Wiping out poverty… again

What are “Western” and “Eastern” approaches to problem solving?

Let’s start with a story that sums up the essential difference between Western and Eastern approaches to problem solving, in the category of healing:

A woman gets a rash and goes to her Western primary care physician. He prescribes some cream she can put on the rash to reduce the symptoms. (Obviously, as she renews her prescription every month, the pharmaceutical companies now have a new recurring income stream, and the doctor is more likely to get repeat visits from that patient so he can bill the insurance company more! Yay!)

This Western approach is called “treating the symptom”.

The Eastern, “holistic” healer will likely try a different strategy. The holistic healer would ask the patient if she recently got a new plant, a new pet, changed her diet, spent more time in the sun recently, switched to a new brand of soap, lotion or makeup, changed jobs, recently experienced unusual stress or had some other change in her life that might be the actual cause of the rash.

If the holistic healer can help the woman successfully identify the root cause, for example, if a new plant or eating too much soy was the problem, then the rash goes away permanently, without the need for continued treatment. This holistic strategy entails eliminating the cause of the problem and the problem disappears on its own.

A summary of Western and Eastern approaches

To summarize:

  • The Western healing approach attempts to treat the symptoms
  • The Eastern healing approach attempts to correct the cause

This dichotomy between Western and Eastern approaches to healing can also be used to diagnose approaches to other issues.

For example, let’s take our newfound wisdom about Western and Eastern healing philosophies, and look at the problem of reducing or eliminating poverty.

There are only two reasons why a person is poor

It’s obvious that are only two possible reasons why a person is poor:

  1. They have some real physical or mental deficiency preventing them in some way from being able to perform the responsibilities of a decent paying job. This could include a dehabilitating injury, physical or mental handicap, illness, or age reason, such as a small child or extremely elderly person.
  2. Some other reason. There are millions of able-bodied people in the U.S. with no physical or mental deficiency that don’t make enough money each month to cover essential needs like food, shelter and medical care.

The Western approach

What would be the typically “Western” approach to reducing the number of the second category, the number of able-bodied people struggling to make ends meet? Treat the symptom. Hand out food stamps. Create government programs to “give a man a fish.”

The “holistic” or “Eastern” approach

The Eastern approach would be to diagnose why someone does not have a decent-paying job.

In the U.S., it is obvious that there are people with more valuable job skills than others.

Someone who has excellent, proven skills in fields like big data analysis, cardiology, internet marketing or software development is highly in demand and can easily get a job with a large salary, while people without any valuable job skills generally work for very little money (if they can even find a job).

Why do people with certain job skills earn a lot more than others?

Because those skills are more valuable to that company’s customers, meaning they’re more valuable to employers. A business has to make a profit on each employee to cover overhead (which includes the cost of training new employees).

If a business can bill a consultant, engineer or lawyer out to clients at $400/hour, that employee will earn far more money than a restaurant worker that the business can only “bill out” at $10/hour; that is, despite all efforts, they cannot generate more than $10 of revenue from an hour of that employee’s time.

Why is there any unemployment at all?

This is simple. There is always an investment and risk to a business in hiring a new employee. There’s a cost to training the new employee to perform a sufficiently good job so that, after a certain time period, the worker will return a profit to the business. And there is an omnipresent risk that, even after months of training and “learning on the job”, that employee may not prove profitable in the long run and will have to be laid off.

This risk of not making a profit is the only factor that would ever stop a businesses from hiring and training new employees (since, obviously, if every worker returned a guaranteed profit, then there always would be zero unemployment, as businesses fought tooth and nail to hire every possible person who wanted to work).

Why do some businesses hire more employees, and others don’t?

If a business has found a way to hire and train employees profitably, the managers of that business will strive to hire as many employees as possible, given that they feel each new employee will most likely add to the business’s bottom line profit, rather than subtract.

Many tech companies are desperate for new employees, participating in job fairs and other events where they compete fiercely for potential employees, offering ever higher wages and benefits in competition with all the other tech companies.

Conversely, if a business feels they will lose money on new employees, they’ll put a “not hiring” sign in the window.

Learning “on the job”

Teenagers and twenty-somethings starting their first job usually lack the seasoned skills and expertise of older, more experienced workers. Younger people generally enter the workforce at a low wage, then, year by year, as they learn more and more, and their job skills increase, they get raises and migrate to better jobs and opportunities until the 45 – 54 age range, which are the “peak earning years” statistically. After this, of course, income trails off as more and more people retire and live off investments, pensions and savings.

earnings by age

Obviously in order to start this lifetime increase in wages by “learning on the job”, you have to HAVE a job.

The point

So now that we know all this, finally we get to the point of this article, which is:

There is currently a national movement wanting to make it more expensive for business to hire unskilled workers.

But, if you care about the plight of the poor, and with unemployment stats as they are, shouldn’t you be doing the opposite? Shouldn’t you be thinking about how to make it less expensive for a business to hire an unskilled worker and train them?

Clearly, minimum wage laws and other government regulations make it more expensive for a business to hire an unskilled worker.

While everyone understands the Western-style, superficial rationale behind this crude, short-sighted attempt to artificially treat the symptom, shouldn’t we be more focused on the “holistic” approach of correcting the cause?

Shouldn’t there instead be a movement to make it less expensive for a business to hire an unskilled worker and train them?

The holistic approach

We need to support the cause to make it less, not more expensive for a business to hire poor, unskilled workers and train them, giving them a longer “runway” for businesses to make a profit from each new employee without having to lay them off if the employees break-even point goes more slowly than expected.

It stands to reason that as the risk and cost of hiring new employees is decreased, and the potential profitability of each employee is increased, businesses will obviously hire more people, because profitability will be more easily and rapidly achieved.

And the more poor people are working, the more people will be on the path, shown by the chart above, of ever-increasing wages earned by their ever-improving job skills.

Problem solved… again!

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One thought on “Wiping out poverty… again

  1. Josh, you are quite a brilliant analyst. It seems the majority of people are so set in their ways that they are not willing to examine any other ideas. But keep on putting your thoughts out there.

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