Tag Archives: Division of Labor

The Division of Labor Gives Rise to the Monetary Premium

2/8/2014 Portland, Oregon – Pop in your mints…

Today we find ourselves, along with the rest of the inhabitants of the Willamette Valley, enjoying what has been dubbed “Snowpocalypse 2014.”  The valley’s residents are now three days into this rare event and, while much in the way of normal transit has been disrupted (truly, it does not take much snow to paralyze Portland).  We do not have a solid measure of just how much snow has fallen and whether or not the event lives up to its name, what is unmistakable is that the snow is beautiful and is has revealed many a great sledding hill in our midst.

Some of our faithful readers will recall that back in December, we began exploring the Monetary Premium, the portion of an item’s relative value owed to the utility of an item as money (those new to The Mint can glance back at these essays for a thorough exploration of the definition of money).  In that essay, we presented the portion of the Monetary premium that arises as a result of an Imperial authority demanding tribute in said currency.  Logically, it may also be said that laws declaring what is legal tender or any law which dictates the monetary unit in which debts are to be cancelled in an economic zone will also give rise to the monetary premium.

Of Money and Metals by David MIntGiven the above example, it may appear that the primary drivers for an economic good to carry the monetary premium are related to imperial or government action.  However, this is decidedly not the case, for the ultimate origin of and primary factor contributing to the monetary premium of any economic good has nothing to do with the government or what is used as money, rather, the Monetary premium comes into being as a result of an increase in the division of labor.

For those not familiar with the term, the division of labor is what makes urban society possible.  While perhaps the most easily understood metaphor is that of the assembly line, where each individual worker dedicates him or herself to completing one facet of the production process, relying on their counterparts on either side of them to ensure that the chain of production, of which they form part of, remains unbroken.

Economic systems are, in a sense, a collection of interconnected assembly lines both large and small, with each member of the system dedicating themselves to a set of tasks; the more time and energy that each individual is allowed to dedicate to their task, the more efficient each individual generally becomes.  The fact that each individual dedicates an increased amount of time and energy to a specific task gives rise for other members of society to pitch in and specialize in tasks that others cannot do for themselves given the specific scope of their labors.

The division of labor, if allowed to rise and sort itself out on its own, is generally good for economic output, as increased efficiencies translate into increased outputs.  However, as individuals increasingly specialize in certain tasks, they increasingly rely upon other members of society to fulfill their need.  As logic would follow that the increased division of labor does not allow much time for barter transactions, an increase in the division of labor always gives rise to the need for a monetary premium to both emerge and expand, attaching itself not only to traditional transmitters but giving rise to new ones as well.

Once the monetary premium expands, it gives rise to an increase in the division of labor, and in this way the dynamic between the two drives real economic growth.

Limitations on the Division of Labor and Monetary Premium

After reading the above, it should be clear that both the division of labor and the monetary premium are generally good for humankind, and that both factors driving real economic growth, if left to operate unhindered would eventually run up against and adapt to the limitations of the natural environment.

However, today, circa 2014, both the division of labor and monetary premium are hindered not by natural limitations, but by limitations placed upon them by well meaning legislators.  While all legislation tends to have either a direct or indirect effect on economic activity, there are two kinds that are particularly harmful to economic growth as they cut off the lifeblood of economic expansion:  The dual expansion of the division of labor and the monetary premium.

The first are laws dealing with minimum wages.  While minimum wages laws strive to guarantee a living wage for all members of society, they never achieve this goal and, in the process, serve to directly hinder the expansion of the division of labor when actual wage rates for certain activities are below the minimum wage rate, and serve no purpose when wage rates are above it.

The second set of laws are those referenced above; legal tender laws.  While Legal tender laws strive to codify what serves as money in a society, they invariably serve to direct an inordinate amount of the monetary premium into instruments that are not worthy of serving as money on a grand scale.  In the process, they serve as a severe limitation on what can carry the monetary premium and, by extension, the expansion of the monetary premium and the division of labor.

We all suffer to some degree due to manmade hindrances to the expansion of either the monetary premium or the division of labor; however, it is those farthest from monetary spigots, as defined by legal tender laws, who suffer the most.  In order for peace and prosperity to accrue to the greatest possible number of persons, it is critical that we grasp the importance of encouraging the division of labor to operate unhindered.

