Tag: demand

Recycling Paper Products Kills More Trees Than It Saves

By Joey Caso | United States

Recycling kills trees. Although this seems like an argument that would be presented by a Kremlin-paid troll, the economics of why this happens is clear and sound.

Firstly, one must ask, “who has the greatest incentive to keep the tree population up in a market-based economy?” It would be quite evident that it would be someone who relies on trees to make a profit. Well, what is the largest industry that relies on trees? The paper industry. This seems to be a pretty simple series of mental steps yet nobody seems to take them, or even worse than that, nobody wants to.

See, we are raised to look at the corporation and the capitalist that runs it with utter contempt. Don’t believe me? How about the Lorax, a book so popular that in 2012 it was ranked 33 on the School Library Journal’s survey about the “Top 100 Picture Books”. What is this book about? A greedy capitalist who destroys the environment to make a profit.

Let’s dissect this. The Once-ler made a product called a Thneed which he made from the Truffula tree. In order to do so, he cuts down the Truffula trees to make his versatile garment until he cuts down the very last one. Then his once-booming business comes to a dramatic end. Now, this is supposed to demonstrate that you should not be greedy, and impressionable kids fell for it, me being one of them. But upon reflection you realize the Once-ler wasn’t greedy, he was just plain dumb.

If he was truly greedy and had half of a brain, he would have replanted trees at the same rate at which he cut them down. To give time for the Truffula trees to grow he would have needed to slow down the process of cutting them down in order to create a continuous loop of resources and with it, a continuous loop of profit. One might say, “The Once-ler’s Thneeds were in such high demand that he needed to cut down Truffula trees at a fast rate.” Well, what would slow down the rate at which he needed to require his resources? A rise in the price of a Thneed. Raising the price would have decreased the demand of the Thneed while creating a larger profit for the Once-ler, who already has a resource creation and collection set up that will supply him with a profit forever until there is no demand for it. That is real greed. That is rational greed. That is capitalism.

Now just like the Once-ler paper industries want that infinite loop of resources and profit. This means just as the food industry wants to keep the population of chickens and cows up and just as the trophy hunting industry wants to keep the population of endangered species up, the paper industry wants to keep the population of trees up.

Now, what force helps to destroy the paper industry? Recycling, specifically the recycling of paper-based products. With the reuse of the paper, the paper industry loses demand for its products. If recycling happened in mass the demand for paper would plummet and along with it the industry that had a profit incentive to save trees.


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A Gentle Conceptual Introduction to Supply-Side and Demand-Side Economics

By Justin Chan | United States

Supply Side Economics

This theory developed most prominently in the 1970s and was firmly established in the 1980s with the rise of conservatism and Ronald Reagan. Supply-side economics is in direct contrast to Keynesian thought, such that it favors the producers as influencers of the market. In its essence, the theory of supply-side economics is that by increasing production factors such as capital, labor, and land, it would lead to economic growth.

Production factors can be influenced by the government in multiple ways. The main three being, influencing the marginal-tax rates or capital-gains, regulatory policies, and monetary policies—or the printing of money. Proponents of this theory focus on businesses, and one major way that they promote production is through tax cuts and fewer regulations. They argue that this would produce organic unity. For example, if a business were to receive fewer regulations they would be allowed to invest in more capital, and thus contributing more to the economy through hiring more workers, expanding their market or their production, etc. If companies oversupply due to production incentives, there will be an excess of good/services that would yield in lower prices, and thus consumers would increase their purchases of these goods and services. This method of thinking is similar to that of trickle-down economics, such that what is good for the business will eventually go down to the worker and be contributed back into the economy. 1

Experimentation of these ideas was used most prominently in the 1980s and 2000s during the Reagan era and with the George W. Bush Tax Cuts. What was empirically determined was that tax cuts to the lower class yielded in increased consumer spending, while tax cuts to the upper class provided more ability to pay off debts, and this saw a boost to the stock market. 2

Critics often cite that during these two eras, there was an increase in the national deficit and a recession seen during George H. W. Bush’s tenure and in 2008. They argue that the multiplier effects are less than a one to one ratio, and this produced middling growth, soaring deficits, and broad-based debt. Moreover, critics also cite that giving tax-cuts to the upper-class has seen little to no economic growth in production values. Non-partisan agencies such as the Congressional Research Service have found no correlation between low taxes on the wealth and of high growth rates in the economy or in employment rates. 3 4 5

Demand-Side Economics

Often called Keynesian economics, these sets of policies and ideas are focused on the high purchasing power of the consumer, and that by improving the purchasing power, consumer spending will increase business expansion and create a multiplier effect for economic growth. This is in direct contrast to the aforementioned supply-side economics. As noted before, proponents of Keynesian economics see the flaws in supply-side economics such that the tax breaks produce little economic benefits, and through government spending, it would help increase employment opportunities in the economy. 6

First, one has to realize that in order to reduce unemployment and to grow the economy, the government must overcome the low aggregate demand. There are four main ways that government can help increase the purchasing power of the consumer. The government can help spur the consumption of goods and services, investment by industry on capital goods, government spending projects and works, and increase net exports. One of the popular ways of doing this is by having the government sell bonds and altering interest rates, or printing money—monetary policy. This would increase the frequency that money is used to buy goods or services, and thus increasing the aggregate demand. 7

What these policies may do is that by an increase in the consumer purchasing power, there may be an increase in prices to offset the growth. The government handles this by trying to control inflation through interest rates to absorb the excess capital from the private sector. If inflation is too high, they would increase the interest rates. 8

Critics of demand-side economics often cite that it would balloon the national deficit through government spending in order to increase employment and the volatility that comes with it. In addition to this, there is the risk to the central bank by printing an excess amount of money to spur growth. Finally, when the government borrows more money, the interest rates on bonds would increase, and thus the higher interest rates would discourage investment from the private sector. 9

Conclusion

Whether or not one may agree with supply or demand-side economics, one has to note that either policy has to contend with the times and the current market. It should be the principle of the politicians and citizens to seek the best economic policy for their current state to best serve the people of all demographics and socio-economic status. There should not be an argument about which theory is better, but which theory is better for the current time period we live in.


Bibliography

Amadeo, K. (2018, January 8). Does supply-side economics work?. The Balance. Retrieved from https://www.thebalance.com/supply-side-economics-does-it-work-3305786

Demand-side economics. (n.d.). Business Dictionary. Retrieved from http://www.businessdictionary.com/definition/demand-side-economics.html

Demand-side policies. (2017, December 8). Intelligent Economist. Retrieved from https://www.intelligenteconomist.com/demand-side-policies/

Ettlinger, M., & Linden, M. (2012, August 1). The failure of supply-side economics. Center for American Progress. Retrieved from https://www.americanprogress.org/issues/economy/news/2012/08/01/11998/the-failure-of-supply-side-economics/

Freeman, R. (2006, May 14). A tale of two theories: supply side and demand side economics. Common Dreams. Retrieved from https://www.commondreams.org/views06/0514-20.htm

Gwartney, J. (2008). Supply-Side Economics. Library of Economics and Liberty. Retrieved from http://www.econlib.org/library/Enc/SupplySideEconomics.html

Harper, D. (n.d.) Understanding supply-side economics. Investopedia. Retrieved from https://www.investopedia.com/articles/05/011805.asp

Investopedia. (2018, January 16). What is demand-side economics?. Investopedia. Retrieved from https://www.investopedia.com/ask/answers/040915/what-demandside-economics.asp

Robinson, N. (2017, April 24). Supply-side vs. demand-side economics. Sciencing. Retrieved from https://sciencing.com/supply-vs-demand-side-economics-5923769.html

Tanden, N. (2013). Burying supply-side once and for all. Democracy A Journal of Ideas. Retrieved from https://democracyjournal.org/magazine/29/burying-supply-side-once-and-for-all/

Weinberger, D. (2017, October 18). Why supply-side economics is right and Keynesian economics is wrong. The Federalist. Retrieved from http://thefederalist.com/2017/10/18/supply-side-economics-right-keynesian-economics-wrong/

Innovation is Being Held Back, but Who’s Doing It?

