Monday, February 15, 2016

The Thinker - A Novel (Chapter 1 Part 4) Economics 101


I MET UP WITH STEVE A HALF HOUR LATER. He was a first generation Korean immigrant who came to the US when he was three. As is typical of many Koreans, he excelled in school, especially math, and had decided to go into a career in finance. We met in my first year in college in economics class. He was studying business and I was studying tech. We soon started partying together. I still remember the day when I first introduced him to cocaine at a house party. He liked it so much that doing coke soon became our thing, and for the rest of college, me, Steve, and our other friend Mario, got together virtually every weekend to drink beer, snort coke, and then go bar hopping in the city. Eventually it started getting out of hand. Doing coke had initially started out as a side thing, a little extra something something to make our nights a little more interesting. We’d pregame it at someone's house, usually Mario's. We'd drink, do a little coke, and then head out to a bar or club for the real fun. But before long, coke had become the main dish. It started replacing everything else in importance. We eventually got to the point where we were spending all our money on coke, and we didn’t even want to go out to the bars anymore. We began thinking like total cokeheads, with each of us reinforcing the worst ideas of drug addiction in the others. Why go out to a bar and spend ten dollars on a drink if we could just spend that money on more coke? It seemed logical. And so we did. Mario especially got out of hand, so much so that I eventually had to stop hanging out with him altogether. At some point, when my tolerance got so high to where I had to spend at least fifty dollars on coke just to sustain a decent buzz, a light bulb went off in my head. I realized that the coke was using me and I wasn’t using the coke anymore. It was working against me and not for me. So I gradually stopped doing it until I didn't need it anymore, which is the way George Carlin quit. Neither Steve nor Mario were able to have this epiphany, and they both spiraled further down the hole. Eventually I managed to get Steve off of it for the most part, but Mario was a goner.
     Being in finance, Steve could never kick the habit entirely, as it generally goes with the lifestyle. But for the most part he kept it under control. He was a diehard capitalist, a true free market proponent. Over the years we had many heated discussions on economics. And so when I met up with him that day I wanted to talk to him about my situation and whether he thought there was anything wrong with our current state of affairs. We went to one of those Irish pubs you see all over Manhattan. I liked those places. I could go in an anonymously drink among strangers and feel like I could fit right in. Steve knew the bartender it seemed from the way he greeted him, although it was hard to tell since he always acted like he was everybody’s best friend. He kindly ordered me a beer and we sat down in one of the booths in the back, away from the rowdy patrons at the bar.
     “So what happened with your job?” Steve asked. “They fired you? I can’t believe it, that’s so fucked up.”
     “Don’t worry,” I reassured him, “it was a blessing in disguise actually. I hated my fucking job. I hated the work, I hated the people, I hated the location. I told you all this before. I was working 60 hours a week and only getting paid for 40 of them because I was salaried. I had to sometimes work weekends too. I was at least paid overtime for the weekends that I worked. But still, that job was so fucking stressful that it was literally sucking the life right out of me. And considering that it’s the middle of the summer, I couldn’t have gotten fired at a better time.”
     “How’d they fire you?”
     “It was really uneventful,” I told him. “My manager just called me into the HR room and told me that I was being terminated due to my lack of motivation and performance. And then the HR girl told me of a few things and that I was a free to go. That was it. It was very anticlimactic now that I think about it.”
     Steve’s eyes widen. “I guess every cloud has its silver lining,” he said. “What are you going to do now?”
     “I don’t know.” I take another sip of my beer.
     “Are you looking for a new job? I have a friend who works in tech and I can ask him if he can help you out.”
     “Honestly, I have no plans to look for a new job right now. I’m going to take it easy for a little bit. I’m going to do some soul searching.”
     “Woa,” Steve said with a look of amazement. He’s the kind of person who’s so easily amused by life. Anything to him can be exciting. I on the other hand had become jaded by life in the big city. It took a lot to get me excited. Everyday things seemed like stale beer in comparison. The thing about Steve that I liked was that I could have long conversations over drinks about economics, politics, and the philosophy behind them. He wasn’t really the deep “intellectual” type. He was a finance guy, always quip to talk about the latest doings on the market and world economy. He was striving to be filthy rich one day, and he had a head full of theories on how to achieve that dream.
     “Soul searching? That sounds spiritual,” he said.
     “It does.” 
     So after I took a long swig of my beer, I turned to Steve and said, “I've been thinking. You know what sucks about America today? We’re going back to the days of industrial slavery. Companies want to milk you of every ounce of blood, sweat, and energy they can, while they can short change you on wages, and have all the economic gains flow right to the top. That’s why for the past thirty years productivity is up, and the middle class has been basically flat. Almost all the new wealth that is generated goes to the top. And it’s only getting worse.”
     “Now hold on,” Steve said making his serious face. It usually came about from something a little too liberal for him to handle. Economics was thing, and he wasn’t havin’ none of this socialist shit.
