Economics, Philosophy and Science

The Occupy Wall Street movement has spawned a great deal of branch protests. It has increased our awareness of economic, educational and governance issues. We have seen a series of aggressive police actions and amazing responses from victims. Historically, universities have been a sites of unrest. Berkeley had it's riots in the 60's, there's the famous Kent State shooting picture and there are many other examples. What do much of these have in common? The state has used it's authority and power to overly aggressively clamp down on protesters. However, violent protesters can't be accepted, but non-violent protesters cannot be met with force. It's part of our heritage to protest the government.

However, it's important to understand what we're protesting and why. It was clear from the beginning of the OWS movement that most of the people didn't really understand what they were protesting. Very broad general things like Wall Street making too much money or the fact that no one has gone to jail. I think it's important that for protesting to be effective the leaders and a majority of the protesters need to be well educated on what it is exactly they are protesting.

In this case the protesters needed to be educated on economics and philosophy/morality. Why economics, those guys are like the bad guys man? Well, sadly, to have an actual conversation with these people you need to speak their language. You don't have to actually accept their assumptions as true or accurate, but you need to be well educated on the topics. Additionally, if you are well educated on economics, you'll know there are different capitalist perspectives on economics that indicate that a more equal society is a safer and happier society. Using evolutionary economics, policies can be crafted to help protect economies from crashes. In addition, being educated in slightly beyond the basic supply demand curve, it will help prevent the wool from being pulled over our eyes. This will also allow more members of our society to enter public discourse and understand and speak intelligently about the topics that impact all of us. People will actually understand what socialism and communism actually mean.

In addition to a good economic ground work, we also need to understand some basic philosophy. People are accused of moral relativism, we need to know what it actually means (morality is flexible based on the situation) and how that impacts people's actions. We also need to know when our leaders are behaving morally, immorally and what sort of freedoms we should be giving to people. Our country is founded on the philosophical ideas of the enlightenment. The US government was founded on rights, which all people should have regardless of sex, race or whatever. This includes speech and protest. If these are within our rights, then we need to protect them from people that believe it is their right to physically assault you when you exercise your rights. Morality and ethics can also drive our legislature to define laws based on humanist principles to ensure living wages and the right to live for all people. Or at least the need to create the social mobility claim to have in our society. Decreasing costs of education reduces the initial burden after school which allows people to take more risks, which may allow them to move from one social strata to the next. These should be done for moral reasons and because education and research has been shown both neoclassical economics and evolutionary economics to be a huge driver of sustained economic growth.

We also need a strong scientific foundation, which will provide a healthy dose of skepticism for government and data published by any group on either side. It gives the tools to decide if we should accept these data or open our tool box and figure out where the flaw in the data is. Science is the driver of current economic growth. It is what allows the next big break through at the platform level. We've had several platforms, coal, steel, rail, and we're currently on the silicon platform/computing platform. To develop new platforms we need to continue to drive to the frontier of science.

Our founding fathers embodied these ideals. Jefferson was a philosopher that wrote his own version of the bible. He and Franklin were both accomplished scientists. All of them believed in the rights of the people that exist not because they are given to them by the government, but because they are natural rights all people have. It is important that we acknowledge these rights and make sure we are educated in these topics to ensure an actual debate over the problems we're facing as a society. Without being educated in the importance of these topics we'll begin to argue based on the best sound byte and not on the content of the message.

In closing, all people need to become literate in these topics to provide the best foundation for an argument. Without being able to speak the right language, you'll sound like whining children that's wondering like a child lost in the woods, or out of your element if you will. With these tools, anyone can talk coherently and powerfully against the very things our own government protests in other countries.

Are democracies or autocracies better with technology Management?

According to neoclassical economics knowledge is a non-rival (I can use it without preventing you from using it) and non-exclusive (available to everyone) resource. This has two impacts on their economic theory. First, the actual impact of research and development is excluded from economic growth and is ignored. Second, that any company should be able to pick up and produce any technology. Both of these points are relatively ridiculous. For two reasons. First, we know that research leads to the formation of new companies. Second we know that most companies cannot produce any product and many companies that produce products outside their expertise fail at it.

From a neoclassical perspective democracies are terrible at sharing knowledge and technologies. Democracies have a slew of laws that regulate access to technology form monopolies for specific technologies if they have something called a patent. Additionally, there are other contracts that can get in the way of sharing of knowledge in a way that is neoclassical. Non-disclosure agreements and non-compete clauses. If you aren't allowed to discuss a specific technology with other people, it prevents knowledge from spreading and being shared to other companies. If you aren't allowed to compete within the same industry after you leave a company, it prevents you from using that knowledge in a positive way at another firm.

These laws have been put into place in our democracies to ensure proper protection of technologies for firms. It's designed to prevent the spreading of tacit knowledge from company A to company B. As a company this is incredibly desirable. Without these protections some research would be worthless to conduct. Knowledge spill-overs would cause prices to fall to cost or lower as firms compete for market share. It's great for consumers, but bad for firms.

So what happens in China? Well according to Make it in America, China requires many firms to hand over their Intellectual Property to the Chinese state. What ends up happening after this is that the Chinese government sells the information or gives the information to one or more Chinese company. These companies tend to be made up of former employees at the company that made the product before. This allows tacit knowledge transfer to the firm and a fast ramp to compete directly with the inventor of the technology. The knowledge is freer in China than it is in the US because of this. This increases competition and may be impacting the cost of goods like solar panels.

In a way this type of behavior forces companies to compete based on the actual costs of the technology. This is what is expected in the neoclassical theory. All prices will eventually drop to the marginal cost of a product with near zero profits for the producing company. In a perverse way, this is a "freer" market than ours because it comes closer to the non-rival non-exclusive knowledge base.

In my next blog, I'll discuss this topic more.