The missing variable: human psychological posturing as it translates into macroeconomic trends
I believe the current economic models do not sufficiently stress the importance of human psychology and the resultant group behavior in economic modeling. Here is how I view human economic activity as analyzed from the perspective of the smallest unit of any economy - a single human being:
There are four psychological postures that humans exhibit in order to acquire goods and services:
- Predator
- Scavenger
- Producer
- Parasite
Those four psychological postures are generally not taken into account in economic modeling. I believe that depending on which psychological postures predominate within various societal groups - correspondingly different macroeconomic trends are exhibited within the state.
During the past two decades the American social discourse overwhelmingly favored and rewarded predatory and parasitic dispositions while the state has taxed the producers (the working, tax paying middle class) to a point where no economic gain was achieved by the very part of society that is responsible for wealth creation.
Case study 1, an individual exhibits all postures concurrently: Anthony is a black male in his 30’s, he exhibits all four postures concurrently even though he holds a full time job paying $9.00/hour plus commission:
1. Predator: when short on cash, Anthony regularly steals small food items from convenience stores. He says he has to keep his “thug skills” sharp. Regularly he seduces white women to get sex and other services like free rides, food, clothing etc. He also hustles some small drug deals on occasion.
2. Scavenger: he collects returned merchandise which instead of being thrown out is given to the workers at his place of employment - some he keeps, some he sells.
3. Producer: he laded in jail a couple times, mostly due to the creativity of the mother of his two children, a woman whom he never married and doesn’t live with. Painfully aware that he can end up in jail again for not paying child support; he works full time and is proud of his motto “my children eat before I do”. Thus through his work he is a tax payer and a responsible child support paying father (mostly since a court ordered deduction is automatically made from his paycheck).
4. Parasite: Anthony gets free drinks, food and drugs at parties (though living a life of an elusive bachelor who never threw a party for anyone). On occasion he finds his way to his mother’s house to plead for cash donations, but since he’s not on good terms with his father-in-law that activity is limited.
I think it goes without saying that in this case the most beneficial activities from societal point of view are posture 2 and 3, or scavenger and producer respectively.
Case study 2, perpetual parasite: Maria is a Haitian immigrant living in Brooklyn. She has four children by four different men, none of the fathers were identified. She’s a high school drop out who never worked in her life. She lives off the city, the state and the country where she never became a citizen, milking the system by producing offspring which additionally strains resources and is headed straight for a predatory (drug dealing, prostitution)/parasitic (milking welfare and social services) economic model.
Case study 3, age group related posturing stages: while one may argue that there exists a less tangible economic value produced by little children, by and large small children are of parasitic disposition, until they’re able to perform some house chores (usually not until they become teenagers). Thus the vast majority of young Americans adopt a parasitic psychological posture for the first ten years of their life, or longer. This is continued through adulthood, depending on what amount of schooling a person gets, in cases of higher education this process may even last until late twenties of early thirties. Of course part time jobs, summer jobs, community work, scientific work, and other producer (as well as scavenger and predator) postures are intertwined throughout childhood and early adulthood, but the primary posture is parasitic. That stage of parasitic posture period in human development should be immediately followed by a period dominated by a producer disposition preferably into old age. In many cases it is. Unfortunately with old age come a variety of ailments, and with the obesity pandemic, wars, natural disasters and due to many other factors either through retirement, disability, wealth accumulation, or wealth loss Americans revert to parasitic a stage. Greatly generalizing, the optimal posturing within age groups should look like this: 0-15 parasitic, 15-30 parasitic/producer 30-75 producer, 75 - on parasitic (of course there will be predatory and scavenger postures as well throughout all age groups; the breakdown is permeable I know of professors teaching full time at 99 years old).
At this point I’m going to postulate (and skip the proof) that entire groups within society collectively exhibit such psychological postures, and it is precisely this psychology that lays at the very root of macroeconomic driving forces. It is the very job of the government to make sure that parasitic and predatory postures are not rewarded over producing ones, while at the same time assuring that human development is homogeneous throughout society preparing young adults for a tax paying producer stage of their life.
In a New York Times article “The Education of a President” it is mentioned that President Obama is painfully aware that Americans aren’t paying their taxes (at all income and educational levels; including his appointees) and he’s bewildered as to the direction and purpose of the TEA Party movement (I just started reading something Tax Enough Already movement participants might be interested in: President Obama cut Americans' income taxes by $116 billion and nobody noticed, well, at least most of us didn’t know). Both phenomena are related to the psychological posturing I’ve discussed above. The American middle class feels cheated by the rich (wall street hustlers, fat cat bankers, big shot CEO’s, even sports and movie stars - who all exhibit predatory postures) and the poor (who get free state or federal health care, housing, in many cases home attendants or social workers, free food and clothing: parasitic posture) while they’re working and bleeding for a country flooded with immigrants who call them gringos and tell them “they’re not doing anything wrong - they only came here to work” (illegally mind you; taking away jobs from the middle class and working off the books for the rich). The Liberty Bell is broken (the honest, hard working, tax paying American middle class) and it’s stuck in a tug of war between the Wicked Witch of the East and the Wicked Witch of the West:
hoping like hell that Big Brother Obama is watching but quickly losing faith:
Whom do the American producers see as the two witches, trying to rip them apart… or rather… as ripping them off? This Rorschach test is exceedingly easy for the TEA party middle class Americans - it’s the rich and the poor (predatory and parasitic); it’s the Chinese Communists taking their jobs and Muslim fanatics taking their blood; it’s the Republicans and Democrats (a patrician government that bled them dry… here I suggest Mr. Obama play an old PC game called centurion; he might find it very enlightening as to what happens when tribute is too high and why winning allies through diplomacy is incomparably more economical than engaging in military conquest).
