Reality Straight Up!

Thoughts & Observations of a Free Range Astrophysicist

Saving Capitalism from Itself

IV. Three Cheers for Small Business

Anyone who owns a small business knows what they rely on more than anything else: customers with money in their pockets! (Part 4 in a series on Thomas Piketty’s “Capital in the Twenty-First Century.”)

Free market capitalism is a remarkable system with a host of benefits. Economic freedom is key to political freedom. Capitalism is an efficient system that encourages and rewards innovation. It has the flexibility to respond quickly to changing conditions. It spurs economic growth. I am a big fan of capitalism!

But as we have seen, no system is perfect, including capitalism. Thomas Piketty’s argument is that in an unregulated capitalist system income inequality grows. It’s kind of hard to avoid the conclusion that he is right.

The question is whether that is good or bad, not just for individuals, but for the economy itself.

A Question for the Small Business Owner

I have a question for you. Suppose that you live in a town of 10,000 people, and own a restaurant. Somebody hands you (figuratively, at least) $10 million, and says that you have a choice. You can either use that $10 million to put an extra $1,000 into the pocket of everyone in town, or you could deposit that $10 million into the bank account of the richest family in town.

What would you do?

Would You Rather See Money in the Hands of Your Neighbors…

Let’s look at the practical effects of the two alternatives. If you put $1000 into the pocket of each of your neighbors, they’ll have more money to go out to eat. More customers means more business for you. Perhaps you will need to hire some more staff. Maybe you will get to take that vacation you’ve wanted, or treat yourself to a few more nights out.

Of course, your neighbors will also spend some of that money at the grocers or having some work done on their homes. The grocer will have more money to spend, and will have to hire more clerks. Contractors will have to hire more carpenters. Those grocers, clerks and carpenters like to eat at your restaurant, too, and now they have more money to do it.

Now you need to hire even more staff! Maybe it’s time to think about opening that second restaurant on the other side of town. You really are doing well! And with the money you are paying your employees, the grocers and contractors are also doing well.

If you put money into the hands of your neighbors, they spend it, and the people they spend it with spend it, too. Its economic effects are amplified.

…or Money in the Hands of a Few?

On the other hand, if you put that money into the bank account of the wealthiest family in town, they will still eat at your restaurant – but no more often than they would have anyway. They will still buy groceries, but no more than they would have. They can only eat so much. Yes, they might invest in your business – and don’t get me wrong, having piles of money around to fuel investment is important – but only if they can expect to get their money back, with interest.

Consumer Spending and a Healthy Economy

That story could be told from the perspective of the grocer, the contractor, or any other small business owner. Consumer spending directly accounts for roughly 70% of economic activity in the United States. It indirectly accounts for most of what is left. Capitalism is a wonderful system, but it only works as it should when money flows through the hands of those who spend it. If you want to create jobs and demand for good and services, put money in the hands of those who buy goods and services!

Your Self Interest may be Different than you Think That It Is

Of course, it is highly unlikely that anyone is going to walk through the door and hand you $10 million to distribute as you see fit. But every time you go to the polls you make decisions that can have exactly that effect. Everyone knows that taxes and government spending are bad for small business, right? After all, that’s what millionaire pundits on cable news and talk radio tell you all the time.

But are they right?

In any wholly unregulated capitalist economy income inequality grows unchecked. That inequality undermines the health of the economy. Government policies designed to reign in that growth in inequality are not creeping socialism or bleeding heart liberalism. Such policies are necessary for the health of capitalism itself.

 

 


Saving Capitalism from Itself: An eight part series exploring ideas from Thomas Piketty’s Capital in the Twenty-First Century

  1. Thomas Piketty & Capitalism in the 21st Century
  2. There is No Such Thing as a Perfect System
  3. Piketty in a Nutshell
  4. Three Cheers for Small Business
  5. Inequality in a Growing Economy
  6. Economic Fairy Tales
  7. What is Wealth?
  8. Win-Win or Lose-Lose, Our Choice

Saving Capitalism from Itself ^ IV. Three Cheers for Small Business  © Dr. Jeff Hester
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Reality Straight Up!

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    When you live in small groups on the savanna, as our ancestors did for most of our evolutionary history, it pays to be suspicious of strangers. Other groups were competition. Strangers didn’t drop by for a cup of tea and a friendly chat about our emotional well being. We couldn’t afford to see a stranger as a real person at all.  It was an “us versus them” world. Fear and aggression were the only rational responses. People who did well in that world (AKA our ancestors, the people from whom we get our DNA), knew that the only safe thing was to beat strangers with a club first and ask questions later.

    Fear of “The Other” is hardwired, and talking about it doesn’t help.

    We may not live in small groups on the savanna any more, but our brains don’t know that. For better or worse we are stuck with our evolutionary baggage. Nothing is going to change that. When you encounter someone who your brain perceives as “other”– and by this I mean you personally, dear reader, as well as myself and every other human on the planet — all of that machinery jumps to life in milliseconds. Long before we are consciously aware of anything, our brains are screaming “Danger Will Robinson! Danger!”

    Call this tribalism. Call it racism. Call it in-group/out-group dynamics. Call it identity politics. Call it polarization. Call it whatever you like. It all comes down to the same thing. When we perceive someone as other our reactions are hard wired, preconscious, and impossible to turn off.

    Good intentions don’t matter. Get high and sing Kumbaya all night. Talk about it until the cows come home. Hold workshops. Post platitudes or scream about it on the internet. If you want to judge the effectiveness of those strategies all you have to do is pick up the paper. The louder the mob screams, the more ground they lose. We’ve tried those approaches. They make things worse, not better.

    Quoting Einstein’s famous parable, “Insanity is doing the same thing over and over and expecting different results.”

    There is only one solution: Humanize yourself by embracing the humanity of others.

    If you perceive someone as other you will respond to them as a threat. There’s nothing we can do about that. Or is there? Take a step back and the answer is obvious. We can’t change how we react to other, but we can change who we perceive as other.

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    How did a Black musician change the hearts of hundreds of Klansmen?

    Daryl Davis is a Black blues and jazz musician with a very strange hobby. He goes to events like KKK rallies not to shout or protest, but to listen, shake hands, talk, and befriend. Literally hundreds of the Klan members who Daryl Davis has become friends with have renounced the Klan. He has a large collection of their robes, including the robe of a man who, when they met, was the Grand Wizard himself.

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    It feels good to gang up and shout at people. The difference between the shouters and the shoutees makes it really easy to tell who is “us” and who is “them.” Our brains love that. The dopamine flows like a river.

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Click on thumbnail to select post:

  • Real Anti-Racism:It’s not what you thinkPosted in Thoughts
  • Watching Rome Burn & Hell Freeze  The fun physics of global cataclysmPosted in For Your Consideration
  • Schools in the Time of COVID  The Decision Will Ultimately Make ItselfPosted in Thoughts
  • COVID-19 Arrives  The Humanitarian Disaster is HerePosted in Thoughts
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  • Shaking the hand of someone you disagree with isn’t as much fun as shouting them down, but it is far more effective.


    When you live in small groups on the savanna, as our ancestors did for most of our evolutionary history, it pays to be suspicious of strangers. Other groups were competition. Strangers didn’t drop by for a cup of tea and a friendly chat about our emotional well being. We couldn’t afford to see a stranger as a real person at all.  It was an “us versus them” world. Fear and aggression were the only rational responses. People who did well in that world (AKA our ancestors, the people from whom we get our DNA), knew that the only safe thing was to beat strangers with a club first and ask questions later.

    Fear of “The Other” is hardwired, and talking about it doesn’t help.

    We may not live in small groups on the savanna any more, but our brains don’t know that. For better or worse we are stuck with our evolutionary baggage. Nothing is going to change that. When you encounter someone who your brain perceives as “other”– and by this I mean you personally, dear reader, as well as myself and every other human on the planet — all of that machinery jumps to life in milliseconds. Long before we are consciously aware of anything, our brains are screaming “Danger Will Robinson! Danger!”

    Call this tribalism. Call it racism. Call it in-group/out-group dynamics. Call it identity politics. Call it polarization. Call it whatever you like. It all comes down to the same thing. When we perceive someone as other our reactions are hard wired, preconscious, and impossible to turn off.

    Good intentions don’t matter. Get high and sing Kumbaya all night. Talk about it until the cows come home. Hold workshops. Post platitudes or scream about it on the internet. If you want to judge the effectiveness of those strategies all you have to do is pick up the paper. The louder the mob screams, the more ground they lose. We’ve tried those approaches. They make things worse, not better.

    Quoting Einstein’s famous parable, “Insanity is doing the same thing over and over and expecting different results.”

    There is only one solution: Humanize yourself by embracing the humanity of others.

    If you perceive someone as other you will respond to them as a threat. There’s nothing we can do about that. Or is there? Take a step back and the answer is obvious. We can’t change how we react to other, but we can change who we perceive as other.

    There is going on 70 years of really fascinating sociological, psychological, political and even neurological research that all supports the same conclusion: If you know and respect someone, it’s hard not to care about them. Break bread together, laugh together, talk deeply, listen, show respect (even when it’s difficult), build bridges, find common purpose and work arm in arm.

