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The Economist recently ran an article on Japanese business culture. Business habits of foreign cultures fascinates me, because it represents such a blunt example of how a culture can effect economic activity. These traits, either for the better or for the worst, can have effects on economic development. The article notes:

Informal cues are as important as the legalistic ones... Managers meet to exchange meishi - their all-important business cards (usually presented with two hands) - and bow respectfully. It helps establish confidence...

In the West, that culture is increasingly one of implicit mistrust. Deals require armies of lawyers and thick paper trails to give parties confidence, in spite of the time and money that such work entails. In Japan, by contrast, companies - some dating back centuries - regularly deal with longstanding partners; reputational concerns, rather than strictly legal ones, are paramount.

I think that it is a grave error for anybody who has anything to do with management or marketing in any firm to ignore the fact that culture plays a crucial role in economic development. Different cultural traits - such as those mentioned above - cause have different events in one economic system and entirely different events in another. Some cultures may have traits that are beneficial to capitalistic economic development while others may carry traits that are beneficial to a socialistic ones (gasp).

Some social scientists suggest a cultural overhaul. Even Mao carried out his Cultural Revolution. But the matter is not one cultural fallacies but of incompatibilities with a given economic system. It's much easier, I argue, to reform an economy than it is to reform a culture. Anthropologists could probably do a more efficient job at drafting economic policy than Chicago Boys with their cookie-cutter perception of global economics.

Neoliberals chant praise whenever a former socialist country begins to liberalize and decentralize its economy. Recently the Economist preached progress in Vietnam, stating that "farms were given their own land and agricultural prices were freed... There can probably be no going back: any attempt to reapply the dead hand of government will ensure that Vietnam's dream of riches by 2020 remains just a dream." Similar praise has been given to Raul Castro's Cuba and any other country where collectivist farms decline in face of individual property rights.

But such reform would not have been possible if it was not for the initial expropriation of the land in the first place. Quite possibly these lots would still be in the hands of a single aristocratic family. Without an invasive government to redistribute the land, those holy property rights would have been enjoyed by only a few.

American settlers in the West were often granted deeds to large plots of land in order to foment expansionism. Many 20th century political struggles in Latin America where characterized by similar demands from peasants and the indigenous community, but were quickly branded as communist reforms. Though these people were subject to coups, invasions, and political meddling from foreign powers, all they wanted was the same thing that their American counterparts wanted: not only the right to own property, but a realist chance to do so.

The global food crisis makes autarky look good. While protectionist Presidents are often blasted by The Economist and champions of the free market, it is quite difficult for a politician to permit food exports while his countrymen are on the verge of starvation. If our leaders were not to do this their Presidential palaces would quickly be overran by mobs of angry, hungry citizens.

Though reliance on liberal borders, free trade, and imports might be more cost efficient (importing foodstuffs from a foreign country, for example, can often be cheaper than growing it yourself), it is not secure. The moment fuel prices jump and the cost is reflected in food prices, governments will shut down exports and thus cause a chain reaction that will make things only worse. One could loosely say that food production is a matter of national security.

My proposal was always that nations produce as much food as possible to tend to their population and then import the difference or export the surplus. Though this might be a bit more costly than relying on the mechanisms of the free market, it does provide a level of national security. Many nations have obtained substantial economic growth during the past decades as they opened their borders and liberalized trade. Ironically, decades of neoliberal fiscal policies and Western pressure were rolled back at the snap of a finger as an instant jump in prices reversed any poverty reduction obtained. "Roughly a billion people live on $1 a day," states The Economist. "If, on a conservative estimate, the cost of their food rises 20%... 100m people could be forced back to this level, the common measure of absolute poverty."

How would one go about doing this without heavy interference in the private market on behalf of a paternalistic state? And how could this be economically viable? The creation of public and non-profit corporations that would partake in non-profit agricultural ventures is one option. The non-profit vision of the organization saves the company operational expenses (for the profit of shareholders is no longer subsidized by the product's prices). The waver of a sales tax on locally produced goods is another possibility. Publicity campaigns are yet another. There exists a number of options aside from import substitution or heavy tariffs.

Stumbled upon a neat PDF-report-interactive site-downloadable book-kinda' thingie while surfing around the Internet during idle office time titled "I Shop Therefore I Am". Click here to check it out. The following table pretty much sums up my entire economic, political, social, cultural, and even religious ideologies into a simple diagram (jaja):

Followers of the 'free world' have always been critical of planned economies. Galbraith unearths the planned nature of modern capitalism, equating the bureaucratic appendages of modern corporations with government agencies.