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for February 8, 2014

Copper Price per Lb: $3.26
Oil Price per Barrel:  $99.88

Corn Price per Bushel:  $4.44
10 Yr US Treasury Bond:  2.68%
Mt Gox Bitcoin price in US:  $680.00
FED Target Rate:  0.07%  ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce:  $1,267

MINT Perceived Target Rate*:  0.25%
Unemployment Rate:  6.6%
Inflation Rate (CPI):   0.3%
Dow Jones Industrial Average:  15,794
M1 Monetary Base:  $2,752,800,000,000

M2 Monetary Base:  $10,968,700,000,000

On the myth of overpopulation

A series of videos refuting the myth of overpopulation:

The Tenets and Benefits of True Capitalism

10/28/2011 Portland, Oregon – Pop in your mints…

We have been kicking around the idea of True Capitalism and cannot shake it.  In our experience, the only hope we have of shaking it and moving on is to write it out, so here it is.  Thank you for listening, fellow taxpayer.  It may be simply a directionless rant, then again, we may solve the world’s problems.  Either way, we aim to make it entertaining.

We will start with what we know:

True Capitalism is man’s most perfect expression of democracy

True Capitalism enables Justice

True Capitalism enables Equality

True Capitalism enables true prosperity

True Capitalism is born in and comfortable with Anarchy

True Capitalism is radically trusting in people

The Breakdown of society is a breakdown of Trust, If there is to be hope for the future, we must collectively learn to trust again.  True Capitalism is a constant test of trustworthiness and a betrayal of trust is quickly and harshly dealt with.  Conversely, those found trustworthy stand to be richly rewarded in a Truly Capitalistic system.  The meting out of natural rewards and consequences increases general trustworthiness.

Anarchy Leads to Order, Not Chaos

True Capitalism improves society by carrying out the consequences of actions in a rapid and impartial manner.  It encourages men and women to serve one another as they find that serving one another is in their mutual interest.  In fact, it is in their rightly understood self interest (to quote a term from Mises) to serve one another.

Intrigued?  So are we.  But what exactly is True Capitalism?

True Capitalism is a radical respect for life and private property.  It is the recognition that the right of an individual to life and private property are inviolate and that individuals, assured that their life and property are no endangered, will reap the fullest benefits of the division of labor and mutual cooperation which men and women on this earth are capable of.

Let Freedom Ring

Participation in the True Capitalistic System is not voluntary, for True Capitalism, as we will find, is not an idealistic concept, rather, it is an ultimate given.  Apart from participation, however, all other actions and agreements which do not violate other’s rights to life or property are completely voluntary.

Apart from being a part of the system, nothing done in the True Capitalistic System is purely obligatory.  This is where True Capitalism differs from what has come to be known as “Crony Capitalism,” the system in which most of the world currently operates which is full of random taxes, fees, regulations, and laws which require compulsion or coercion by a nation state in order to be paid or obeyed. 

At the other end of the spectrum, in the Truly Capitalistic system, actions such as paying an entity or observing a regulation may be strongly advisable to the point of being considered a necessity, but not taken under compulsion or the threat of violence by a nation state or another actor in the system.

In a Truly Capitalistic system, the best way to get ahead (obtain more opportunities, leisure, or whatever one desires) is to make oneself useful to his or her fellow man or woman.  The nature of the system is to reward those who best serve others.  Those rewarded then find themselves able to consume goods and services freely produced by their fellow man by using the resources they have obtained by doing the same.

If one lifts the veil of the machinations of today’s nation state, it is abundantly clear that this is more than idea, it is natural law.

We submit for your consideration, that, far from being unattainable ideals, True Capitalism (and by extension, Anarchy), are ultimate givens within which the current system of nation states are forced to operate.

If the nation state were to cease to exist, it can be argued that Anarchy would reign.  This is technically true.  Unfortunately, too many individuals believe that Anarchy would lead to chaos.  We believe that quite the opposite is true.

Out of Anarchy, the Truly Capitalistic System would ORGANICALLY emerge, and with it a new dawn for humanity, built on mutual interest and almost endless capital formation which will engender a spontaneous and dynamic social order, and a society without borders that would enjoy freedom and prosperity that we cannot even imagine under current conditions.

Believe.

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for October 28, 2011

Copper Price per Lb: $3.67
Oil Price per Barrel:  $93.32

Corn Price per Bushel:  $6.55  
10 Yr US Treasury Bond:  2.33%

FED Target Rate:  0.07%  ON AUTOPILOT, THE FED IS DEAD!

Gold Price Per Ounce:  $1,743 PERMANENT UNCERTAINTY

MINT Perceived Target Rate*:  2.00%
Unemployment Rate:  9.1%
Inflation Rate (CPI):  0.3%
Dow Jones Industrial Average:  12,231  

M1 Monetary Base:  $2,071,500,000,000 RED ALERT!!!
M2 Monetary Base:  $9,607,200,000,000 YIKES UP $1 Trillion in one year!!!!!!!