     “The reason why the money flows to the top is because leaders earned it. They’re the ones running their businesses and creating growth and opportunities. They’re the job creators. Do you expect a CEO to make the same amount of money as you?”
     Steve’s economic platform was thoroughly republican, even though he was a liberal on pretty much every other issue. And we had had this conversation many times before. But now, with my recent firing in memory, it felt different. It was more personal now, it was more emotional, no longer just abstract ideas on economic theory, but the real life consequences of them up close. So I retorted.
     “Of course I don’t expect them to make as much as I do. I have no problem with people getting rich. You know I’m not a socialist like that. What I have a problem with is the economic system we have now that's rigged in favor of the rich getting richer, and the poor and the middle class staying flat. I just want to be able to make a decent living in a job where I don’t have to dedicate my entire life to it. What happened to the forty hour work week? Is that no longer a thing anymore?”
     “You basically just want to be lazy and still get by,” he snarled. “We live in a world where there’s a survival of the fittest. There are winners and losers, makers and takers. If you want to be successful in this world you have to be cut-throat. You have to be a go-getter. You have to be willing to do whatever it takes to make it to the top, even if that means working long hours and dedicating your life to your job. That’s why I respect those CEOs who make it. They’re extremely hard working and talented. When you work hard, you will be rewarded. That’s the way it is.”
     Steve had fully bought into the trickle down economic theory that I thought was nonsense, and we clashed over it constantly. He was one of those people that was absolutely convinced that he was going to be rich one day and the “free market” was the prerequisite in making that possible. You could see from his Ayn Randian ethos that it was pretty much just thinly veiled social Darwinism elegantly wrapped up into “trickle down economics.” It made me want to puke.
     “It’s that very survival of the fittest attitude that causes of all our economic injustice today,” I said. “It’s all about getting rich by any means necessary. In other words, ‘fuck the environment,’ ‘fuck the workers,’ ‘fuck paying people a decent living wage.’ ‘We’ll just outsource all the jobs that we can to China and India, and force the workers in America that we can’t outsource to work like dogs while reminding them that they can be replaced in the blink of an eye.’ And all that money they save goes right to the top. The reason why our economy sucks is because people have no money to spend. After bills are paid, most people have almost nothing left over, and almost no time to spend it. The 1 percent can’t keep the economy afloat. The middle class is what keeps the economy running. We’re the consumers, not the rich. And that means we're the real job creators.”
     “But all that outsourcing actually helps you,” Steve fired back. “Think about it. You can go to any store now and buy what you want for really cheap. If all that was made in America it would cost three or four times as much.”
     “But it’s a catch-22,” I replied. “We can buy cheaper products but we have to deal with cheaper wages. I’d rather pay a few dollars more for stuff and have a larger paycheck. Plus my rent and transportation costs aren’t getting any cheaper. They always go up.”
     Steve was visibly annoyed by my rantings but I was all fired up. I had been waiting for a long time to say this to someone like him. So I continued.
     “Look Steve—and here me out on this. I’ve been thinking about where I stand on economics recently. I’m not a socialist. I believe in free enterprise—but with limitations. The problem with the way it is today is that the conservative media wants to tarnish anyone who even remotely criticizes the free market as a full blown Stalinist. I’m not trying to take away anybody’s right to make money. We just have to have a system where we have checks and balances along the way to prevent the inevitable rise in greed that corrupts the system. So I’ve been thinking, the term I’d use to describe my economic position is a liberal capitalist or a compassionate capitalist. I’m for free markets and competition and entrepreneurialism, but with an underlying philosophy that cares about workers and animals and the environment. Consider this analogy. I’m a liberal on social issues for example. I’m for ‘free love’ — but with some common sense restrictions. You can’t rape people, sexually assault them, and you can’t have sex with little kids. Why? Because we know human nature and we know that if those things aren’t kept in check, some people at least will try to do those things. It’s an unfortunate aspect of our sexuality. In the same way, I’m for a ‘free market’ — but with some common sense restrictions on it. Because just like with sex, there are some unfortunate outcomes due to our desire for wealth and power. There needs to be checks and balances that protect the little guy—the worker for example, who goes out everyday and labors for the benefit of the company so that they aren’t being taken advantage of. And we need other things too like making sure companies aren’t putting poison in their products. We have the natural tendency to overvalue short term gains at the expense of long term well being. And our greed can easily make us blind to the suffering of others. That’s why we need to keep the market in check. So this idea of a totally unregulated free market with no restrictions is just like the idea of not having laws against rape or child molestation.”
     Steve leaned back in his seat in contemplation over what I had just said. Then he turned to me. “It sounds too…idealistic,” he said. “It’s never going to work. Wall street will never buy into it.”
