Monday, April 07, 2008
Ownership
It’s time to come clean - I’ve been horribly delinquent.
The name of this blog was suggested by Mrs. Du Toit, after a book. I have read excerpts from it, but I have not read the whole thing. This weekend while at the bookstore, I saw it there on the shelf, and my usual anti-impulse-buy sentiment was thoroughly trounced by curiosity.
The book is a fascinating set of letters from a French nobleman that settled in upstate New York to farm, right around the time of the American Revolution. He writes about the people and their attitudes, with significant emphasis on the differences between Americans and Europeans of the time. He also writes a little about the farming techniques of the day, which are probably of more interest to me than to the average reader.
Out of the many things that struck me, one stands out. The author emphasizes the differences in land ownership between American and Europe. In Europe, lords own the land, and their tenants farm it, giving a portion of their crop to the landlord as rent. In America, families own the land that they farm, and they keep every bit of their crop. In Europe, lords can kick tenants off their land. In America, land can be bought or sold, but no one can take it away from a family without compensation.
This got me thinking about economic cycles again. At the time America was settled, this change in land ownership was a paradigm shift of major proportions. For a thousand years, the European nobility had owned the land while the peasants farmed it. Then suddenly, an empty continent was discovered, and land was available to anyone with the means to get on a boat and go claim it. People were no longer necessarily dependent on people in a higher economic class for their livelihood. The means to sustain one’s family was there for the taking. All that was necessary for a satisfying but simple life was to apply one’s labor to the capital at hand.
The difference in economic structure between then and now is astounding. With the onset of the industrial revolution, increases in production efficiency shifted labor to different industries on a scale never before seen. Glossing over the century-long process and just looking at the endpoint, we find today that very few people own the means by which their family’s livelihood is sustained. Small-business owners do. Everyone that collects a paycheck from someone else does not. Small farmers may own their land, but industrialization has pushed the prices of their commodities so low that they can’t really sustain a family by farming alone.
I have been accused of looking at the past with unwarranted nostalgia, and that may be true to some extent. However, everyone who hears rumors of layoffs or outsourcing knows the fear inherent in having someone else control your destiny. We largely find ourselves at someone else’s mercy - our standard of living continues to exist only by the grace of corporate executives that probably don’t know and almost certainly don’t care about us personally.
I am by no means advocating a scheme of land redistribution, or even of price supports to give small farmers a chance to make an independent living. All of those schemes have associated negative effects that far outweigh the scanty positives. What I wonder about though, is the long-term ramifications of having converted our economic structure back into something that contains elements of feudalism, where people are no longer in control of their economic destinies. Certainly a vital difference between our modern economy and that of the feudal era is that today we have freedom to search for work elsewhere if we choose to, whereas serfs were frequently tied to the land they worked by law. Clearly it is this element that has caused the virtual elimination of abuses of workers that existed in the feudal era. If workers are not satisfied with their employment status, they will leave.
What struck me most about this American Farmer was how he gloried in his independence, knowing that back in Europe the peasants were still at the mercy of their lords. Not independence in terms of not needing or wanting the companionship and cooperation of neighbors, but in terms of owning the means by which one’s livelihood is sustained. I suspect that the loss of that independence has done something to our national psyche, in that now people automatically look to others for their economic security.
I don’t offer solutions, just observations. I look at this as yet another unintended consequence of the industrialization of our economy. As competitive advantages become exploited with greater and greater efficiency, our economic lives become incredibly intertwined. The positives - a huge increase in the standard of living. The negatives - a near complete loss of economic security and independence. I instinctively seek a middle ground, even if the rest of society does not. Who knows where that will lead me.
Comments
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As a small business owner, I can tell you that we don’t control the means of our families’ livelihood. We depend on clients (who may have clients) who have extra money to invest in a development.
I think the only people who can be entirely independent from beginning to end are hunter-gatherers who live on land that no one else wants.
Pioneers who set out for new land were independent going forward, but they didn’t mine the ore to make the implements to conquer the land. As to “satisfying but simple life,” I always wondered what portion of their time was satisfying as opposed to worrying. Actual accounts seemed to have plenty of descriptions of disease, sickness, hunger, and early death. In that sense and in that time, though, probably the pioneer was to the serf as the small business owner is to the employee of today: he has many of the same problems as the other, but he has more freedom in how he approaches them.
Hobbes said it right that man’s life in a natural state is “solitary, poor, nasty, brutish, and short.” While he referred to a life without government, I think it applies equally to life without an economic system of some sort. (Leap to Adam Smith)
I don’t think I aspire to economic independence from my fellows - I know I haven’t the energy to make everything I need. I aspire to the maximum economic stability I can achieve. I see that coming through avoiding debt and reducing my operating costs as much as possible. Those operating costs are the things that make up a monthly budget: mortgage, utilities, food, transportation costs, etc. Storing up what you can against a rainy day could, to a degree, stabilize your income, too, by dampening the effects of income fluctuations.
I think we might define economic independence today as a lack of economic fetters or drains: no debt, no silly monthly payments, no frivolous spending habits, etc. That’s something we can offer as a partial solution - to teach our children not to fetter themselves or squander their lives which they do when they squander money.
The cost of a thing is the amount of what I call life which is required to be exchanged for it, immediately or in the long run. - Henry David Thoreau
All we have is time to exchange in some manner for stuff. Waste the stuff, you waste the time, you waste your life.
Weetabix | 4/7/2008 09:19 AM CDT -
Surely even small business owners are not completely independent. But neither does their employment exist at someone else’s whim. You personally make choices that affect the outcomes of your business, whereas I could be training my replacement and out of a job in two months if that is what was decided by my superiors.
Perhaps I need to define my terms better. I don’t mean independence in terms of not needing the rest of society, I mean independence in terms of self-determination and being in control of the capital by which one produces one’s livelihood. Right now I provide a service to a company, using their equipment, office space, and their other resources to create business that needs to be serviced in the first place. I am infinitely replaceable, a Dilbertesque cog in a machine. Though your situation as a small business owner is certainly not secure, you have made your own place, you have your own resources behind you, and you have a degree of self-determination that I do not.
The American Farmer draws a distinction between the frontiersmen that initially opened up the land and the farmers that followed them. He paints a picture of the frontiersmen as largely rude, uncouth, uneducated, and lawless, living a nasty, brutish, and short life as you describe. The farmers that followed them built on the gains the frontiersmen had made, bringing civilized society into what used to be the wilderness. I don’t see the frontiersman as having anything going for them, other than that they are the rough edge of humanity that needs to bite into the unknown before the more refined elements can enter.
I agree with your assessment of modern economic independence, to a large degree. Frugality is the key. But even so, one needs an income to buy the things they cannot produce themselves. I’ve read about people that live on a couple thousand dollars a year. They raid food pantries, eat livestock-grade food, etc. That’s not living, that’s surviving. I aspire to more than that. The farmers of American Farmer’s day were able to live with their own resources, trading their surplus for the things they couldn’t make. Today, even living debt free, most people have no means of creating an income without relying on someone else’s capital. No income means no food, no clothes, and potentially no property when the property taxes come due.
American Farmer | 4/7/2008 09:50 AM CDT -
The right to leave one’s job is more like the right for a peasant to move from one lord’s land to another’s, in your analogy. Small business gives every “peasant” the opportunity to become a lord. If one doesn’t want to work for an employer, one doesn’t have to. The only reasons to do so are either insufficient boldness to take one’s destiny upon one’s own shoulders, or so massive an advantage to accumulated capital in one’s field of expertise that working for others provides a better life than self-employment does.
But nobody forces anyone to choose one way or the other. The choice remains open, for those willing to take it.
And THAT is the important difference between now and then.
Matt | 4/7/2008 05:39 PM CDT -
I think the larger point is that it is no longer possible to choose to live off the land, as the original farmers did.
While it would be nice to get coffee and sugar (or cash) in exchange for your excess growth, you didn’t have to. You could live off the animals that were wild on your property or the crops you raised yourself.
That is not an option any longer, even if you pay off the land. With property taxes, you never own your land clear, as people once did.
You are forced to sell your crops to others or work for others.
Mrs. du Toit | 4/7/2008 05:58 PM CDT -
I am not sure if I can get my point across as well as I would like, as it is not fully formed in my own mind yet....
Maybe we have to look at the economics somewhat like warfare. At one point it was all about the castle or fortress. A truly self-sustaining fortress being the ideal. Worst-case scenario is you wait till the attacker wears out and goes home. Modern technology ended that. Now the enemy will just shell and bomb you out of existence given enough time. Mobility is now king. You hold position only as long as is fesible/neccessary.
I think that we long for the days of an economic self-sustaining fortress (I know that I do). I might just be that in the world we live in, that is antiquated and doomed to failure. Weetabix, I think, came close to making that point. Frugality leaves you economically mobile. Your wealth is not locked in to land/goods that could end up, in this modern world, useless to you, quickly.
The most successful people, in this modern day, are the ones with wealth they can make use of, as needed, at a moments notice. Just as the successful army is the one that can move and apply force where and when they choose as the situation dictates.
It seems to me that the economic mobility we need to concern ourselves with is not the ability to change economic class, but, the ability to apply your wealth where you want, when you want. The key is knowing when and where to move that wealth. Like in a game of chess. The Queen with her superior mobility is one of the most powerful pieces. The King, on the otherhand, is serverly limited in his movement, making him weak and vulnerable.
Cobar | 4/8/2008 07:20 AM CDT -
Let me start by stating that I am about as risk-adverse an investor as you will ever find.
The problem with that scenario from my point of view is that you may have wealth, and it may be mobile, but what happens when the bank fails? Your wealth is all fictional - numbers in a computer. You look at land as tying you down, I look at it as capital by which wealth can be created and life sustained.
Suppose it’s 1934, in the middle of the great depression. Would you rather be the person that owns the farm, or the person that is a wandering farm laborer? Now nearly EVERYONE is a farm laborer, moving from job to job, with no “farm” of their own. I think it changes the national psyche to have no roots, and no personal means of wealth creation.
I think I look at issues like this fundamentally differently than most, a bottom-up view rather than a top-down view, if you will. Probably because my ideal life is farming, teaching my kids, and reading. Modern conveniences are nice, but they are conveniences, not necessities.
American Farmer | 4/8/2008 07:31 AM CDT -
When I mention mobile wealth, I mean it in the abstract sense. Not just money in the bank, bonds, stocks, etc. I agree that wads of cash in your pocket, or are large total in a savings account can mean nothing, overnight.
If we slip in to a depression, all the modern ways of looking at economics goes out the window. We end up back in a feudal-like system where holding the land becomes the key.
What I am trying to say is that if, in the modern system we are in, we invest solely in that land and build our economic fortress, we are limiting our mobility. The key is to decide just how immobile we are willing to become.
Every modern army builds bases and holds territory. What every smart army does is not rely solely on that. They leave themselves the ability to apply force beyond the pure defense of that territory. No sane army would invest every resource in to building a fortress and fill it with defensive guns. That would leave them no transport or offensive means. The enemy would simply go around them, or destroy them from out of the defenders range.
A base is a grand idea. If I own a factory producing widgets, that is a base. It sits there producing those widgets. If there is no demand for those widgets, or, the competition can provide the widgets for a better price, I HAVE to become mobile. That does not mean that I HAVE to sell the factory for cash. I could re-tool to make better widgets, or choose some other course.
Cobar | 4/8/2008 07:57 AM CDT -
I think the key is figuring out what level of economic independence meets a balance of practicality and idealism. This will vary between people, and the matter on which I’ve been deliberating is a theory of primary education that places independence as the main core of a high school education.
Economic independence exists in degrees.
On one hand there is the level that is typically taught to most people: Learn a skill and get a job that uses it. This may impart a certain amount of functional independence, but lose your job and that can evaporate quickly.On the other hand there is the absolute level in which you have your own farm, and build and maintain everything you want yourself. I think it’s appropriate for most people to aspire to go in this direction, and to place in high esteem those who are most successful at it, but it is not necessary for everyone to go all the way in trying to achieve absolute independence.
