Skip’s Theory
Once upon a time there was an American Economy – my dad told me about it when I was a little guy. Dad had joined the Navy when he was nineteen years old “to give his life for his country” as they called it back then. He was in the Navy for about three years, and although there was a war going on, as luck would have it, he didn’t have to give his life for his country, but came home from the South Pacific and got his GED, and married my mother. Anyway, Dad’s theory of the economy emphasized a couple of points. The first point went something like this:
Skip Runyan’s Theory of the Economy Explained.
Point #1. “Once upon a time there was an American economy. In that economy, things were always balanced.” (As Lord Maynard Keynes, who my dad had never met would have noticed: In this ideal economy aggregate supply always equaled aggregate demand.) Anyway, as my dad noticed: “Working guys were paid enough to buy back quite a bit of what they produced every year, and business owners were making enough profit to keep their business going and to send their kids to college and buy a boat to cruise the Caribbean.” Such a balance had been unusual in the history of the world, though England had come close to such a balance just before it began its Industrial Revolution – just after a big plague killed lots of workers, and the workers were being paid a bigger percentage of what they produced than before. (Landowners had to pay more to get workers to work for them because there was simply a smaller supply of workers, and as everyone knows, a smaller supply of anything raises its price. This is called the law of supply and demand in today’s college classes.)
But Dad was more interested in discussing the Once Upon a Time American Economy than the Old Time British Economy. And in this Once Upon a Time American Economy, however it happened, a thing called aggregate supply –as defined by Lord John Maynard Keynes whom my dad Skip Runyan didn’t know – the total of all things produced to be sold from store shelves and automobile dealerships, always equaled a thing later called aggregate demand – which was also defined by Lord John Maynard Keynes, whom my dad Skip Runyan still didn’t know. This aggregate demand as defined by Lord John Maynard Keynes included the total of all things bought from store shelves and automobile dealerships. Anyway, in my Dad’s Once Upon a Time American Economy, pretty much everything on store shelves and at automobile dealerships was bought every year by folks who made enough money to buy these things.
· Long before Lord Maynard Keynes defined aggregate supply and aggregate demand, economists had been trying to define things called a “just wage” and a “fair profit”, especially in Germany where paternalistic leaders believed in paternalism. These economists thought they needed to figure out everything for working class guys, and someone had long ago noted that just wages and fair profits must of necessity be wages and profits that will allow the economy to work or there will be no economy at all: if wages are so high there are no profits, the businesses will have to shut down, and if wages are so low the workers can’t buy enough of what is produced, lots of extra products will be left on the store shelves, and the businesses will lay off workers and shut down their plants. Either way, we will end up with the economy disappearing, sometimes until there is no economy at all. And wages and profits will disappear.
This, you may have noticed, runs parallel with Immanuel Kant’s “Categorical Imperative” which we will discuss later – which says something along the line that an idea is probably not a good idea if implementing the idea doesn’t allow the idea to work. (In this case it is not a good idea to implement a just wage or fair profit that won’t let the economy work, since we will end up with no wages or profit at all.)
Skip Runyan’s Theory of the Economy Expanded
This next point is a point Skip Runyan was unaware of since he never went to college, but it might seem to verify his economic theory.
Point #2. Once upon a time wages went up a whole lot in England. This happened after a big plague killed lots of folks in a place Sir Winston Churchill would one day refer to as “Our Island”. Historians tell us that maybe half of all the workers in England died from the plague, and pretty soon rich folks noticed they had to pay a lot more money to get one of the surviving workers to hoe their flower gardens or stand in their doorway as a butler since these workers were also being asked to hoe the flower gardens of other rich folks who had started bidding up the wages they would pay to get flower gardens hoed, and get their front doors butlered.
All this happened because of a phenomenon that would later be noticed by economists. It went something like this: “If there is less supply of something, its price will tend to go up.” This phenomenon is now called “the law of supply and demand” in American college classes which Skip Runyan never attended since he only got a GED, and the only British history he told me of was about a certain drunk British sailor who Dad’s friends called a “Limey”, who complained about America a lot and woke up one morning with “God Bless America” tattooed across his chest. Anyway, the phenomenon worked something like this in England: Since there was a smaller supply of workers since lots of workers had died, those who were lucky enough to have lived were offered more money to hoe rich men’s flower gardens.
My Dad Skip Runyan was unaware of much of that since he had never studied British history in college, but he liked to point out this next point which he pointed out to me, and I have put in my own words under the heading of Point #3.
