Category Archives: Economics

Why Are Children So Expensive?

I wrote this a few months back, but never got around to posting it. Scott’s post on wage stagnation reminded me to post it, because I discuss some of the same things here, while he ignored what I think is the most obvious cause of wage stagnation.

Someone posted on twitter, asking why kids became expensive. I answered mostly about the spiritual reasons: the unwillingness to sacrifice. And that’s true; kids are affordable, IF you’re willing to make the necessary sacrifices.

However, as Nick B Steves has said, ordinary virtue should not require heroic effort. You can have many kids if you’re willing to make extraordinary effort to do so, but any sane and healthy society should make it relatively easy to have many kids, ours does not. So,I’m going to show why kids are so expensive.

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Wages

The first reason is wages. Inflation-wise wages have been stagnant since about the 70s. Despite massive increases in productivity, people are not making more real money.

Wages are determined by where the demand for labour and the supply of labour meet: how many jobs are there and how many people need jobs. This is elementary economics, but I’m going to make it clear here, because when it comes to discussing labour supply and demand, I notice people tend to make self-serving analyses as if basic economic principles change when it comes to labour, so I want to make it clear:

The more jobs that need to be filled, the higher the demand for labour, so this pushes wages up. If the jobs to be filled decreases, demand for labour decreases, which pushes wages down. If the size of the labour force increases, labour supply increases, which pushes wages down. If the size of the labour force decreases, labour supply decreases, pushing wages up.

Over the past 60 years or so, there have been multiple major trends both increasing the labour supply and decreasing labour demand.

The biggest trend is feminism. Feminism pushed women into the workforce which (more or less) doubled the labour force over a period a few decades. This pushed wages down hard.

The second major trend is immigration. Since the Immigration and Nationality Act was passed in 1965, opening immigration up, 59 million immigrants (as of 2015) have arrived in the US. The US population in 1965 was 194 million, in 2015, it was 321 million, for a total growth of 127 million. 46% of US population growth since 1965 has been from immigration.

That is a unnaturally massive growth in the labour supply, which has had a massive downward pressure on wages.

I will note here, that keeping wages low has been a near explicit part of the arguments for immigration. “Labour shortage” is synonymous with “wage shortage”; when employers argue that there are not enough workers, what is really being said, is they are not paying enough to attract workers. “Jobs Americans won’t do” is synonymous with “Jobs Americans won’t do unless paid more than currently offered”.

To make matters worse, the 1965 INA opened up immigration from third world countries, where wages were already naturally low. So labourers being imported into America would be willing to work for much below what an American would accept as reasonable, increasing the downward pressure on wages.

While these two trends where increasing labour supply, other trends were decreasing labour demand. Particularly off-shoring and mechanization.

Off-shoring moved industry from high-wage America to low-wage third-world countries, while mechanization has replaced human workers with machines. Both of these have had large depressive effects on labour demand, and therefore wages, particularly in non-service, low-skill occupations, which are the easiest jobs to both automate and move.

You can’t afford children, because you’re not getting paid decent wages because capital has systematically forced you into competition with poor third-world labour, imported labour, and your wife over jobs, forcing wages down.

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Housing Costs

Housing costs are the single biggest expense (rivaled only by taxes) to your average person, and housing costs have exploded.

In 1960, the median house price was $58,000 (in 2000$). In 2000, the median house price was $119,600. In 2015, the median house price was $294,200 (in 2015$), which comes to $213,700 in 2000$.

In 55 years, housing prices have almost quadrupled, while wages have stagnated.

One of the major reasons is the increase in housing size. Since 1975, housing size has doubled. But that does not explain a quadrupling in housing costs. It would at best explain a doubling, but should be less than doubling because new marginal square footage should theoretically be cheaper due to the fixed costs in a home.

Another major drivers of house pricing includes increased demand from the fracturing of the family. In an intact nuclear family, two parents and their children share 1 house (possibly with a grandparent or two). In a divorced family, two parents and their children share 2 houses. An unmarried man and an unmarried woman have 2 houses (roommates amerloriate this to an extent). A single mother with children and her baby daddy have 2 houses. Etc. Throw on top of this the shift from multi-generational homes, and the fracturing of the family and the turn away from marraige has had a large, but, AFAIK, unmeasured effect on home prices (this would make a good study proposal for any economists out there).

Another major driver is immigration. 59 million people needing housing is a huge upward driver of housing demand and therefore housing prices.

A third major driver is schooling and safety. “Good schools” is a major driver of house prices and “safe neighbourhoods” because most parents, understandably, want their kids to get a good education and to be able to live without worry they’ll won’t become involved with or victims of drugs, gangs, and crime. Everybody is also aware that “good schools” and “safe neighbourhoods” are politically-correct codes words for schools and neighbourhoods without poor minorities who statistically make schools bad and neighbourhoods unsafe.

Because federal laws make discrimination in housing on any basis but price illegal, the only way to keep schools good and neighbourhoods safe is to discriminate on price. This puts a huge upward pressure on price, as people move to high price neighbourhoods to escape poor minorities (who may then follow them, because they too want good schools and safe neighbourhoods, forcing the process to repeat, escalating prices even higher).

Because of this, safe, affordable housing is functionally illegal in American cities and prices ever increase.

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Two Income Trap and Child Care

The increased upward pressure on housing prices has the side effect of forcing more families into the two income trap, so they can afford a good house.

This has a variety of effects that increase costs, making children expensive.

Child care is the largest of these. As I’ve explained before, affordable child care is impossible, so child care will immediately eat up a significant portion the second income. Child care by itself, is a major factor of why children are so expensive.

A second income usually requires a second vehicle (more on this below), another major fixed expense. A stay-at-home parent has time to cook home made meals, mends clothes, and participate in other cost-saving activities; a dual income household will eat out more often, purchase more expensive pre-made food, have to replace clothes, etc.

The two income trap imposes a number of large extra costs on families and removes many cost-savings that an at-home parent allows.

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Taxes

I was going to write about the increasing tax burden here, but I couldn’t find much much data on the overall US tax burden; most of it was just federal tax rates, and calculating overall tax burden for the average middle class person over time is much more effort than I’m willing to put in to a blog post.

But according to this 2012 NYT article, the overall tax burden has been declining somewhat, except for low-income people, who continue to pay minimal taxes.

So we’ll say increasing taxes probably aren’t particularly responsible for kids costing too much.

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Vehicles

Among average people, vehicles are second largest major fixed expense after housing, and they have generally gotten more expensive over time, primarily as more families have moved to being two car households and gas has gotten more expensive.

This site compared a few classic cars and all have increased by half to almost doubling since 1965 (inflation-adjusted). But these are classics and so might no be applicable.

According to Wiki, the Chevrolet Impalla was the best-selling full-size car in 1965 and is still the best-selling today, so we’ll use this and assume other similar cars are competitively priced. In 1965, a 4-door V-8 sedan Impala was 2,779, which comes to $20,910.17 in 2015$. The base price of a new Impala in 2015 was $27,700. An increase of about a third.

But large families need more than five seats. The 1965 Impala 9-passenger station wagon was $3,073, $23,122.33 in 2015$, the 6-passenger was $22,347.32. You generally can’t buy station wagons today, because US regulations classified them as cars, making them uneconomic to produce under US fuel standards, which was a major regulatory backfire for environmentalists, as families switched to minivans and SUVs, which were much worse on fuel. The best-selling SUV in 2015 was the Ford Escape, which started at $24,000, but only can seat 5 passenger. The best-selling minivan, is the Dodge Grand Caravan, it seats 7 passengers, and started at $22,000. The Chevy Express was the cheapest 9+-passenger I found on a site, and it starts at $29,000 for the cargo version, so probably just a bit more for a passenger vehicle.

So, it looks like 3-4 child family vehicles are significantly more expensive to buy, as are larger 8+ child family vehicles, but, contrary to my expectations, the large 5-7 child families are about the same.

Except that the SUV’s and vans cost a lot more in fuel and as mentioned above, 2-income families now almost always need 2 vehicles.

Gasoline costs have increased: with the exception of the 1973 and 1979 oil crises (when prices hit $3/gallon, post-WW2 gas prices generally stayed between $1.50-$2/gallon (in 2015$). Since 2000, gas prices have ranged between $2.50-$3.80 per gallon. Since 2006, gas prices have generally been higher than the $3/gallon they were at the peak of the oil crises. During this time gasoline usage has also been increasing, likely largely due to increasing suburbanization.

Another hidden cost: older vehicles were generally easier to repair and maintain at home, but the increased inclusion of electronics in vehicles, makes it increasingly difficult to repair without very expensive specialized electronic equipment, necessitating an increasing reliance on professionals for maintenance and repair, adding significant cost.

