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The Scarcity Trap

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  • The Scarcity Trap

    In a previous post, I mentioned that I had listened to a podcast about how our "American Dream" mentality in the U.S. has a negative side. The idea that the U.S. is a land where anyone who wants to can go from rags-to-riches has the negative corollary that anyone who has not achieved riches is "lazy."

    I just listened to another podcast I found interesting. It's about the effect of scarcity (poverty) on the human brain and human thinking. It describes how, when we are faced with a scarcity of a necessary resource, it impacts what we can and do think about. The focus narrows to the scarcity, and to short-term thinking instead of to the larger picture and long term effects. In short, when you're hungry, all you can think of is food. When you are poor, all you can think of is where the next month's rent will come from. The impact on making long term plans and implementing them is profound.

    It's worth a listen (or read).
    The ultimate weakness of violence is that it is a descending spiral begetting the very thing it seeks to destroy...returning violence for violence multiplies violence, adding deeper darkness to a night already devoid of stars. Darkness cannot drive out darkness; only light can do that. Hate cannot drive out hate; only love can do that. Martin Luther King

    I would unite with anybody to do right and with nobody to do wrong. Frederick Douglas

  • #2
    Please help me to stop thinking about bacon all the time. Send me all of your bacon.

    and money. that too.

    Comment


    • #3
      But seriously, I think this is partly why we keep getting so many immigrants trying to sneak into the country. They have this image of America as a golden land where everyone is rich. But we have just as much poverty as other nations. Coming here is not a guarantee of a better life.

      But we DO have more opportunity than many other places. Especially in starting your own business. You don't need government permission to just open up a small business. Anyone can do it. You just need a product, which many people make themselves. So there is that.

      Comment


      • #4
        Originally posted by Sparko View Post
        But seriously, I think this is partly why we keep getting so many immigrants trying to sneak into the country. They have this image of America as a golden land where everyone is rich. But we have just as much poverty as other nations. Coming here is not a guarantee of a better life.

        But we DO have more opportunity than many other places. Especially in starting your own business. You don't need government permission to just open up a small business. Anyone can do it. You just need a product, which many people make themselves. So there is that.
        The highlighted part above is the one thing I disagree with. It is correct to observe that there are no legal obstacles to most people starting a business. Anyone is legally permitted to do it. Indeed, we even have businesses started by illegal immigrants, who are hiring legal residents!

        But not "anyone" can start a business. Some people do not have the aptitude to run a business. And some people are caught in the trap described by the article. When you are hungry, food is what your mind thinks about. It doesn't have room for much else. When you are poor, how you are going to stay housed and fed and clothed is all you can think about.

        This is why an appropriately designed social safety net is so important.

        And it is why the wealth disparity in this country is so egregious. We don't have to be socialists to say, "if the CEO of a business is walking away with $100s of millions a year in income and bonuses, and the rank-and-file are working 2-3 jobs to keep food on the table, something is seriously wrong. All of the attention from the right is on how some government programs amount to wealth-redistribution and are essentially "stealing" money from people who "rightfully earned it." Little or no attention is going to the poor slob working 60-80 hours a week and barely feeding him/herself and his/her family. This person's labor and time are being stolen/redistributed, but no one seems to complain very much about that.

        Little surprise. The poor slob at the bottom of the food chain doesn't have the megaphone of the rich one, and doesn't have the time or resources to lobby Congress. So their labor/time is stolen, the money that labor generates is concentrated at the top, and then that money is used to keep them at the bottom by massive media campaigns to convince the right to "protect our wealth" and to undermine social programs that might actually help people climb out of poverty.

        For example, thanks to changes in the national welfare program, over 72% of the money earmarked for "Temporary Assistance for Needy Families" doesn't actually get used by needy families as cash assistance. Instead, the states can retask it for pretty much anything they want, as long as they can meet one of the four objectives of the program. Unfortunately, two of those objectives are so broad as to encompass almost anything, giving the states free reign to do pretty much anything they want with the money. Apparently, what they don't want is to actually give it to people who need help.
        The ultimate weakness of violence is that it is a descending spiral begetting the very thing it seeks to destroy...returning violence for violence multiplies violence, adding deeper darkness to a night already devoid of stars. Darkness cannot drive out darkness; only light can do that. Hate cannot drive out hate; only love can do that. Martin Luther King

        I would unite with anybody to do right and with nobody to do wrong. Frederick Douglas

        Comment


        • #5
          Originally posted by Sparko View Post
          But we DO have more opportunity than many other places. Especially in starting your own business. You don't need government permission to just open up a small business. Anyone can do it.
          I am surprised to hear this idea that starting your own business is difficult in 'many other places', and easier in the US. I am curious as to what you mean by this. Can you elaborate?
          "I hate him passionately", he's "a demonic force" - Tucker Carlson, in private, on Donald Trump
          "Every line of serious work that I have written since 1936 has been written, directly or indirectly, against totalitarianism and for democratic socialism" - George Orwell
          "[Capitalism] as it exists today is, in my opinion, the real source of evils. I am convinced there is only one way to eliminate these grave evils, namely through the establishment of a socialist economy" - Albert Einstein

          Comment


          • #6
            Originally posted by Starlight View Post
            I am surprised to hear this idea that starting your own business is difficult in 'many other places', and easier in the US. I am curious as to what you mean by this. Can you elaborate?
            Good point... I disagreed with that too and didn't call it out...
            The ultimate weakness of violence is that it is a descending spiral begetting the very thing it seeks to destroy...returning violence for violence multiplies violence, adding deeper darkness to a night already devoid of stars. Darkness cannot drive out darkness; only light can do that. Hate cannot drive out hate; only love can do that. Martin Luther King

            I would unite with anybody to do right and with nobody to do wrong. Frederick Douglas

            Comment


            • #7
              Originally posted by carpedm9587 View Post
              The idea that the U.S. is a land where anyone who wants to can go from rags-to-riches has the negative corollary that anyone who has not achieved riches is "lazy."
              This reminds me of a great little Ted talk I watched this week on the question of what countries is it easiest to get rich in (either to (a) be rich, or (b) go from rags-to-riches). I found it a fascinating question because it wasn't an issue I'd seen addressed before by empirical studies. The empirical data, and his speculations as to the reasons why the answers are what they are, are quite interesting.
              "I hate him passionately", he's "a demonic force" - Tucker Carlson, in private, on Donald Trump
              "Every line of serious work that I have written since 1936 has been written, directly or indirectly, against totalitarianism and for democratic socialism" - George Orwell
              "[Capitalism] as it exists today is, in my opinion, the real source of evils. I am convinced there is only one way to eliminate these grave evils, namely through the establishment of a socialist economy" - Albert Einstein

              Comment


              • #8
                Originally posted by Starlight View Post
                This reminds me of a great little Ted talk I watched this week on the question of what countries is it easiest to get rich in (either to (a) be rich, or (b) go from rags-to-riches). I found it a fascinating question because it wasn't an issue I'd seen addressed before by empirical studies. The empirical data, and his speculations as to the reasons why the answers are what they are, are quite interesting.
                Hopefully it will be in my podcast feed...
                The ultimate weakness of violence is that it is a descending spiral begetting the very thing it seeks to destroy...returning violence for violence multiplies violence, adding deeper darkness to a night already devoid of stars. Darkness cannot drive out darkness; only light can do that. Hate cannot drive out hate; only love can do that. Martin Luther King

                I would unite with anybody to do right and with nobody to do wrong. Frederick Douglas

                Comment


                • #9
                  Originally posted by carpedm9587 View Post
                  We don't have to be socialists to say, "if the CEO of a business is walking away with $100s of millions a year in income and bonuses, and the rank-and-file are working 2-3 jobs to keep food on the table, something is seriously wrong.
                  What do you think of the claim that if a CEO were to divide his/her income among the employees, it would only amount to a miniscule raise? I'm assuming you've looked at the actual example numbers for various businesses and know what kind of figures we're talking about. Is a tiny raise really worth it? Or are you thinking of some other way to redistribute that money to the rank-and-file, such as a need-based program?
                  Curiosity never hurt anyone. It was stupidity that killed the cat.

                  Comment


                  • #10
                    Originally posted by carpedm9587 View Post
                    Hopefully it will be in my podcast feed...
                    Seems unlikely as the talk is new to me but is 2 years old. I suggest you follow my link to youtube if you want to watch it.

                    Originally posted by QuantaFille View Post
                    What do you think of the claim that if a CEO were to divide his/her income among the employees, it would only amount to a miniscule raise?
                    That seems unlikely. For the medium sized company I used to work at, it would have been about a 5% pay rise per employee if the CEO salary was distributed.

