Because most philosophies that frown on reproduction don't survive.

Friday, August 01, 2008

Trickle Down Economics and Me

A couple weeks ago, MrsDarwin and I drove by the tea shop in the "old down town" of our area (a single street with difficult parking which is not within walking distance of anywhere and not easy to get to, but features a dozen picturesque old buildings on each side of the street and the public library down at the end) and saw that it was closing its physical premises and becoming an online-only business. "That's really too bad," we said. "It was nice to have a tea shop around here."

Of course, if all the people who thought the tea shop was nice were like us, it's no surprise that it closed. I went there once and spent about $50 buying MrsDarwin a tea pot and a variety of loose leaf teas for her birthday two years ago. MrsDarwin had stepped in a few times to meet someone over a pot of tea. Between the two of us we probably spent less than $100 there over the four years that it was there.

The difficulty, of course, is that one only needs to blow $25 on a tea pot every so often. And loose leaf tea (and theirs was rather expensive) is often more of a pain to deal with. So most of the time we just used the boxes of Twinings that we could pick up at the supermarket when we were doing all our other shopping. With friends like that, no wonder the tea shop decided to close its physical doors.

The term "trickle down economics" is mostly used for derisive purposes, and yet at root, there's a very real process that it describes. As we spend out money, we determine which businesses make money, and which don't. And that in turn determines which businesses expand, keep their current employees, and hire more, and which businesses lay off employees or close up entirely.

This idea that one is responsible, though one's spending habits, for other people's livelihoods is a bit hard for me, as I come from a background (and we maintain a family culture) which puts a fair amount of emphasis on thrift. As a family, we go out to dinner or order pizza perhaps once a month, and MrsDarwin and I make it out to have a "date night" dinner together at a nice restaurant perhaps five times a year. If these practices were universal, I'm assuming we'd have far, far fewer restaurants available to choose from -- because most would be out of business. Thus, our ability to go to restaurants at all is subsidized, in a sense, by those whose eating out habits we'd consider rather profligate.

In other cases, our spending habits to reflect more clearly the sort of economic landscape we'd like to see. We put a fair amount of money into used bookstores each year, and enough new books to give book publishers a boost as well. We eschew prepared food makers, but are willing to shell out money for artisanal cheeses, bakery breads, micro-brew beers and scotches and bourbons from small distilleries. On the other hand, there would be a lot fewer clothing makers if most people were like us. And fewer electronic gadgets.

Something that was striking me particularly the other day, however, was how our choices and preferences affect people who might hope to make their living working directly for you. For instance, I'm of a distinct minority among my co-workers in that I do not have a "yard guy" or yard service to cut my lawn, trim my trees and shrubbery, etc. I do all my own yard work, partly out of a conviction that a man should tend his own yard, and partly because I don't see the inconvenience of spending a couple of Saturday mornings a month working on the yard as something it's worth $80/mo or more to avoid. Similarly, we try to do all the home repairs and improvements possible ourselves. We've done all our own paining, installed our own hardwood floors and tile, etc.

I tend to think of this doing the work yourself rather than "making someone else do it" as showing a respect for hard work and getting things right -- and yet for those who seek to make their livings from doing yard work or installing floors, my preferences amount to denying them employment. When I install my own floors at the cost of my free time, I essentially insert myself into the labor market at a cost of 2 beers/day and thus drive out anyone who might have competed for me for my business.

Of course, I'm a minimal danger to the wider flooring industry, because knowing what hard work it is I'd never volunteer to do this kind of work for someone else -- except perhaps as an even exchange of my help on that for help on my own projects at some later date. But it did get me wondering if those who consider it immoral to pay less than a certain dollar amount per hour for a given type of work would consider my insistence on using free labor (and thus not hiring anyone) to be immorally denying to work to someone who needs the money. If it's wrong to hire a "scab" for lower wages instead of a union member, is it doubly wrong to get the work down without hiring anyone? (But then, it'd dangerous to try to predict what people one disagrees with would think: one is too tempted to make them look foolish since they look foolish to one.)

2 comments:

DMinor said...

Darwin,
Was your labor truly free? Not really. Some employers (not mine) pay time-and a half for cutting into free time.

What is the value of your free time? If we assume that your floor is as good as you would get from your average artisan, you could say your lost time was worth the amount you would have paid to employ a worker.

Nice Floor = Materials + Labor = $Price
v.
Nice Floor = Materials + (free time opportunity cost) = $Price


Now if you took twice as long to do the work, you price per hour would go down and you might start to get into scab territory. But if you either enjoy the work or get an extra sense of satisfaction out of the work, the equation changes because you are getting more than just the floor. The value of the satisfaction in monetary terms is the value of your time over and above what it would have taken a professional.




Nice Floor = Materials + Labor = $Price
v.
Nice Floor + Pride in work = Materials + (free time opportunity cost) = $Price + value of Pride in work

Tony said...

Last night I told my wife the story I had heard about all of the corporate Bennigan's' restaurants closing. My wife's response:

"So?"

And that's basically our attitude. We don't feel obligated to prop up someone's choice of a business with our hard earned dollars.

We, like you, eat out seldom. When we do, we go some place like Friendly's or Denny's. I like to do the work myself if I am able (though I hired out the hardwood floor stuff, both the installation in the kitchen and the refinishing in the eating area). I can do electrical, plumbing, insulation, some wallboard stuff, etc.

I'm even getting into reloading my own ammo.

I buy my computer equipment on eBay that is over two years old when I need to replace what I have. I don't have a wide screen TV, but I do have a palm pilot and an iRiver MP3 player (both older models, bought used). We buy used cars that are a good value and we pay for them with cash.

The businesses that cannot support themselves need to fail to make room for businesses selling stuff people want, and are able to pay for.