Friday, March 31, 2006

Entremanure

According to George Bush, apparently the reason for the general lack of business success in France is they have no word for "entrepreneur" over there. But in fact, the French seem to do okay without it.

"Entrepreneur' is simply a fancy French word for 'promoter' or 'huckster'. Promoters are a natural and necessary part of the business world, and without them the workers would have far fewer jobs in the first place. Someone has to think up new ideas, bring together the various talents needed to prototype and develop and produce them in the form of services or manufactured goods, and establish channels for their sale. And those people do need to have the opportunity to profit-to make, in the event they are successful, a living that's better enough than average that bright, hard-working people will forego the steady income of being a worker on hourly or salaried wages to take the risk involved.

The problem today is that entrepreneurs are politically protected and are collecting the lion's share of the profits, and are isolated from the full penalties of their failures. Seeing this, everyone has decided that he wants to be an entrepreneur.

Balzac famously opined that behind every fortune could be found a crime. While that isn't strictly true, what is more true today than ever before is that the surest and most common way to make a lot more money than most people do is to sell something, commonize the costs incurred, and privatize the profits.

Commonizing costs and privatizing profits leads, soon enough, to what Garrett Hardin famously called the tragedy of the commons. In the old days, a farmer would have a sheep, which he owned, and he would take it to graze on the village green- an area owned by the entire village, which was to say, by no one in particular. Now there could be just so many sheep out there, eating the grass and weeds, and pooping on the ground, enriching it, but only slowly in comparison to the amount the sheep ate. The village green, or commons, could support a certain number of sheep with no net loss of grass, as rain and sunlight and sheep poop made the grass slowly grow to replace that eaten by the sheep.

Once the population got high enough and enough people had enough sheep, the grass starting thinning out and vanishing in spots. People realized that the grass was a limited resource. Some people reacted by grazing fewer sheep, but others realized that since they were not proscribed from keeping more sheep, and in fact would have to in order to maintain their current income-never mind making more-they bought or bred even more sheep, figuring they would eventually eat themselves (and everyone else's) out of grass, but until then would have more wool and more sheep than their neighbors, and when the grass was all gone would then slaughter, or sell their sheep. The commons would be destroyed, but that was not their problem as long as they had their profits put away by then.

Today's entrepreneurs are doing much the same by designing products in the high-wage West, having them built in Western-designed plants in China with incredibly cheap labor and avoiding environmental and worker safety costs, and importing them at a high profit to Western consumers. Companies make a lot of profit, the Chinese Communist Party and its minions collect billions in skim for doing nothing except not shooting the workers (and billing their families for the bullet), and consumers, as consumers, get stuff cheaper.

This is known as arbitrage. Global labor and manufacturing regulatory arbitrage tend, of course, to equalize costs and profit margins, all things being equal. However, the conditions for the Chinese are improving, but not very much, because the Chinese Communist Party (which is not communist, socialist or fascist today-it is merely an outfit of looters and brigands with nuclear weapons and an enormous standing army) won't permit the necessary organization of labor to increase its income. The conditions for Americans in manufacturing, on the other hand, have plummeted. Worse: an America stripped of manufacturing is, contrary to idiotic notions promoted by idiotic economists like Milton Friedman, incapable of long term survival as a soverign nation. Dependency on Asia for all manufactured goods is a situation the Asians will, sooner or later, turn to their advantage: when they can as a group cut us off unless we do what they want, they will, and we will have little choice but to follow.

0 Comments:

Post a Comment

<< Home