    I could dig into that research, but mercifully for you I won’t. Instead I am going to share an uplifting and illustrative story of what effective anti-racism really looks like.

    How did a Black musician change the hearts of hundreds of Klansmen?

    Daryl Davis is a Black blues and jazz musician with a very strange hobby. He goes to events like KKK rallies not to shout or protest, but to listen, shake hands, talk, and befriend. Literally hundreds of the Klan members who Daryl Davis has become friends with have renounced the Klan. He has a large collection of their robes, including the robe of a man who, when they met, was the Grand Wizard himself.

    Read that last sentence again. Then if you honestly care about fighting racism you owe it to yourself to invest 18 minutes and listen to Daryl Davis’s story in his own words.

    This is not your Woke friend’s Anti-Racism.

    It feels good to gang up and shout at people. The difference between the shouters and the shoutees makes it really easy to tell who is “us” and who is “them.” Our brains love that. The dopamine flows like a river.

    But that is not what Daryl Davis did. There was no shouting about racism. Terms like “White privilege” and “White fragility” were never used. Daryl Davis never complained about microaggressions or political correctness. DEI workshops were not part of the program. Mr. Davis did not wear his feelings on his sleeve. Quite the contrary, Daryl Davis listened even to open hatred and tried to understand where it was coming from. There was no talk of victims and oppressors. There were no social media attacks or calls for deplatforming. There was no virtue signaling about Wokeness.

    Instead, Daryl Davis treated those who were predisposed to hate him with dignity and respect. He listened. He questioned. He befriended. He humanized himself by seeing and acknowledging the humanity of others, including those with whom he deeply disagreed. In the process he did what few have ever accomplished. Daryl Davis changed the hearts of hundreds of the most committed racists in the nation.

    This is what real, effective anti-racism looks like. And as Davis mentions at the end of his talk, if he can do it, so can we.

  • What do record fire seasons in the West, record hurricane seasons in the Atlantic, record winter storms in the South and the hottest years in history have to do with each other? Everything.

    This article originally appeared in the December 2019 issue of my Astronomy Magazine column, For Your Consideration.

  • You don’t tug on Superman’s cape. You don’t spit into the wind. Yes, schools are desperately important to kids. No, COVID-19 doesn’t care, and COVID is making the rules right now. Attempts to open schools this fall will fail of their own accord. The relevant question is how to meet the needs of children, families and the community in the face of that reality.

  • Currently new cases of COVID-19 in Arizona are doubling every 7 days. ICU beds in the state are already full. The rest of the country isn’t that far behind us. You do the math.

  • Now is not the time for scientists to be circumspect and silent. We are on the short end of a battle over whether truth even matters. If scientists do not stand up for what is real, who will?

  • The morning cyclist in my neighborhood may not be standing in the Michigan Statehouse carrying a gun and demanding her right to spread contagion far and wide, but she may as well be.

  • You know those nice charts and graphs that make it look like we are over the hump of COVID-19 and that things are about to get better? Those predictions are dead wrong, with an unfortunate emphasis on “dead.”

  • Imagine three gregarious scientists, each with the gift of the gab, all coping with stay-at-home orders. Of course we started a livestream/podcast talk show! What else would we do? Welcome to the kickoff episode of Scientists Stuck Inside.

  • Even after COVID-19 kills hundreds of thousands in the U.S. over the coming weeks, we will still be almost as vulnerable to the pandemic as we are today. We’d all love to “get back to normal” after that, but the price could be a second wave, worse than the first. Some see us facing either economic Depression or allowing vast numbers of preventable deaths, but that is a fool’s choice. There are better options if we have the will to find them.

  • There is a lot of information about COVID-19 out there, much of it misleading. When looking at the future, start with what the science really says.

  • If someone can’t tell you how they would know that they are wrong, they don’t have a clue whether they are right.

    This article originally appeared in my Astronomy Magazine column, For Your Consideration.

  • Once seemingly incomprehensible, the origin of life no longer seems such a mystery. Most of what once appeared as roadblocks are turning out to be superhighways.

    This article originally appeared in my Astronomy Magazine column, For Your Consideration.

Over his 30 year career as an internationally known astrophysicist, Dr. Jeff Hester was a key member of the team that repaired the Hubble Space Telescope. With one foot always on the frontiers of knowledge, he has been mentor, coach, team leader, award-winning teacher, administrator and speaker, to name a few of the hats he has worn. His Hubble image, the Pillars of Creation, was chosen by Time Magazine as among the 100 most influential photographs in history.
©Dr. Jeff Hester LLC, 5301 S. Superstition Mountain Dr., Suite 104 #171, Gold Canyon, AZ 85118