First there is the issue of technology. "The needs of the consumer must be anticipated - by months of by years." "If men use picks and shovels," states Galbraith, "they can be called out on the same morning that the decision is taken to do the job.... When specifications are raised to modern superhighway standards and heavy machinery is introduced, the market no longer works as well. Engineers, draftsmen, drainage experts and those who arrange the elimination of trees, grass, parkland, streams and other environmental amenities may not be readily available..." Increased technology leads to an increase in the need to plan.

A second issue is price controls. "Competitors of General Motors," for sample "are especially unlikely to initiate price reductions that might provoke further and retributive price-cutting." Oil companies, though enjoying exceptionally high windfalls wouldn't dare initiate a price battle. There is a sort of silent agreement between all parties in the form of an informal price control. Free market proponents claim that companies would not be allowed to artificially maintain high prices because a new addition to the industry could easily step in, offer lower priced goods, and obligate the larger players to regulate the prices. This is not absolutely true for large corporations have the ability to suffer certain losses in the name of outlasting the competition. "Everybody knows that the survivor of such a contest would not be the aggressor but General Motors. Thus do size and small numbers of competitors lead to market regulation."

"The modern large Western corporation and the modern apparatus of socialist planning are variant accommodations o the same need," notes Galbraith. Galbraith even notes that "the organization of the Soviet firm is far simpler than that of its American counterpart."

This whole gas crisis thing is quite frustrating. I'm not necessary upset about the high gasoline prices for I feel as if gas was too cheap in the first place. Its price did not include the hidden subsidies of road sprawl, deforestation, and air contamination. Though it still doesn't, its high price acts as a sort of gas tax that promotes alternate forms of transportation. (I've always driven a tiny car, so it doesn't hit me as much as someone who drives around a Hummer.) What is upsetting is how everything else in our world - especially electricity, food, and consumer products - is dependent on it.

This "crisis" has continued for quite a few years now and we have yet to see any alternative presented by our leaders. Their solutions are drilling into wildlife reservations, offshore oil reserves, and pressuring oil producers to raise their output.

Many people point their fingers at crisis in Iraq, an unfriendly Iran, an anti-American Venezuela, and other short-term political conflict as the source of rising gas prices. While the above might disrupt market security the truth is that the problem lies with demand and not supply. As developing nations like India and China aggressively plow themselves through industrialism demand for energy, food, and consumer products is sky rocketing as oil supply remains the same. According to the natural laws of economics, this imbalance of supply and demand results in higher prices. But hey; that's what you get when the entire world begins to adopt the same lifestyle as the developed West. I recall a quote from a Fidel Castro speech in Angola:

What would the world be like if the capitalist model and capitalist consumer habits were to be spread throughout the world? If every individual were to have a car and aspire to all the luxuries of capitalist society? These luxuries that a minority has under capitalism, those luxuries that the most industrialized countries have. At what cost? At the cost of the rest of humanity starving to death?

In this age of globalism, nobody makes their own food. Everybody prefers to ship in their produce from thousands of miles away, a process that not only makes their consumption insecure, but depends on oil for its transportation. Quite possibly this crisis could promote consumption of locally produced goods and the fomenting of local food cultures. Sadly, though, few have proposed this.

This process also demonstrates that the neo-liberal economic growth obtained in recent years was quite unreliable and insecure. A slight rise in gas prices over a few months, for example, could set back decades of economic growth obtained by budget cuts, privatizations, and foreign investment. (The Economist covered this subject in its April 19th issue.) Many  leaders seek economic growth without taking note of the different types of growth.

One positive side-effect of the economic turmoil is the ousting of unpopular regimes. Popular discomfort has lead many governments to implement necessary reforms. Haitian protesters forced the prime minister to resign, Egypt's President ordered the army to start baking bread, and the Philippines made hoarding rice punishable by life imprisonment.

I don't think things will get better any time soon. Let's see what happens.

I get upset at how arrogant some people can get.

The Economist recently covered an article on Brazil's oil potential and its rapidly growing economy. Anybody who knows anything about Brazil's growth during previous years knows that the country has been doing pretty well. Ironically, though, the Economist expressed "a cause concern" that Brazil's currency is getting too strong. "Brazil's currency, the real, has already soared to levels that make manufacturers wince. If it becomes petro-currency, many factories will be forced to close unless the needlessly high cost of doing business in Brazil are slash."

Needlessly high cost? Wince? It sounds like the authors wish anything but good for Brazil. Though it is true that the Third World factories of Brazil might go elsewhere as the country makes its way into the developed world, a strong currency and a healthy economy will allow the population to step out of the sweatshops and into newer fields such as technology, service, or bio-industries.