So, the need for two vehicles due to the two income trap has increased the cost of vehicles significantly for your average family, while vehicles themselves have become moderately more expensive. The cost of gasoline has increased significantly while consumption has increased.

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Food

Food is generally the fourth biggest cost to families after housing, taxes, and vehicles. The average American spends less on food, as a percentage of income, then they used to. Hoever, good expenditures have stopped declining and been flat over the last 15-20 years.

However, this is deceptive, if you look at average household size since 1960, it mirrors average household size relatively closely. The levelling off of food costs as income share matches the levelling off of household size. This suggests food costs have been mostly constant per person, but less kids means less spending on food.

In a time of major productivity gains and stagnant wages, food costs have not really shrunk.

A major cause of this is the increase in eating out. It costs more to eat pre-made food than it does to make your own food. The average American now spends about 43% of their food budget on eating out. As well, when eating in, they are more likely to buy expensive pre-made meals than making their own. All this increases food bills.

The primary cause of this increase in eating out and in eating pre-made foods, is the two-income trap. When one parent was at home, they had sufficient time and energy to create homemade food, saving money. When both parents work, food preparation time becomes a luxury often foregone due to a lack of time and motivation.

In addition, to eating out costing more, eating out itself has increased in cost.

In economics, there’s an informal purchasing power parity index known as the Big Mac Index, that can roughly how close inflation rates measure actualy close consumer price data.

In 1968, when it first came out, a Big Mac cost $0.49, $3.34 in 2015$. In 1986, the first year of the Big Mac Index, it cost $1.60, $3.46 in 2015$. In 2000, $2.51, or $3.45 in 2015$. In 2015, the most recent year the BMI measured, it cost $4.79.

The cost of a Big Mac stayed relatively even until sometime after 2000. Since then there has been a ~40% increase in the cost of a Big Mac beyond inflation. My anecdotal experience in Canada and basic market competitiveness theory, suggests that this growth is probably true across eating out on average.

So eating out, which is 40% of your food bill, is now 40% more expensive than it used to be.

I’ll also note here, that the rapid growth of Big Mac costs past inflation, suggests that inflation has been severely underestimated, in which case, everything I’ve posted is much worse than the numbers suggest. I’ve always been skeptical of CPI, but a 40% extra increase over 15 years in something as basic and omnipresent as a Big Mac heightens my doubts.

Food costs haven’t really increased, but they haven’t particularly decreased either.

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Education

Saving for college is a major expense for many middle-class families. Lots of ink has already been spilled over this, so I’m not going to repeat much. College has been increasing in price much faster than wages. 8 times as much according to this article.

A lot of young people start off with a lot of college debt. The average student loan borrower has $37k in debt upon graduation. That’s a lot of money, the equivalent of a down payment on a house. Instead of buying a house and accumulating capital, they’re paying off usury.

And they’re not really getting anything of increased value for this debt. The money is being burned in cost disease and their job prospects are worse than those of college grads decades ago.

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Consumer Debt

Now, one of the major destroyers of people is usury. The average millennial has $42,000 in debt, the plurality of which is credit card debt. The average American is $33,000 in debt. I’ve already written about usury (and inflation) before, but debt and debt payments are major

Usury takes advantage of the average person who is not mentally equipped to fully understand the implications of debt and compounding interest. It shackles them in debt bondage. The average American spends $280k over their lifetime just on interest. The average person with credit card debt pays $1.1k in interest each year.

Household debt has increase from 31% of income in 1951 to about 100% now (it was up to 120% during the housing boom). All this debt means increased interest payments to banks.

Usury is strangling the average household, particularly the young.

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Communication Technology

This is a simple one, but the average American user spends $47/month on mobile phones and $132 on cable and internet. That’s almost ~$180/month. When I was growing up, cable was rare and internet and mobiles practically non-existent. And this is just monthly bills, not including the purchase of HD TV’s mobile phones, and computers. This is a huge added expense most families take on.

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Personal Choice

Finally, personal choice is why you can’t afford children. This is what my tweets harped on. People can’t afford children, because they are unwilling to sacrifice for them.

People eat out instead of making meals at home (driven by the two-income trap). People buy larger houses than they should (driven by “safe schools” and the two-income trap). People by two cars (driven by the two-income trap) and new cars. People go into consumer debt. People take useless degrees. People buy luxuries.

There are major structural issues making children expensive, which I’ve outlined above, but on the individual level, you can probably afford children if you are willing to sacrifice. People have been raised and become accustomed to luxuries they can’t afford (hence the massive amount of consumer debt most have). This may be due to structural issues, but on an individual level you can probably afford kids if you sacrifice.

Don’t go into debt for a useless degree; take trades or get a useful degree. If one of the parents stays home and engages in traditional money-saving practices (such as home-cooking and coupon-clipping), the family can avoid buying a second vehicle and paying child care costs. This will require buying a smaller house, children may have to share rooms and you may have minimal private space. Luxuries in entertainment and food may need be cut back. Cable cut. Home internet forgone for mobile only, or vice versa. It may require moving to a lower cost county or state.

Your grandparents raised 6 kids in a small 3-bedroom house with no TV, 1 car, minimal entertainment or luxuries, home-cooked meals, and penny-pinching. You can too if you will it enough and are willing to sacrifice for it.

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The reason you can’t afford children is because wages stagnated while costs increased across the board.

Wages have been destroyed by a rapidly expanding labour pool due to immigration and feminism. At the same time, housing costs skyrocketed due to the two-income trap, a quest for safe schools and neighbourhoods, rapidly and artificially expanding population, and family breakdown. The two-income trap necessitated two vehicles, which along with gas greatly increased transportation costs.

Education has trapped the young in debt, while general usury eats people alive and prevents them from accumulating capital.

Finally, you’ve been raised to be accommodated to a lifestyle and luxuries you can’t afford and which you finance with debt.

On a personal level, you can overcome this and have children by making major sacrifices. On a societal level, it is insane and unhealthy to require the average person to make inordinate sacrifices just to be able to afford children. Any decent and sane society will do what it can to make raising a family comfortably affordable to most people.

Our society has been designed to destroy your ability to have children without either being rich or taking on massive usurious debt and making inordinate sacrifices.

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Post-Script: I am not blaming immigrants for immigration, minorities for integration, or women for feminism. All of these are structural issues basically forced upon an unwilling populace by government and capital. Immigrants, minorities, and women followed, as would be expected, the incentives given them, and I generally don’t fault people for following incentives unless it’s a heinous evil, which none of the individual actions taken under this incentive structure would be. In fact, minorities and women probably suffered the most under this regime. Immigrants generally benefited, but being foreigners had minimal hand in the original changes in the 1960s.

The ones at fault are government and capital who imposed a destructive economic incentive structure upon society so they could destroy wages and increase consumption to feed their greed and lust for power. They are the ones who caused this and the ones responsible for why you can’t afford children.

Make sure you aim the blame properly.

The Neoliberal-Socialist Synthesis

I’ve mentioned the neoliberal-socialist synthesis a few times on Twitter and have received flack for them being incompatible, but it is the best way to describe the current economic system.

Neoliberalism promotes laissez-faire capitalism, privatization and trade without regulation, while socialism promotes state control of the market,* two things that, on the surfacem seem to be at odds.

Yet we see it everywhere. The state continually expands, with greater power over people’s lives and ever-increasing spending on a variety of state programs: health care, education, welfare, old age security, etc. Yet at the same time, free trade and the global capitalist marketplace increasingly dominate, with off-shoring, free trade agreements, and worker importation to continually destroying the ability of workers to have gainful employment at good wages.

The same people who argue for ever greater social programs argue for the free movement of workers and free trade of goods. The two-party consensus marches on, with the only difference being whether socialism or neoliberalism is emphasized more. Each potential threat to the system, whether mild like Bernie-style socialism or Trumpian nationalism, or more radical is attacked with ruthless vehemence.

To see how these commingle, we, surprisingly, look to Marx, who was often not wrong on analysis, even if his solutions were lacking:

The rule of capital and its rapid accumulation is to be further counteracted, partly by a curtailment of the right of inheritance, and partly by the transference of as much employment as possible to the state. However, the democratic petty bourgeois want better wages and security for the workers, and hope to achieve this by an extension of state employment and by welfare measures; in short, they hope to bribe the workers with a more or less disguised form of alms and to break their revolutionary strength by temporarily rendering their situation tolerable.

In this analysis,** the petit bourgeousie would win against the set up a democratic system, and provide the workers with just enough state handouts to make their lowly state tolerable.

This is from where the NLS sythesis flows.