Point #3. Many years later the opposite thing happened in a one-time British colony now known as the United States of America. Rich folks who lived in nice houses overlooking the Pacific Ocean, or maybe lived in their jet planes as they flew from California to some fancy resort in Spain or to Hawaii, or maybe to some ski resort in the Swiss Alps, didn’t want to pay lots of money to the descendants of English peasants to hoe their flower gardens or carrot plantations in the Central Valley of California. So they encouraged politicians to forget about laws that told folks from Mexico and Guatemala they couldn’t come to California and work for less than minimum wage or be cheated out of overtime, or work cleaning out asbestos from old buildings without wearing a mask, so they wouldn’t die before they were forty years old, since they, being illegally in this country couldn’t hire lawyers to sue folks snorkeling somewhere near Truk Island in the Pacific Ocean, or Marie Santos which is also in the Pacific Ocean and is a place my dad Skip Runyan visited during World War II.
The result in the Central Valley of California of course, which my dad knew about, was another phenomenon noticed by economists, and also related to the Law of Supply and Demand: “If there is an oversupply of something the price will go down.” This phenomenon occurred because there were lots of workers since Mexican workers kept coming across the border from Mexico, and they still hadn’t all died of asbestos poisoning of their lungs which is the way most people who died of asbestos poisoning died even though some people died of things like stomach cancer since they sometimes got asbestos on their taco when they ate their lunch which was probably exactly one half hour and didn’t include a siesta like it would include in Mexico or Guatemala where it is hot even though I understand it can sometimes get hot in the Central Valley of California. The result of all this of course is that real wages in the great country now called the United States of America have not gone up since President Richard Nixon took some pretty big campaign contributions from international businessmen and folks who owned farms in the Central Valley of California, even though production per man hour – a thing called “productivity” in American college classes – has gone up a whole bunch.
All of this has resulted from an oversupply of workers which has resulted in lower wages; and now lots of Black Folks, whose fathers and uncles and grandfathers and stuff like that traveled to Vietnam or Korea or maybe to Iraq or Afghanistan, or maybe they traveled to World War II, stand on street corners in some big city until they get in trouble since they don’t have a job to keep them busy forty hours a week.
Of course a forty hour job would also keep them out of trouble while they ate their lunch and drove to work and rested up while watching the news after a hard day at work, and spent time every weekend spending some of the money they were paid every Friday. They also might stay out of trouble while they played with their kids if they were earning enough money to support a wife and kids, which would be one of the reasons they looked real hard for work, which they probably wouldn’t look real hard for if their job only paid enough to buy the gas to drive to and from work, and didn’t leave anything over to hire an attorney if their job caused them to die of asbestos poisoning before their kids grew up.
Public relations outfits working for some rich folks skiing in the Alps or somewhere near Aspen, Colorado, said things like this: These American sons and nephews of American war veterans (and here I quote) “are not willing to work” (unquote) for wages that won’t buy enough gas to drive them to their job, or hire a lawyer if they die a miserable death from having breathed too much asbestos, or ingested asbestos in their bean, beef, and asbestos taco.
A Point My Dad Would Not Have Noticed Even if He Had Lived Long Enough.
Point #4. As almost all economists except Skip Runyan noted back in the early 1980’s, the American Worker, including the sons of Black American War Veterans, needed (and here I quote again) “to be competitive” (unquote), and here’s the point: If undocumented workers in Central Valley were willing to work for wages that wouldn’t pay for things like gasoline, maybe American workers should “suck it up” as their uncle learned in the Marine Corps, and help make America great again by working for nothing, and maybe sign a work agreement that they wouldn’t sue the company they worked for if they died of asbestos poisoning, or at least let the companies lay them off all the time so they wouldn’t be able to prove which company they were working for when they got asbestos poisoning, or when they crushed a couple disks in their back and become lazy no-counts who always complain about a bad back, and “are not willing to work” (and here I have quoted again) for wages that won’t pay to get their back fixed .
I might also here note that good American businesses were also told they needed to compete with businesses in places like India – whose workers were willing to work around asbestos and who didn’t need auto insurance because they were not making enough money to buy a car, or maybe even a bicycle.
A Point I Noticed:
Point #5. In the year 1970 I had the privilege of walking around Vietnam in a squad of five, six or seven guys, two of whom were Black Guys, and one of whom I figured saved my life. Not like he did a Rambo act or something, but he said something like, “Hey, that’s Rock”, as our buddy was preparing to pull the trigger on a nut he saw running across a field with a rifle and rucksack. (My squad leader had forgotten me on an observation post while the rest of the platoon left the area to find a night-laager. There were considerable dead bad guys and not-so- dead bad guys in the area.)
Anyway, in later years I would see some Skinny Black Kid wearing an old army jacket walking around San Diego or some such American town, and wonder if this could be Larry Thomas who I figured had saved my life. I always hoped Larry had a good life, earning enough money to support a wife and kids – sometimes taking them on vacation to Disneyworld or maybe scuba diving near Truk Island in the Pacific, and things like that.
Of course I sometimes worried a bit about Larry since I understood that the main way most young Black Men died in America was thanks to murder which ranks just above accidents and suicide. And later when I was cranked out as having PTSD thanks to my time in Vietnam, I figured Larry might have had the added complication of something like PTSD himself, and while Larry was a rather good-natured mellow sort of guy, his military experience could have made him a bit touchy over some of the hassles I understand some Black Folks experience during their lives living in America.
And one of the big hassles for Black Guys living in America seems to be a lack of work, since, when they are not in prison they usually top the unemployment charts. Sometimes this is because they “are not willing to work”, as the truism goes, for wages that may not pay for the gas to get them to work, and even more likely won’t support a family.
Anyway, the famous magazine The Economist once presented an article speculating that one reason the Industrial Revolution took hold in England was that the Big Plague we talked about a few pages back had lowered the number of workers in England, so their wages went up. I am not advocating such a plague, but only noting that the Law of Supply and Demand as it is now called in American college classes says that fewer workers tends to mean higher wages for those working. And as I said, real wages, adjusted for inflation, have not risen in America since about the time I returned from Vietnam in the 1970’s, while production, and productivity, have increased a lot.
And about 1970 Richard Nixon fixed things so American businessmen could escape taxes, and make more money by building new manufacturing facilities in Japan rather than rebuilding thirty year old facilities in Detroit.
As part of a history lesson, or at least as a reminder, let me note that lots of jobs were shipped to countries like Japan about this time, and American workers were told they “needed to compete”, as the saying went. One union worker I knew at the time – I heard he later died in an industrial accident while working on a construction job – asked if American workers were to compete with Japanese workers at six dollars an hour, Taiwanese at four, or Koreans at three? “Where will it end, he asked, “in Indonesia at fifty cents an hour?”
While I appreciated his analysis, I have to note he was off a bit. The American’s big competition was not the 1980’s Indonesian worker at fifty cents an hour, but the 2005 Chinese worker at fifty cents an hour. That has changed. While wages have gone up in China since then, I note that in 2016 Bangladesh, where some of my shirts originated, twenty-one cents per hour was still the minimum wage.
(I think someone put a public relations outfit to work on what could look like bad publicity for International Businesses doing business in Bangladesh. Someone on Mr. Google said Bangladeshi workers were making something like “1500”. The entry didn’t elaborate on what these “1500” were. As near as I could figure, the fifteen hundred (Centavos?) translated into English as about twenty one cents per hour!)
Well, okay, the point to this diversion is that some smart economists who must have been working for some foundation funded by some international businesses said we needed to keep wages low in America to “compete” with foreign workers making twenty-one cents per hour. This resulted in some Black American Kids in some inner cities standing on a corner all day before they ended up in jail because “they weren’t willing to work” for wages that wouldn’t pay for their trip to work and back. I just hope none of these kids were the sons or nephews of anyone who watched my back while I walked around in Vietnam.
Let me suggest that a forty hour job would probably keep a lot of guys in inner cities from ending up in jail. If my math is correct, forty hours, plus an hour going to and an hour returning from work, comes to about fifty hours a week a young guy will probably not be getting into trouble. Add a half hour for lunch, and an hour resting up every evening, and we have over fifty-seven hours a week a nineteen year old kid will not be standing on a corner waiting for trouble to show up. I suspect he will spend some time looking for something to spend his money on, so we have probably seventy hours a week an employed young guy will probably not be looking for trouble. And if he finds his paycheck is adequate to raise a family on, he may find a young lady who would like to spend some time with him and keep him on the straight and narrow.
I know, a quick mathematical calculation says there are some hundred and sixty-eight hours in a week, so there are still almost a hundred hours for a young guy to get in trouble, especially if he hasn’t found a young lady to keep him on the straight and narrow, although some mothers can fill that role part of the time. But let me also note that most young guys need to sleep and eat a couple of meals every day, which will take up some of their time, and a young guy with a decent job may not want to get into trouble because he wants to keep his job.