The international economists community pushes neoliberal policies in order to allow countries to lower the cost of doing business within their borders. But when these countries begin growing and their currencies begin to take value, are these economists willing to let go of their offspring and let them fly?

John Kenneth Galbraith does not fail to amaze me once again with his book "The New Industrial State". After reading "The Affluent Society", Galbraith quickly became one of my favorite economists. Rarely have I seen someone critical of the capitalist system without considering themselves socialist. Many of those critical of capitalist economics are too easily swept away by utopianism and Marxist views. Galbraith maintains independence from the traditional ideological left.

Galbraith starts his critique of the capitalist system by stating "Eighty years ago the corporation was still confined to those industries... where, it seemed, production had to be on a large scale. Now it also sells groceries, mill grain, publishes newspapers and provides public entertainment." I'm not sure how well such a critique applies to modern society, for many companies seek to outsource and subcontract much of their services. In fact, some of our most renown corporations don't sell any product at all. They simply purchase pre-manufactured goods set to their customization, brand it, and market it.

Another observation concerns ownership. Most corporations these days operate independently from the actual owners. While previous business entities were owned by a small number of wealthy families, today's corporation is characterized by a board of directors and an independent management. "The men who now run the large corporations own no appreciable share of the enterprise," notes Galbraith.

Proponents of free market capitalism state that the "sovereign consumer who, through the market, issues the instructions that bend the productive mechanism to his ultimate will." While this statement has a sort of democratic essence about it, I feel it necessary to note that some are more consumer than others. Economists such as Ludwig Von Mises hail the democratic potential of consumerism equating a dollar spend with a vote casted, some of us have the wealth to "vote" thousands of more times than others.

Also, the word "sovereign consumer" is quite contradictory. Consumers have been subjected to manipulative marketing, guerrilla advertising, addictive additives, and profound market research meant to hijack the psychological. Aside from such perpendicular controls, producers and marketers can also obligate consumers to purchase goods at their outlets by utilizing aggressive tactics to squeeze out competitors. There are many areas of the industrial world where citizens have no choice but to purchase fast food or shop at a mega department store to tend to their needs.

The Economist recently ran an article on a lower appetite for risk among Brazilian businessmen. The lack of a Western style competitive drive is something that I have noticed myself among my local community's business sector. As long as businessmen stay afloat and survive, there is little need to go the extra mile to eliminate the competition. "Competing" businessmen can live side by side without any hostility to each other nor with any urge to shut the other out of business. Both are content with mere subsistence.

Sheldon Smith states that Latin American economic culture is "closet to East European economies such as Poland or Hungary" as opposed to American and West European models. Smith states that "the dominant form of economic production in the formal sector from the 1950s to the 1990s was the family-owned conglomerate... [but] the family-owned enterprise is not entrepreneurial... [where] there is no clear-cut separation between family interests and business interests in family-owned enterprises."

Lomnitz and Perez Lizaure speaks of how "families were generally reluctant to use their own capital". "The conservative character of family enterprises," continues Smith, "meant that they were usually unwilling to take risks., the essence of an entrepreneurial company".

I would love to compare the above takes on the issue with raw data. An in-depth study establishing the following traits (and then comparing them to stateside levels) would be fascinating.

• How many Puerto Rican entrepreneurs have lead failed enterprises prior to their current one?

• In small businesses, what percentage of employees are family members?

• How much of a Puerto Rican entrepreneur's profits are re-invested in the business?

• Give examples of a number of potential business risks and measure willingness.

• Within the previous 5 years has the business invested in any major technological advancements? (Internet, networks, scanners, etc.)

A recent Time Magazine article covering Taco Bell's expansion into the Mexican market noted that the stores' taco shells are imported from abroad. Such ironic contradictions are not rare; recently I purchased a set of Puerto Rican Taino statues only to see a "made in China" sticker under each piece. Even avocados, beans, rice, and plantains - important components of the traditional Puerto Rican diet - are imported from neighbors and distant sources alike.

One evening while on a lengthy flight I decided to occupy my time by mapping the "made in..." locations mentioned on each and every one of the food products on in complementary airline dinner tray. I concluded that it would have been just as productive for me to scribble all over the entire sheet. The lettuce (Mexico), bread (U.S), sesame seeds (India), beef (Argentina), cheese (Germany), ketchup (China), and other ingredients on your average hamburger have been packed, shipped, and flown for thousands of miles in a complex arrangement that would be unimaginable before the age of globalization.

Globalists claim that such an array of crisscrossing trade lines is in fact a representation of free markets looking for their most efficient outlets. Though there is a sort of cultural contradiction and theoretical inefficiency, often it is at times more economic to import produce from half way across the world than it is to grow it next door.

Despite this, I argue that just because it is economically viable, does not mean that it is the most efficient solution. Though I can cheaply import rice and from distant countries, these cheap trade routes are often subsidized by and endless list of hidden and invisible externalities - most of which are not calculated in traditional GNP statistics. The negative effects on our health caused by an increasingly shrinking variety of dietary species; the cost of a society shifting towards a high-calorie diet; the public dollars spent on roads and ports; the effect fossil fuel usage has on air quality and water; and the wars needed to reclaim and protect oil fields are never factored into the price of your average everyday imported good. Instead, we often pay for it with our public welfare and tax dollars.

The Economist recently published an article on Brazilian businessmen, noting that "Brazilian entrepreneurs seem to have a much lower appetite for risk... Perhaps this lack of staying power is because there are many more pleasant things to do in Brazil than work."

Though the article does cite bureaucratic red tape as one obstacle, such cultural traits must be taken into consideration before assuming that a single set of economic principals can be implemented throughout the globe with similar results.

My writing compliments my reading. All of my books feature scrabbled notes on the margin, on the front and rear blank pages, in the headers and foots, and even in the bend of the book. Arrows, lines, and even bootleg charts little the pages. Below are notes from a title that I recently finished reading "Comparative Economic Systems: Models and Cases" edited by Morris Bornstein. Since the book was taken out from a library (I still wrote on the pages), I must "unload" my notes as to not have them disappear into the shelves of a library archive.

From the handwritten-polluted margins:

I
I am against centralism, be it in the public or private sectors. Centralism degrades security, I believe; putting all of ones eggs into a basket. It limits competition. It minimizes diversity. David Waton said it best: "Whether it calls itself capitalist, socialist, democratic, or fascist, its project is essentially the same: the establishment of a megatechnic work pyramid to expand empires (big mafias and small), through the reduction of nature and human communities to an archipelago of sacrifice zones or gulags from which the value is extracted for the maintenance and expanded power over the hierarchy." J.R. Shackleton states that "The assumption that bigger means better has increasingly been challenged."

II
"Marxists and neo-liberal capitalists understand each other very well. The real conflict occurs in the center," stated my professor Hector Luis Acevedo. I agree. I believe the line is drawn on who deserves the spotlight; capitalists place priority on the consumer and socialists on the producer.

III
I tend to not limit laissez-faire considerations to economics. I at times apply the concept to culture, for common sense, taboo, and tradition are often sufficient to maintain order and functionality as opposed to law; to nature, for if left alone the system will realign itself; and comically even Puerto Rican driving. "I love the way they drive down here," a laissez-faire capitalist friend tells me. "Yea," I respond. "It's sort of laissez-faire where everything just works itself out. Add lines, stop lights, and stop signs and you have yourself a bunch of accidents."

IV
I don't want a powreful state. I want an empowering one.

V
Despite this, society is generally becoming less social. Heads of households are enveloping themselves more into their professions. Thus a third party (the state) is necessary to take up responsibilities that were traditionally carried out by social interaction (such as schooling).

VI
Arthur M. Okum states that "What I have to sell today reflects my entire life history, including the nutrition and health care I have received, my education, my previous job experience, and any physical property I have acquired by previous saving or inheritance. To the extent that my current supply of marketable services is augmented by effort (or thrift) that I have exercised previously, I am reaping the harvest from the seeds I planted in the past." This statement, I must add, emits theft by previous generations (land grabs, expansion, and colonialism), inheritance, and culture. Okum would be entirely correct if we are speaking of a society that measures its access to health, education, and capital strictly by merit. Okum himself states that "it seems undeniable in principal that the prizes for the performance would be more defensible ethically if everyone had an even start."

VII
Excellent observation from Okum: "Leisure is a form of income and an element in one's standard of living." When the Municipal cabinet were discussing how to go about the recent raise in the federal minimum wage I suggested that instead of compensating employees with higher wages (which we could not afford), to grant them an extra day off from work. Jaroslav Vanek states that "monetary income... is definitely not the only [important ingredient of satisfaction] for example, [some may] sacrifice some money income in exchange for additional leisure time, lesser intensity of work, better human relations-or even a kinder managing director."

VIII
Okum makes reference to "the reliance on "greed" as a key motivating force in economic life."

