Thursday, January 17, 2008

The Pyramids, Food Production, and Economic Inefficiency

5,000 years ago the civilization of ancient Egypt had signs of wealth... in their pyramids, the temples, the medicine they practiced.

Civilizations arose in areas of the world where agriculture allowed farmers to feed a large number of people, freeing others to specialize in other areas such as development of technology and philosophy. Egypt for example occupied the fertile banks of the Nile river.

Jared Diamond is an evolutionary biologist with a theory of how civilizations came about and how it is that modern civilization sprung up in Eurasia. Eurasia had a combination of plant and animal life that was very conducive to agriculture.

The following is a summary of his book Guns, Germs and Steel. It is fascinating and well worth reading:

One question that comes to mind is, how much more efficiently can we produce food, as compared to ancient civilizations such as Egypt? It stands to reason that if we can produce food 5x as efficiently as the Ancient Egyptians, we would need to work 1/5th as much for the essentials, if cost of the other essentials such as housing were reduced the same amount.

This webpage says 129 people, today, working 8 hours a day. (In 1960, it was 25.)

That would suggest that if one's economic output were roughly equivalent to a farmer, one would need to spend less than 1% of their time (if working 8 hours a day), working in order to pay for food. That number probably does not include the cost of a farmer's machines and land; let's just pretend for a very rough calculation that the cost of a farmer's labor in food production is 30%; that would still suggest that 3% of a person's economic output would be needed to pay for food.

Let's look at the other essentials - shelter and clothing.

It took one guy 9 weeks to build a 1200 sq ft log home:
Out of 40 weeks per year and 40 years, that's not even 1% of a person's economic output. Let's just assume that that cost is doubled by the cost of tool rental. That's still less than 2%.

Clothing is probably less expensive than food and shelter.

So if food is 3%, housing is 2%, and clothing is say 1%, that brings the total to 6%. Let's just say medical care will cost the same as food, and energy, the same as housing. The total is 11%. This pie in the sky calculation says that the basic necessities of life can be purchased by working less than an hour a day. Let's pretend there is a taxation rate of 50% in a socialistic society. That's still only 2 hours a day. Or, put another way, with today's technology, we should be able to get the basic necessities just working 60 days a year. Anything over that should just be fluff.

Let's say the Ancient Egyptians worked 8 hours a day 300 days a year. Today the average worker works 8 hours a day, something like 220 - 240 days a year. Has 5,000 years of technology only allowed us to work 25% less??? Or, why have we not benefited from technology in the form of reduced workloads?

The answer I believe is incredible economic inefficiency today. There is much waste. Think of all the people in industries that really are parasites on society. Everyone's favorite example is lawyers. Think of nuisance lawsuits. Think of how much economic output is wasted not only by lawyer's fees, but also by the time spent by jurors. Another example are the tax accountants. They are being paid to do a job simply because the tax code is onerous and byzantine.

In many ways, wealth is destroyed simply by wasting people's time that could have been spent being productive - basically when people have to take time off from work in order to do things such as going to court for a traffic ticket.

The largest wastage of economic productivity is government. In the example above I used a tax rate of 50%. However, taxes are probably much higher. The average Federal income tax rate is 25%, but Social Security and Medicare is another 15%, and in some states, the state income tax is 5%. Then there is regulatory compliance cost of 16% of GDP. That brings the total to 66%. Some may say "but those costs are for some necessary services". Government is incredibly inefficient at spending money to provide services. They simply have no motivation to spend money wisely, unlike the free market. FSK has said that the resulting total tax is even greater than 66%.

There is another parasite that is living off of the middle class. These are the beneficiaries of the corrupt monetary system. The tax they foist on the middle class is in the form of interest payments on debt, and inflation because of the central banking system. Note also that the income tax pays for interest on the loans made by central banks to government, using money created out of nothing.

Even if my calculations are off, the reasoning stands. A heck of a lot of wealth is confiscated or destroyed by government and by debt.

1 comment:

Anonymous said...

Its by design, taxes pay for billion dollar missiles and weapons and destructive wars...because parasites benefit from it. Orwell in his 1984 was right: