How Lobsters Expose the Achilles’ Heel of the Conservative Movement
A group of rugged Novia Scotia fishermen met at 8:30 am to discuss their future. They were being ripped off, they said. They worked hard on their boats netting lobsters, sold them to a local wholesaler, who then sold them to someone else in the world, who then sold them to. . . . You get the picture.
The fishermen were up in arms because they sold their lobsters for $4.50 a pound, but found those lobsters fetching $10, $12, $15, or more a pound in New York or someplace else.
They were being ripped off, they said. To prevent it, they appointed a representative group which went to Europe with the purpose of bypassing the local wholesaler. They would sell their lobsters themselves directly to the foreign buyers.
But they returned empty-handed, and soon found themselves in this meeting that had been organized by the local wholesaler. He called the meeting so I could address the fishermen.
“How much of that $10 or $12 selling price do you think you’re entitled to?” I asked.
Various responses. Six dollars. Half of it. Most were quiet. There was no answer with which they all agreed.
I gave them one.
“You’re entitled to the full amount of the selling price. If it’s $12, this is yours. After all it’s your lobster.”
Stunned silence. They didn’t expect that answer. I continued.
“But, in order for you to get that $12, you’re going to have to pay for holding tanks here at home where the lobsters are starved so they ‘clean’ themselves (which makes them ready for the dinner plate), then transport them to a major airport. Someone has to organize this. Do you think that person should get paid for his time and facilities that make the sale possible?”
They nod, affirmatively.
“Good. In addition there are the freight costs to some geographical location such as New York, Spain, or Korea. Should these be paid?”
“Where will the money come from to pay for this?” They are silent, because they know the freight costs have to come out of the final selling price.
“At the other end of the air freight delivery there’s unloading, holding, and distribution again. Should people who handle these activities so your lobsters can be sold be paid for time and effort?”
“Yes,” they agreed.
“Now how much of that $12 is left for you?”
“As I said, the lobsters are yours, the last price, the retail price is “yours.” But you have to pay all the people in the middle who make the ultimate sale possible. What you get is what’s left after everyone gets paid — by you.”
“But we’re getting ripped off,” they claim.
“By whom?” I ask. “Which one of these people in the middle is ‘ripping you off’?”
Silence, again. They’re afraid to point the finger at the local wholesaler, my client.
I continue: “When you catch your lobsters and bring them in, there’s a price that consumers are willing to pay — today. Your lobsters have to be in holding tanks for at least 48 hours before they can be eaten, so your catch cannot be sold today. It will be sold two days later. The wholesaler cannot sell them today, since buyers want them shipped ready to eat. They don’t have holding tanks, so it makes sense for them to buy when the lobsters are ready for the dinner plate. And the ones you’ve just landed cannot be sold in their present condition.
“Over the next 48 hours the price can go down. Are you willing to hand back some of the money you were paid today because the price goes down 48 hours from now? In other words, are you willing to take on the risks that the wholesaler here in Nova Scotia and the risks that other middle men he sells to take on board?”
Once more there’s silence, this time with a little feet shuffling. There’s angst in the room and everyone can feel it. This is all new to them. Well, maybe it’s not new, but to bring all the issues together in this way begins to paint a different picture.
No, they were not willing to hand back money 48 hours later. They expect the local wholesaler to take the risk on price movements. They had a guaranteed payment at today’s prices, whereas the wholesaler had to wait 48 hours to find out what the market would pay. On some deals, he lost. At some times of the year, he was lucky to break even. In the good season, he could make money as demand sent the price up during that 48-hour holding period.
Now, jump from Nova Scotia lobster fishing to poverty in Central America for a moment. The solution to poverty has been the life work of Peruvian Hernando de Soto. The poor are poor because the legal framework does not permit them to use assets for growth. De Soto’s book, The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else is based on the story of property rights. Or, at least, the “rule of law” — whatever that might mean — and its failure to release capital in Third World countries.
My interest in the issue of property rights is to tie together the story of the fishermen, de Soto’s view on property rights, and highlight the missing ingredient in property-rights theory. It explains why property rights as they are understood are a failure, and do not, nor can they, relieve poverty. Without all the proper ingredients, property rights become a myth, a slogan, a mantra. This missing ingredient is the Achilles Heel – the weakness – of the conservative movement.
“Do not oppress or rob your neighbor; specifically, you are not to keep back the wages of a hired worker all night until morning.” (Lev. 19:13 – Complete Jewish Bible translation)
That missing ingredient is here in the text from Lev. 19:13. Specifically, it is money and the ownership of money.
About two centuries ago, the British High Court ruled people have no ownership in their money. And that ruling has made its way around the world. Money is owned by the political order, and you use it because government money is determined to be “legal tender.” This is why legal precedent allows the banks to take “your” government-issued money and do whatever is “legally prudent” for them to multiply money through the fractional reserve banking system.
