The Biosphere and Minimum Wage

In the mid 1990’s scientists tried to create a self-sustaining, sealed environment that would produce all necessary food, oxygen and nutrients to sustain life.

Biosphere_2

The project was called Biosphere and massive amounts of time, energy and financial resources went into the project in an effort to succeed. The Biosphere was set up to house a fully enclosed and balanced system of animals, plants, water, minerals, chemicals and other life-sustaining items.

While bold in scope, the project ended in failure.  Mainly because keeping the system in balance could not be achieved. There was always something interfering with the ecological balance. Ants and cockroaches ran wild because there were not enough predators to eat them. Some vines grew wild thereby killing off other plants. There was too much nitrogen in the air, not enough oxygen, and the water became polluted.

The scientists worked tirelessly to get the ecology back into alignment; but, in the end, they realized the enclosed Biosphere could never support life..human or otherwise. Two of the scientist, Cohen and Tilman, concluded “No one yet knows how to engineer systems that provide humans with the life supporting systems that natural ecosystems produce.”

The U.S economy is like an ecological system wherein various commercial entities (organisms) around the globe compete and work to produce goods and services (plants, water systems and fauna) to bring to the marketplace (a balanced biosphere). Price changes are signals that are transmitted throughout the system. Entities react to those signals, adapting and adjusting to maintain or re-establish economic balance and then evolve.

Price of gas too high? Car companies build smaller cars to compensate. Price of sugar too high? Consumers will use more honey in their diet as a sweetener. These signals are continually sent out within the global system whereby humans react and adjust their behavior accordingly. Both humans and markets are way too complex to understand and regulate with certainty.

Yet, we have politicians trying to do it none-the-less.

For example, in California, if I have a job that needs to get done and would like to pay someone $6.00 an hour to do that job…I can’t. The law does not allow me to pay an amount below the minimum wage. Even if I find somebody who chooses to work at that rate, and who  desperately needs the money, the job must go undone.  Despite the fact that both parties are willing to meet at this price, the government will not allow the transaction to occur.

If, then  I am forced by law to pay a higher wage for that same job to be done, I will have to pass the additional cost on to the consumer who will ultimately buy my finished product. However, consumers of my finished product have a ceiling of how much they will pay. If my price exceeds that ceiling, my product goes unsold. The inevitable end result of that is my company goes out of business.

Overall, small jobs get left undone and businesses close. People move away from the geographic region in search of jobs and better quality of life after properties values drop. Just like the ecosystem where the wild vines grew and killed all the helpful plants, regulations, laws and taxes have the same net effect…strangling and cutting off otherwise healthy business environments. And “minimum wage” jobs? They are the first to go when employers are forced to pay a wage that is  harmful to their business. All that discussion about a minimum wage not being a “living wage” is a canard. Only 2.5% of all minimum wage earners are over age 21.  It isn’t meant to be a living wage. Its meant to be a starter wage for teens and unskilled workers to enter the workforce and move on to an education or skilled job.

In the Biosphere experiment, the scientist came to the conclusion that it was virtually impossible to regulate an ecosystem. It was too complex. But our politicians, in their hubris and ignorance, think they can control the economy by way of laws and regulations. They tend to look at markets as inputs and outputs rather than complex adaptive systems which, when left alone, will find their own balance.

This artificial intrusion by government has lead to disastrous consequences:

  • In 1998, as a result if the Asian Crisis and failure of Long Term Capital Management, the Federal Reserve slashed rates and saw a gush of money flow into the technology sector only to see it crash and burn in 2000.
  • In 2001, after the Twin Tower bombings and subsequent military actions decimated the economy, the Federal Reserve slashed rates yet again. This money promptly moved into Real Estate causing the financial meltdown of 2008.
  • In 2008, the banking sector crashed and the U.S. government slashed rates again then went on  a massive spending spree to jump-start the economy. We are still waiting to see the full consequences of those decisions; but, I predict the next crisis will be one of the largest ever recorded in history. Perhaps the bursting of the student loan or auto loan bubbles.

The intrusions have left us all worse off than we started.

Take a look at healthcare. Unhappy with the state of  healthcare, President Obama embarked on a plan to nationalize all health care because he knew better then everybody else what was needed.

President Obama is a lawyer by training and a community activist by job experience.  Yet with no formal qualifications whatsoever in the medical space, he decided to impose a healthcare plan that affects 300 million people. Once he saw the infeasability and likely real-time effects of his plan, he and his minions approached media outlets with knowingly false and misleading statements about the plan to deceive the American populace into supporting it.

Where is healthcare as a result? Its where the Biosphere is. It is a failed system that is, itself, on financial life-support!

Democrat leaders (especially Progressive Democrat leaders) believe they know what is best for everyone in every situation and stop at nothing to ram these untruths down our throats. Democrat ideologues and sycophants could care less whether they are lied to as long as “their party wins.” There is no search for meaning. There is no search for truth. The game is all about power, even if the implementation of that power does more harm than good. The economy, like an ecology, is a complex adaptive system wired to self-regulate if only specific political humans, cloaked in the garb of Democrats, stay out of the way.

Did you know that the Progressive Democrat Party in the U.S. was born from the Fabian Socialist Party in Europe who’s mascot and symbol was…wait for it…a wolf in sheep’s clothing. You can’t make this stuff up!

fabianHumanity is a dynamic system not a machine to be manipulated by constraints and levers. We are so complex and unpredictable and that it is virtually impossible to map our behavior; so, let us be free.

Personally,  I favor liberty, opportunity and free markets. We need to start looking for talented people who do the same and are willing to take us where we want to go…not where they think we belong.

Steve & Carole

sleeclark@gmail.com