The Corporations Complaint

I have a final in a couple of days on business law, so, I'm posting here. Makes sense, right?

I've seen a number of people post things on Facebook regarding companies and corporations, etc. Most of these friends are OWS proponents and rather intelligent people; people for whom I generally have a good deal of respect. But the posts tend toward - how to say this politely - the naive. The two that I can think of are the photo that has circulated stating "I will believe corporations are people when Texas executes one" and the sentiment that, if a corporation is legally a person, the corporation should face criminal penalties for its acts. The second is in the context of a West Virginia mining company and the death of 29 miners.

My response is twofold: First, how can you criminally punish a company? Jail it? And second, stating that a company is legally a person is not analogous to the way a human being is a legal person. Saying that it is the same shows a gross misunderstanding of the law, at best, or deliberate manipulation of the language, at worst.

Now, to the first point. Saying that a corporation even can be criminally punished is laughable. There are several reasons I say this. First, the corporate officers are the ones who took any illegal action. Sure, they took the action on behalf of the company and in the role as corporate agents, but the corporation is legally only able to take lawful actions. So, any action by a corporate agent that is unlawful is the unlawful (and unauthorized) act of that specific person. That just means that, while you may not be able to hold the company criminally liable, there is no reason that you can't criminally prosecute the corporate officers. Second, what punishment can be assessed to a company? You can't throw it in jail and you can't throw all the employees in jail without it being a gross violation of civil rights. All you can really do is fine the company, and that is a civil punishment, not criminal.

And the second point. The legal fiction of corporate personhood. I know a number of people who would be happy to do away with that particular fiction. I say, "That's a really bad idea." There is a business form that does dispense with the corporate person, the partnership (ok, and the sole proprietorship... but close enough for government work). Without that fiction, the partners (or the owner) are personally liable for all business debts.

Ok, so you might say "Personal liability is a good thing. It'll keep those nasty business owners in line." Umm, you do realize that "business owner" would mean anyone who has invested in a company, right? So those 401k accounts, IRAs, any money market savings account you have mean you have money invested in companies. If you take away the limited liability of the corporate form, remember the form that has the legal fiction of personhood, then you are a partner in that company. So, that company does something wrong and you could be liable for the entire debt. Just for being smart about your retirement funds.

Wait, what? These evil business structures that allow companies to not be criminally liable are the same ones that allow our economy to thrive by reducing the risk of investing. So, go ahead, take away the legal corporate protections. Just be prepared to not have retirement because all investments are too risky to participate in due to your personal liability.

A Profitable Point of View

So, I caught snippets of Obama's press conference last night pushing his health care plan. Obviously, something about it got me thinking and this isn't going to be a post about health care law and reform. When the President made a comment about how insurance premiums are rising at the same time as the insurance companies are making "record profits" I thought about the complaints of a year ago about oil companies posting record sales and profit numbers. So, I have to ask of those who think that the companies are making too much money: what is too much profit?

I'm serious. What do people mean by saying that someone is making too much money? What makes it evil to be making money during a down economy? At what amount do you decide that someone is making more money than is fair? I rarely hear anyone make the argument that people should be paid the same amount for a job that requires a lot of training and skill as for a job that requires far less training or is involved with less risky situations. For example, I don't think I know anyone who will say that I should be paid as well as a heart surgeon.

I think the idea that someone is making "more than their fair share" comes from one of two things, or a combination of them. First, their is the common mistake that the economy is a zero-sum game. If they are making that much money, there must be less money left for me, the argument goes. While budgets are (or should be, in my opinion) operated on finite amounts, the economy as a whole is much more flexible due to lending and commodities trading and more. Second, is envy. It's a simplistic explanation, but true whether we want to admit it or not. Those who cannot see how to elevate themselves are quick to think that others must be doing something wrong or unethical to have such gains in their own lives. Therefore, the playing field must be leveled, that way there is a more equitable division of assets. As I've said before, leveling the playing field only leads to lowering everyone to a common denominator, rather than raising the masses up.

Another issue I have with complaining about company profits, especially true in the case of complaints leveled against the oil companies, is that no one seems to care if the company is also at record levels of expenditures. Costs go up to the consumer, profits go up at the company, obviously the company is just pocketing the whole enchilada. Wrong. If a company is making a constant 7% on the sale price of a commodity, do you think people will complain about how much money the company is making? 7 cents on the dollar is still 7 cents, whether that's coming from a $4 gallon of gas or a $2 gallon of gas. Of course they are making twice the profit on the $4 gallon, but they are also spending twice the money to make it. Let's check my math: 28 cents from the 4 dollar gallon leaves $3.72 and 14 cents from the 2 dollar gallon leaves $1.86. Yep, twice the cost and twice the profit and still a 7% margin.