What I think should be the standard, however, at least in the context of a modern high school education, is to expect people to work towards achieving an effective level of flexibility, by which I mean an individual should avoid situations in which his livelihood is solely dependent on one sector of the economy. These situations can be avoided by pursuing multiple skills instead of dedicating oneself to a single specialized profession.
George guy | 5/3/2008 08:51 PM CDT -
This post has been on my mind for quite some time. Funny it should come back to life.
AF #2 - I didn’t mean to imply that small business owners don’t enjoy more freedom than employees. They do. That’s why I do it. I was trying to define independence, too.
I agree with your assessment of frontiersmen vs. farmers, and I agree that everyone needs “an income.” I think, though, that the entire concept of “income” may cause a problem. It almost implies that one sits passively waiting to receive whatever “they” choose to give one. Maybe a part of this economic independence thing needs to be a change of perception. Maybe we need to return to the idea of producing a surplus to trade for others’ surplus. Unfortunately, given the state of education and entertainment (with its mentally stupefying qualities), that may prove difficult.
A great many posts seem to come together here for me. Mrs. du Toit has written on education vs. training as has Nock. They each seem to believe that only some portion of the population is educable. I believe that, too, though I don’t know just what proportion I’d believe educable (e.g. 10%? 50%? 90%? Probably 15%).
Hold on! It gets more muddy from this point.
I believe bell curves apply in almost all (if not all) areas of human endeavor, competency, educability distribution or whatever. Let’s consider several attributes: educability, ambition, rapacity, and let’s see if we can’t pan back out to a more olympian viewpoint.
A certain portion of the population will be ambitious and rapacious. Those people will attempt to exercise power over others via economic or political means. I think those are probably the most effective means to control larger proportions of people. Fewer, I think will be ambitious and altruistic.
Let’s posit:
- that “educability†means “ability to learn to understand and analyze data to the point of being able to predict future trends based on past ones†or something like that,
- that educability distribution follows a bell curve,
- that people can be educated to greater or lesser degrees.
- that to be able to be “educatedâ€, you must lie at some point right of center (I’d think 1.5 SD’s right, maybe.Educated people will find many different areas in which to become educated. Not all of them will choose economics. (Quick “proof†– how many wealthy professors have you heard of?). So, we have a much smaller portion of educable people who fully or partially understand economics than people who are ambitious and rapacious.
Could it be that the “normal†state of man is for a smaller number to control the larger number because that smaller number is both competent and driven toward a goal while the larger number holds people who are less competent or are driven in directions that have perhaps no definite goal, but more a pursuit for pursuit’s sake?
In the old days, the ambitious and rapacious controlled land. Now they control jobs. It’s always in their interest, though, to placate or sedate the “masses†via fairs, circuses, radio programs, television, movies, Survivor, or whatever entertainment. (Drive down the street some fine evening after dark, and look at the windows on the houses – a depressing number will have a blue flicker in the window.) (Also, I have no tinfoil hat on: I don’t think there’s some mystical band of cognoscenti controlling us. I just think we’re sadly bound by human nature.)
Could it be that in the beginning, America was an anomaly? This great, rich, practically empty continent offered many things to many people – escape, political or economic freedom, adventure, etc. It probably drew many people for many reasons, but it also probably drew more heavily from the right end of the bell curve in many areas. Of course, we began with more freedom. But does it follow that it would stay that way? I’d think it would take a concerted cultural effort to maintain that freedom. I haven’t read the essay, but maybe that effort comes from Nock’s remnant. Maybe it’s not even an effort. Maybe they’re the leavening in human nature, merely acting the way they ordinarily would.
And maybe we, the ones with a flickering sense of what’s at stake, can provide the cultural effort, working to push back the darkness of the human mind. We need to help people understand how to best maintain their own economic robustness (or independence, if you prefer), because only someone with some control over his own life can exercise independence in other areas of interest. People need to be able to get beyond their physiological and safety needs before they can get further (see Maslow.)
I guess I’m agreeing with George guy on the education front while stating my reasons in a rather prolix fashion. I’d say educate the educable and train the trainable to be flexible, “independent,” robust, or whatever.
Sorry for the length.
Weetabix | 5/5/2008 08:05 AM CDT