As the Last Psychatrist, wrote (then later deleted [copied here] after he mysteriously disappeared),

Do you want riots in the streets? How much does it cost to prevent LA (your choice) from catching fire? Answer: $600/month, plus Medicaid. Medicalizing social problems has the additional benefit of rendering society not responsible for those social ills. If it’s a disease, it’s nobody’s fault. Yay empiricism.

He was talking primarily about black urban neighbourhoods, who were the first to be eaten by the synthesis, but the synthesis is rapidly eating through white America.

As Nick land loves to point out, the global capitalist system, unrestrained, ruthlessly selects for efficiency. Efficiency means prioritizing lowest cost inputs, which in the case of workers means minimum possible wages, which, in a global market place means hiring borderline slave labour in the third world and replacing labour with machines.

Of course, the byproduct of this efficiency is unemployment and low wages, yet this creates two problems: If the worker’s wages are low and they can’t afford goods, who buys them? And won’t the workers rebel?

The socialist state solves both these two problems. It gives workers a tolerable standard of living and provdes them resources to fatten themselves to complacency on sugar, soy, heroin, TV, and porn, the modern bread and circuses,.

For those not sated by such, the socialist state also provides the status of being middle-class and higher qualities of sugar, soy, heroin, TV, and porn to those who work in the socialist state or in one of its many dependencies (and don’t kid yourself, an indeterminately large portion of “private” corporations subsist on the leavings of the socialist state). The “private” dependencies of the state allow those who aren’t quite comfortable with being dependent on the state a way to gain middle-class status while still being arm’s length from the state.

This is the economic cycle of our modern society. Ruthless global neoliberal capitalism churns out consumer goods efficiently while eating up and vomiting out the working and middle classes. The socialist state provides the refuse of the neoliberal system with a material standard of living just tolerable enough to prevent revolt at the alienation and soullessness of the system while having only minimal drag on efficiency (the state takes it’s ~40% tax and puts a few less arduous regulations, while leaving the system intact).

Globalist neoliberalism could not exist without the socialist state, (at least not until the Landian technofuture where we’re all economically efficient biomachines), for we’d revolt against its heartless machinations. Yet, the socialist state can not exist without globalist neoliberalism churning out untold quantities of goods and services as efficiently possible to take their cut to dish out bribes and placate those who may rebel against their economic slavery to the socialist state. The symbiosis of Moloch.

We do not have the worst of each system, for if we did, we would notice, perhaps resist. Instead we have reached a symbiotic equilibrium of minimal tolerance. We eat our sugar and watch our TV, discontent, alienated, isolated, yet ignorably so.

As I’ve said repeatedly, likely the only reason the US isn’t a charnel house due to the rebellion of listless young men who’re unemployed, drugged up, sexually frustrated, and socially isolated, is likely due to porn and video games which keep them barely sated.

The neoliberal-socialist synthesis provides.

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* Yes, I know, some socialists, diehard marxists, and anarcho-socialists theorize that socialism will end up with the withering of the state, but socialist theory aside, in practice every attempt at socialism, communism, and social democracy increases the power of the state, and every socialist and communist I’ve seen in the wild promotes measures to increase the state’s power over the economy.

Stateless socialism is an impossibility, as the political redistribution of resources requires a state apparatus.

** Interestingly, reading that speech, does it not seem vaguely prophetic. Don’t the petit bourgousie and their interests seem vaguely reminiscent of the current ruling cultural elites who espouse the neoliberal-socialist viewpoint? Doesn’t the system and working Marx described seem to be similar to the system we have currently?

The Young Man’s Dire Problem

Scott Alexander examines technological unemployment, concluding that there it is unlikely there is technological unemployment.

He notes that the number of prime age male labor force non-participators (PAMLFNPers) is increasing. He looks at this graph, and states it is not discouraged workers who are not in the labour force:

Concluding this section Scott states:

Second, Winship’s optimistic take on PAMLFPR is hard to easily refute. PAMLFNPers pretty clearly say they’re not looking for jobs, and they’re just perfectly innocuous students, retirees, etc. We have trouble believing them, especially based on their demographics. But it’s very hard to look at the increase and see a place where unemployment issues could have slipped in.

Third, PAMLFPR has been getting worse gradually since about 1960, with no sign of any recent worsening. It is hard to explain why technological unemployment would have started around that time – at least if we limit our explanations to the nature of technology alone. And it doesn’t seem to match the more sudden decline in manufacturing around 2000.

Following this section, he then goes into a section how automation seems to be driving people from middle-skill jobs to lower-skill jobs.

What Scott sees but doesn’t notice the ramifications of, is that the increase in PAMLFPR is a long-term trend as is automation.

Being a discouraged worker requires having looked for a job at some point. But if the long-term trend is there are no jobs, a young man will give up before he starts. He might want a job in some vague sense, the same way you might want a million dollars or a Ferrari, but he knows it’s not going to happen, so he doesn’t try in the first place.

This is where the PAMLFPR’s come from.

Scott asked why technological unemployment started around 1960, but if we compare the manufacturing employment  it begins to decline about 1950 or so (ignoring the WW2 bump). It leads the increase in PAMLFPR’s by about 10 years, which is more or less what you’d expect, given that young men take some time to adapt to new market conditions. (Scott points out: “87% [of manufacturing unemployment] is due to increasing productivity/automation”).


As you can see, with a bit of an expected lead time, manufacturing employment and the increase in PAMLFPR’s (ie. decrease in employed PAM’s) are pretty heavily correlated. Manufacturing employment as a percentage of employment declined from 30% to 10%, while PAM employment declined from about 97% to 88%. A 20-point decline in manufacturing employment is met by a 9-point decline in PAM employment.

This is what you’d expect from technological unemployment, given that many men will find lesser jobs elsewhere, instead of dropping out entirely.

In this long-term trend, many are going to drop out preemptively. They won’t be discouraged, because they never would have been “encouraged” in the first place. Technological employment won’t show up on these charts, because it is long-term, generational, and permanent, while these charts examine “normal” economic processes.

Scott also asks, “Why didn’t previous eras of improving automation result in job loss?” Economists say that past technological advancements increasing productivity had not historically reduced employment. So why is it doing so now?

The answer is simple. Previous technological advances required humans to make them. Agriculture advances: fewer farmers, but farmers become buggy makers. Ford makes the Model T: fewer buggies, but buggy makers becomes car assemblers. Robots are invented: fewer car assemblers, but car assemblers become machine assemblers. But at this stage the pattern changes. Machines start assembling other machines.

Machines assembling machines is a fundamental change in the way the economy works. Other technological advances required human workers to implement them and build the new technologies, but when robots make robots, there is minimal need for humans, the robots are replacing them permanently.

Of course, this is not happening all at once, and that’s why the charts are a decline not straight drop, but this technological shift is fundamentally different and is permanent (barring industrial collapse). What happened in previous eras is irrelevant.

There are other related reasons of “why now?”: prosperity, entertainment, and the decline in marriage and fertility.

We are prosperous enough that practically everybody has their basic needs met. Unless you are mentally ill, a drunkard, or a druggy, you’re almost guaranteed a roof over your head. Our poor people are fat, so no one’s going without food. Entertainment is cheap: for $100 you can get internet, Netflix, and a video game or two each month. In the past a young man had to work or starve; now, with a few roomies, or an indulgent parent or girlfriend, a young man can live very comfortably with nothing more than a  small disability cheque and/or the occasional side hustle.

One former discouragement of being unemployed is the boredom of having nothing to do. Now, one $60 video game can provide hundreds of hours of entertainment, $7 gets you Netflix, and $50 internet access provides unlimited entertainment if you don’t mind pirating.

inally, and probably most importantly, men work primarily to take care of their families. It doesn’t take much for a man to provide a comfortable life for himself: a cheap, shared apartment or mother’s basement, tendies and ramen, and an Xbox. That doesn’t cost very much. Men only really need real money if they’re taking care of their family. With the average age of marriage being 30+, declining marriage rates (25% of millenials won’t marry, period), and declining fertility, a significant portion of young men will never have to shoulder family responsibility, and those that do won’t until much later in life. If he’s not supporting a family, he doesn’t really need to be employed.

So, let’s take a look at a low-skilled 22-year-old male looking at his future, here’s what he faces:  medium-status jobs are an impossibility, his dad’s job at Ford will replaced by a machine when he’s forcibly retired at 55 and the job is never coming back. He’ll probably never get married; if he gets your girlfriend pregnant, odds are they’ll break-up anyway and she’ll be supported by the welfare state. He could get a job at McDonald’s but half his pay will go to child support, so it doesn’t really seem worth it. If his parents let him stay in their basement and feeds him,  the occasional under-the-table job, a small disability cheque, and a few bucks from Patreon for a game review blog or a few Fiverr jobs get you an Xbox and enough games. If they kick him out, he lives at his buddies for some cheap under-the-table rent and maybe he gets the job at McDonald’s or maybe he just does a bit more under-the-table work or starts selling weed. If his buddy kicks him out and things get too bad, he shoots himself, adding to the ever-rising white male suicide rate.

Is this 22-year-old unemployed? No. Is he a discouraged worker? No. Will he ever be a productive member of society? Probably not. Is he suffering? Maybe existentially, but not materially.

If he technologically unemployed? By any reasonable analysis he is. If his father’s job wasn’t going to be replaced by a machine, he’d probably work for Ford, be productive, and get married, but he doesn’t have that option. So, he doesn’t work, but he never shows up in any conventional economic analysis, because he has never worked and never plans to work. People dismiss technological unemployment because they didn’t measure him, but still economists wonder, where did he go?

This is the first stage of the Dire Problem. Technological unemployment is invisible, because none of the standard measures measure it and nobody important (except, maybe, Donald Trump) cares about young working-class men, but it is here nonetheless.

Crippling the Priesthood

Here is another, long term strategy for the Trumpenkrieg.

The right has two main enemies: the press and academia, together with the bureaucracy they form what we call the Cathedral. Academia creates liberal doctrine and indoctrinates the young into it. The press promulgates doctrine. The bureaucracy implements it. The bureaucracy, while a problem, follows the lead of the press and the academy.

The press is immolating itself. It is being outflanked by non-traditional media enabled by modern technologies and is squandering what’s left of its legitimacy rapidly. We should help it along its course, but its self-destruction is nigh inevitable. The main question is rebuilding something favourable to western civilization in its place.

On the other hand the academy is going strong and continually grows stronger. It’s primary strength is that a diploma is necessary for a “good” job. The destruction of the traditional economy is leaving many in a situation of Yale or jail. For ever-more Americans the choice is increasingly either college or destitution. So most young Americans choose to load themselves in debt for their anti-poverty paper.

I’ve stated before, we should end federal student loans, and I stand by that, but that is a minor measure that still leaves the system intact. Another measure to strike against the university is to end disparate impact. Sailer has been writing about how disparate impact prevents direct meritocratic hiring, forcing employers to rely on indirect signals, such as a degree, for years now. Ending disparate impact would alleviate some of the economic necessity of a college degree.

But, I’m going to present a strategy even more direct. One that would almost immediately cripple the academy’s stranglehold over meritocratic signalling. I will say beforehand, that this would require significant resources and extensive coordination. Ideally, this could function as a start-up if someone had enough access to VC and could get buy-in from at least one industry to start, but realistically, this would probably have to be a government project (so if any of you have a line to Bannon or someone else who might be interested, send this idea along; take credit if you want, the idea is simple and not particularly novel, its implementation would be the heavy work).

The idea is simply a Knowledge and Skills Signaling Organization or KASSO for short. Essentially, the KASSO would be a single window supplier of certifications for occupational knowledge and skills.

KASSO would work with various industrial and occupational organizations to develop a battery of certification tests, both academic and practical, for each industry/occupation, the completion of which would demonstrate a certain level of competence in the tested competency. Upon successful completion of certification tests, the testee would be given a certificate of competence, which would he could present to employers.

For an example of how this would work, let’s look at programming. Programming already has a large spread of certifications, but KASSO would centralize and standardize these certifications. It would start by consulting with major Silicon Valley firms and other firms with large programming departments, about what particular skills requirements they would require for their various programming occupations. It may also talk to other industry players, such as programming languages organizations, language developers, or conferences, but it would primarily be aimed at what the employers wanted.

Working with these groups, it would develop a series of tests that would show competence, in these. For example, you could have a C++ 1, C++ 2, and C++ 3 for basic C++ knowledge for grunt-work programmers, mid-level programmers, and expert programmers, respectively. Each test would be a rigourous, complete and supervised. The C++ 1 test could, for example, be a combination of developing a few simple programs or routines, doing some basic debugging, and answering some basic theoretical questions. While the C++ 3 certification could be developing a complex program from scratch and a difficult debugging problem based on a real-life example.

The length and involvement of these tests would depend on the requirements thereof. The C++ 1, may only be a 3-hour test, while the C++ 3, may be three 8-hour days or even a 24-hour marathon.

Upon successful completion of the C++ 1 test, the testee would then be provided with his C++ 1 certificate, which he could present to his employer who would know that this testee was qualified for C++ work and to what degree he was qualified. What competences and what level of competence each degree represented would be easily available and clearly explained on KASSO’ website.

Of course, adding more gradations of skills would also be a possibility. You could have, for example, C++ 1 – Standard, Silver and Gold, depending on the level of competency shown.

Cheating would be possibility, so the strictest anti-cheating measures would be put in place to ensure the integrity of the process. Each testing class would be kept small, say a half-dozen testees. Each test would be monitored by two KASSO testers at all times. To prevent memorization, each test would actually be one of a half-dozen similar and equally challenging, but different, tests administered in a quasi-random order. There would also be a cool-down period for unsuccessful testees; say 4 months before they could attempt the test again. Insofar as possible, the tests would be as practical as possible so that cheating required as much competence in the subject matter as successful completion.

KASSO would pay for itself, or even be a for-profit organization. If each student had to pay, say $500 per a test, they could take a half-dozen different certifications for a fraction of a years worth of tuition, yet KASSO would still be raking in cash. Or, more likely, different tests would have different costs: C++ 1 may only cost $100, while C++ 3 may cost $2000. For those taking multiple related certification, there could be a discount program. Say, $5000 for testing in C++ 3, VB 3, and Java 3.

This same thing would be done for each in-demand language. There might be a set of certifications for those showing competence in language independent parts of programming. Whatever industry expresses a desire for. There might be a broader Programmer certification for those who’ve been certified in a certain range of programming languages and theory.

For each skill domain, industry, and/or occupational group there’d a similar set of tests and certifications, drawn from the needs of the various industries and organizations hiring people with those skills.

In addition, to such specialized certificates, such as programming, KASSO would offer more generalized certifications. A small battery of tests, similar to a GED, similar to a high school certification. Another, more larger and more difficult general test, that would be generally equivalent to the knowledge gained from a generalized humanities bachelor. A series of general tests could be equivalent to a Bachelor of Arts in Philosophy, with a minor in Political Science. A series of tests could be the equivalent of a business degree. And so forth.

You could even apply tests to softer skills. Although, these tests may be harder to plan and implement, you could have certifications in salesmanship or public speaking.

These were all general examples, the details would have to be developed by experts, but the essential idea of KASSO is to create a self-funding organization providing a set of well-known, broadly-accepted, reliable certifications. Employers would know exactly what certified students had demonstrated competence in, while (future) employees would know which certifications would be needed to get the job they wanted.

There are a number of potential pitfalls. The main problem would be starting this up and getting buy-in from employers. Now, for the federal government a solution might be converting the useless education department to developing KASSO.

Another problem that would come from a government implementation of KASSO is political considerations intervening in what should be an impersonal and objective certification program. To combat this, the government should make it an independent, arms-length institution mostly outside the the ability for politicians or bureaucrats to interfere. Possibly even privatize it after it gets off the ground.

Anybody implementing KASSO may also have to be wary of disparate impact, but with enough will this could be worked around.

But beyond these pitfalls, KASSO would have numerous benefits. First, it would allow another route to competence signaling beyond college or even beyond high school. It would allow the self-taught, the self-motivated, and prodigies to receive certification without having to rely on formal schooling. It would reduce tuition debt slavery, as people could get certification relatively inexpensively through KASSO. It would reduce certification time as people taught themselves on their own schedule, so young people could enter the workforce earlier. Once heavily adopted, it would provide a standard set of certifications for human resources departments to look for and for (future) employees to pursue. It would help poor people lift themselves from poverty; they could get “better” jobs by studying on their own schedule and getting certifications. It would break the back of academia. It would prevent the waste of time and resources of dropouts, as it’s a lot easier to waste a day and $500 failing a test than a year and $10,000 failing your first year at university.

* All numbers and examples are rather arbitrary and undeveloped. They are there for illustrations sake; this is a broad outline, the experts would have to develop the real details.

On Cost Disease

SSC has written on cost disease. Essentially, a lot of important goods and services (health care, education, infrastructure, and housing) have increased by up to 10x their cost with no improvements in service for no discernible reason. He gave some though to it, and a number of others provided explanations.

The explanation that immediately sticks out of course is government over-regulation and over-involvement, as those industries listed are some of the more heavily regulated industries in the US. I’ve written of factors effecting housing costs a few times before.

I think those have a decent amount to do with it, but I think there are two fundamental problems that no one in those posts mentioned. They relate to two principles you’ve probably heard before: the Pareto principle and the iron law of bureaucracy.

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Pareto Principle

The PP, also known as the 80/20 rule, is a basic rule of thumb essentially stating that 80% of the results come from 20% of the causes. Ex: 80% of the work is done by 20% of the workers. Following from this rule, you can also mathematically determine other rules. 20% of the 20% is going to cause 80% of the 80%; in other words, 64% of the outcome will come from 4% of the cause. This can then be extended to 51% of the outcome will be caused by 1%, and so on down the line. The rule’s not perfect and shouldn’t be taken as gospel, but it’s a nice rule of thumb.

In this particular case of cost disease, we’ll apply the PP to costs. By the PP, 20% of the population causes 80% of the costs. Or stated elsewise, the 20% uses 4x as much resources as the 80%.

So what happens when you add a new 20%?

For example, health care. I, like most people reading this, cost the health care system very little. I’ve been to the emergency room twice in in my adult life, and I go to a walk-in doctor about once every 2 years when I have a particularly vicious or inexplicable pain or cough. The 80% of the people like us can be treated relatively low cost; we get an occasional check-up and the rare emergency.

On the other hand, there are those with chronic illness or other conditions who use more health care in a month or two than I’ve used in the last decade. 20% of the people cost 80% of the health care resources. That’s not an indictment on the 20% (if I got hit by a bus on the way home today, I’d probably be in that 20%), but it’s undeniable that if us 80% simply stopped caring about the 20% and just let them suffer and die, health care costs would be 20% of what they are now.

Over time we’ve been going increasingly towards being able to treat more health problems and keep the nearly dead alive longer. Take AIDS: in the 80’s someone with AIDS was dead in a months. Now, he can be kept alive for decades using expensive drug cocktails.

So, let’s put some very rough numbers to it.* Let’s say 20% of that 20% (4%) used to just die quickly, because we couldn’t treat them. So, we have the 80%, the 16%, and the 4%. The 80% still can be treated; we cost stay the same. The 16% still use 4x the amount of resources the 80% use; a broken pelvis doesn’t treat itself. But now the 4% of AIDS patients and the like can be kept alive through expensive new technologies. This 4% is now 64% of the budget, which the budget has grown to accommodate. Keeping 4% people alive has well over doubled the costs of health care.

Now wait an unspecified amount of time for expensive new technologies and drugs that can treat a new 20% of the 4%who couldn’t previously be treated. Costs double again. Then another unspecified time later they double again and so on.

But that’s not including the new costs you impose. We 80% used to go to the ER once a decade and the doctor once a year, then die in our sleep from a heart attack at 70. But now, instead of dying at home in bed, new technologies and new detection we are able to detect and prevent that heart attack, so now we are heroically rescued by new medical technology, so we can die a decade or two later from a different age related condition. Then when our alloted time is over, instead of just giving up the ghost, we keep ourselves alive at great cost for a few extra months. We are now the 20%, maybe even the 4%.

This is not just hyperbole: 30% of Medicare spending goes to just 5% of people who will die within the year. 10% of Medicare goes to those people’s last month of life. Those extra few months are costly.

For education, we get the same thing. Look at this chart:

In 1973, 30% of people dropped out in high school. It’s safe to assume these are mostly the hardest and most expensive to educate 30%, they’re probably mostly handicapped, persistent trouble-makers, class clowns, generally stupid, or future ex-cons. In 2018, only 10% dropped out. So, rounding the PP off widely for ease, 70% of the students using 20% of the resources, 20% of the students using 80%, with 10% still dropped out. So you’ve added 20 percentage points of troublesome and costly students which have increased the amount of resources used by 4x.

The 10% left are the real costly troublemakers, these are the ones that are dumb as bricks, violent offenders, hate school with a passion, have hourly seizures, or whatever. So, if we start to include these very troublesome students, the will be the new 4%, and increase costs even more. The more stupid and disruptive the people we try to force to stay in school, and the longer we force them to stay there, the more costs per pupil inflate. If the education for everyone doesn’t stop, eventually, we’ll be spending half the education budget keeping 100 psychotic mass-murdering teenagers and low-functioning autists who enjoy biting teachers in a Supermax high school from killing each other and trying to learn their times tables.

College is no different. I’ve looked at the tuition bubble before, but let’s briefly go over it again. Look at that chart again: in 1973 only 28% of people had a degree, there were statistically no college dropouts. in 2018, 45% will have a degree and 17% will dropout. The college keeps adding new 20%’s. The 28% getting degrees in 1973 were, likely, the top 30% of the population in terms of intelligence and/or work ethic. They didn’t require much resources to teach themselves. Now 60% of people are going to college. People with below average intelligence and work ethic are having to be accommodated. A new 20% has been at least 3 times since 1973. Using the PP we can estimate costs would have risen by over 50x. Now, this is not entirely accurate, there are likely costs savings due to scale and at the most expensive of those waves mostly drops out, but you get the point.

Let’s look at infrastructure. Here’s a story I randomly saw from Toronto. Sidewalk spaces are being expanded to 2.1m at the costs of restaurant patios to accommodate the disabled. On the TV report I saw, they said it was because 2.1 meters allowed two motorized wheelchairs to pass each other. Again, the PP. It costs a lot for infrastructure to service the small fraction of people who are handicapped. It costs even more to service the rare event of two handicapped trying to pass each other at the same time (I can’t ever remember seeing two motorized wheelchairs at the same time in the wild). And one councilor is demanding even wider sidewalks for more accommodation. That’s a lot of extra cost for both the city for such a rare event.

Apply this one minor story more broadly. Beyond, the disabled, there’s the environmentalists, special interest groups, NIMBY, safety. You have to accommodate more and more people and more and more exceptions.

Now, almost everybody is and always has been housed, so PP doesn’t really apply there. Cost increases are more likely related to the factors I linked to earlier. You’ll also notice that housing costs did not grow at as high a pace as other costs in Scott’s post.

Over time these major services have gotten more inclusive. These new people being included cost significantly more resources than the people who were already included. By the 80/20 rule, ever new 20% we add quadruples costs. Every new 4% we add, almost doubles costs.

For the large majority of people, services haven’t improved at all, even though costs have skyrocketed, because these costs are being eaten by the inclusion of ever smaller but ever-more resource-consuming minorities.

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Iron Law of Bureaucracy

One commenter linked to the following graph:

The ILB states that there are two types of people in every organization: the first is devoted to the organization’s goals, while the second is devoted to the organization itself. The second will always end up controlling the organization and it resources.

Look at the chart, it is clear the administrators control the organization and hiring and are hiring more of their own. It’s the ILB in action: the teachers directly contribute to the organizational goal of teaching, but the administrators are the one’s profiting themselves.

The ILB is what is a major part of cost disease. Over time any organization becomes more about expanding the organization than about completing its goals. The free market to some degree mitigates this, as organizations suffering too heavily under the iron law are forced to either reform or die out. But the organizations controlling education, health care, and infrastructure are not traditional free market organizations. They are either government organizations or heavily regulated, government-financed organizations.

Unless an organization dies or is forced to reform, it will inevitably become controlled by those devoted to enriching the organization and themselves, rather than to completing its goals.

Infrastructure provides a nice example. Look at the Big Inch pipeline built in 1944 and extending from Texas to New Jersey. At that time, government infrastructure programs were controlled by people dedicated to providing infrastructure. It took 3 years from planning to completion, because they wanted it up.

Comapre to the Keystone XL, controlled by our new iron-lawed infrastructure regulators dedicated to expanding their organization. It was proposed in 2008 and after 7 years in bureaucratic hell, was rejected by Obama. Then was allowed to start again under Trump a couple weeks ago. It has become more about increasing the power of hanger-on organizations than actually getting things done. Placating environmentalists, native activists, NIMBYists, labour organizations, etc. and making sure each gets their turn at looting is more important than actually creating infrastructure.

I don’t really think I have to explain this too deeply, anyone who’s ever worked in a large organization can easily see there is a small minority of people actually physically accomplishing the organization’s goals, then there are hoards of people having meetings, making mission statements, discussing work-life balance, running committees, making HR rules, doing busywork, playing corporate politics, doing pointless revisions to act like their contributing, and otherwise not actually accomplishing anything real, or sometimes even actively preventing the accomplishment of goals.

As people dedicated to expanding the organizations (and their own personal power bases) become more powerful, it becomes more costly to do the same amount of work. All those extra people don’t pay themselves.

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* I know there’s mathematical and logical flaws and over-simplifications throughout these examples, but they’re just quick calculations for illustrative purposes. I’m dealing with a rule of thumb, not a mathematically precise model. Don’t get lost in the numbers, get the general jist of the message.

Economic Options

Back when I wrote my first post in this series Williamson and the other cucks were accusing everybody who doesn’t like how the current economic system destroys traditional communities and promotes rootless cosmopolitanism is a liberal, because, according to them the inhuman destruction of community and the promotion of rootless urbanism all in the name of greater efficiency is the definition of conservatism.