The discussion on the economic repercussions of profit/salary caps and punitive taxation on production and innovation will be left for another day. I think most readers can figure out what my opinion on that will be. So, I leave you to think about my initial question, in a rephrased format: at what point will you claim that you are making too much money?

Happy Tax Day

Makes it sound like a holiday, right?

I doubt that most people would think of celebrating today. Even though we all "observe" Tax day, it is not a Federal holiday or a day we take off from work. It is, however, a day when most of us at least think about the amount of money we send to our government. We don't normally notice the withheld income from our paychecks or contemplate what is actually being done with the taxes collected (unless the wrangling about budgets is hitting the news) or even really think about the fact that it is our money being used. That's the whole point of withholding. Out of sight, out of mind. We never see the money in the first place so we never consider the fact that we had it coming.

I'm not going to used this space to rant about what the federal government is doing with your tax dollars, or talk about my opinions on government reaction to the economy, or even talk about "progressive" taxation rates. Ok, maybe a little, but I'll try really hard not to. I want to talk about why tax people? Simple question, right? Not so much.

Taxes are, obviously, how the government pays for its activities. They exist because there are government activities which cannot be paid for in the same manner in which a business makes money, namely the sales of services or materials. We could pay for things like the mail service on a pay-per-use fashion (think stamps and postage) because that is a service provided to the people that the people use regularly and are happy to pay as they go. You don't expect the postal service to send your letter without paying for the stamp, just as you don't expect UPS to send your package without paying them for shipping. So some government services clearly don't need taxes to function. Some, however, clearly do need taxes in order to function. You wouldn't want to pay for police or military on a pay-per-use scale, would you? Of course not, since, by the time you need to use them, you don't want to need to worry about whether or not you can afford to call on them. Therefore, taxes are a necessary part of a functioning society. They are necessary to supply the basic functions of government. What those basic functions are is where we come to disagreements.

Addressing the question of basic function, in our society, must revolve around the confines of the Constitution, first and foremost. It outlined the duties of the government and should be what is followed, whether I believe it currently is being followed as a guideline I will keep to myself, for the moment. Article One, Section 8 of the Constitution starts with this sentence, "The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States." It's that "general welfare" statement that gets us into trouble and arguments.

"They are not to do anything they please to provide for the general welfare, but only to lay taxes for that purpose. To consider the latter phrase not as describing the purpose of the first, but as giving a distinct and independent power to do any act they please which might be for the good of the Union, would render all the preceding and subsequent enumerations of power completely useless. It could reduce the whole instrument to a single phrase, that of instituting a Congress with power to do whatever would be for the good of the United States; and, as they would be the sole judges of the good or evil, it would be also a power to do whatever evil they please... Certainly no such universal power was meant to be given them. It was intended to lace them up straitly within the enumerated powers and those without which, as means, these powers could not be carried into effect."
-- Thomas Jefferson: Opinion on National Bank, 1791. ME 3:148

While I can find numerous other quotes regarding the use for taxes regarding providing for the general welfare, I think that sums up the original intent far better than most. With it, I begin my case, to be continued...

Oh, so I lied a little about not talking about my opinions on tax policy. Anyone heard about the Tax Tea Parties going on? Simon Jester talks a bit about them, and that's where I found these links. Apparently, there might be some conflicts of interest in demonstrating against government policy (taxation) and First Amendment rights in a few places. I say might, because it looks like changes in paperwork required is what's causing the problems, even if the paperwork was originally approved, like in Vermont and Philly. Then again, in Texas, calling the event "not in the public interest" looks like a political stooge trying to tell the people what should be thought. Though that might just be me.

Atlanta people who want to know more, go here.

Goodness, I seem to have tended more toward domestic policy with the blog than I ever intended. We'll see where I go from here.

The New Power Play

Something I have often said as a joke is that Germany realized after World War II that it could never take over Europe militarily, so it switched to trying to take over monetarily. Somehow, that joke always slipped into conversations regarding the European Union and the Euro. I made the joke initially because the Euro was so heavily backed be the German economy and banking system. As it stands now, to join the Euro community, a country must meet the "Maastricht Criteria." These conditions (which include domestic price stability, measurements of responsible public finances, exchange rate, and others) were put in place to insure financial stability amongst the nations involved with the single European currency. Basically, a country subordinates its economic and monetary policy to the wisdom and wishes of the European Central Bank.