                    For a really really large company, distributing the CEOs salary itself isn't going to do much to help the average worker, but such companies have whole layers of senior management that are all really highly paid like the CEO, so for those companies you'd want to apply the distribution to their salaries too.

                    e.g. Apple. Without digging into the data too much, it looks like Apple has around 20 top executives at around $20m a year each, and 47k US employees, so that would be 8k per year more to each and every employee if you split their compensation among the employees. I suspect though that Apple would actually have a lot more upper management in the $1-$10m per year range than merely the 20 top executives that 5 seconds on google is telling about, so if you distributed their salaries too, that's a lot more money to go around.


                    There's been plenty of productivity increases in the US, but the gains from it have been all going to the rich, not to the average workers:

                    Productivity has surged, but income and wages have stagnated for most Americans. If the median household income had kept pace with the economy since 1970, it would now be nearly $92,000, not $50,000.


                    Pretty much all the new wealth generated by the more-productive-than-ever economy is going into the pockets of shareholders, CEOs, and upper-management, not the average worker. What sort of difference would it make to the country if the median wage were $92k now rather than $50k? I suspect rather a lot.
                    Last edited by Starlight; 06-21-2018, 07:56 PM.
                    "I hate him passionately", he's "a demonic force" - Tucker Carlson, in private, on Donald Trump
                    "Every line of serious work that I have written since 1936 has been written, directly or indirectly, against totalitarianism and for democratic socialism" - George Orwell
                    "[Capitalism] as it exists today is, in my opinion, the real source of evils. I am convinced there is only one way to eliminate these grave evils, namely through the establishment of a socialist economy" - Albert Einstein

                    Comment


                    • #11
                      Originally posted by QuantaFille View Post
                      What do you think of the claim that if a CEO were to divide his/her income among the employees, it would only amount to a miniscule raise? I'm assuming you've looked at the actual example numbers for various businesses and know what kind of figures we're talking about. Is a tiny raise really worth it? Or are you thinking of some other way to redistribute that money to the rank-and-file, such as a need-based program?
                      I think the problem is not just CEOs. It is the priority companies place on paying to shareholders. Despite all of the hoopla about Trump's tax cuts, there is little evidence that the saved money is going to employees. What is putting pressure on wages right now is the low unemployment rate, which was expected as unemployment continued to drop. Outside of a few high-profile raises, a few more high-profile bonuses (which a company can do once with no obligation to do it again, unlike a raise - which is more permanent), most of the saved money (and returning money) seems to be going to stock buy-backs and share-holder dividends.

                      Un-regulated capitalism (the so-called free market) is a formula for social injustice. I support a national minimum wage. Without it, American companies are in competition with each other to cut costs when unemployment inevitably climbs. That will put American companies at an international competitive disadvantage, which will force companies to a) find other ways to manage costs and stay competitive and/or b) occupy innovative niches not currently occupied overseas.
                      The ultimate weakness of violence is that it is a descending spiral begetting the very thing it seeks to destroy...returning violence for violence multiplies violence, adding deeper darkness to a night already devoid of stars. Darkness cannot drive out darkness; only light can do that. Hate cannot drive out hate; only love can do that. Martin Luther King

                      I would unite with anybody to do right and with nobody to do wrong. Frederick Douglas

                      Comment


                      • #12
                        While mass income equality on the scale we see on the US is immoral IMO (the minor prophets in the Old Testament juxtaposed rich and poor quite a bit), I think the real problem is shareholders who insist that any unexpected profits go toward dividends and complain about raises and bonuses given to hourly employees.
                        "I am not angered that the Moral Majority boys campaign against abortion. I am angry when the same men who say, "Save OUR children" bellow "Build more and bigger bombers." That's right! Blast the children in other nations into eternity, or limbless misery as they lay crippled from "OUR" bombers! This does not jell." - Leonard Ravenhill

                        Comment


                        • #13
                          Originally posted by KingsGambit View Post
                          While mass income equality on the scale we see on the US is immoral IMO (the minor prophets in the Old Testament juxtaposed rich and poor quite a bit), I think the real problem is shareholders who insist that any unexpected profits go toward dividends and complain about raises and bonuses given to hourly employees.
                          And the shareholders are also in the top eschelons of wealth. The bottom 50% (according to wealth) own essentially zero stocks. Then there are all those like me who own and never attend a single shareholder meeting or vote. Then there are the top shareholders, who actually do vote, but a significant block of those either work for the company or on the board of directors. The system is badly inbred, but we live in an age where "regulation=bad" and the people with the biggest bullhorns can convince a vast block of American citizens to vote against their own best interests by pounding on the "government bad" and "regulation bad" and "free market good" drums, knowing that as long as that is the mantra - they can continue to gain wealth at the expense of others.