Clarkhat wondered:

So, today, I’m going to propose some non-socialist, non-liberal, and traditionalist measures that could be potentially taken to stop the rapaciousness of the modern US economy. There is no liberalism or big government in these measures, simply traditional common-sense. I’ve already explained how the market should be restructured on a large scale to be more human, it should be owned, but the following are more practical in nature, and could all be implemented within our current system. (also, keep in mind my points made about the economy and GDP here throughout).

Replace Income Taxes with Tariffs and Consumption Taxes

We could raise tariffs on foreign goods. Trump has mentioned this and many conservatives have pointed out that this is a tax on consumer goods. They’re right but they’re also wrong in that they’re bad.

For the government to function it requires taxes of some sort and I have yet to hear a conservative saying we should entirely eliminate government. So we need taxes. For taxes we have a few options:

Wealth taxes are the worst: they encourage consumption, discourage savings, punish the virtues of planning and thrift, and destroy capital. Corporate taxes are the next worst form of taxation: they are inefficient, they hinder entrepreneurship and production, and the costs are simply passed down to the consumer and employees in the form of higher costs and lower wages. Income taxes and payroll taxes are almost as inefficient: they discourage working, punish labour, and hurt production, they also reduce the amount a worker retains after working. Consumption taxes are the best: they are more efficient, they punish consumption rather production, and they discourage consumerism while promoting savings and thrift.

If we’re going to tax (which everybody but anarcho-capitalists agree we will) we should gain tax revenues from consumption taxes rather than other, worse forms of taxes. Tariffs are a form of consumption tax, but they have an added advantage: they specifically punish the purchase of foreign goods made by foreigners for the profit of foreigners, while general consumption taxes punish all consumption, including the consumption of domestic goods made by domestic workers for domestic profits.

So, if you care about your nation (and if you don’t you are not conservative in any meaningful sense) you should be support tariffs over any other forms of taxation. For any funds needed that can’t be raised through tariffs, we should use consumption taxes. This would have the benefit of promoting the reindustrialization of America and encouraging real growth through savings and investments.

A proper tariffs scheme will also effectively end off-shoring as it would no longer be worthwhile to do so.

Decentralize and Reduce Federal Regulation and Bureaucracy

Conservatives pay this lip service, but rarely do they actually do anything real. Cutting red tape and solving inefficiencies sounds nice to the ignorant, but it is limited. So actually start doing real cuts and and passing more power to the states.

The Department of Education should be immediately eliminated. It serves no purpose and is entirely superfluous, if not actively harmful. Anybody who doesn’t make this a plank of their platform is not meaningfully conservative.

Housing and Urban Development and Health and Human Services should be rapidly devolved. Agriculture should be eliminated, food safety can be spun off to its own small agency. Transport should be heavily slashed; any ground-based regulations should be devolved to the states. Energy should be eliminated; their laboratories and regulatory functions sold ot devolved and nuclear weapons programs moved to Defence. Labour should be devolved. Commerce should be slashed, limited to foreign trade and statistics. Veteran’s affairs should be placed under Defence, and Defence should be slashed to the point where the US has no more troops in foreign countries we are not enagaged in war with. State should be slashed as the US reduces foreign entanglements.

End Student Loans

I’ve already gone in depth how the tuition bubble is economically raping and enslaving our young, leading to a massive economic waste as people pursue the empty status-signalling of degrees.

If we simply stop all federal student loans (and any other government post-secondary education subsidies) and make student loans dischargeable in bankruptcy like all other loans, the problem will mostly right itself. Banks will only loan out to students they are sure they can make a profit from (ie. those who can make use of a degree), while the intellectually deserving will still get scholarships. With fewer people going to college, degrees will no longer be necessary status signals to get jobs where post-secondary education is not necessary.

Eliminate Mortagage Insurance and Securitization

I’ve went over this before, housing is mostly a positional good. Easy and cheap mortgages raise demand for housing, accelerating out of control housing costs, and making people house poor. Fannie Mae, Freddie Mac, Ginnie Mae, and any other federal organization dedicated to securing, insuring, backing, or otherwise making loans easier to obtain should be eliminated. The lenders should be solely liable for any mortgages they lend out with no government involvement. This will makes mortgages harder to obtain, lower house prices, and stabilize the housing market.

Eliminate the Federal Reserve

The Fed destroys savings and real growth and enriches bankers at the expense of the people through manipulating interest rates and money supply. It should be eliminated.

Raise Interest Rates/Stabilize the Money Supply

This is a lesser version of the previous point. If you’re unwilling to end the Fed, then at least set a set schedule in the rate of growth in money supply, preferably a low one to prevent inflation and the subsequent erosion of capital. As well, raise interest rates (slowly, over time, not as a sudden shock) to ensure that we are allocating capital efficiently.

End Illegal Immigration and Minimize Legal Immigration

Wages are low, particularly for low-skill jobs, because we keep increasing the supply of low-skilled immigration. Reduce the labour supply and wages will increase. “Economic efficiency” may suffer slightly (remember what I wrote), but the actual economic health of the nation will improve.

Criminalize Usury

This is the first one that is an actual regulation. Usury is the abomination at the base of most of our economic woes and many of our social woes. It is the fuel of degeneracy. Criminalize it. Usury regulation is traditional and Christian.

Criminalize Credit Cards and Payday Loans

If you’re not willing to fully criminalize usury then at least criminalize credit cards and payday loans. These are the most virulent forms of usury;  prey on and enslave the poor and middle classes and promote hollow consumerism. They prioritize consumption over savings and provide no long-term economic benefit.

Lower the Legal Work Week to 20 hours

As I’ve already shown productivity has increased 500% over the last 70 years, while work hours have only decreased by 12%. The 40-hour week was formalized in 1937, 8 decades ago during a time of massive productivity gains. We should reduce the legal work week to 20 hours. This should not be done all at once, but a slow transition, say, for example, 2 hours a year for 10 years. We’d still be producing far more than we used to, but we’d have more leisure. This would ease the effects of the transition to post-scarcity and create more productive employment for more people while overall work is declining.

Some might argue this is government intrusion in the marketplace, but we’ve already accepted that the government should be allowed to regulate work hours. This is only a difference of degree, not of kind. This objection is only valid from those opposed to any and all limits on work hours and overtime pay.

End Free Incorporation

Incorporation is a government intrusion on the free market. They distorts the free market, promotes big business over consumers, and reduces accountability. They are anti-free market and it should be ended, or rather our current way of using them should be. Maybe We could reinstitute chartered corporations , but we should end free incorporation.

End Government Unions

If we have a government, we will have government workers. They should not be allowed to unionize. Doing so only creates a bribery system for government workers.

Encourage Off-site Work

With the increasing digitization of many white collar jobs, actually going to the office is becoming less necessary as time goes on. All government workers who’s physical presence is not required for them to do their jobs, should be work from home. Hopefully, by setting this example, private businesses will follow. This will result in cost savings, may help improve quality of life, and will have the added long-term benefit of reducing the pressure on urban real estate markets, as commercial office real estate becomes less important.

Owned Markets

We’ve seen the modern market is not made for the average man, but is instead made for the soulless, high-IQ, homo economicus. So what kind of economic system do we replace it with?

We can not replace it with socialism, communism, or the like, for those systems lead to misery. Distributism looks nice, but is light on details and is unlikely to scale to large urban populations. It is undisputable that free markets are the most effective and efficient means of producing goods and services, but modern free markets are based on the abominations of usury and inflation, and destroys traditional communities and leave those humans not suited for inhuman money-grubbing frozen out.

So, where can we get a system that is a combination of efficient, just (in the proper sense, not in the evil ‘social justice’ sense), and human?

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Before we begin, we first recognize that the market, just like the economy, does not exist in a real, tangible sense. It is an abstraction of billions of trade contracts between millions of people. It is real concept, but not a concrete entity.

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Everybody knows of the tragedy of the commons. It is a major plank of libertarians and conservative thought on economics and their support for the free markets. Everything must be privatized because people inherently tend to abuse and exploit common property, while they generally tend to care for and tend their own property.

Leftists in turn argue that the tragedy can be avoided by settng up complex social schemes (ie. government regulations) to prevent them. Of course, we all know how rapidly these schemes snowball out of control and how regularly they backfire, leading to self-serving, self-sustaining bureaucracies that tend to perpuate problems rather than solve them. The social schemes themselves are common property subject to pillaging.

The problem with free markets though, is that they are free. Libertarians and conservatives do not take their thoughts as fully forward as they should. We can privatize all the goods and services on the market, but that leaves one question, what of the market itself?