By Mason Mohon | USA

The last decade or so has blessed the human race with technological innovations like we have never seen before. Apple celebrated the 10th anniversary of its iPhone with the release of the new iPhone X. Silicon Valley geniuses are constantly trying to come up with the next big thing and trying to get their tech on the market and widely used. A new vehicle model with new driving features seems to be releasing every year, and it is impossible to keep up. All of this innovation is pushing us to be able to do more than ever before, with technology allowing U.S. companies to outsource online jobs to India, where they can be done more efficiently and cheaper. Few would argue that this innovation is a bad thing, but are we stifling it? Are we at our fullest potential?

A basic rule of free-market economics is that consumer demand must be served. An entrepreneur or business firm cannot and will not continue to exist if it does not serve the needs of the consumer. If a business begins to provide a good or service that the consumers don’t want, said business will begin to lose resources and will cease to gain profits. If a business wants profit, it has to test the market and find out what a substantial amount of people actually want to have. That is one of the beautiful things about the free market. Demand of the consumers is met, and that is the only way any producer of anything can hope to make money. The people have needs and wants and they are met by the market. But what if these consumers want to work against innovation? What if the majority of consumers didn’t want or didn’t care for new technologies?

Let us say that most consumers do not see the potential a product has for them or for the world as a whole. They do not see the innovation, and a game-changing piece of technology ends up flopping. That would really suck, for we would miss out on a new technology. Is this a fatal flaw in the system? Could the consumers (who make up humanity) be holding back humanity?

We would have to look at what the problem in this situation is, though. If this issue would arise (or is arising), it is not a problem at all, but rather an opportunity. This is an opportunity for new technological innovators to show how they are changing the game. It is a problem of information arising, and the consumers need more information. A well-placed ad campaign and a good partnership could remedy the problem in no time. Chances are that the market would solve something like this, but only if it pushed hard enough.

An example would be the comparison between Samsung and Apple phone products. For a long time, my Samsung owning friends have joked with how primitive I was owning an iPhone, for Samsungs tended to be better on nearly every front. They were the better, stronger, more durable, and more innovative technology, but regardless, many stick with iPhones. It was recently discovered that Apple intentionally slows down old models of its phones when a new model comes out. When the iPhone X was released, very noticeable bugs came in the new operating system on my 6S plus. Samsung has not shown to be doing anything like this, which just adds a cherry on top for their technological superiority. Now, Samsung has an opportunity to make this issue with iPhones as big as they possibly can. People are staying with Apple iPhones for various reasons, but no informed person is staying with them because they are better. Here’s the chance Samsung! Now take it!

What would the alternative be, anyway? Should we put government bureaucrats in charge of allocating money to what is innovative? Should there be a federal agency to promote human development? No, because in short, government agencies usually suck at their jobs. The state should not be in charge of deciding what technology is worth promoting and what is not. The consumers and the market do a great job of sorting all of that kind of stuff out, as the above paragraph indicated. The state should not tell people that Samsung is better and promote Samsung, whether it be through regulations or subsidies. Any sensible person should be able to see that this should be the case.

It actually turns out that the state is the enemy of innovation. State taxes on big companies and corporations mean they have a lot less money to put into new technologies and serving the consumers more. Regulations make it hard to create new products and tariffs cause resources to become more expensive. Taxes in any part of the economy, whether it be capital gains, corporate, or income, tend to make people more present-oriented. This decreases foresight and causes people to care less about the future, making fewer long-term investments. This means that people will be less focused on the future and more focused on the present. This means fewer people oriented towards tomorrow, looking to change the world with the next big tech boost.

Humanity is getting better and better at creating new things each and every year. What we want to avoid is throttling that, and we want to make sure we can keep this growth going for the long haul. The way the free market is set up – to serve consumers – is not an impediment for this, even though it may sometimes seem like it. Rather, the government is the ultimate danger to human growth and flourishing. Once its barriers are taken back, we can see humanity reach new never before imagined heights.

We Need a Separation of Art and State

By Mason Mohon | USA

Many aspects of American society have been rightfully viewed for centuries as outside the jurisdiction of the state. In particular, the separation of church and state protected by the first amendment of the constitution has gone more or less unabridged throughout American history. The United States Federal Government has fortunately restrained itself enough to let individuals live and let live in the world of religion, whether that means being Muslim, Mormon, Atheist, or Christian. This is because spirituality is important to the individual, and it is highly subjective, meaning that the cold non-discriminatory hand of arbitration extending from the state should not be involved.

