Self - interest

I come across as selfish. And I laugh it off most of the times since it takes about 2000 words to explain that it is rather self-interest. I usually sum up situations quickly and determine what the best outcome would be. So to laugh it off rather than explain how self-interest is so valuable seems like the best thing to do most of the time.

“It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.” That was from economist Adam Smith in the Wealth of Nations. I’ve always felt that if everybody was as selfish as me, we’d be better off. And the reason I’ve stuck to that belief is because I believe that persons who cannot put their own interests first naturally cannot have my best interest foremost in their minds. Walter Williams, economist from George Mason University, shares a similar view:

    "Texas cattle ranchers make enormous sacrifices to husband and insure the safety and well-being of their herds: running down stray cattle in the snow to care for and feed them, hiring veterinarians to safeguard their health, taking them to feed yards in time to fatten them up prior to selling them to slaughterhouses. The result of these sacrifices is that New Yorkers can enjoy having beef on their supermarket shelves. Idaho potato farmers arise early in the morning. They do backbreaking work in potato fields, with the sun beating down on them. Similarly, the result of their sacrifices is that New Yorkers can also enjoy having potatoes on their supermarket shelves. Why do Texas cattle ranchers and Idaho potato farmers make these sacrifices? Is it because they love New Yorkers? Only the most naïve would chalk their motivation up to one of concern for their fellow man in New York. The reason Texas cattle ranchers and Idaho potato farmers make those sacrifices is that they love themselves. They want more for themselves. In a word, they are greedy!"

Ok, if you like the word greedy, I can use that instead. But you get the drift. Whether you dance from self-interest to selfish to greed in search of a better political word, the bottom line is we are better off collectively if we each individually strive hard¹. I was not taught any of this during my undergrad years studying economics. Instead I was encouraged to think how the rich (those that supply us with what we need or want, be it Amazon, Walmart, Facebook) must be taxed more so we can address the inequality of wealth. And when I looked around me, I did see inequality and I concluded, since I live in a capitalist economy, that our style of business was to be blamed. I did not simultaneously realize that I was in my 20s and that my prefrontal cortex was not fully developed. This is the part of the brain that curbs impulsive behavior and exhibit rational thought.  If you didn’t know, now you may understand why teenagers act the way they do.

¹To argue that everyone should be selfish is specific to striving for excellence. Period.

It can also explain why the 18-29 age-group favored the Democratic Party than the Republican. Now, please do not mistake my words. I am not inferring that young people are stupid. I’ll leave that to Kamala Harris (Click here and forward to minute 16 -18). I’m simply positing that this age group lacks knowledge and experience, like I was in college. And when the inexperienced is egged on by politicians who speak from both corners of the mouth, or by educators with their own agenda, yes, bad decisions are made.

With time comes experience and I’m able to look at the facts and draw conclusions devoid of irrational thought. I figured in the comfort of a classroom where the arithmetic has no tangible benefit beyond a passing grade, the younger folks favor liberal policies to redistribute wealth. But when they step in the workforce and see the benefit of self-interest, a split emerges. One group work and sometimes fail but never give up while the other fail and quit, complaining about the unevenness of the system. It is the members of this latter group – the complainers – that fixate on redistribution of resources. They failed at generating wealth so they vote politicians in who will support them in balancing the apparent broken system. Higher taxes, for instance, is championed. That’s the only way student loan forgiveness can be funded. The United States government has no other way.

The problem with higher taxes and student loan forgiveness, as two examples of addressing disparity in wealth, is that the benefits only show up in the short run. Arthur Laffer, an economist in the Reagan administration is remembered for illustrating on a napkin the inverse relationship between high tax rates and total tax revenue. Put simply, total tax revenue fall as businesses restrict investment and move overseas to circumvent high income tax rates. This analysis is known as the Laffer Curve. So, the complainers ought to know that what we’re dealing with is not novel. We’ve been dealing with this phenomenon for over a century. Wealth disparity naturally occurs when people serve their own interests in a society that has minimal government intervention. Vilfredo Pareto, an Italian economist, first observed it in the early 20^th century. He noticed an inequality: 20% of the population owned 80% of the wealth. Since then many similar observations in different areas followed a pattern which later became known as the 80/20 rule. If you were to google the 80/20 rule, you can find hundreds of examples like 20% of criminals commit 80% of crimes; 20% of customers account for 80% of total profits; 20% of the most reported software bugs cause 80% of software crashes; 20% of patients account for 80% of healthcare spending, and so on. And it is not always 80/20. That’s just an average.

I am not a complainer. I am in the former group. I’m the type that fail and try again. So, instead of blaming the system, I try to see how I can make it work for me. And with this 80/20 rule, I made my personal observations and adjusted accordingly, with much success in managing people and the few resources I have. I have a few shirts and a couple pants and three pairs of shoes. I also have very few friends; so few I can count them on one hand. The reason being is that I am aware that if I’m to overstock on clothes and shoes I’ll only wear 20% of them 80% of the time. It’s better to just give away the excess. And if I have 20 friends, I know that probably only 4 will be good enough to invite to my home. I realized that I can achieve the same amount of output at work by being there 3 times a week. My employer, like many, pays their employees to be at work for 5 days a week. Let’s not misstate the facts. None of us work 100% of the time we are at work. And we can achieve the same result if we were organized better.  Matter of fact, we can acquire more skills in fields we enjoy in the 3-4 days we are not at work. (And it matters not that the days we work are longer when the week is shorter. Days are days irrespective of the day define as 8 hours or 12. It’s like life on earth. There is no difference if we die at 50 or 80 with respect to contribution. Dr. King died at 39 but his contribution to black people is invaluable. It is what we do with the time we have that matters.) And you can expand this to see how this plays out in our current affairs as well. If a politician win about 12 States, that’s enough in terms of electoral and popular votes to win the presidency. You don’t have to actively campaign in all 50 States.

Now for the complainers that don’t accept the 80/20 rule as a natural occurrence in a free society, what do we do about this phenomenon when it shows up, say, in sports? A few athletes perform exceedingly well. That’s why I can call names of basketball, football, baseball, and soccer players even though I do not watch any of those sports. When the game or tournament begins, every player from every team starts out the same way – at zero. A hierarchy develops, the most skilled gets their name on front page news.  And particularly in basketball and football here in America, most of those skilled folks are black men. Are we supposed to rid this inequality by telling some black players to stand down so the white players can shine?

Kamala Harris, via Twitter days before the recent election, claimed that while we live in a free society, one group gets a head start. If that idea was tweeted 100 years ago, it probably would have been true for most colored people. Now, it is true for those who constantly point it out – the complainers. I noticed in that claim the group that got a head start was depicted by a white man. I wondered if it is symbolism for Jeff Bezos. If it is, I’m getting closer to understanding these complainers. See, I know if I continue doing what I do I’ll be a millionaire in about 20 years. It takes time and lots of work to get there. But I’m not shooting for a net worth of 150 billion. I’ll have to be exceptional. I’m not. A million is comfy and I’ll see where I can go from there. But I must reach there first. And it is no different for the complainers. You cannot bypass failure and years of hard work and get straight to Bezos territory. Not many knew of Bezos in the early 2000s and less knew that name in the 1990s. And if he had put his feet up with just Amazon selling books (remember those days?) not only would we be worse off during COVID with all these brick and mortar stores closed, but Bezos would have been ordinary, like millions of the well-to-do in this land. It is this plateau of “ordinariness” that most Americans find themselves.

On this plateau, relative to the rest of the world, we have the best healthcare, food, homes, transportation, and most of all, a strong currency. What we seem to be losing is knowledge. Arthur Laffer, referenced above, wasn’t the one who first came up with the idea of high-income taxes as a deterrent for investment. It was Ibn Khaldun, a Muslim scholar some 600 years prior, in 1377 that mentioned it in his famous 1200 paged book, Muqaddima. To Laffer’s credit, he did admit that it was Ibn Khaldun who first conceived the idea. But we do not call it the Khaldun Curve. We call it the Laffer Curve because people like Laffer picked up books and read them while the complainers among Muslims kill each other and blow things up. The Muslims are painted today as intolerant and prone to terrorism. And that’s what happens when you have other people telling your story; they push through their self-interest. The complainers here at home should take note. Get off the streets and pick up a book. Have self-interest.

The Minimum Wage

I bought a Santa Claus suit a couple years back. I failed at every opportunity convincing the kids I’m the fat man from the North. I go the distance: enlarge the mid-section by stuffing a pillow; bellowing ho ho ho as best as I can; using gloves and tall boots to really send the message, but still, all in vain. So I finally asked, and was told – “Daddy, Santa Claus is not brown.” What an honest discriminatory remark, I thought. Then I went further along this road. What else is not brown, or black, or white? Flip it, and what is brown or black or white. My attention at that point drifted to the TV. YouTube is streaming live, a Trump rally in Pennsylvania. Back on the road of thoughts: Trump is not brown. Is racism white or black? The following was written with this idea in mind, that racism is not endemic to a particular people but it is a socioeconomic construct, with its many tools, used to oppress the weak among us. And one such tool used today is called the minimum wage.

The H-1B visa is a temporary permit allowing a person with at least a bachelor’s degree to travel to the United States and gain employment for a period of time. Not too long ago the Trump’s administration revised the requirements for the H-1B visa program. Among the many new stipulations was the order for American companies to pay a higher wage to anyone seeking a H-1B visa. These visas, 85,000 of them, are given out yearly by the United States administration to companies here at home that express a need for foreign talent. That need is justified by a single basic claim – there is not enough talent in science, technology, engineering, and mathematics (STEM) from among our local pool of applicants. That claim is political.

As the most powerful nation on earth, the United States of America (that, too, is a political claim) wants the best of everything. And the world’s talent is no exception. But the talented are not in abundance. So when we find that American companies are bringing that high number of foreign talent every year and we still can’t cure cancer or the Russians are able to break into our networks and “meddle” in our elections, we know there is something else in play.

From the 1990s (the time the law was enacted) to now, many revisions of this program were conducted. At every junction, the program expanded and became more liberal. For example, during the early 2000s, the quota was expanded to as much as 195,000. And even though that number would return to normalcy in the coming years, the program began including applicants with graduate degrees from a United States institution. It also provided extensions to applicants with a pending green card application. Of all the nationalities in the world, Indians benefitted the most. Today there are CEOs of leading American companies that are beneficiaries of this program. Sundar Pichai of Google and Satya Nadella of Microsoft are worthy examples.

With this increased liberal approach to the H-1B visa program came a noise, faint at first, but audible with time. A case was being made: foreign talent is coming to the United States at the expense of local talent. American companies are able to obtain cheap labor via the H-1B visa. The Indians (though not exclusively) are competing with American workers for jobs in America.

The Trump administration, in its attempt to restrict foreign labor thereby giving more opportunities to those at home, raised the minimum wage that employers must pay if they want foreign labor. And sure enough, arms were up in the air against Trump and his administration but it is worth knowing that he is only borrowing an economic policy, proven to work, from those long before him.

In the late 19th century, the Japanese were moving into British Columbia for a better life. Like any new group of faces, they endured hostility from the locals. The locals observed that the Japanese were willing to work for wages that they won’t accept. So, by 1925, they lobbied for and were successful in introducing a minimum wage. The Japanese were soon unemployed.

In 1931, Congress passed the Davis – Bacon Act which mandated that contractors pay its workers a wage that was higher than what it paid majority of the laborers at the time. Many black laborers lost their jobs. What was happening here, in all of these examples, is what the renowned economist Thomas Sowell observed: “The net economic effect of minimum wage laws is to make less skilled, less experienced, or otherwise less desired workers more expensive — thereby pricing many of them out of jobs.”

Let’s dwell here for a few lines because economic terms, definitions, and examples are not our staple. More so we’re at the Street Corner, if we do not understand it here, we will not understand what they say on TV.

For instance: one may want to know, given the examples above, how exactly did the Japanese and the blacks lost their jobs? How can you price someone out of something?

Well, like the Japanese in British Columbia, the blacks were unskilled. These were the years before the Civil Rights Act of 1964. Black people got the second best everywhere they went, and that included education and vocational training. The employers knew this and in the interest of cheap labor were willing to take them on. The black laborers did not mind the meager wage for they worked with the highly skilled tradesmen and had an opportunity to learn new skills. However, when the minimum wage came into play, the employers were forced to pay the laborers a wage much closer to that of the skilled tradesmen. The black laborers were sent into unemployment.

But the Civil Rights Act was around the corner. Soon black people would be given the same opportunities as white people. The world would be a better place and we’ll all live happily ever after. The southern democrats saw this picture. And they didn’t like it one bit. A plan was developed. It was well calculated and so subtle that most black people participated subliminally as it was executed, driving them to their own destruction. And that plan was articulated by Lyndon B. Johnson, the 36th President of the United States – “These negroes, they’re getting pretty uppity these days and that’s a problem for us since they’ve got something now they’ve never had before, the political pull to back up their uppityness. Now we’ve got to do something about this, we’ve got to give them a little something, just to quiet them down, not enough to make a difference.”

“We got to give them a little something, just to quiet them down,” audacious, aye? The little something that was given was not the Civil Rights Act of 1964. That was huge; however, while it formally made it unlawful to discriminate, it did not make it unlawful to discriminate by unconventional means. You can still price people out of jobs and restrict their upward mobility by minimum wage mandates. In the years to follow, the minimum wage law (not enough to make a difference) was widely cheered and the welfare (a little something) resoundingly encouraged. The hallmark of this post 1964 approach was that it got the very people it intended to oppress onboard with the plan. For, Lyndon Johnson’s secretary of labor, Daniel Moynihan, unearthed something startling: the black nuclear family was beginning to fall apart. According to Thomas Sowell, that would be the last time an honest report on race would be issued by the United States government.

Walter Williams, an economist at George Mason University, reminiscing about his early days in Philadelphia said, “We lived in the Richard Allen housing projects. My father deserted us when I was three and my sister was two. But we were the only kids who didn’t have a mother and father in the house. These were poor black people and a few whites living in a housing project, and it was unusual not to have a mother and father in the house. Today, in the same projects, it would be rare to have a mother and father in the house.” The Moynihan report was thrashed by some because it included many examples akin to Walter Williams. The notion was that you cannot blame the victim. Sadly such a conclusion highlights either the readers’ inability to comprehend or their political tailwind.

In laying out the oppressive nature of the minimum wage, I first noted the Indians, followed by the Japanese. There are others, like, the Hispanics, and the poor white majority. This last group is hardly referenced. Probably due to the doctrine of racism, if you’re white, you’ve got it all. You are privileged. You cannot possibly be poor and struggling. It was this group that gave Obama a historic 2008. And it was this same group that gave Trump a memorable 2016. You see, this form of oppression has affected everybody, across all religions and skin colors, and while the aforementioned groups managed to keep their heads above the water, black people are encouraged to think that the system is rigged; that it is systemic racism. No, it is much more nuanced than that.

The support that Trump got from white America was because that base understands, among the many grievances, that their children are competing with foreign workers (non-immigrants) for jobs in the STEM fields. And they realize if corporations are allowed to flood the market with foreign talent, the wages for these positions would drop to a level that’s unacceptable given the cost of living in most American cities. When I call for tech support and Ravi Venkatesh shows up, a heavy-accented lad from Uttar Pradesh, it is not because our boys and girls are less smart than those in India. It is because the wage offered by Google is considerably attractive to him than it is to our children. Why would a young man or woman in America want to get into a STEM field when the upfront cost (opportunity cost + college fees) is so high and the payout unattractive? Yet, given all of the above, we still find many Americans who are on Wall Street. We find many who are scientists, computer engineers, and doctors. When we look closer though, majority of these Americans are not black.

“While it might sound like an excuse, the unfortunate reality is that there is a very limited pool of black talent to recruit from,” said Charles Scharf, CEO of Wells Fargo. Mr. Scharf would later be given the proverbial shaft in the Social Media Court of Justice. He later apologized, for what exactly, I do not know. Of all the groups that the minimum wage has affected, black America is positioned the worst. Most black people are not even competing for STEM. And that’s because they do not have the luxury of a nuclear family. Yes, the Moynihan report, again. When the average black kid from a terrible neighborhood struggles in school, mom is too busy trying to make ends meet to stop and answer his academic need. She is that busy because her partner, the child’s father, left long ago. The family is so important. It is because the nuclear family is intact in other oppressed households that the young ones are able to find their footing in trying times. When that young white or brown graduate is given a wage that’s less than ideal, mom and dad provides a brace while the young one gains the experience necessary to be more competitive. Denzel Washington, speaking on the importance of a mother and father in a home said, “I think it is more important to make headway in our own house. By the time the system comes into play, the damage is done. Where is the father?”

There is no father. Among the many hurdles, the minimum wage priced him out. And the government welfare check replaced his. “The welfare state has done to black Americans what slavery couldn’t do, what Jim Crow couldn’t do, what the harshest racism couldn’t do, and that is to destroy the black family” – Walter Williams. Somehow, the Democrats think they’ve got what it takes to help the black family. Believe me, I’ve checked, they’ve got nothing beyond the little something Lyndon Johnson talked about. What they have is the similitude of giving the black family a fish; keeping them hostage. Imagine the possibilities if the oppressed were taught to fish. This is not to infer that the Republicans have the answer though I’m yet to see remarks as brazen. So, what should the black people do? I can speculate but for the first time in these couple of pages, if I do, it will purely be my opinion.

Homework

Did you know that booming economies like Singapore, Denmark, Norway, Switzerland (to name a few) doesn’t have a national minimum wage? Read up on GDP and unemployment rates. Look at the quality of life in these nations.

Geneva was pressured for years to institute a minimum wage. Earlier this month they did. Do you know how many thousands of Germans, French, and Italians commute to Switzerland every day for work? Who felt oppressed in Geneva and who will soon be priced out?

Do you think the Swiss are racist?