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Overview | Process | Self | Society | Organizations | Recommendations | Summary
What is the economic problem?
Q. What is the economic problem?
A. The basic economic problem is to determine what each person in the economy should be doing and how much to reward each person for their efforts.
Since each person wants different things at different times it is hard to know in advance what work needs to be done. Without knowing what work needs to be done, it is hard to provide the proper training for each worker so that the proper skills are available to perform any given task.
The general approach is to provide a basic training for each worker as a base upon which to build. Then provide more specific training to those with an interest in a particular knowledge area. Pay tends to reward the effort and the scarcity of particular skill areas and levels.
Part of the problem is that people and skills are not normally in the correct location. Relocating people is difficult because they have relationships with other people who have their own set of skills and wants for service and products.
Given the complexity of the multi-body problem and the rapidly changing set of needs and wants of the population; central planning is next to impossible while providing for freedom of individual choice. Thus, capitalism with its open individual freedom of choice for employment options for each worker provides an efficient solution for the overall allocation of work among the people.
The main problem with capitalism is that wages are driven to very high and very low extremes in the long term relative to the human life span. Over a long time period the market would solve this problem. But, people are not very flexible in terms of relocation and retraining due to their reluctance to change. There are several large obstacles to more rapid adjustment to better opportunities for wage improvement within the economy for any given worker. The lack of knowledge about the opportunity or realization that the opportunity exists for any given person has been a problem in the past which can be addressed with today's technology. Also, people with higher wages are not motivated to have additional competition for their jobs and thus drive down their own wage. Therefore, they erect barriers to competition and try to establish monopoly positions wherever possible.
As a result, people tend to stay in both high paying and low paying jobs. Society has tried several things to try to improve the fairness of the system. Labor unions are an attempt to give the employee more pricing power by collective bargaining. This results in over pricing labor and reducing efficiency of the system. Government has tried to provide welfare for under-employed people. This has resulted in breaking up of families and reducing the desire to provide a high level of effort for lower paying jobs and a lack of desire to get the preparation for higher paying jobs. The self worth of some individuals has been diminished. Whole neighborhoods have been demoralized as a result of welfare.
Minimum wage laws have been enacted to try to increase the pay for the less skilled jobs. This results in inflation within the economy. And so on, with other symptoms which can be enumerated.
We need a better solution.
What are the problems we want to address?
First, we need to provide full employment. Anyone who desires a job should have one within a very short time period, say one week. Jobs are essential for self worth and will maximize the potential output of the total work force.
Second, everyone who is a productive member of the work force should be able to maintain a reasonable life style and provide for the basic necessities of life for themselves and their families.
Third, over time social injustice should be eliminated so that crime and civil strife is greatly reduced. The rule of law should remove most conflicts between individuals within society.
Life will not be as stressful as today and each individual will be more fulfilled and gain more benefits from technology and social organization.
How do we achieve these ends? We need to enact some new laws and adopt some new attitudes. First we are all equal in the eyes of our creator. Intelligent people are no better than those less gifted mentally. Good athletes are no better than those less coordinated. The strong are no better than the weak among us. We all have our strengths and weakness. We each have our place in the world. Yes, some people should receive better wages than others. Some people are better prepared to be president than others. Some people would rather spend more time with their families and less time at work than others. But; we should all prosper and benefit from the bounties of this great world in which we all live!
Now for the specifics: