Why Does Unemployment Match Consumer Confidence Index?

The Influence of Tax Rates

In a previous post I investigated the variables that influence unemployment. The first variable was tax rates. Many people, including very influential people and even candidates for the President of the United States, make the statement that lowering taxes will increase the number of available jobs. Their rationale is that lowered taxes will make it easier to compete in the market so production will be up and hence jobs will rise and unemployment will fall. What actually happens is often the exact opposite and instead of the extra money going to increased productivity, it goes to increased profitability. In fact, if you examine the history of the US in recent years, increasing taxes (not lowered taxes) were almost uniformly followed by lowered unemployment. Another worry expressed by many is that the tax rate in the US is too high. In fact, as a percentage of GDP, the US has one of the lowest tax rates in the world. Corporate tax rates in the US are currently fairly high compared to other developed countries. But a comparison of countries with high and low corporate taxes shows that unemployment is unrelated to the corporate tax rate.

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False hope? Do Lower Corporate Taxes Really Mean More Jobs?

The Claim

At least in Europe and North America, we hear politicians equating lower taxes to an abundance of jobs. Some politicians even go so far as to suggest that free market capitalism is a panacea for the unemployment problem, that if rules, regulations, and taxes are reduced or eliminated, businesses will mushroom in productivity and jobs will be created in record numbers. But what are the actual observations to back up this claim?

Some Background

Recall that the reason capitalism evolved (and it was a spontaneous evolution, not a designed development) was to increase the power of a business to control the production and distribution of products so that the profit could be maximized. The trick to accomplish this is to combine the assets of a number of people (capitalists) into a corporation so it can more effectively achieve control, sometimes by competition, sometimes by acquisition, and sometimes by merger. The profit is then split amongst the capitalists. Where do the rest of the people fit? They are the employed and unemployed. The capitalist corporation views both employees and unemployed people as resource packages of energy and skills to be used at the lowest possible cost to improve the profit level. If the local employees are too expensive, the labour is either transported to an offshore, cheaper location, or replaced by machinery. So there is no inherent reason why capitalism needs “people”, it needs energy and skills at the lowest possible cost.
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Global Warming is Now

Global Warming Positions

At this point debate about climate change is good but at this stage it will take more than debate to change the minds of government leaders. In most countries, government positions on global warming are already established. They assume global warming is real, but that it will have only a relatively minor impact in the next 100 years, no more than can be handled by adaptation strategies costing less than 1% of GDP on average. Many already have staff devoted to climate change and already have plans, strategies and in some cases have taken preliminary action.

Global Warming Summary

Global warming is a conclusion that most climate scientists and scientists in related fields predict based on direct and indirect measurements of CO2, temperature, and sea level rise among other variables. The scientists have predicted that with increasing release of CO2 and other greenhouse gasses, the temperature of the earth will rise in proportion to the addition of the gasses. They further predict that as a consequence of the rise in temperature, there will be both sea and land ice melting that will be of sufficient volume to raise the level of the sea over time. The rise of CO2, temperature, and sea level all have direct and indirect impacts on the physical and biological characteristics of the planet, some of which will be benign, some adverse, some not easily predicted, and some unknown. The end result depends on how much CO2 is ultimately released, but the extreme is probably something like 300 million years ago when the world was much warmer than humanity has ever experienced, had much higher CO2 levels than humanity has ever experienced, had no ice caps, and the sea level was about 70 meters higher than today. This was a period of tropical gigantism. It was followed some 40 million years later by an extremely dry period in which only reptiles and aquatic animals flourished.
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Sustained Growth in Ecosystems and Econosystems

Sustained Growth is Not a Stable Econosystem

Sustained growth in current capitalistic econosystems is seen to be a necessity to maintain a stable economy. Now am I crazy or is that just plain ridiculous? How can constant growth imply stability? Constant growth is by definition not stable, it is constantly changing, and often in an unpredictable fashion. Constant growth is by definition also just not physically possible. The world will not sustain constant increase in anything except age, and even that has its ultimate limits.
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Natural Justice, Fair Play, Empathy, and Personality in a Capitalistic Society

Capitalism like ecology is an implacable system of selection based on how well an individual or a corporation is able to adapt to the current ecological or economic conditions. Sometimes this is a competitive process, but just as likely it is simply how well an individual of a species can make a living using its characteristics and abilities to extract and modify the resources available to generate energy and build bodies or products. In still other cases it is how well the individuals of one species get along with each other in complex societies such as ants, bees, and humans.

We know that in both ecosystems and economies (even capitalism) individuals within the system exhibit greater or lesser degrees of natural justice, fair play, and empathy. Research in many different species and groups of mammals show all of these characteristics exist in animals other than humans. Personality and individual recognition is now known and documented in many social animals, even insects such as ants, wasps and bees. We also know that in both systems individuals who know the rules nonetheless cheat in an attempt to increase the return on their investment of work at extracting resources or producing bodies or products by short-cutting the processes. If caught they get punished. But in a capitalist system, the only legal obligation of a corporation is to make more profits. The capitalist culture expects short-term profits and rewards handsomely. Based on behavior, if corporations were real people, many would likely be diagnosed as pathological. But they are not people, they are economic entities responding in an amoral fashion to the adaptive and competitive pressures driven by a need to maximize profits.
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Combatting the Oncoming Anti-Science Tsunami Cloaked in Ideology

Preliminary Caution

Although this little blog outlines a possible plan that can change the course of science funding and science literacy, it is not possible to implement this plan overnight. It will probably take years to turn the system around. Academics interested in effecting changes in the system to enhance its funding base, capabilities and acceptance by the general public through increasing science outreach, must remain and succeed in the system. Therefore it is imperative to continue to play the academic game and be certain to uphold the standards of excellence demanded for moving through the ranks.

Statement of the problem

1) The general public has an appallingly low level of understanding of the universe and the world around us as well as basic biology, natural history, and fundamental principles of ecology and sustainable anything. Effective decision-making in a political or business-driven arena about the natural world and our relationship to it is thereby made almost impossible. The consequences of poor decision-making for world climate, renewable resources, finite resources, general health issues, and pollution to name but a few can be severe in the present and devastating in the future.
2) Science education in public and high schools is poorly informed and there is also a creeping anti-intellectual and anti-science tendency which results in education largely omitting or scrambling science principles in a student’s education.
3) University-level teaching of science is restricted to actual university students who enter a science course. While there is a potential to offer general understanding of science principles by science outreach or interacting with news media, in general this is discouraged in favour of refereed science papers that are used to rank hiring, promotion, and tenure candidates, and internal institutional committee work.
4) Museums are ignored by universities or at best are considered to be scientific service organizations to the university needs. In fact, museums have the only institutional mandate to offer science education on a popular basis to the broad general public from a base of actual research through to professional level interpretation and exhibits as well as outreach programs.
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James Hansen on Climate Change

Dr. Hansen is well-qualified to speak on the subject of global warming and in this lecture describes the underlying principles and evidence for the changes we now observe. He also makes predictions for the future against the accuracy of prediction he has made over the past several decades, all of which are now fact or on the predicted track. Dr. Hansen is the target of attacks about his views of a proposed economic method to reduce carbon emissions and about his claim that NASA tried to muzzle his alarm about climate change.

Here is his talk March 10, 2012.


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Managing Free Market Capitalism from Within?

Expanding the Draconian Hypothesis

The goal is to drive an econosystem currently in place (anywhere) towards a highly diverse economy solidly founded in primary production and primary consumption (more-or-less the same as secondary producers in economic terminology), with a very elaborate infrastructure functioning to distribute the raw materials, products, information about the end products, and wealth. The infrastructure itself will spontaneously develop and support allied and dependent businesses. These infrastructures include physical structures such as roads, rail, airports, as well as communication systems such as mail, telecommunications, information transfer systems including the various satellite and digital infrastructure elements used to support Internet services.
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Capitalism Can Leak Empathy and Wealth

Natural Justice, Fair Play, and Empathy in Nature

Injecting moral values into capitalism is not an easy task. Capitalism is a wealth-driven, competitive system in which there are no built-in internal mechanisms for requiring responsible behaviour with regard to people other than the capitalists themselves.

A sense of natural justice is deep seated in our evolutionary past. We are not the only animals that understand what’s fair and what’s not fair. Nor are we alone in having empathy for each other. Experiments with a wide range of animals including primates, parrots, crows, elephants, whales, wolves, rats and others suggest that these feelings of justice and empathy we have are very instinctive. If you have ever played a game with your dog, you can see that he trusts you to play by the rules — and yes dogs understand the rules of a game and of interrelationships. But some dogs play by the rules and others know how and when to break the rules to their own advantage, so cheating is not unique to humans either. What dogs do when another dog cheats? They refuse to play with the cheater. And it takes quite a while for the cheater to be trusted again.
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Sustainable Capitalism? Nice Idea, But …

The Sustainable Thesis

Al Gore and David Blood have proposed developing a sustainable capitalism. I agree completely with the underlying sentiment to create a system that does not over-exploit the planet’s resources nor ignore the people who are not included in the equation governing capitalism. Unfortunately, capitalism is not designable — it is a spontaneous, self-generating process that reacts to external forces operating on individual entrepreneurs or capitalists. It is possible to influence capitalism if you can exert external forces from outside the system. From inside the system one can only react as do other individuals in the system. And we are all inside the system.

I suspect that Gore and Blood share with many of us, the sense that capitalism appears to compete with ruthless (in human terms) strategies. They propose to design a system that is not competitively ruthless. This might be possible, but I doubt it. On the other hand a more appropriate approach might be to examine how econosystems work using a biological metaphor and see if it is possible to make a better analysis and projection of what can actually be achieved by attempting to manage what is a spontaneous self-generated system, with no predetermined end points.
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