     I looked at him with partial dismay. “Maybe you’re right. But I see it as a movement from the ground up. I know hedge fund managers and venture capitalists like Mitt Romney are never going to buy into it. But a new generation raised on it could when they get into power. Who knows? I need another drink.”
     After another round courtesy of Steve, who always liked to spend big and flash his money around, the conversation continued.
     “My problem with your views,” Steve said, “is that you basically want big government to intervene in the market to tell businesses what to pay and what to do in order to make it convenient for you. Companies need freedom to survive. A startup might not be able to pay its workers forty grand a year. It may have to rely on unpaid interns while it establishes itself. If you want government to force companies to pay people higher wages, you’re going to kill businesses—especially the smaller ones that aren’t well established. So your views would actually hurt people like you in the long run.”
     “So you’re basically saying that I have the choice between working ridiculously hard for pay that is just barely enough to get me a middle class life—or—have no job at all.”
     Steve was looking at me right in the eye with a look as if he didn’t quite know what to say. But I continued.
     “If that’s the logical outcome of capitalism, then why should I even be for it? Why not socialism then? The way I see it, it’s a choice between me getting paid a reasonable middle class wage with health care and benefits and all that, versus the CEO getting paid a little less. Instead of twenty million a year, he could make only ten. Take the Walton family who owns Wal-mart. Together they’re worth over seventy-five billion dollars. That is an obscene amount of money for one family to have. And yet Wal-mart pays their workers eight dollars an hour and offers them no health benefits. They even tell their workers to apply for food stamps and medicaid because Wal-mart isn’t paying them enough to be able to survive on their own. So taxpayers end up subsidizing people with full time jobs because their wages are kept so low by their employer. Does that make any sense?”
     Visibly annoyed at my rant, Steve turned to me. “Look,” he said. “Companies will simply move to another country if they feel they can get a better deal over there. Business owners must make a lot of money. That’s the incentive for them to invent, and produce, and innovate. That drive is what makes the economy work. It’s what produces all this technology you have. It’s what makes America the richest country on earth. We’re the richest country on earth because we reward innovation. Steve Jobs came from nothing and created a multibillion dollar business that changed the world. Bill Gates came from nothing and became the richest person on earth with his software. Same thing with the stock market. You have a 401k right?”
     “Yes. Well, I did from my job.”
     “Ok. Take that 401k. You put money into it, that money is invested in companies, it grows overtime. Those company’s stock grows because they make money. They might make a new product that has a lot of buzz, that fixes a problem, or creates a whole new market. This is possible because they are not taxed at high rates and because they have enough money to invest in research and innovation.When you retire, that money sustains you when you’re not working. If companies are burdened with laws and regulations that will restrict their ability to do research and innovate and hire the best talent. That means no new iPhone, no new Samsung, no new computer.”
     We obviously were not going to agree, so I felt like I had to let it end. By about seven Steve and I were thoroughly drunk, although he was as usual a lot more wasted than I was due to his low tolerance. We took a break and were outside on the street smoking cigarettes, looking at all the pretty ladies go by. Steve was still a heavy smoker, and I was trying to quit. But he had offered and I couldn't refuse. The stress from our argument desperately called for an intervention of nicotine.
     “You know how much one semester costs to go to NYU?” I asked Steve in between drags. “Forty thousand dollars. Can you believe that shit? It’s fucking unbelievable. It’s another reason why it’s getting harder to make money in America now. It now costs a fortune to get a good education.”
     “Yeah but they’ll be making good money once they graduate,” Steve said with his usual optimism.
     “Not really. Even that’s not guaranteed anymore nowadays.”
     Just then my phone rang. It was Alex, our college buddy. He had an apartment on the Upper East Side that he grew up in. When his parents were out of town he’d occasionally throw small parties there. Maybe he was having a party I thought.
     “Yo what’s up man?”
     “Nothing much. Chillin’ man. What are you up to?”
    “I’m with Steve in Midtown, we’re drinking.”
     “Steve. From college, remember?
     “Oh yeah. I haven’t seen him in months. I think since my birthday party last Spring.”
     “Yeah, we’re just drinking and debating economics as usual. Where are you?”
     “I’m home. If you want to come over that’s fine by me.”
     “You’re parents aren’t home right?”
     “No. They’re upstate for the week.”
     “Oh alright. Hold up, let me ask Steve. Yo Steve it’s Alex, he’s got a free crib, his parents are out of town. Wanna go?”
     “Oh yeah where is it?” Steve asked
     “It’s in the Upper East Side by like seventieth street. It will take like 10 minutes to get there.”
     “Umm.........Alright” Steve said taking a drag.
     “Alright, we’ll be there in like a half hour. We just got to close out our tab and we’ll head over. Do you have drinks?”
     “I have Vodka.”
     “What do you have to mix it with?”
     “I’ll pick up some orange juice because I’m not a huge soda fan.”
     “Aight. See ya.”

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