Showing posts with label labor. Show all posts
Showing posts with label labor. Show all posts

Tuesday, October 28, 2008

Home Ownership and Minimum Wage

Lending practices represent hundreds of years of bitter experience. Shifting them for political gain is now providing another bitter lesson and giving us the second great global financial panic.

The solution to the lack of growth in the housing market could never come from changing the lending rules. It has to come from a proper reorganization of the relationship between government and the labor market itself.

Let me spell this out. The labor market is a market that is currently structured with a deliberate built in inefficiency. A minimum wage is established by fiat that is arbitrary, but makes it impossible for a lot of useful activity to work around the edges and promotes the existence of a large cadre of idle workers who are in no position to support debt.

Grant that individuals who are limited by health or other issues cannot work and must become wards of the state.
Everyone else is available to do either light or heavy work at minimum wage with a premium provided for heavy work.

This work is provided by the state automatically the moment that an individual is laid off from other work. This is not work fare. It is temporary to even permanent work provided by the state at minimum wage to pursue goals understood to serve the common good. A classic example is tree planting and historically waste cleanup got a lot of attention. Once the government knew it was in the business of deploying temporary human capital, it could get very good at it.

Most importantly, the minimum wage is tied directly to the monthly cost of supporting the standard mortgage on say five hundred feet of living space per earner with the appropriate multipliers.

This makes every working person a qualified buyer of a home or condo and the linkage between this wage and measured cost of built space will make it hard for the system to become distorted. If housing prices drop then wages drop, attracting more buyers and more demand for the workers and the opposite is also true.

By linking this wage directly to the capital cost of space and thus directly to the real cost of producing that space, we have created a firm floor for both the housing industry and the labor market that should result in home ownership maximizing and producing a compensatory increase in tax revenue since everyone is either working or living off his savings.

Quite simply we make the customers good so that the banks can do what they do best. This may not sound like a scheme that is revenue neutral but I suspect that it can be fairly quickly once we learn how to properly deploy the temporary labour pool to proper economic effect.

It could turn out that many folks enjoy working on farm projects and that then permits farm operators to entertain value added enterprises that requires the availability of labour.

We will be surprised at what we want to do once labor is readily available for normally labor intensive tasks.
And you will be quite sure that a lot of high end employers will grab available talent just to take on projects that have lacked priority in the normal course of business once a system like this is set up and it will not be life or death to either party.

By establishing a real floor for the labor market, mobility will naturally improve, unwilling unemployment will disappear and an efficient job brokering system will also emerge.

And since everyone qualifies fairly quickly to have a mortgage, home ownership should approach ninety percent which is the objective.

Friday, September 28, 2007

The New Model Farm

As my readers have likely figured out, I use thought experiments to advance new ideas. I have a lifetime of massaging other peoples doubtful business plans to inform me and I must sometimes ask the reader's forbearance when I assume he is as experienced in this process as I am.

That is usually a bad assumption and it is very easy to assume prior knowledge when it is not true. So just as a reader is welcome who brings new information, I want to welcome that reader who does not follow the argument. Ask questions! It gives me a chance to rewrite those same ideas and in the process allows a larger group of people to understand the concepts.

I use one key principle when thinking about the human aspects of any innovative protocol that I am introducing. I call it the rule of 200.

Essentially, humanity naturally organizes itself into communities whose maximum head count should never exceed 200. We have learned to create larger organizations only through the expedient of operating virtual communities within the organization and explicitly defining their bounds.

Command an control is achieved by the rule of 6 in which only six people report to any one individual. There are lots of ways to play around with this and it is never meant to be used in a rigid manner. However, anything larger tends to turn into a one way communication meeting.

Understanding this allows us to realize that our ancestors tended to naturally organize their economic life around farmland and a village of 200 or so. It is a powerful predictive tool for deciphering ancient settlement patterns.

Perhaps with that in mind, you can understand my logic in suggesting the creation of a new agricultural protocol implementing new agricultural ideas and using the modern condo tower as the central village around which community life revolves. After all, our condo delivers the entirety of the modern lifestyle in a completely financial form. No one has yet got wise to this idea and how this can solve several major problems.

1 A full community social support package can be implemented easily and internally financed.

2 A community capital base can be provided for maximum agricultural efficiency.

3 A base labor pool becomes available to the agricultural sector that opens the door for higher value custom agriculture.

4 The community is integrated into the life of the associated farm operation. Many natural recreational options open up.

5 All members of the community can access part time economic value for their effort. That particularly includes the elderly and the young. This is a major social improvement.

This is a radical change of outlook for traditional western urban and farm operators and was never quite practical in the past. The advent of the internet changes all that forever.

Of course there are plenty of aspects that need to be worked out in a protocol so revolutionary. The more I think about it however, the more comfortable I am that such a protocol can readily resolve the many conflicts that are particularly built into our urban civilization.

I am going to call it the new model farm community. I encourage comment and ideas. There is a lot of meat to put on this bone before we are finished.


Tuesday, July 10, 2007

Human Labor

I often forget that few understand how dominant to the economic model underlying agriculture is the element of human labor. Every shift in effort means the reallocation of that very limited resource.

Thus for an Indian family in the Amazon to put in the extra effort to carbonize corn stalks, they must have realized an immediate benefit. That came about by the ability to reseed the hills in a couple of weeks. Unless someone tells me otherwise, the Indians of the Amazon had a continuous growing season that could readily support three crops per year provided that nutrients could be restored immediately.

Since the likely biochar would contain a mix of soil,ash,charcoal,char and even a little unburned material as well as four months of chared household waste, the nutrient release profile would be sustained over the next growing season.

The whole field would thus require a concerted effort during the planting period, perhaps lasting a week or two with minimal weeding thereafter. That is an incredible return on labor for pre-modern agriculture.