IX
Let us suppose that an industry-wide association is formed with the task to overlook the regulation of such industry. This association is made up of 1/3 members chosen by the owners and investors of the industry, 1/3 members chosen by the workers, and 1/3 members chosen by the public. Due to the composition of the three bodies it is understood that a sort of checks-and-balances system will arise. The association could have either executive or consultation powers. Such an initiative would provide for an interesting experiment.

X
Ludwig Von Mises states that ""Artifical" markets in socialism cannot successfully replace the true markets of capitalism in pricing producer goods so as to use them most efficiently." True. To mimic such a system a planned economy would have to be staffed by millions amounts of bureaucrats, each with the task to follow even the most minimal supply and demand tenancies. Despite this, John Galbraith in his "The New Industrial State" states how large-scale corporate capitalism is in fact a planned economy; replacing a few public agencies with a few corporations that eliminate markets through contracting and the expropriation of supply.

XI
Socialism, claims Von Mises has "no means of ascertaining whether a given piece of work is really necessary, whether labor and material area not being wasted in completing it." True, but I wish to signal instances where two gas stations of the same store brand can be find across the street from each other.

XII
Proponents of a planned economy believe that "even under Capitalism the managers of joint stock companies work not for themselves but for the companies, that is to say, for the shareholders. Under Socialism, therefore, it would be possible for them to act in exactly the same way as before, with the same circumspection and devotion to duty." Von Mises counters this by stating that the stockholders who choose managers "are risking their own property or a part of their own property... Under Capitalism, the capitalist decides to whom he will entrust his own capital... to strike a balance between his desire for profit and his estimate of the risk of loss."

XIII
One must question the viability of neoliberal economics in a society where a "live and let live" feeling prevails such as those in "participatory economies" or even small business in Latin America, I would add.

XIV
Edvard Kardelj states that "the first, and lower, form of socialism" is Nationalization. Evan Luard in his book "Socialism Without the State" carried a similar tone, as he argues against the mainstream view of socialism as a system equivalent with big government. The concept of worker ownership, cooperatives, and profit sharing mechanisms have always fascinated me - all of which can take place within the framework of a free market. My preferred style of socialism is more in tune with 19^th century anarchists than they are with the statist Joseph Stalin and Fidel Castro. My socialism is manifested by the popular and not the state. Public services and budgets should be managed by the collective, with each citizen taking a direct role in its dissemination, execution, and development. Like I always say; big government can be just as bad as big business.

XV
My fascination with socialism as an ideology has little to do with liberalism. I'm not tuning into their anti-death penalty, anti-abortion, pro-gay marriage message, and thus have in the past refrained from identifying myself with any socialist organizations. I tend to be more preoccupied with concepts of hierarchy, economic freedom, community empowerment, and the management of public assets.

XVI
Franklyn D. Holzman claims that autarkist economies are generally planned economies. I could see how this would be true for in a planned economy the market has not been able to establish a suitable price for the good, which would thus make it quite difficult to trade on the international market. Even houses can't be sold without an appraisal.

A February 9, 2008 article in The Economist stated that "Only 59% of Americans think international trade is benefiting the country, compared with 78% in 2002." Such data is interesting indeed considering the fact that it is generally the U.S. Government and its financial institution appendages that are pushing foreign countries to liberalize trade and open their frontiers. The free trade doctrine is often dubbed "The Washington Consensus" by its critics.

Economic liberals (in its classic sense) hail as natural phenomena such as international trade, outsourcing, and the replacement of old methods of production by newer, more efficient technology. Such things allow for lower production costs and thus turn lower prices and finally higher purchasing power. Methods to curb international trade or to stick to traditional methods of production are deemed protectionist, anti-market, and socialistic. Economic liberals carry much reason in stating that without such advancements in production we would still be laboring as small-plot farmers and artisans.

I subscribe to the laissez-faire argument that displaced workers will eventually be integrated back into the workforce and thus I am weary of bans on imported products. Though import substitution led to amazing economic progress during Latin America's early second half of the 20th century, the quality of the products and services of such are only a step up from that of state-owned enterprise. I agree that at times protectionist measures can foment laziness and lack of innovation on behalf of local producers. Despite this, I find myself in a difficult position; feeling that entrepreneurs should have the right to trade their products over borders but at the same time having distaste for cultural globalism and transnational corporations.

As a nationalist, I note the romantic qualities of autarky. It would not only be beneficial cultural diversity, but it would theoretically dilute the need of resource-influenced wars. I am also one to believe that local lifestyles, growth patterns, and political systems should be responsive to the materials at hand and the realities of the local environment. The asphalt and urban planning patterns of the temperate regions, for example, are difficult to keep up with in Puerto Rico as our tropical and rainy weather chip away at roadways quicker than in the North. Tropical countries have had difficulties keeping up with the West's concept of industrialism as machinery quickly breaks down and degrades in face of the harsher climate. Despite this, imported standards - and not necessarily imported products - are to blame.

