The Impossibility of Economic Utopia

People can not seem to understand why it is absolutely impossible to have an Economic Utopia. A Economic Utopia is a state where you have 100% employment and everybody makes enough money to buy everything they want. This is an absolute impossibility due to human nature.

What is Human Nature within the context of business? It is a struggle between greed and laziness. On the one hand people want to do as little work as possible… and on the other hand people  want as much luxury as possible. When the possibly of excelling above their peers is not available through the force of greed, such as in a socialist system, people will fall back to laziness and work as little as possible. As people work less and less, first luxury items will become scarce and then basic needs like food and shelter will no longer be produced. Hence Utopia is an impossibility in a Socialist system.

A capitalist system is also driven by the same human characteristics of greed and laziness, but the system favors greed.  So why is economic utopia still an impossibility in capitalism??? Because even at the highest levels of greed there is still an element of laziness. The average businessman will not set up a business model to satisfy 100% of a given population. The Average businessman is content to target 60% or less of a given population; 60% if he targets the middle class, 20% if he targets the  high end market and  20% in the low end market.

I will give a personal example from my experience to clarify what I mean. I owned a food service establishment that targeted the middle class and of course was accessible to the upper class… but the prices were prohibitive to the lower classes.  Here is a simple calculation I made for a restaurant with 100 seats.  I could sell a cheese burger deluxe for $7.50 and expect to sell it to 80 people… or I could sell it for $6.00 and sell it to 100 people. Either way I would gross $600, (7.50×80) vs (6×100). The difference is that when selling it for $7.50,  I only have to serve 80 people… less work, same money.  So I will choose to only target 80% of the population every time.

Now here is where it gets interesting… and the part that a lot of people don’t get. If somehow money became available through some artificial means like welfare and 100 people started showing up at my door because they could now all afford my prices… I would increase my prices to $9.40 so that only 80% could  afford the prices even at a level where I am grossing $750,  (7.50×100) vs (9.40×80).  So I am back to working at only 80% of capacity. At 80% capacity, the  customers that I do get will get better service since the place is running under capacity. While this may seem like a flaw in the system, it can actually serve as incentive. In a system that naturally favors less then 100% capacity, there is an competitive incentive for people to work hard to stay in that top 80% (middle class). The only incentive that people would have to not work hard to get into the middle class is if their is a fail-safe underneath them like wealth-fare.

This is a market force that completely escapes those who wish to create some fantasy world where everyone can have everything they want. It is a complete waste of time to try to put economic gimmicks into place to satisfy 100% of the population.

About Bill Tsafa

Swordman, Gunman, Scholar, Accountant, Patriot
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One Response to The Impossibility of Economic Utopia

  1. Pingback: Economic utopias | Mycfosandiego

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