It is important for individuals to experience truth for themselves, rather than it being forced upon them. People search for an emotional or spiritual truth within religion, but at the same time within articulation and writing of their thoughts, feelings, desires, and arguments. This is why we also have a separation of the press and state, so that information can spread freely. We have a freedom of speech in the U.S., paired usefully with a freedom to gather, which creates the potential for dialogue, allowing truth to arise through the exchange of thought between two or more individuals.

One instance, though, that we have not seen this clear line in the sand for the protection of free thought and truth pursuit is the arts. Art is an incredibly important aspect of humanity, society, and civilization. Jordan Peterson stated that paintings give the viewer a connection to the unknown, gripping them within. Artists find the balance between chaos and order and then express it within their art form. Leo Tolstoy said that “[a]rt is the activity by which a person, having experienced an emotion, intentionally transmits it to others.” Barbara Ernst Prey, an appointed member of the National Council for the Arts described art in the following way:

A lot of what artists do is tell stories. They help us make sense of our world, and they broaden our experience and understanding. The arts enable us to imagine the unimaginable, and to connect us to the past, the present, and the future, sometimes simultaneously.

Art is a phenomenal aspect of humanity. We do not fully understand it, for it is deeply ingrained in our emotional state. This ingraining, though, has serious implications. Something that is so tightly connected to our humanity should not have involvement with the state for various reasons. These reasons are the philosophical, political, and economic dangers of state involvement within the arts.

In the first place, as stated before, art is deeply tied to who we are as humans. It is made to connect with our deepest emotions, in a personal, subjective, manner. The state, though, cannot fit into this world. The state itself is a violent entity, for it receives all funding through either secretive and destructive inflationary methods or taxation (the taking of money from individuals through the threat of force). These two things will only mix as well as oil and water. It poses serious moral and ethical questionability to have such a powerful force (art) backed by such a destructive force (government). David Boaz, executive vice president of the Cato Institute, said that “art…is so powerful, dealing as it does with such basic human truths, we dare not entangle it with coercive government power.” It should be a serious red flag to ever suggest that beauty should be backed with violence.

Furthermore, it would be a dangerous game for the art world if it began to mess with politics. Furthering what Boaz said, there is another disadvantage to the entanglement of art with government power. Politics is a mess, for people on the left and right are constantly trying to fill it with their culture. Art, being a heavily cultural matter, should not be subject to the whims of whoever has control of a state agency. When the public funding of the taxpayers is involved in the promotion of art, controversial questions of what kind of art should be funded arise. Should gay characters be allowed in publicly broadcasted TV? Should brutal violence be allowed? Should the horrors of slavery be revealed? Should possibly offensive language be censored? Any answer to any of these questions will go against the convictions and cultures of one taxpayer or another. Boaz continued by saying that “[t]o avoid these political battles over how to spend the taxpayers’ money…we would be well advised to establish the separation of art and state.”

The economic side of the issue should also be looked at. Lawrence Reed, president of the Foundation for Economic Education, said that “expecting government to pay for the [art] bill is a cop-out, a serious erosion of personal responsibility and respect for private property.” The free-marketers are seen as enemies of the art world because we do not support “public funding” for the arts. This could not be further from the truth, for, aside from the political and philosophical issues with state-funded art, there are various economic issues. Money taken from individuals through taxation is money that cannot be spent on something else. Every dollar the state takes from someone is one that can not be spent on something that they may have actually wanted, which could, of course, include art museum or theater tickets.

“Public” government investment almost always comes with strings attached. There will be some sort of political manipulation that erodes the integrity of the art world. At the same time, public investment always has the potential to displace private investment. The danger of a publicly funded art program is the same as any other publicly funded program. When funding is guaranteed, the price tends to increase while the quality tends to decrease. In a demandless publicly funded art world, this issue will only manifest itself in one of the most important parts of human existence.

When art finds voluntary funding, it is because people wanted it. When it finds public funding, there is no way to know if people wanted it with the same degree of accuracy that the market provides. Public funding and state involvement in the world of the arts is dangerous for many moral, political, and economic reasons. Art lies in the same interhuman space that speech and religion tend to inhabit. These things should all then be treated the same; they should all be treated as too good for state control.