a nice thing. It only means our engineering is advance enough that we don't need everyone to work. Which means people can work less and have more time for themselves. The problem is how we interpret and deal with it. Free people can be asset as well as a burden, depending upon how we look at them. Free people can educate themselves, work on socially significant problem, not addressed by the free market. But our economy punishes people without jobs. US unemployment rate is 15%. If everyone works 15% less and takes home 15% less pay, we can easily support 100% employment. We get the same result using labor corporation, giving 15% people life and opportunity to do something for the community. And by making it 20% voluntarily, you can get wages to increase and come to a point where community as a whole makes more money with 20% less people working or everyone working 20% less.  The idea of creating jobs is not sustainable. Less jobs is not something wrong with people, it is actually the measure of our technological advancement. If the businesses don't need more people, it is just a fact of life. When trades happen with millisecond frequency, when companies exist or die based on quarterly review, who cares about what happens in next 10, 20, 50 or 100 years. Businesses solve people problems. But people are produced by people who live. Educated people are produced by people who live and make enough money to send their children to school. Healthy people are produced by people who make enough to feed and have shelter and access to hospitals. It is hard to think 100 years down the line. You need to listen to you parents and their parents and read lots of history and books and think about future, not just yours, but future of your children and their children. Our notion of economy doesn't captures people and life and we will have to pay for it with people and life.

BTW we have another solution if we do away with the concept of human dignity (which is anyway gone, just don't realize it) to legalize slavery. Slave is an asset and the owner ensures that he/she is alive for being of any use to him. It won't solve the poverty problem because technically slave has zero money, but it does solve the hunger problem by being of value to at least one person in the economy.

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