The lib/cons wish to privatize everything but the market itself, leaving the market as its own commons. They than argue the socialist argument that the market, and the contracts that it consists of, should be enforced and controlled by the public through the complex social scheme called the government. Of course, the government tends to snowball out of control, and the lib/cons are suprised when a formerly free market country becomes a socialist state.

The solution then, is to privatize markets themselves. We need not free markets, which are subject to the plundering all commons are subject to, but owned markets, markets which are privately owned and controlled for the profit of the owner.

This is neocameralism as applied to the economy. Somebody should own the market and have control over his own property. By this I mean, that the owner of a market should have absolute control over the rules regarding the usage of his property, the enforcement of the rules of said rules, and the right to extract profit from the market.

Now, you’ll notice that control and enforcement sounds eerily like government and that profits sounds eerily like tax. You’re correct in that assessment.

So what makes this different from our current government or from a lib/con free market? Our current government is not owned by anybody and taxes are ostenibly for the good of the people, which in reality means that the government (or rather the many different institutions and individuals that comprise it) is in competition with itself to suck the economy dry to buy off the people with their own money. The lib/con free market it much the same, but instead the limited government not being owned does nothing to prevent the tragedy of the commons as everybody competitively rapes the common market (ie. millions of humans their trade decisions) for personal exploitation and gain at the expense of others and with no eye towards the long-term health of either the market or the people it consists of.

On the other hand, in an owned market, the market owner is the only one who profits (in the narrow sense of the term) from the the taxes he levies and he has a vested interest in ensuring his cash cow remains healthy for not only his own life, but for his legacy as well. He has to ensure that not only is the market and its laws are healthy, but the people who produce his wealth are as well.

An owned market would (generally) be free with strong contract law because the free market works and the owner would aim to hit the optimal point of the laffer curve to maximize his own revenues. The owner would also recognize that the well-being of his people was necessary for profit maximization and so would (effeciently) invest some of his profits into infrastructure and public welfare programs to ensure profit-maximization. Pork and rent-seeking would simply cease to exist as a problem, as the king can do with his own money and property as he wishes. Finally, the owner, having human judgement, would be able step in if an corporation or individual within his market was abusing it and address the issue on an individual basis, without having to create an unwieldy set of regulations (with many exploitable loopholes) to cover every eventuality and a huge, impersonal, self-serving bureacracy to enforce it.

Naturally, none of this is to say that there is no possibility of the owner abusing or misusing a market. Vested self-interest does not necessarily mean wise or correct decisions, he may himself be foolish, sociopathic, or mad, but they do mean that sociopathy and foolishness are temporary states of the current owner rather rather than inherent and permanent structures at the base of the market.

To make the market more human, more just, and more efficient we need human judgment with skin in the game. We need owned markets.

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The obvious owner of the market would be he who owns the country the market is found in, the king. Ideally, the king would own the market, he would extract taxes from the market in exchange for enforcing contracts and policing the market.

The owner could also delegate authority over certain areas of the market, either in specific places or in specific markets. The former would be a form of economic fuedalism, while the latter would be a form of the guild system and the chartered corporation system (where corporations were formed by government charter rather than by registration).

I have one more post on economics upcoming, this one with potential practical economic actions that could be implemented by either the future market owner or by the current government.

The Economy Doesn’t Exist

I said last post, I plan to have an economic post upcoming. This is not it. This is some basic foundation for the upcoming post.

The economy does not exist. There is no such thing.

Hyperbole, but true hyperbole.

The economy, despite the absolute importance we place on it in our mammon-worship, is not a real, existent entitity. It is an abstraction and simplification of millions of humans making billions of trade decisions.

It does not stand alone. It should not and cannot stand apart from the people and decisions it abstractly represents.

The economy is the be all and end all of the liberal state. Almost every political decision comes down to: ‘will this grow the economy?’

But the economy is not an end. All these abstracted trade decisions exist, or at least should exist, to better human welfare. The flourishing of humanity is the goal, the economy is merely an abstraction of the trade decisions and processes we use to help bring this about.

The question government should ask itself is not, ‘will this grow the economy?’, but ‘will this benefit the people being governed?’

Growing the economy for its own sake is pointless and counterproductive.

To misquote Jesus, “The economy was made for man, man was not made for the economy.”

Which brings us to a sort digression on GDP.

GDP does not a measure human flourishing. It is a measured abstraction of the production of goods and services within a country, that is somewhat correlated to the economic health of a nation.

GDP was a moderately useful measure for ascertaining one small aspect of human welfare (goods), but it has become a goal purported to be the primary measure of welfare, against it’s creator’s advisement. Once a measure becomes a goal, as GDP most assuredly has, it ceases to be a useful measure. In addition, a measure is useless for measuring that which is was not designed to measure.

GDP was not designed to measure well-being and it does not do so. It measures economic production and to some degree economic health. Economic health is a part of well-being but definitely not the full measure, it ignores community, relationships, culture, and all those other things that make us human.

But even in that, GDP is insufficient. It counts the use of capital for consumption as economic gain, even though, long-term, capital loss is economically draining.

It doesn’t include productive activity if no one is getting paid, so making a beautiful wooden table for yourself does not add to the GDP or the economy, but buying a plastic table from Walmart does both. Making a home-cooked meal does not add to GDP, buying McDonald’s does. Raising your own children does not but paying a stranger to do so does. In each case, the former is probably superior for both economic production and human welfare, yet the GDP and the economy only recognize the latter.

More interestingly, the movement of women from home to the home to the workplace helped the economy, even though women generally do the same work in both.

Beyond this, the economy, and it’s measurement, GDP are not necessarily positive goods themselves, even in the limited areas where they are useful. While more widgets are usually, all things being equal, better than fewer widgets, all things are not equal. All goods and services come at their own cost, of which time is the most obvious, but the focus on the economy doesn’t measure time apart from the wages spent hiring them (if the income approach is used)  (ie. More time spent working leads to a higher GDP, ceterus parabus).

Look at these charts (keep in mind the y-axis labels):

Labour productivity (ie. comparitively how many goods/services workers in an hour) is five times what it was 70 years ago, on the other hand, the average work week has only dropped by about 4 hours. We can make 5x as many widgets per an hour as we used to be able to, but we still spend almost the same amount of time working.

The more we work and the more efficiently we work, the more the economy grows. If people started working less, the economy would shrink. Our government and almost every mainstream analyst would consider this shrinking a bad thing.

But wouldn’t life be better for everyone if a 5x increase in productivity led to a more than a 12% decrease in work hours? Full-time hours could be only 8 hours a week and we’d have the material standard of living as our grandparents, we could work 16 hours a week and have the same material standard of living as our parents. This doesn’t even include that during your grandparents’ time, women mostly didn’t work. Ceterus parabis, two parents could each work 4-hours per a week and have the same material standard of living as their grandparents.

Yet, more free time would kill the economy, because fewer widgets would be produced and fewer wages would be paid, even though many people would be happy to live like their parents if it meant only working two 8-hour shifts a week.

If GDP measures free time at all, it measures a lack of it, through money spent on wages.

Finally, GDP treats increases in the nominal value of goods as an increase in production. As an example, housing makes up 15% or so of GDP (real estate is the largest industry in the US, other than combined government). As I’ve argued before, housing, is a positional good. What this means is that, as housing costs (captured by rents or imputed rents) go up due to competition, GDP goes up. So, if the cost (as shown through rents) of the same house doubles, GDP would increase, but there would be no difference in production. Other industries where the goods are positional, or that are mostly services suffer the same fate. For example, primary and secondary education costs continually increase, but it would be hard to argue anybody is receiving better education.

For many sectors of the economy increased GDP is not actually reflecting an increased quantity or quality of goods or services which may contribute to well-being, it is only reflecting an increase in costs and competition.

For all these reasons, the economy doesn’t exist, growing it is not an end goal, and the GDP is a narrow measure not an all-consuming goal.

The High-IQ Homo Economicus

You may have read parts of the Kevin D Williamson NRO article attacking the white working class. It’s behind an NRO paywall and I refuse to pay them for anything, so I haven’t read the whole article, but the excerpts I did read lead me to make to Twitter tirades. I have since found an version of the original article here.

The first rant was about how Kevin is an ass for attacking the white working class for being what it is after decades of prolonged government attack, which he partially supports, destroyed it. The second is was a rant on how soulless high-IQ homo economicus, like Kevin and his ilk, set up an inhuman system designed for them, then sneer at how others the system is not designed for fair poorly under it.

This gives me the opportunity to write something I’ve planning to write for a while now, but haven’t got around to yet.