If all this sounds too idealistic, let me note that crime went down considerably during Bill Clinton’s presidency when the economy, cashing in on the peace dividend, as it was called, when the Soviet Union disappeared as a big nuclear threat to our country, and the economy was providing lots of jobs for almost everyone, including the sons and nephews of Black Kids who walked around in Vietnam. I would like to see lots of jobs happen again. Maybe we could reanalyze the theory that caused Richard M Nixon to allow what had become International Businesses to invest all their profits in Japan or China, and reanalyze the thinking that said it was good to allow foreign workers in America to compete with wages that wouldn’t allow them to hire an attorney if they crushed a couple of disks in their back and became lazy no-counts.
We sometimes hear the argument that American businesses paying a decent wage “can’t compete” with businesses paying twenty one cents an hour in enlightened countries like Bangladesh that have figured out how to be competitive. That of course is true.
Like I said, I wouldn’t like to see wages go up thanks to a plague killing lots of American workers, but just like I think it is insane to expect American Businesses to compete with businesses paying twenty-one cents an hour, I don’t think we need an excessive supply of workers in this country driving wages down. So even though there were a couple of Hispanics who watched my back in Vietnam, I don’t think we should invite everyone who can sneak into this country to do so, and see wages driven down thanks to an excess of workers standing on street corners until they get into trouble.
Some folks say raising the minimum wage is a good remedy for all this, and we could note that even the Economist magazine, which always likes free trade and stuff like that, saw the income of American workers as so out of whack that they said the US should raise the minimum wage. I personally prefer a free market to such government manipulation, and though raising a minimum wage may seem at times appropriate, I would first hope to see wages rise by stopping the American Businesses’ and the American Workers’ insanely low priced “competition”.
My Dad Skip Runyan’s Theory Concluded (almost)
Immanuel Kant whom my dad had never heard of and didn’t think a lot about was a big time philosopher back in the last half of the 18th Century. My college philosophy teacher said he had made a valiant attempt, but failed in his attempt to develop a philosophy that would work for everyone at all times (or maybe I should say he failed to develop a rule that would rule everything). Even though it seems Immanuel Kant failed in his attempt to establish a rule that would rule everything, it seems his theories became a starting place for much subsequent philosophizing, so it might be worthwhile to know what he said. He said, for instance, that any law or rule that destroys itself when it is applied is probably not a good law or rule. He called his rule the “Categorical Imperative”.
Although most folks don’t think this rule can rule everything, it seems to have lots of applications: Herbert Stein, for instance, a real smart economist who worked for lots of American Presidents, applied Kant’s Categorical Imperative, noting, as far as certain things in the economy went: “If it is not sustainable, it probably won’t be sustained.” I thought this sounded like a smart application of Kant’s Categorical Imperative, and sounded a lot like a statement from my dad Skip Runyan who would sometimes say something "isn't workable,"implying of course that if something "isn't workable, it probably won't work."
Anyway, in another attempt to apply Kant’s Categorical Imperative, we might have noted some pages back that a “just wage” and “fair profit”, which we talked about, must of necessity be a wage and profit that will allow the economy to work by maintaining a balance between Aggregate Supply and Aggregate Demand. (Everything produced must equal everything bought, consumed, used up, or whatever you want to call it, since, it seems, the economy will cease to exist without that balance, and there will be no wages or profit at all.)
This basic idea is certainly correct, that the final “just wage” for the Aggregate Demanders, and “fair profit” for the Aggregate Suppliers, must allow the Aggregate Demanders to buy back enough of what is produced by the Aggregate Suppliers to keep the economy going – or we won’t have an economy, and so we won’t have any wages or profits. And, again, please note, this might seem to fit in pretty well with Kant’s Categorical Imperative, that says that “any rule that doesn’t allow the rule to be applied is probably not a good rule.” (In this case, any rule that results in too much or too little wages to wage earners, or too much or too little profit to business owners, will tend to destroy the economy – and we will have neither wages nor profits.)
Give More Wages (to solve today’s problem, where production keeps increasing)
So if too much has been produced to allow the Aggregate Demanders to buy back all of the production the Aggregate Producers produce, we can expect the economy to disappear. To remedy this -- now get this! – we might give the workers who end up being the Aggregate Demanders more wages. (Well, I’m not sure we should say producers should “give” the workers more wages, if in fact a “just” wage is one that will allow the economy to work; we might think that rather than being “given” the wage, the employee should be paid the wage he has “justly” earned. )
While I might see some validity to such an argument, which is sometimes used to prove businessmen are all jerks and thieves, I’m not sure such moralizing is in order. After all, it was the entrepreneur who forewent ice cream at snack time at David Douglas High School when I was a kid so he could invest in the pencils he sold to his classmates, and this is where he accumulated the capital to start his later businesses by risking everything to move from Oregon to West Virginia when he heard house prices were depressed there.