It is easy to believe that in Western countries you have “property rights.” But what does this mean? You have title to some land, perhaps. But under the auspices of “eminent domain” you can be removed from that land at government whim. Yes, you can argue about the price you are paid, and seek redress in the courts. But in all other respects, you are a tenant of the State.
Money, among other things, is a store of wealth. It is property in the same sense that any other physical property is an asset. You can touch it, feel it, smell it, and see it. More importantly, because it is money, it is the most “marketable” of all property because it is easily exchanged for other goods.
The text in Leviticus clearly ties money and theft together. To hold back the wages of a hired person overnight is theft. The corresponding passage in Deut. 24:15 connects this with the needs of poor people. They cannot wait, so pay them today. But here in Leviticus the payment of wages is linked to property ownership and theft.
In the example of the fishermen, I suggested they were entitled to the full price of the lobsters at the end of the supply chain. But they would have to pay, out of that price, all the activities that took place in order for lobsters to end up on the consumers’ plate.
Now they may be entitled to it all, and they could keep all of it — if they did all the work. But as soon as someone else gets involved, that portion of the selling price no longer belongs to the fishermen. It now belongs to those who do the work.
It is the same in many other businesses. An automobile dealer does not “own” all the money he collects from the buyer. There are suppliers of raw materials, subcontractors and employees involved in getting that vehicle to the consumer. Each contributor “owns” a portion of the selling price. The auto dealer may collect all the money, but all of it is not his. It needs to be paid to the true owner(s) — today, not tomorrow.
Your economic system currently depends on a violation of this principle. If business owners were really collecting on behalf of staff, contractors, suppliers, they would take that portion of the money that did not belong to them, and put it aside out of reach, or better still, immediately pay for the goods and services they receive.
And this is also the explanation for the failure of property rights to release capital in Third World countries. True property rights don’t exist in those countries. The worker is not perceived to be the immediate owner of his wages and that the employer is now a trustee on behalf of his employees. Instead, the employer is perceived to own the money until such time as he makes the payment to his hired hands. Meanwhile, employers go bankrupt, or some simply pocket the money, and the employee does not have capital released to him.
As at home, there is no legal requirement that a portion of money earned belonging to the employee should be placed in a separate bank or escrow account. So the employee’s earnings get mixed up with the corporate funds and get extracted only on the day the wages are paid.
Political issues only make things worse. Since the political order claims entitlement to everything, it demands its portion of the sale price — taxes. Civil governments do not recognize Scripture and its principles. But they do know the meaning of ownership of money: Pay now!
Without property rights in money, individual property rights are watered down to the point where “eminent domain” by the political order reigns supreme.
Another passage of Scripture says: “A curse on anyone who moves his neighbor’s boundary marker. All the people are to say, ‘Amen!’” (Deut. 27:17).
From this it can be seen that property rights are not a small thing in God’s eyes. All the people are to say ‘Amen’ to the curse that is placed on those who move boundary markers.
Have you helped to remove your neighbor’s boundary mark? Politicians, judges, professors and clergymen have been removing the boundary markers for a long time — centuries — if not overtly, then covertly by their silence and acquiescence. Yet people continue to vote for them. The boundary marks of property (wealth) — especially money — have been moved time and time again.
The difficulty, however, is that many people are unwilling to say “the system” is the problem. They act as if individuals are the problem, so they select a “good guy” to vote for. And then they become perplexed when the “good guys” do the same thing as the “bad guys” — move the boundary marks of money. They may do it slower rather than faster, but move the markers they do.
And after all these decades people continue to believe in fairy tales . . . that “Prince Charming” — or sometimes “Princess Charming” — will arrive with a kiss on the cheek, and they’ll awaken as if this were all a bad dream.
It is not the person, however, that is the problem. Toyota’s one-time eight million vehicle recall was not a person problem: it was a problem of their manufacturing “system.” And our nation-states are also a “system” – a system of government that begins with the idea that Christ will not reign on this earth. This is the “system” from hell. It’s sometimes called democracy – rule of the 50 percent plus one. Or it could be called monarchy – rule of the monarch.
No “system” of government – as a system – is noted for its protection of property rights. In fact, to the contrary, it is the single distinguishing mark of government of any kind: control of property in some form, especially money. It might be through “eminent domain” or it might simply be through the process and control of money, defining what will constitute “legal tender,” and the control of its volume. In every instance control of property is designated in taxation laws.
The battle for property rights was lost over eight centuries ago, almost as soon as the ink had dried on the Magna Carta – the Great Charter, of 1215. Money and taxes were the issue then as they are now.
What makes you think you can turn your economy — and your culture — around, without a return to property rights in money as a key ingredient of reform?
And to do that, “the system” needs to be eliminated and a new one put in its place. A godly system, and nothing less.