Now, before I begin, because some cucks like Tom Nicholls argue like 14-year-old socialists, I will clarify my personal position. I come from the working class. Through the luck of genetics and the grace of God, I happen to have be born with high intelligence and an impersonal, homo economicus sperginess, so I am now personally comfortably middle-class, but I see second-hand through family the degeneracies of the lower classes. As well, I am not a Kremlin troll (although, if a Russian psy-ops happens to read this and wants to pay me…)

The current socio-economic system is designed by rootless, soulless, high-IQ, low-time preference, money-/status-grubbing homo economicus for benefit of those same homo economicus. It is a system for designed for intelligent sociopaths. Those who are rootless with high-IQ and low-time preference can succeed rather well in this system, but it destroys those who need rootedness or those who are who are low-IQ or high time preference.

Kevin says, “Nothing happened to them. There wasn’t some awful disaster.” But he’s wrong, there was a disaster, but no just one, multiple related disasters all occurring simeltaneously. Ones that would be missed by a rootless cosmopolitan like Williamson. These disasters include the sexual revolution, the long march, feminism, mass immigration, globalization/off-shoring, forced integration, the drug epidemic, mass TV propoganda, governmental growth, and cultural genocide.

Within a span of a few decades working-class whites saw their communities invaded and destroyed by immigrants and integration, the traditional sexual/moral framework destroyed and replaced by degenerate Hollywood mores, the collapse of restraining institutions such as the church and local community, and what forced into competition for what jobs weren’t off-shored to foreign places paying starvation wages with imported illegals willing to work for almost nothing.

Every support the white working class (and for that matter the black working class) had vanished within less than a generation. There was a concerted effort to destroy these supports, and this effort succeeded. Through minimal fault of their own the white working class was left with nothing holding them up.

Now, some people can succeed in this. Low-time preference, high-IQ groups and individuals, like New England puritans and myself can more or less get by without too many supports. Rootless homo economicus, like Williams, New York bankers, and hipsters, can have satisfying(?) lives living in a rat utopia, grubbing for dollars and status, anomie won’y affect them much. Sociopaths (in the colliquial sense), like most politicians, are made to survive in soulless, inhuman system.

For these types of people this is functional, but different people and groups naturally have differing temperment, intelligence, and time preference. Most people are not high-IQ, soulless homo economicus, most people are of average intelligence and have a strong need for communities and community support. Just as with corporal punishment, differing people require different socio-economic structures and controls.

A high-IQ Jew can probably have a dozen sex partners without becoming a single mother, then go on to either economically-productive bitter cat-ladiness or a stable low-sex marriage. A high-time preference Scots-Irish or black with a dozen sex partners is probably a single-mother with multiple baby-daddies and either a Wal-mart job or welfare payments. In a realm of easy divorce, the marriage of a low-time preference post-puritan will probably survive, but that of a low-IQ trailer park resident won’t. In a town with minimal economic prospects and easy access to welfare, the high-achieving, socially-isolated nerd will probably find it easy to ditch town for university and a Silicon Valley career. The low-achieving stoner or the son of a tight-knit farming clan won’t, and will likely choose the path of least resistance. The low-time preference WASP with good job prospects from an intact, single-child household may snort a line or two of coke on occasion and he’ll be fine, the high-time preference Scots-Irish from a broken family with an unemployed father will follow that first hit of meth down to destruction.

Working-class whites (and blacks, and hispanics) are not able to and can not be expected to function in an inhuman, cutthroat, anomic socio-economic system designed by and for upper-middle class WASPS and Jews. They are no more constitutionally endowed to be able to than women are to be marines. Some of the working-class on the right-side of a bell-curve or two may be able to extract themselves from the cultural collapse and some others may be passed by, but most are no more able to escape than a baby is to swim.

People are not equal. Differing people and groups have differing levels of in-born ability to be responsible. You can talk personal responsibility all you want, but most people require cultural and institutional structures to help hold them personally responsible. Those structures are gone, they’ve been destroyed.

You can not expect natural peasants and yeomen to be able to properly hold up the responsibilities of natural aristocrats or priests.

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Nature-defying leftists think they can remodel men and make them all into perfect new socialist men. All men are blank slates that can be molded by education to become perfect. Man is perfectable. Of course, every attempt at perfecting man has failed.

Modern conservatives, having whole-heartedly adopted liberalism, fall into the tabula rasa trap from a different angle. All men are capable of perfecting themselves, they just need to become rugged individualists and pull themselves up by their bootstraps. While personal responsibility and individual effort are important, to think that all men are capable of self-actualization in anomic isolation is just as nonsensical the New Soviet Man.

Most men need community, cultural, and institutional support to self-actualize.

Now, there it is possible to just say, fuck them, they lost the darwinian struggle and deserve to die. Rootless conservatives like Kevin certainly do, as they propose that the broken white working class just move and gets jobs. Rather than trying to fix a system that was designed to destroy working-class communities, he glorifies a system where men’s only hope is to leave behind their families and the towns where their ancestors lived for generations to move to anomic, demographic-shredding urban centres to simply to be able to provide for themselves. Whatever you might call such inhuman mammon-worship, it is nothing anyone sane would recognize as conservatism.

Real conservativism and reaction recognizes that not all people are equal. You can’t just abandon whole swaths of people to anomie, poverty, and economic misery. Superiors have a duty to protect and care for their inferiors just as the inferiors have a duty to obey and respect their superiors. Conservatives can not abandon the idea of noblesse oblige.

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None of this is to say that we should adopt socialist or communist policies where everybody gets free government handouts. That’s just another form of anomic, inhuman mammon-worship. There are other options besides anomic socialist mammon-worship and anomic corporatist mammon-worship. I’m planning another post on economics, hopefully soon.

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Finally, just to make it clear, there is nothing shameful about not being an aristocrat or priest or with being a yeoman, peasant, or even a slave. While our modern status structure prizes the priestly class (ie. the educated, the academic, the high-IQ, the journalist, the bureaucrat, etc.) as having status above all, primarily because the priestly class seized the status hierarchy for themselves through their control of modern mass communications, this is a corrupt and degenerate status hierarchy. (The aristocratic class is all but dead). The denigration of the admirable yeoman or peasant and the loss of the status that used to be given granted to an honest blue-collar family-men is an evil corruption.

Anybody, who knows their proper position in the hierarchy and faithfully renders their duties should receive the proper honour and status. Such is right and noble. The priestly class should and will pay dearly for their destruction of the natural status hierarchy.

Abortion Regulation and Hypocrisy

I came across this Slate article defending and promoting the dismemberment of unborn children. Abortion is a travesty, but the support of abortion not what was particularly interesting about this piece. Rather this part is:

And partly because the bill was written by nonphysicians using nonmedical terminology, there is a good deal of uncertainty among doctors about precisely which procedures will be illegal come July.

In some ways, these new second-trimester bans are of a piece with the national movement to intimidate and harass physicians, with strategies that range from forcing them to perform unwanted ultrasounds and read from factually flawed “informed consent” scripts, to forcing them to obtain admitting privileges at local hospitals (which may refuse to provide them)—or new efforts to simply refuse to let doctors learn about abortion in the first place.

This has echoes of earlier pro-baby-killing insanity in Texas. You might remember that last year the baby-killers got in a fit because Texas instituted laws where abortion clinics had to “meet the same architectural, plumbing, staffing, training and other requirements that apply to surgical centers”.

Didn’t it seem odd to anyone else that somehow baby-killing “clinics” were not held to the same basic safety standards that applied to other clinics? Didn’t it seem even more odd that leftists, usually in favour of safety regulations, were so opposed to the application of safety regulation in this particular case?

But this article combined with the earlier Texas events point out something even more odd: when it came to their sacred rite of abortion, the leftists seem to recognize that stringent regulations have negative effects on the ability of service providers to provide services.

Now compare this to Obamacare: somehow the leftists realize that heavy, arbitrary, and unclear regulation hurts the ability of baby-killers to kill babies while at the same time calling for even heavier, more arbitrary, and more opaque regulation on the health care industry as a whole? Do they want health care to be worse, do they lack the ability to integrate particular reasoning into wholistic worldviews, or are they just base liars and hypocrites?

When it comes to baby-killing, leftists even go so far as to say that basic regulations are simply forms of harassment and intimidation. Yet these same leftists will happily call for far more stringent and arbitrary regulations on everything not related to baby-killing. So, by the leftists own logic it seems that leftists wholeheartedly support the harassment and intimidation of any productive activity.

It it interesting to note how hypocritical leftists are on regulation. When it comes to things that are unimportant to the leftist, like economic production and good health care, stifling regulation is good, but when it comes to something important to the leftist, like massacring babies, any regulation at all is too much. As I’ve written before, the definition of good regulation to a liberal is anything that increases the power of government and doesn’t personally impact them, while the definition of bad regulation is anything that inconveniences them personally.