So let me limit my moralizing on how the employer doesn’t “give” but “owes” a just wage to his employees, a wage I have to some extent defined, and I think rightly so, following Kant’s Categorical Imperative, as one that will allow the economy to keep going.
Give More Credit
There was another remedy to the problem of a growing economy that my dad noticed after World War II, and didn’t really like…..Anyway, another remedy to the problem of overproduction by the producers (or under consumption by the demanders – the consumers –) is to “give” the demanders more credit. This is not always terribly bad: 7% interest leaves less debt in the consumers’ pocket than 27%, so simply lowering the interest rate does much the same as raising wages. And we might call this “giving” the consumers more credit.
Of course this is not always what is done; sometimes “giving more credit” simply entails letting more consumers qualify to pay 27% on their credit card, no matter how insolvent their financial situation may be. This sometimes results in folks going bankrupt, or letting the bank foreclose on their house.
(My dad Skip Runyan noticed this: he said that when he first returned from the South Pacific after World War II, things were pretty much bought for cash, or with only a little loan. Soon things were bought with five or ten year loans, then fifteen and twenty year loans, and finally with twenty-five and thirty year loans in the end. Folks were not buying things with the wages earned that year, but with wages they hoped to earn in thirty years!)
So let me again note the economist Herbert Stein and Skip Runyan’s argument that a just wage must necessarily be one that will allow an economy to work – or we won’t have an economy: (“If it isn’t sustainable it probably won’t be sustained”, and: "If it isn't workable, it probably won't work"). Such an argument might suggest that everyone who doesn’t pay a workable wage is a jerk, and we might revert to Karl Marx’s conclusions as pursued by Joseph Stalin and Mao Tse Tung – that everyone who succeeds in a business enterprise must be a jerk, and, according to Stalin and Mao, deserves death, or at least a lot of re-education. Of course Marx, Stalin, and Mao were atheists, and I suggest none of these guys read the book of Proverbs in the Good Book that noticed that successful folks sometimes gave up drugs and alcohol , and got up to go to work, and maybe weren’t paying child support to several different women. And of course Stalin and Mao didn’t know my high school buddy accumulated his wealth by foregoing ice cream at snack time at David Douglas High School.
Which brings us back to the Mexican Problem, which we started to address earlier. As we noted earlier, the law of supply and demand states that if there is a lack of something its price will rise. And if there is an oversupply of something, its price will drop.
This works in the world of labor: if there is an oversupply of workers, wages will drop. And that includes any workers, including Mexican workers from Mexico.
And we are left with today’s situation where lots of American Kids, and especially American Kids in America’s inner cities, and I quote: “are not willing to work” (unquote) for wages that won’t buy them gas to get to work and back.
More on The Mexican Problem
This Mexican Problem, as it is sometimes called, can appear a bit complicated. And for me it is especially complicated since some Mexican Guys watched my back while I walked around in Vietnam, just like a couple of Black Guys did. Of course some of these Mexican Guys who watched my back were not even from Mexico. Frank Rodriguez, for instance, was actually from Puerto Rico although he was also from New York but still spoke “Mexican” as most of us White Guys would have noticed. Or at least he spoke a dialect of Mexican or something that sounded Mexican since it all sounded the same to me.
At any rate, since “Frank”, sometimes called “Francisco”, Rodriguez watched my back in Vietnam, I hope he or his son or his nephew hasn’t spent a lot of time standing on some street corner in New York City because he couldn’t get a decent job.
I haven’t worried much about “Cardo” (Ricardo) standing on a street corner in New York or L.A. or something like that because, as luck would have it, he “gave his life for his country”, as they sometimes called it, while still in Vietnam.
But I still worry about the sons and nephews of all these guys who speak some dialect of Mexican standing on the street corner of some town across this country because they can’t figure out how to be competitive with Bangladeshi workers earning twenty-one cents an hour.
I even worry about the Mexicans I met in Vietnam having to compete with other Mexicans who have been recruited to ingest lots of drugs inside of balloons before they sneak from Mexico into the United States of America since they will probably need the ballooned drugs inside their balloons to subsidize any wages they make in America since lots of folks are sneaking into these United States, keeping wages low by competing for work, but not low enough to compete with Bangladeshi workers making twenty one cents an hour. They may need these ballooned drugs to trade for all natural tacos with no added MSG to fight any cancer they may have gotten cleaning up asbestos, and to numb any pain from any smashed disks in their backs that they can’t afford to get fixed since they have become lazy no-counts.