Just a quick comment, today about an article I read on Zerohedge yesterday by Tyler Durden. He was writing about subsistence labor. He argued that unmeasured subsistence labor where a person works several jobs just to stay alive can still happen in an economy reporting high labor non-participation. This argument doesn’t matter in an economic sense because economies are complex adaptive systems where the individual’s contribution can only count toward economic wealth when it produces a surplus that helps the economy to grow. Surpluses can build an economy toward prosperity. Subsistence can’t do that.

Imagine a farmer who only works hard enough or with soil fertile enough to maintain a subsistence lifestyle. Over his lifespan he will get older but no richer. It is only when he can sell something in excess that he can get ahead and use his profits to invest in his farm and make it more productive. He can buy more land or get more livestock or more seed or better inputs of whatever kind that increase his outputs that he can sell in order to get ahead. When economic surpluses are used to grow greater surpluses, and when many people can do that, economies grow. Subsistence isn’t unimportant to individuals who use it to survive, but it can’t grow an economy.

This matters because of the many ways that governments can parasitize economic profits so that they aren’t reinvested in making the economy grow. When governments take economic profits in taxes, it undermines the incentive to create a surplus and it also directly reduces economic growth. Even though there are people working in government who want to have a government job, that job never creates a surplus that can be reinvested in the form of capital. Instead it uses up capital taken out of the economy. When there is too much taxation, economies can become stunted. Debts can pile up. That debt represents a tax on tomorrow’s surplus. If there isn’t a surplus, the debt can’t be paid and it blocks the ability of a surplus to help the economy to grow.

A society has a political system that can either protect economic surpluses or squander them. The social group’s ability to enjoy prosperity depends on protecting each person’s surplus so that that person can increase their production which can add up eventually with other surpluses and lead to social wealth. That wealth can diversify society so that people’s labor can specialize. But without a productive surplus as you have in the case of subsistence, a person’s production can’t grow an economy, can’t support economic diversity, can’t store up wealth and can’t do research and development to discover new ways to make more surplus that can be reinvested in economic growth.

In 2015, I self-published a book, Political Catsup with Economy Fries, that discusses the history of the U.S. by describing 3 different political ideologies over American history. In that book, I also describe the way the the economy and politic work together to sustain or destroy society. You can buy a copy of Political Catsup with Economy Fries at Amazon.com.