While the purpose of the ECB is to maintain stable growth throughout the EU, policy will always favor the major players, in this case, the two largest players in the European economy are Germany and France, with Germany typically leading (of the $18.85 trillion dollar Gross Domestic Product, $3.82 trillion is Germany and $2.98 trillion if France.) Germany and France are also two of the countries that do not follow the economic and public finance guidelines set down as requirements of the member states, specifically the percentage of public deficit and debt allowable(60.7% and 67% public debt respective of GDP, respectively, with the maximum allowed by the ECB set at 60%.) For those interested, or in need of reading material as sleep aids, here is the Maastricht Treaty.

Why do I find it interesting to point all of this out? Russia recently tossed out the idea of proposing a global currency at the next G20 summit. With the Gross World Product at $78.36 trillion and the US economy running a Gross Domestic Product of $14.33 trillion, that puts the United States at 18.3% of the world's economy. Would Russia (GDP of $1.76 trillion, or 2.25% of the world's economy) be willing to subordinate itself to the needs of the largest segment of a globalized economy, or would this proposal turn into a device to institute "parity" in the world's economic systems? With some of the other recent moves by Russia, I would think motivations need to be carefully considered.

Economic Policy or Economic Paradigm?

This article on Yahoo News was brought to my attention today. President Obama's desire for stable economic growth is understandable, laudable even. However, wanting economic growth in a free market without accepting the fact that free markets have downturns as well as growth is something of a pipe dream. As I have said before, one of the fundamental features of a free market is the unstable nature of growth. To change that would be to change the economic system which we live with and, as has been shown numerous times by the countries that try centralized economic planning and heavy price regulation, the chaotic nature of capitalism tends to promote growth best.

Now, I understand the President says he doesn't wish to supplant the private sector, merely to regulate it in such a manner as to prevent the “reckless speculation and spending beyond our means; on bad credit and inflated home prices and over leveraged banks.” He also said, “Such activity isn’t the creation of lasting wealth. It’s the illusion of prosperity, and it hurts us all in the end.” Which is, of course, why his spending plan calls for the US government to borrow heavily so that the government can spend beyond its means and create the illusion as economic growth.

However, is government action the correct answer to a market crisis (in this case a crisis precipitated by the financial markets)? Is the answer to regulate the market until it, supposedly, cannot fluctuate so drastically? Or is the answer to allow the fluctuation to amputate the non-functioning segments? To allow economic Darwinism (by which I mean profitability, aka, greed) streamline the market until it flows smoothly again seems like a painful alternative to the easy way out of letting the government handle our mistakes.

As a warning against a greater degree of government intervention, I present the findings of the Cato Institute relating to the relationship between financial deregulation and financial crises. According to the study, financial deregulation in itself does not lead to financial instability, as half of the countries in the study that deregulated their financial systems experienced market instability and half did not. The findings point to the size of the country's government as the pivotal factor in whether or not the country will experience a financial crisis: the larger the government, the more likely the market will not self adjust without crisis.

What does all of this mean? It means that continued government interference and "help" is more likely to maintain economic instability rather than promote economic growth. As further evidence of this claim I put forward the theory, increasingly popular as economists study it, that the New Deal prolonged the Great Depression. Also, there is the claim that the government's intervention in the financial market increased the market drop last year. As it is, I wonder how long it will be before the people of this country remember that economic trouble means a shift in the economy as well as economic opportunity to those brave enough to take personal risks. This economy became the world's largest through risk and perseverance rather than cowardice and government control.

"You and I are told we must choose between a left or right, but I suggest there is no such thing as a left or right. There is only an up or down. Up to man's age-old dream -- the maximum of individual freedom consistent with order - or down to the ant heap of totalitarianism. Regardless of their sincerity, their humanitarian motives, those who would sacrifice freedom for security have embarked on this downward path. Plutarch warned, 'The real destroyer of the liberties of the people is he who spreads among them bounties, donations and benefits.' " -- Ronald Reagan, October 27, 1964

The Economy of Coercion

John Stossel's latest column at Town Hall echoes some of my latest reading material. Stossel makes his point far more eloquently than I would, but it won't prevent me from trying to expand on what he wrote. Von Hayek wrote about why government cannot run an economy better than the Invisible Hand made famous by Adam Smith. A government run economy depends on experts in their field to plan the best route for production and, through that, the best route for consumption. The major flaw with this is that experts have a very narrow scope of vision, primarily the field in which they have studied. What happens then is they all vie for the important aspects of their division to be paramount while not being able to comprehend the total interaction of all aspects of the economy.