With November 2nd just around the corner, now that President Obama’s administration has accomplished more in two years than the previous five administrations have done in two decades, someone has to convince Americans that the Wizard of Oz is watching… someone needs to restore Americans’ faith that the evil wicked witches will not triumph… and that in the end the Federal Government will make sure that it pays off to be a noble producer in the U.S.A., because without a shadow of a doubt: courage, intelligent creative innovation and good will have never left American hearts and minds… they’ve just got confused and delayed for a while.
Here are a couple more points on why poverty levels (i.e. people reporting incomes below $11K/year) are so high: since people are mad as hell at heavy taxation and feel they don’t get representation in local, state of federal governments, they simply hide or under-report their income. This may no longer be accurate, but I recall that over 4 million Americans were making their living on the internet tax free, running internet shops through E-bay (many were doing very, very well). Many people who are self employed sub contractors (and do not pay for their own medical insurance) and hire workers (many of those workers - illegal immigrants) off the books - make over $100+K in cash per year, tax free and report minimum income (or produce a few fake workers and pay taxes for them, thus paying a lower tax themselves, but are able to show income they need to qualify for loans). That same scenario is applicable to farms, slaughter houses, bakeries, real estate maintenance jobs, small manufacture, etc. How many home attendants in New York City do actually work for their Russian Jew clients? Very few indeed - most simply share the free cash and go about their business… working off the books elsewhere (in some cases the elderly who supposedly are in need of domestic help and have attendants assigned to them: work off the books themselves!). And the rich? Well, they have lawyers to do their cheating for them: they’re called tax shelter specialists.
This all boils down to the minimum wage in my opinion. If the federal minimum wage is so low that it is more profitable to be on welfare and other aid than it is to work honestly and pay taxes (and thus have no time to prostitute oneself, rob liquor stores or deal drugs)Â people who are in the lower income brackets of $15k to $30k will continue to feel like slaves or under-report income made off the books (keep in mind that in many cases barter may be used and no money ever changes hands, thus there technically is nothing to report: say you paint your uncle’s house and he gives you his old car). Now, I’m not suggesting that we raise the minimum wage to $15/hour… I’m simply saying that’s what my calculations show would be necessary for Americans to go back to work, pay taxes and not be pissed off.
The other part is hiring of illegal immigrants off the books. Lets take Meg Whitman as an example (not that I have anything against her per say, I actually think she’d do well as a governor): her housekeeper worked for her 9 years off the books. Now, if that job was filled for $15/hour by a legal American worker (Ms. Whitman could afford that for sure) or she decided to sponsor her employee so she could become legal and tax paying (for instance on the basis of the housekeeper’s unique irreplaceable culinary talent) the country might have another hard working tax paying citizen by now (sponsor process takes under 5 years, during which Ms. Whitman could rely on her employee’s loyalty; even if the woman came into the country illegally she could leave in secret and return on worker visa and then have her status adjusted) or the legal American employee would have paid a pretty penny into the State and Federal coffers. Now, since American multinationals have generally decided to move manufacture to somewhere with very cheap labor (China, India, Indonesia etc) I think this is where we need to concentrate: make sure simple service sector jobs are American and that they pay well enough that taxes may be paid. Of course when Japan starts mass producing their robot assistants programmable for all these tasks and more… those jobs will be gone as well (yeah I know it’s not grammatically correct to start a sentence with of course). Can you imagine 80% unemployment rate? Long term we need to start thinking about restructuring more than just the minimum wage and immigration laws: we need a whole new world financial system and social structure.
OK. I have one more thing to get off my chest which was hit right on the button by Mr. Robert H. Frank in his article:
Thanks to Mr. Frank my verbal tirade can now be much more succinct, I’ll sum it up with monkeys, Poles and a bell. Basically I believe that within a society (such as a country, or a state, or a city) income distribution levels and wealth should OPTIMALLY be reflected by a standard distribution BELL curve, I’ll take the liberty to illustrate it by hand:
(here would appear a bell curve diagram, but since nobody reads this shit I’m not going to bother: income levels $11K to $250+K and the amount of wealth held by each group within U.S.; I’d like to also include an animation of how that curve has shifted over the last 25 years. I found an interesting picture of the Bean Machine that resembles the ideal bell curve, so I guess you do get a visual aid after all:)
I must say that I too turned a blind eye to this basic intrinsic interconnectedness of human psychology and its imminent macroeconomic manifestations. I confess I was a proponent of both the hiring of physicists by wall street to design algorithms and the financing of real estate up to 100% of market value (I failed to see that investors are normal people and a huge gap in I.Q. distances them from those who designed the tools that were supposed to help them. I also failed to realize that most people are ruthless, egotistical, cheating, scheming, stealing bastards and the removal of risk from the borrower’s side was immediately exploited by all sides: borrowers, banks, brokers, investors, insurers etc etc etc).
The Republican Elephant instead of crushing the bell curve should look more like this cartoon character:
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