                          And before someone accuses me of "hating the rich," (another common mantra - this is all just "class warfare"), I do not. I have not problem with wealth. I have problem with wealth at the expense of others.
                          The ultimate weakness of violence is that it is a descending spiral begetting the very thing it seeks to destroy...returning violence for violence multiplies violence, adding deeper darkness to a night already devoid of stars. Darkness cannot drive out darkness; only light can do that. Hate cannot drive out hate; only love can do that. Martin Luther King

                          I would unite with anybody to do right and with nobody to do wrong. Frederick Douglas

                          Comment


                          • #14
                            Originally posted by carpedm9587 View Post
                            The highlighted part above is the one thing I disagree with. It is correct to observe that there are no legal obstacles to most people starting a business. Anyone is legally permitted to do it. Indeed, we even have businesses started by illegal immigrants, who are hiring legal residents!

                            But not "anyone" can start a business. Some people do not have the aptitude to run a business. And some people are caught in the trap described by the article. When you are hungry, food is what your mind thinks about. It doesn't have room for much else. When you are poor, how you are going to stay housed and fed and clothed is all you can think about.
                            Well yeah, that is what I meant. I was speaking of opportunity. Not ability.


                            This is why an appropriately designed social safety net is so important.
                            Why?

                            And it is why the wealth disparity in this country is so egregious. We don't have to be socialists to say, "if the CEO of a business is walking away with $100s of millions a year in income and bonuses, and the rank-and-file are working 2-3 jobs to keep food on the table, something is seriously wrong. All of the attention from the right is on how some government programs amount to wealth-redistribution and are essentially "stealing" money from people who "rightfully earned it." Little or no attention is going to the poor slob working 60-80 hours a week and barely feeding him/herself and his/her family. This person's labor and time are being stolen/redistributed, but no one seems to complain very much about that.

                            Little surprise. The poor slob at the bottom of the food chain doesn't have the megaphone of the rich one, and doesn't have the time or resources to lobby Congress. So their labor/time is stolen, the money that labor generates is concentrated at the top, and then that money is used to keep them at the bottom by massive media campaigns to convince the right to "protect our wealth" and to undermine social programs that might actually help people climb out of poverty.

                            For example, thanks to changes in the national welfare program, over 72% of the money earmarked for "Temporary Assistance for Needy Families" doesn't actually get used by needy families as cash assistance. Instead, the states can retask it for pretty much anything they want, as long as they can meet one of the four objectives of the program. Unfortunately, two of those objectives are so broad as to encompass almost anything, giving the states free reign to do pretty much anything they want with the money. Apparently, what they don't want is to actually give it to people who need help.
                            First, who says life is fair? Why does the rich guy owe the poor guy anything?

                            As a Christian, I am commanded to help my fellow man. Personally. But I think forced assistance is not mandated. If I steal money from you to give to a poor person, I am still a thief and not a good person.

                            I believe we should all assist the needy, but voluntarily, not forceably.

                            Usually the free market takes care to even things out in the long run. Sure, you will have some greedy rich people who get away with it, but generally such people end up losing what they took. People will refuse to work for them or with them. They generally will isolate themselves or do something illegal and end up in jail. Most "rich" people are not bad. They are business owners who employ a lot of people and treat them right, and the employees prosper and the company prospers and the owner prospers.

                            I mean just look at Uber. The owner was a total creep. He ran Uber using very shady business practices. He treated him employees like crap. He was brought to task and booted out. Where are his friends now?

                            I mean, YOU said you were a business owner right? And I bet you treat your employees well. If you have a successful company, you are probably more well off financially than most people. Does that make you evil for being successful?
                            Last edited by Sparko; 06-22-2018, 08:02 AM.

                            Comment


                            • #15
                              Originally posted by Starlight View Post
                              I am surprised to hear this idea that starting your own business is difficult in 'many other places', and easier in the US. I am curious as to what you mean by this. Can you elaborate?
                              I was thinking of the Vietnam and Chinese refugees that have come over here. Many of them, fresh of the boat, so to speak, were able to just start up restaurants and make a living without having an education, or even knowing English. In their native country, they had to depend on the communist governments to allow them to have a business, or work where the government told them to. I have always been impressed especially by the Vietnamese people who came over during and after the war. It was when I was still a teenager and I went to school with many vietnamese children (being an Army brat we lived in many of the same locations that they were relocated to) - They didn't ask for handouts. They just started their own businesses, worked hard to learn the language and become part of American society. The kids I went to school with excelled and many went to the top of the class. I was very impressed. They took the opportunity they saw and ran with it.

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