If the experts can't put it all together, how can the average citizen, you ask? Simple, the average citizen merely has to concentrate on that which is pertinent to his or her life. When you have an entire populace looking out for number One, the invisible hand appears. Market forces shape the flow of commodities by making the most used products and industries buy more and industries and products that aren't economical fall off the map or become a specialty and niche market. It makes for a very fluid and sometimes unpredictable economy. However, it also creates something of a market Darwinism, an evolution of production. Those companies that are useful and have a working business model profit and continue be useful in the economy; those that lack those things fail and remove the excess fat and chaff from the market.

Yes, a free market makes uncertainty a part of life, but it also drives innovation and development. The liberal ideas that sparked the explosive growth of the past three- hundred years still work but they also mean that we must be able to understand that sometimes things must change to continue that growth. This brings me to my next point: What will happen if we bail out the Detroit automakers? What happens when we artificially prop up failed business models? In the short run, a bail out may allow the companies to free up and divert capitol to projects that make them more competitive. Or it might give them the illusion of a cushion against the current push of the markets and make them even more sluggish in response to changing consumer needs, merely prolonging the death throws of a dieing business model which other companies have already left behind (including the continued leaching by the UAW.) The biggest hurdle the American automakers face in becoming competitive is the cost difference in production compared to their foreign brethren. GM has hourly labor costs (including benefits) of $78 per hour, while Toyota has a mere $35 per cost. At half the cost of labor, the non-union model is more streamlined and can cut consumer cost further. Add to this the perception that Toyota has higher quality cars and you get a compelling reason to cut the chaff that is GM from the economy.

The above is one example where a free market would cause fluctuation and uncertainty, but the economy would come out stronger. What worries me the most about the auto bailout currently proposed would pave the way for nationalization of the auto industry. If the government already owns a portion of the company, how big of a step would it be to buy the rest of it in the name of helping direct the company to more effectively aid the economy? Why does nationalization worry me? If my opening paragraph doesn't paint a clear enough picture, let us examine what happens to any industry when it gets taken over. First, it is important to note that most countries that at one time nationalized various industries re-privatized them later. It seems that the main effect of nationalization is to remove the incentive to innovate: profit for the individual (or group of investors.) Without that drive to innovate the economy stagnates and flounders, see the example of the "progress" experienced by the ultimate example of state control, the Soviet Union. The USSR did increase production under state control with a mandated shift away from agriculture to industry, but it also increased the cost of such development (including the human cost of producing less food,) resulting in the lowering of the standard of living. I suppose that is one way of achieving equality, and perhaps the only way. To make everyone equal you must bring everyone to a common denominator, usually down.

Looking at the Theoreticals

I seem to be hearing more and more from the doom and gloom school of thought about our current economic status. So, it seems to be time to take a look at some of the economics at play.
First, let's examine the weakening dollar. The US economy is still one of the world's largest, assuming the EU is counted as one economy. If you don't count the EU as one unit, we are only ahead of our next closest competitor (China) by 6.8 trillion dollars, or 11 trillion ahead of our closest European competitor (Germany.) Therefore, a weak dollar is only a huge impact on our global economic standing if you look at it from where we are, at the top. In addition, it affects our purchasing parity, meaning we can't buy as many foreign goods. To look at it another way, it makes domestic goods a better choice than imports. To simplify that we have to compare apples to oranges, the American apple vs. the Global orange. Apples still cost us the same amount, but an orange is now more than an apple. This also means that American apples are less expensive globally than oranges; more global consumers can buy apples too. You see what I mean, a weaker dollar means that we import less and export more, doing very good things for our trade deficit.
Second, the complaint of rising unemployment. We have an unemployment rate of 4.6%. In theory, this puts at just about the minimum rate, due to job fluctuation. Also, compare that to a worldwide average of 30% and it looks even better for us.
Last, I want to take a look at the much maligned housing market which my real life job is very dependant upon. The worry we all hear about is the rise in foreclosure rates, with one number I saw saying that foreclosures are "up 30%." But what does that mean? It means that now 1 out of every 172 loans defaults, primarily in the segment of loans which would never have been approved by conventional loan methods. However, the latest measurements also state that the rate would have dropped if it weren't for large spikes California, Florida, Nevada, and Arizona. While we have seen a market slowdown in development and home sales, they still sell and they still develop. Its a slump driven by overproduction and will self correct given time. Thank you, Adam Smith.

Back to China, and Its Less Loving Activities

After my hiatus working on other projects, such as a new blog and my actual job, I wanted to get back into the swing of things with a post about my favorite subject: China. The last time I brought up the PRC, I talked about its tying itself into the world economy and its developing economy at home. This time I would like to take a look at the downside of those efforts.
We have seen the reports on China's growing economy and we have all heard of the problems with pirated software and cheap knockoffs from China, but how many of us know how much counterfeiting is going on in that country and how much is being done about it? Worse yet, how much does it effect our daily lives?
All of those questions are easy to ask but hard to answer, partially because they are so intertwined. In order to comply with World Trade Organization regulations, China has had to publicly crack down on counterfeiting, but state owned factories are in on the game. See how complicated it has become already? Another complication to the ending the Chinese piracy is how wide spread it is. They manufacture anything from soap and shampoo to peanut butter and beer, cell phones to software, even fake motorcycles and car parts. Some estimates of the market penetration are a conservative 30% of all products sold. The shear breadth of the counterfeiting is costing legitimate businesses millions to develop means to identify the real deal from the fakes, whether it be Budweiser's temperature reactive label or Microsoft's (now faked) holographs on the boxes.
One of the reasons China is so lax on cracking down on piracy is that the state is well aware of the technological disadvantage its companies are at. Their tech base is about a decade behind most fully industrialized countries. The government aids the state run economy through efforts to steal technology from other countries to bring itself into closer competition on the world market. Like all espionage, the PRC does not limit itself to consumer goods and has had many high profile investigations into attempts to steal classified military information. This is an interesting look at China's spying tactics, for those who are interested.
Why is all of this a concern for us? After all, it's not like they are getting the one up on our industries and will be selling high quality items that do new and different things, right? Well, that isn't the concern. What the counterfeiting does to our economy is send in lower quality items (that still work) at much lower prices. The influx of low priced goods undercuts our demand economy and undermines the years of R&D and the millions of dollars in development and branding spent by our companies. It decreases the incentive to develop and makes the reputations of the companies fall. Do we really want that to happen?

The Changing China

In an earlier post, I mentioned China briefly and would like to open that can of worms just a little bit further today. When I was in college, I wrote a paper which detailed why I believed China would continue to integrate itself into the world economy and power structure in a peaceful manner. I argued this in light of China's emerging economy, its liberalizing labor laws, and China's changing attitudes toward trading on a global scale. In many ways, I still stand by this assessment, but it is also disturbing to note that China is becoming a dichotomous country in terms of its outlook on the world around it.

One, China's economy needs outside sources for technology and outside markets. Chinese companies are beginning to invest in other countries in the region and the world, trying to integrate themselves into an already strong Occidental market. With China's manufacturing ability and immense manpower, production is not a problem. What is a problem is the lack of the technological base possessed by the West, specifically the educational and scientific advantages in the United States. China can buy the technology it needs, but this can be costly. They can also reverse engineer or steal the technology they need, but this can be dangerous. Just because they know how we make something does not mean that they can replicate it. Yes, they can follow the plans but they may not have the high quality equipment to make it correctly, leading to low quality copies, almost like a dirty Xerox copier where you can see what its supposed to be, but you can't use it nearly as well. Also, as part of China's search for a market for its goods, they will sell to anyone who can buy, including states which have a historically strained relationship with China, such as North Korea, and states with a strained relationship with the United States, such as Iran.

G. John Ikenberry points out that China can grow into the current world structure, or can grow in opposition to it. He uses several examples, first that the United States grow into the world structure around the turn of the 20th century, and subsequently changed the world power structure peacefully and without damaging the countries in Europe where the power had formerly resided. Second, he points out that Germany in the same time frame grew its economy and military at a high rate, and then challenged the rest of Europe. I think that China can learn from this history lesson, because, even though Germany had a much larger and better trained military as well as a larger economic base, the old guard still defeated them resoundingly. Unfortunately that defeat led to Germany's rise in the 1930's and Hitler's attempt to lead the country into its former glory. It would be to China's advantage to grow within the current world economy, as it already has a large stake in it. To disrupt that trade and anger those sources of income would unnecessarily hamper economic growth.

However, no matter what China's new economic policies are, we must remember that it is a socialist state and does not always do what we as capitalists would consider is in its best interest. As a developing country, the largest portion of its economy is still agriculture, however the policies which drive economic growth also mirror socialist Russia's environmental degradation. In order to become a major world player, China is destroying itself. Accordingly, the good of the country is to the detriment of the people. The aggressive state lead growth has lead to other aspects falling by the wayside, something that in a truly capitalist economy is much less likely to happen due to consumer and workforce pressures.

I think that this is all for now. I will continue in a later post with a, hopefully, more structured analysis.

Production and Consumption

As I spent part of the day lazily flipping from link to link this article on the New York Times' website caught my eye. The article itself is well worded but somewhat deceptive in its presentation. It effectively presents the same style of Malthusian argument that we have been plagued with for centuries, merely using statistics rather than theoretical and philosophical statements. The problem I have always had with arguments based on statistics is that very few people understand the field of study of which those numbers are products. Therefore, a concrete integer, quantifying a problem in a way that looks simple and easy to understand, can be used to fool people into thinking that they know the basis of an argument without ever actually having to show them any real data. In the case of this article, the now-classic statement about dwindling oil supplies echoes the argument Thomas Malthus made over two hundred years ago about the human population outgrowing the world's capacity to supply food, thereby starving the population. In the same way, the argument that the world has x years before we deplete our fossil fuel supply has been around since the 1970's. Since the early 70's x has stayed roughly the same. Does that mean we have found better ways to extract oil? Does that mean we had horrible estimates of the world's reserves? Does that mean that we have better production methods? Or does it mean that we have no idea what forces are behind the creation of crude and are using fear as a motivator?

Essentially, the statement that we must cut our consumption in order for the rest of the world to be able to increase their own consumption has a few flaws that should be glaringly obvious to anyone who wishes to look at the argument from a purely logical perspective. First, the assumption that the world will run out of resources is flawed. Yes, the world has a finite amount of natural resources, that I will not argue. I will, however, take issue with the assumption that we know what those limits are. One, the estimates of the world's resources vary wildly from report to report, depending on who is running the numbers, how they run them, and the sort of outcome for which they are looking. Two, according to the science upon which these estimates must be based, there is no way to destroy matter. Therefore, we never actually use up resources, we merely convert them to another form of material. (Flippant and pedantic, I know, but true none-the-less.)

The next problem I have with the argument is the underlying elitism in the idea that we must cut back in order for the rest of the world to catch up. Do we really think that we are so far advanced that others can't make it to our level without us lowering the bar? Does it not seem unfair to developing nations that we impose the Kyoto Protocol on them? A plan in which we would be required to cut back on emissions, true, but also a plan which would restrict the use of technology that the developing world could use to bring themselves up the level of technology we take for granted in everyday use. One last thing about the pretension evidenced by this particular argument is the concept that all other people in the world want to live as we do. Even if one can define what it is to live as an American lives, given the disparity in lifestyles in our country, one can by no means claim to know that every one wants to have that way of life. Whether it is because they have a belief system which prevents them from aspiring to aspects of our culture, in the same way that the Amish in America have no desire to live the "American" lifestyle, or something as simple as they have a personality that militates for a simpler life, it is arrogant to assume that we live the ideal.

The simplest of the fallacies to notice, and the simplest to fix if necessary or possible, is the assumption that consumption and population will continue to grow while all other factors remain static. If population grows, then not only will consumption grow, manpower and the work force will expand. With the technological advances of the last century production grew at not merely proportional rates but at exponential rates relative to the workforce. To assume that this trend cannot continue as the rest of the world population grows would be foolhardy. Not only would production increase along with the increased demand of world markets, technologies also will multiply and improve at exponential rates.

While I think that the argument for conservation must be made, I believe it should not be made in such a way as to say that we must conserve or be forced to conserve, as in a statist's plea for the government to make our decisions for us. It seems that the economic remonstration for conservation is more effective than a pseudo-moral appeal to people's emotion. Does it not make more sense to say "Conserve, and you will save money through cutting your wasteful and unnecessary consumption," than to say "Conserve and cut your consumption so that those who are less fortunate may have more?"