Monday, January 08, 2007

Why Do the Poor Persist?

I need to make a little aside from Hebrews. Bear with me - there's a Christian application here that's important.

I like to read this little rogue cartoon called Savage Chickens. The author has this creative approach by drawing the cartoons on these little yellow sticky notes. Today's cartoon is not his normal humorous fare. It reflects the poor reasoning afforded by "common sense" economics. The flaw in this reasoning is the belief that there is a finite amount of money available for people to have. This leads to flawed conclusions. For example, many people believe that if some people have too much money, then there's not enough left over for all the poor people.

Today's Savage Chickens cartoon has two business chickens (probably in sales), standing across from a robot holding a board with a nail in it. The robot is a character called "PROD3000" often used by Doug Savage in his cartoons. The PROD3000 is often crass and demanding and provides fodder for some of Savage's humor.

One of the chickens says "You ask us to increase sales EVERY quarter! How much money is enough for this company?"

The PROD3000 replies, "Ideally, we'd like all of it."

The cartoon can be viewed here.


I work in manufacturing. I do production control in one plant of a company that has a few plants in one location. My plant is one of the smallest plants and while we share some resources with other plants, there is no shared resource that does specialized analysis for my particular plant - my plant doesn't constitute the company's "meat-and-potatoes" as it were. We're more like the green beans and parsley. As production controller, I'm also the production reporter. It's a natural function that if we need any analysis done for our segment of the industry, I'm the one with all the information. I offer here my analysis of the flawed economic reasoning that drives today's cartoon - as well as many of the comments:

Recent manufacturing marketing trends favor smaller margins and shorter lead times. That means that competition is hot and heavy in today's burgeoning economy. In order to maintain good investment returns, increased sales means an increased volume of work the plant needs to do. This means more work done at improved productivity (given I can adapt our processes to new capacities fast enough) at a lower variable overhead. (That's accounting jargon for "we make more things, but pay the same light bill, therefore we have a lower light bill cost for each thing we make.") Enough of a sales increase means I can hire more people.

Does anyone want a job?


If we don't have the sales, it means it's time we develop a new product that WILL sell - so we can continue to pay everyone from the lowest associate to the highest investor. It's foolish to protect a product in the market that is no longer economically viable. Either the government says you can't make it anymore because it's a bad product and penalize you for making it, or enough customers say they don't want it anymore and stop buying it. The goal is to adapt faster than your competitors to a changing market so that your business remains fresh. For the economy, it is not necessarily a good thing to put your competitors out of business. Some competitors need to be put out of business, but good competitors make the economy healthy. Without a healthy economy, even good businesses can fail. It is therefore incumbent on business to protect their long-term interests by keeping the economy strong.

The way money and the economy works is that money represents work done over a period of time. If I go out and build a house for my neighbor who grows potatoes, he may promise me part of the potatoes he expects to have grown by the end of the summer. He can give me a note saying that he owes me those potatoes. What am I going to do with all those potatoes? I can go to town and get a haircut and pay the barber with a note for part of the potatoes. I can go to the grocery store and buy some bread with part of the note for the potatoes. Eventually, I may end up with anything BUT potatoes. If I decide I can live on potatoes and work hard to get all the potatoes for myself, all someone else has to do is grow their own potatoes and there is no potato shortage. My potatoes are going to go bad because there will now be so many potatoes that all the potatoes I worked for will not be worth what I worked for them. If I work hard for potatoes and turn around and trade them for nice things, I have more according to the work I did.

If I work to make a chair with my own wood and trade it for potatoes, I will have more potatoes than if I worked to build a chair with someone else's wood. They sell the chair for the same number of potatoes, keep some of the potatoes for their trouble and give me the rest of the potatoes. I have fewer potatoes than if I would have used my own wood. However, if I have no wood to start with, then using someone else's wood may be the only option I have.

If I can independently make one chair per day and another fellow can also independently make one chair per day, then we can make one chair per person per day. However, if another fellow comes along and has the smarts to organize myself and this other fellow together to make four chairs per day between us, then the one who organized us can pay us for more than one chair per day and also keep the lion's share for himself. His smarts have earned it. Expand this concept to a large corporation and one can begin to understand the sizeable incomes top executives make.

The United States, through capitalism, has been particularly good at engendering employment opportunities for everyone. Consequently, we have very few homeless that are such aside from some mental condition. There are people who are willing to donate to organizations dedicated to helping homeless people without forcing work and homes upon them. The least of those who are willing to work in the US live like the wealthy of most other countries in the world. Our "middle-class" live like the very wealthy and our wealthiest exceed lives of most kings around the world.

Through our national government, we send billions to poor nations to help them feed their poor. Through private endeavors, we send billions more.

If wealth was finite and we give so much of it away, why do the poor around the world persist? To begin with, wealth is not finite. Wealth happens as long as people work. People are poor because they don't work. They don't work for a number of factors. I imagine people would work if they could. The big reason behind all the factors contributing to a lack of work is because this is a fallen world. Sinful rulers vie to keep their people under subjection by force, law, or economic repression instead of through moral courage. Temptations lure many people to their own demise in such as bars, casinos and brothels.

While Christians may be accused of trying to force morality on others, it is morality that will solve the problem of widespread poverty throughout the world. Morality is a result of salvific faith, not a cause of it. While Christians go to feed people, it is foolish to believe that simply feeding someone today will make them wealthy tomorrow. People come for food for their stomachs. A good missionary will give them food for their soul: the gospel of Christ. Only after understanding grace will morality begin to follow.

Even then the wise Christian missionary understands that poverty may not end. Christ said that He was with us for only a short time, but that we would always have the poor. I suspect that God gives us the poor to see if we will vie to care for them. Their ministry to us is to need what we have in abundance. To fail to try to meet this need is to fail in one aspect of our own sanctification.

To God be the glory.

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