Though I am not for outright bans on foreign products, I am a proponent of finding more efficient and comforting ways to ease the negative effects of switching from traditional to newer methods of production. Recently I wrote an article titled "Public Layoffs and How to Go About It" with recommendations aimed towards alleviating the macroeconomic effect of public sector layoffs.

Often these private sector layoffs are strictly local and limited in area. As sad as it might be for these workers to be laid off in mass, there does exist the option of relocating to another area. We are all aware that almost always there are labor surpluses in one area, there are shortages in another. Public officials of shrinking towns and cities often panic at the oncoming economic shrinkage and make desperate attempts to either entice the corporations to stay, invite other producers, or initiate costly urban renewal programs. Private and public figures alike have ingrained in their heads the need for infinite upward growth and simply cannot fit into their skulls the idea of settling for a smaller town. I recall reading a recent article about Mayors who have come to the conclusion that their cities' shrinkage is long term, and thus initiated an interesting psychological and bureaucratic transition from medium sized city to small town. Let's bulldoze those abandoned factories and reforest, eliminate abandoned roads in order to cut down on maintenance, and put on a shoe that actually fits.

There will be instances where the practice is not limited to individual localities and causes major widespread effects. In such cases relocation is not an option, for the tendency is national. Re-education and re-incorporation into the workforce replace relocation in such cases. Those jobs aren't coming back. The only option is to equip the workforce for the jobs of tomorrow.

Companies often carry out lengthy viability studies and impact evaluations prior to relocating or lay off a portion of their workforce. Few such decisions are carried out overnight. Thus there is a "grace period", we can suppose, that a company is willing to go through prior to the lay off moment. I think that that the most effective and economic way to mitigate wide-scale unemployment is to take advantage of this very period. It would be a lot more costly for the state to absorb these citizens after their layoff. Why don't we keep our workers on their toes and equip them for market uncertainty and re-integration? Would not corporations be at the mercy of their highly educated, versatile and dynamic workers?

Efforts can be made to educated potential layoffs during a pre-layoff grace period. (My concept of a universal education system would be quite beneficial during times like this.) Getting such a head start on the re-education of the soon-to-be-unemployed will assure that the time it takes to re-integrate the employee is shorter than the time it takes for the negative effects of such widespread unemployment to level out. In the worst case scenario, all these surplus workers would have to do is join the Army (jaja).

I am faithful that a surplus in one industry is countered by a shortage of labor in another. If every industry were to have a surplus of labor then I seriously think that we need to re-think our stance on industrialism and modern society in general. If every corporation and employer had too many employees, then we either need to cut back on our consumption or implement a utopia where we all sit on our asses and robots do all of the work.

Such layoffs have a higher impact when they occur within large corporations. A small business deducting its workforce from 5 to 4 does not have as much effect on the community as a large corporation lowering its workforce from 5,000 to 4,000. We can suppose that the vast majority of the jobs lost are monotonous and assembly-line type positions. A layoff in a sense is a blessing, allowing for the state to take advantage of the situation and re-this monotonous labor into an entrepreneur culture of small business, entrepreneurs, self-employment, and cooperatives. A small business loan and courses on basic business is a hell lot more efficient than welfare and food stamps.

Outsourcing, imports, and technology provide enormous savings for producers and service providers. Only a fraction of those savings render lower costs for consumers with the majority of such translating into higher profits. There are other ways to better distribute such economic growth with the population such as a combination of higher wages and a shorter workweek. I am a firm believer in a living wage, thus if producers can provide lower consumer costs than the living wage could be lowered to accommodate such. I don't perceive such as redistribution of wealth but as increased accessibility to profit.

The February 9, 2008 issue of the Economist (I know - I'm late) brings forth a term that I was quite unfamiliar with: "leapfrogging". Leapfrogging is a modern phenomenon that allows developing countries to surpass the need for widespread and expensive infrastructure such as telephone lines and electric plants due to the rise of technological advancements such as the mobile phone and solar panels. The concept is truly fascinating and presents an infinite amount of possibilities for poor and improvised countries hoping to improve their quality of living without having to go through the same lengthy steps as their Western counterparts. Marxists have long stressed the need for society to pass through certain phases as seen by Lenin's introduction of New Economic Policy. Capitalists too - especially through international organizations such as the World Bank and the IMF - place infrastructure as one of the first stepping stone of developing countries in their search for economic development.

