Saturday, 26 July 2014

The Market Matters: 5 Points To Ponder

My chief beef with both left and right-wing politics is that they tend to leave the public with but one choice: take it or leave it. Middle-out economics, my preferred solution, provides a range of options by taking the best policies of both sides and presenting them in a way that works in the real world because it recognises the role of the market in the economy. Let's take a closer look, shall we?

The mechanics of the market

The market is where supply meets demand. Money is but a medium of exchange, the idea being that you trade one thing for another. In a barter economy you'd trade services or favours. The point is, market forces affect us whether we like it or not. They drive prices up or down, determine fashions and trends in culture, and set the standard for technological development, and they manage all this in the face of curtailments via artificial shortages caused by IPR and hoarding. Neither supply nor demand by themselves comprise the market; both must be present for one to exist.

Traditional policies and the market

Where protectionist practices exist, the market is not free. Failure to understand and base policies around that truth results in the tax-and-spendthriftiness on the Left and boom-and-bust on the Right. Socialism fails because it either denies the existence of the market or attempts to subjugate the market to the state's well-intentioned agenda. When the problems of unfulfilled demand spill over into a thriving black market and clamouring for goods and services, the usual refrain from the top is condemnation of the "decadent" capitalists to shame the demand-side instead of serving it.

Unfettered capitalism demands unswerving commitment to driving up profits no matter what. Wages are cut or permitted to stagnate on the assumption that the market will attend to the costs of living. The number of food banks in Britain is increasing because they keep forgetting that there's no such thing as a free market. Landlords don't drop the price of the rent and bills don't go down just because everyone is feeling the pinch; they assume you'll either find the money from somewhere or there's someone else who is willing to pay to live in their property. Since there's little in the way of competition rents tend to keep rising. Speculation drives the costs of buying a home up as enterprising would-be property moguls buy up houses and board them up till the prices are high enough for them to make a profit.

The middle-out approach to the market

Middle-out economics means investing in the health, education, infrastructure, and purchasing power of the middle class. - Nick Hanauer and Eric Liu

I promote middle-out economics for the pure and simple reason that it's reasonable and fair. When you look at middle-out policies you know exactly who's going to pay for them, how, and why it's worth doing. Market-inclusive policies work because they recognise the push and pull of supply and demand. They don't abandon the people to poverty, they strengthen the social safety net by providing a big enough tax take to pay for it. If we earn more and are taxed at the same rate, HMRC gets more revenue, it's that simple. Increases in National Insurance contributions via higher wages pay for pensions and healthcare, it's all covered. Raising the minimum wage is a start but the monies from tax revenues needs to be spent on providing education and training to make workers more employable. The idea is to meet market demand for particular skillsets to keep jobs in this country and encourage investment.

Critics complain that some businesses might not be able to afford to pay all their workers at a higher rate and would have to let some go. That's a demand-side problem, they don't have enough customers paying for their goods or services. Mind you, they may be concerned that obscene CEO compensation packages might not be as lucrative as before under a middle-out system. Actually, capping CEO wages at 11 times that of the lowest paid worker so that if the CEO gets a pay rise, the workers do too, is one heck of an incentive for them. The idea that they require huge bonuses, etc., to incentivise performance annoys me. If they threaten to leave I'll help them pack.

Society, creativity, and the market

I've had arguments over my market-inclusive philosophy because some people I don't want to have the merit of their offerings judged by other people, they want to receive a basic income by virtue of their mere existence on their own terms. Basically, they want to exempt themselves from the market so no matter how unattractive their offerings are they want to receive money anyway. They'll find other ways to frame it, of course, but what it all boils down to, my dear friends, is that they want to be indulged.

Now the more talented among us will correctly point out that appealing to the lowest common denominator is degrading our culture. Fair enough, but on the flip side high art is often inaccessible to those of us in straitened circumstances. The Arts Council have been wasting public money on promoting copyright awareness instead of providing highbrow entertainment for the masses, much to the chagrin of the Pirate Party's Loz Kaye. He's right to complain but as I pointed out to him you shouldn't rely solely on the government for anything; if they can giveth they can taketh away. Even if the Arts Council was better funded there would still be competition for funding so it's good to have other sources of income. Remember, one of the reasons we've got insanely long copyright terms is because it's been deemed a welfare scheme for artists and creators. Beware of getting into a mindset that would have you swap one for another. It's better to stand on your own two feet so nobody can turn off your income stream.

Access to the market

My main complaint against supply-side/laissez-faire nonsense that's running economic policy in this country is that it assumes equal access to the demand and supply side of the market, and that everyone behaves reasonably. Well that's not true. If you can't afford to pay for goods or services, and you can't compete with other providers because you're locked out by protectionism, you don't have equal access, do you? If you don't have the education and skills you need to apply for the job you want, you're at a disadvantage, aren't you? And if you have an idea for a product that's quite similar to an existing one, chances are you'll run into trouble over licencing; nobody is obliged to grant a licence to a potential competitor.

The trouble with socialism is that it tries to compensate for deficiencies in the demand-side instead of removing the barriers to competition by curtailing protectionism. That's because both philosophies tend towards consolidation when what we actually need is distributed decentralisation of power and resources. Well given a choice between denial and paternalism I choose neither because the individual must be free to act and limiting your options limits your freedom. Policies based on middle-out economics would increase access to the market by empowering us to take part in it as either buyers or sellers. IPR reform is a key part of this because it would open up the market instead of locking it down, as it currently does.

If the Pirate Party is to truly forget about being left or right, it must adopt middle-out economics as a policy position and resist the pull towards the left-liberal end of the spectrum. People are crying out for a party that truly represents them and the Pirate Party can do just that if they adopt an economic policy that benefits everyone. Middle-out economics actually does.

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