ECONOGAL

I am currently travelling away from my small town and thought I would share some random economic thoughts. These ideas spawn from a few weeks stay in a city whose population ranks in the top 25 in America. This is a far cry from my hamlet of 7500. This post contains my opinions. I am fortunate to live in the United States of America. The Constitution guarantees my right of free speech. You may differ in your opinion on the below subjects. I respect that. We may end up agreeing to disagree.

Big Box Hardware versus Mom and Pop Hardware Stores

This time of year I make many trips to the hardware store. Spring heralds longer days. More daylight means more hours to work. Since I am currently in a city I have visited both the Big Blue and Big Orange hardware stores. Neither have been satisfactory in the service category but the orange guys are at least passing. However, the price points are great. So, if you know exactly what you need and can tolerate the lack of personal service you are good to go.

I prefer good service. My blood pressure rose a bit after five trips for a landscape project and poor service. This particular Big Blue store used to be a favorite go to store. My Mom and I spent many enjoyable mornings picking out plants. The store became slightly tarnished in my mind two years ago because it could not hire someone with a physical handicap. This is well within the law due to the type of work and the specific handicap.

However, the place is now in purgatory-at least this location because of the abysmal service. Multiple trips were made for 2 cubic foot bags of mulch because the rental car could only hold so much. On three of the four trips to haul the mulch, no offer was made to help. The other time a young man,able bodied so hired, appeared by the stack of mulch and proceeded to watch me load the already carted bags into my trunk. Watch me. Best case scenario, he was dumber than a doorknob. As was another young man who told me one bag would cover one and one half square feet.

I have worked on both professional and personal levels with physically handicapped individuals. One of whom is a quadriplegic. In each and every case their work ethic is/was fantastic. Sometimes the physically handicapped are much less handicapped than the able bodied individual.

Today, I opted to go to Big Orange Box store instead.

What is the long-term economic impact of poor service? I am not sure service value can be measured. Economies of scale make it hard for the Mom and Pop stores to compete on product price. The big box stores enjoy discounts from their volume purchases. In my little town the Mom and Pop stores are often almost double or double the price of the big box stores. (Not to mention the online opportunities.) However, if I knew of a Mom and Pop place here in this metropolis I would be willing to give them a try.

I will pay a small amount more to support a local business, but only a small amount. After all I wouldn’t want to negate Adam Smith’s Invisible Hand Theory. This is just one of the theories posited by Smith over 200 years ago.

Specialization

Another random economic thought from this trip is specialization. Adam Smith wrote about the positive impact of division of labor in his 1776 publication Wealth of Nations. In a small town you will find many Jill of all trades (some Jack’s as well.) Because of scarcity of a wide number of services you learn to do more. Specialization occurs, but in multiple areas.

For example, neither one of my parents love the kitchen. My skills came from necessity. Unlike a city where you could dine out for a solid month without ever repeating restaurants, choices in small towns are limited. But I do not even consider my cooking to be in my top three skills. I am thinking in multiples, so there goes the idea of specialization out the window. Perhaps that is why David Ricardo is my favorite economist and not Smith. Although I do describe myself as a capitalist.

So two small town people tried tackling a sprinkler system in defiance of Adam Smith. If we were playing baseball we would be a hit. But I see our fifty percent success rate as a failure. In hindsight, I should have found someone who specialized in sprinklers. Or waited for daylight to return. Of course a little more service from Big Orange would not have hurt either.

Just-in-Time Inventory System

The reliance on Just-in-Time inventory also plays a part. A lack of stored sprinkler parts demanded the trip to the hardware store. I deem items, such as sprinkler heads, as non-storage items. They are easy to purchase, inexpensive, and not often needed. This type of item lends itself to Just-in-Time inventory at my home. Unless one desires their own hoarder’s reality show, replacement inventory for everything under the sun cannot find a place under one’s roof. This is not a contradiction to an early post on National Preparedness Month. Some inventory is needed in the home. Items I categorize as Just-in-Time parts differ from items preparing a home against events such as hurricanes and blizzards.

For those who detested economics or skipped class that day, Just-in-Time manufacturing appeared in the 1970s. The approach, generally credited to Japanese car manufacturers, cut costs by delivering parts as needed. This reduced the footprint needed by production companies by eliminating storage costs. Thus today it would not be unusual to see vertical components within the same industrial complex, For example a factory producing air condition units for buses might be found a few blocks away from a bus manufacturer.

Social Media Regulations

Facebook dominated the news the first few days of my trip. Mr. Z would like you to believe the pop-up ads on Facebook are as random as these random economic thoughts. He took out full-page ads apologizing for a breach to your privacy. Theoretically the breach was unintentional.

This is not the case. Social media needs to sell your data in order to make a profit. The economic model does not work without advertisements. Of course advertisers want their dollars to work efficiently. They need to target their ads to people most likely to use the product they sell. Hence the role of Big Data. Social media platforms are great ways to socialize in the 21st Century. But they come with a cost. (Remember nothing in life is free. Not liberty, not love, not even water, but I digress.) Facebook has expenses so they need revenue in order to operate. Since Facebook users can sign up “free” of charge, the money must come from somewhere else.

So should Congress regulate social media? I think your answer will reflect your politics. My own answer is to use outlets such as Facebook sparingly.

Striking Teachers

Another random economic thought concerns the striking teachers. In general I am not a big fan of strikes. However, I can at least understand why these strikes are occurring. Teachers in the United States are not paid well. Some attribute it to the nine month school year. I think even if they worked twelve months and the pay was increased proportionately the profession would still be underpaid.

But the traditional low pay scale is only part of the story. Violence in the schools is increasing. The media do report the shootings, but other acts of violence occur as well. Fistfights can be everyday occurrences and I know stabbings happen as well. Teachers are handling all of these violent acts. In addition, drug overdoses are occurring during the school day. Education has become a hazardous occupation. Usually jobs that involve a risk to life and limb are compensated with an increase in pay. I believe teaching needs to fall into this category.

In general, I think most kids start school wanting to learn. I also believe most students are good citizens. But we seem to have reached a tipping point. The minority number of trouble makers and in many cases troubled students is now large enough to have a sustained negative impact on the education system. Teachers are on the front line. They need combat pay.

Full Circle on Specialization

Why is there so much violence? What can be done? These questions have many answers. My answers are quite opinionated. I believe we have become over specialized. I doubt Adam Smith ever addressed this and to be honest I will need to reread Wealth of Nations to see if over specialization was discussed other than in terms of the Invisible Hand. In a well oiled economy if too many carpenters exist, some will change careers. This is the theory of the Smith’s Invisible Hand. Equilibrium will occur naturally over time.

As applied to school violence and societal violence, we have tipped beyond a point of balance. I believe we need to re-think our system. We have too much idleness in our youth. This is not a new concept. Devout readers of the Bible as well as staunch fans of Chaucer’s Canterbury Tales understand this notion. Idle hands are the Devil’s tools. Of course both the Bible and Chaucer predate Smith.

But how do we achieve this? Do we really want sixteen year olds with no interest in higher education roaming the streets? I am in favor of vocational-technical (vo-tech) education. We need more plumbers and electricians. But both professions need individuals with strong work ethics. Power outages occur day and night as do broken pipes. We need to introduce vo-tech careers as early as grade school.

Vocational-Technical Education

By the sixth grade there can be an indication of which students have lost interest in education. There are a myriad of reasons. Some don’t have the aptitude for book learning, others are hindered by environmental factors. The problem with fixing an arbitrary age to divide children into tracks of learning is the fact some people are slow developers.

Again, a child can be hindered by outside forces. Tara Westover is a prime example. Please read my review of Educated to understand why I am against a set age for kicking individuals off the path to higher education.

Grade school needs to incorporate some career development. Many of you may remember the early reader books on careers. These stories introduced jobs in many fields. Unfortunately, many were out of print by the time my children were learning to read. Children can multi-task by learning to read from books introducing various types of jobs. Maybe the desire of the young to multi-task is a response to over specialization.

Equilibrium Balance one more Random Economic Thought

One last thought on idleness. Some nations as well as some religions require service commitments. I have no first hand knowledge of the parameters of this work. Nor do I have data on the success of these individuals. However, I believe the idea has merit. We need to promote the idea of work and working with others. Two years serving a country or as a mission to a religion seems likely to give an individual time to mature. Of course hard work at a full-time job may also achieve the goal of self sufficiency.

This country needs to regain balance. Teachers are underpaid, in part due to the new work conditions facing educators. Needed vo-tech employees are scarce. Too much violence is a result of mal-adjustment. At the risk of being labeled a Keynesian, somehow the Invisible Hand needs a little help. Individually and collectively a push needs to be made concerning work ethic. We see this in the service industry as well as in the emerging industries of the 21st Century.

Somehow the education system needs to alter so that kids retain that desire to learn you see on virtually every kindergarten face. This is not a task just for the teachers or the parents. The students themselves need to be involved. Work ethic comes from within.