The billions of dollars spent on roadways for example, could be substitutes by telecommuting employment. Power lines can be supplemented by solar panels. Libraries and universities can be replaced by Internet cafes and distant learning programs. National postal services can be replaced by e-mail. VoIP, wi-fi, mobile phones, video conference, and online marketplaces also represent cheaper, handier alternatives to traditional ways of doing business. The first phase of a planned highway detour in my town of Aguas Buenas, for example, is meant to shrink our town's gruesome traffic jams made by persons commuting to and from their jobs. The first phase of this project costs enough to purchase each resident of the Municipality a laptop computer and a broadband Internet connection. It could also construct 280 public Internet stations or 1,000 distant learning university tuitions. (I'm not saying that that's what should be done, I'm simply trying to put this into perspective.)

The concept of leapfrogging - if it can be manifested into public policy - provides a challenge to these traditional concepts of economic development.

Morris Bornstein in "Comparitive Economic Systems: Models and Cases" points out how every economic system has a "social preference function". Such function "expresses the community's effective aggregate preferences regarding the ends and means of economic activity" either through "individual preferences expressed through individual choice in market", the political process, or the preferences of a ruling group.

The West Covina, California City Council once voted on denying the sale of a plot of land that was to be used for a Wal-Mart. The Los Angeles City Council was also considering such a vote (Enter Stage Right). Even Puerto Rican law makers have evaluated protectionist measures that would drastically limit the advantage that large chain stores have in urban centers.

On the other hand, market advocates will argue that such legislation - though democratic - is contrary to popular will. If people didn't want Wal-Mart, McDonalds, or Wal-Greens, they argue, then they wouldn't shop there. "If Wal-Mart cannot make money in a given location," said one source, "it will either not move there or will close the store. So far, however, it makes money everywhere it opens a store for one simple reason: customers want to shop there." (Enter Stage Right) The Ludwig Von Mises Institute states that "the critics are thereby attempting to cripple consumers' ability -- especially lower income consumers' ability -- to obtain the products that Wal-Mart sells."

Recently a Burger King was constructed in my small town; an idea that I have disagreed with even before the company expressed interest in doing so. This Burger King represented the town's entrance into the fast food battles. "We're finally developing!" some citizens would hail. I moved to this town to escape the endless sea of fast food restaurants and department stores that blanket the suburbs that I grew up around, and it hurts me to see that there seems to be no escape. Unfortunately, that is what the "people wanted", and the inauguration of the Burger King was well publicized and attended by a massive crowd who quickly formed a queue that filled the store. Though the loudest voices during the public hearings were the anti-Burger King crowd, at the end of the day the consumers had their way.

I as well find myself stuck in the middle of the contradiction. If Wal-Mart was to submit all citizens to a referendum on whether or not Wal-Mart should close down its businesses, I would without a doubt vote in favor. Despite such, there have been instances where out of either a shortage of time or a lack of any other option I have made purchases in Wal-Mart. When Wal-Mart purchased the local Amigo supermarket chain I heard many citizens say that they will no longer make purchases from the brand. Despite such, business runs as smoothly as normal. We are all caught in the contradiction. Often at times it is easier to be swept away into a miniscule purchase than it is to be tempted at the polls. We have the habit of voting consciously and of consuming subconsciously; paying  little attention to the affect that such action will have on our community or economy.

While I understand the mechanism of the market advocate's argument, I disagree with the statement that just because a transaction is made means that the transaction is legitimate. Drugs, prostitution, abortion, and even slavery could be justified by such an argument. "If people disagreed with slavery, than they wouldn't purchase products made by slaves," the market advocates might have said centuries ago. I could walk into another country, steal resources and land at gunpoint, turn around and sell the fruits in my local market, and most likely people will still buy them. Such does not justify my practices.

Many neighbors were dumfounded when I told them the reasons why I opposed the new local Burger King. Not only have they never thought or heard of such arguments, but many noded in agreement. The truth is that most consumers are oblivious towards their actions and the direct and indirect effects of their consumption habits. Few are aware that their service and product providers have used the eminent domain powers government to obtain their market advantage, or that their management has contracted the assistance of paramilitary forces to stun union activity, or that foreign government officials or suppliers are paid under the table for their assistance towards the company.

Though consumers can be quite ignorant, I do not necessarily wish for the state to intervene anymore than it does. If a company wants to sell transfat, then I believe that it should be able to do so. If a consumer wants to buy transfat, then they should be able to, only if they are aware of the effects of such. That's where the state steps in. Uniform nutrition tables and GM labels are a start. A public Consumer Reports-like shopper to be distributed with newspapers is also a grand idea. Package labels that describe the actual cost of the item, the original location of the product, and the amount that will be kept by the company are also options.

Consumers alone do not have the tools and knowledge available for them to understand the effect of their purchases as much as they do their votes. Nor does the state have the intrusive right or capacity to regulate corporations at every step. Thus, I think that using the state to educate consumers in order to make them better informed is an acceptable medium.

Nathaniel Branded in "Capitalism" notes:

A bromide commonly cited in this connection by capitalism's opponents is the story of the old corner grocer who is driven out of business by the big chain store... the chain store could give [the people] better service at lower prices and thereby let them save money. Thus both the owners of the chain store and the people in the neighborhood are to be penalized - in order to protect the stagnation of the old grocer. By what right?

I think the issue has to do with many more things than price.

Diversity. While there were once 10 grocers selling a variety of products, now there is 1 large grocer, often succeeding to sell at a lower price by consolidating product sources and purchasing in bulk. The proliferation of McDonald's and Starbucks for example, drastically lower the product diversity available in the area.

Security. Now products and employment are limited to less and less producers and employers. A sudden decision to close shop or to relocate can effect the lifeline of the entire town, considering that their formerly diverse business culture has withered away.

Distance. Products are now shipped in from far away lands often traveling from distant and mechanized farms. Local products have less and less of a presence. Also, with centralized centers of consumption, citizens must now become dependent on automobiles. These prices are not necessarily "cheaper", for air quality, pollution, government spending on roads, deforestation, imported oil, transit police, and traffic jams subsidize those prices.

Family. Family shops can employ family members and pass through lineage. Jobs at Wal-mart cannot. There is no longer a family entrepreneur culture.

Jobs. May 28, 2003 article in the San Juan Star states that nearly 300 drug stores have closed in the past decade mainly due to the expansion of large pharmacies such as Walgreens, K-mart, and Wal-mart. The three stores at the time had opened a total of 85 pharmacies. Thus, we can suppose that for each chain pharmacy that opens, 28 local pharmacies have closed. Each of these local pharmacies employed an average of 8 persons, states the article.

I always looked at it like this: would you spend a few more pennies on a product in order to assure that your family and friends remain employed?

I am not too fond of monopolies - be they private or public. Even public corporations - if possible - should permit competition. In cases where there exists natural monopolies, then of course I prefer public over private ownership. Nathaniel Branden in "Capitalism: The Unknown Ideal" argues that there are no such thing as "natural" monopolies. "Nickel of Canada produces more than two-thirds of the world's nickel - yet it does not charge monopoly prices. It prices its product as though it had a great many competitors. Nickel (in the form of alloy and stainless steels) is competing with aluminum and a variety of other materials... when the price of bituminous coal rose... this was instrumental in bringing about a large-scale conversion to the use of oil and gas in many industries."

Though Branden made a good point, such industries often tap into something that I find difficult to lump together with other forms of private property: subterranean natural resources. Some of these resources are found under huge bodies of water. And despite Verna E. F. Harrison's statement in "Free Enterprise" that "A vast amount of today's wealth was created, not stolen by conquest or fraud", the capitalization of natural resources is one of the instances where I'll agree with Proudhon's "property is theft".

Nathaniel Branden in "Capitalism: The Unknown Ideal" states that "the free market does not permit inefficiency or stagnation - with economic impunity - in any field of production." I'm not sure if I can agree with that in its entirety. In fact, not only do many industries but the concept of infinite economic growth itself depends on us consuming more than we need. If consumers were to purchase only the products they need and spent without dipping into credit, the economy would be stagnant and the economic gods would cry over the coming recession.

Just mind wandering...

A sovereign consumer is one who:

Purchases upon need and convenience, instead of through impulse.
Purchases to refurbish and restock, instead of through impulse.
Is not effected by advertising.
Is aware of manipulative and addictive qualities of advertising.
Is aware of the effect his purchase might have on his community.
Is aware of the effect his purchase has on the communities of others.
If fiscally independent with no or little debt.
Can differentiate between high quality good and goods priced high for bragging purposes.
Weighs leisure over luxury.

How about this: once a country's quality of life and economic well-being is at a satisfactory level, why not peg the labor force's productivity rate to the number of hours in a work week. Thus, if worker productivity goes up, new technologies are introduced, or existing technologies are maximized then the work week will shrink.

Of course with our current mentality of infinite economic growth, endless mobility, and over consumption such would never be possible.