There’s been lots of talk about the economy lately, and, if anything, it’s underscored how I don’t understand as much of it as I thought I did and how my position on what is smart policy seems to shift in the face of an actual test, but never-the-less, I blog to you this day a bit of wisdom I feel sure of regarding our greatest institution. Money.
I feel confident that many of you already know this, but it has come to my attention from some of the piss poor arguments of people on the radio and around the lab that some of you don’t. And in my experience, when some people don’t know something of the nature and import of the wisdom I reference, there is often an even greater number of people who don’t know that they don’t know it, and they’re likely to believe whatever the first person tells them on the subject. So in the case that you are in that last category, I hope you read this post before it is too late.
The information I will impart is somewhat tricky in that it is not something that seems immediately important. It is of the variety of being so basic in depth that it doesn’t warrant discussion, and consequently is often not taught. It is knowledge people tend to intuit, and not know that they do it, which is knowledge of a dangerous sort, because intuition is very often wrong.
You can recognize those who are confused on this subject, most often, by their stance against business. Now, this is not mutually inclusive in either direction. Meaning, people who hate business are not always mistaken about this wisdom I’ve yet to impart, and people who are mistaken do not always rant about the evils of corporations. Still, arguments I’ve had with people who seem to have an irrational hatred of business lead to me recognizing this malformed piece of knowledge as being an issue, and it makes sense those mistaken would be against our corporate “overlords”.
I’ve drawn out the wisdom far too long. I seem to be doing that lately. Used to just get straight to the point like a good scientist. Maybe I’m becoming too influenced by showmen. Now I’m rambling on tangential me. Here it is. In the economy, everyone can benefit.
People seem to forget this very fundamental principal on which commerce is based. I have donkeys, you want donkeys, you have limited edition Star Wars collectible action figures with light saber action, I want limited edition Star Wars collectible action figures with light saber action, we trade, we both are better off. It’s totally obvious with bartering, but when you put the intermediary in, money, people somehow think that if someone is making money, they must be losing money. So remember, even though Microsoft and Exxon have tons of money, it doesn’t mean if they didn’t exist their money would be in the hands of the little people.
Let me make sure you are following the important core logic by giving an example that’s more illustrative, and less humorous. I have water, which has an intrinsic value to people because we need it to survive. You have food, which is essentially the same. Now, I value my water, because if I didn’t have it, I would die of dehydration, but you value it more, because you haven’t had anything to drink in a week. You value your food, because if you didn’t have it, you would starve, but I value it more, because I haven’t eaten in seven days. We meet, exchange goods, and both get to live. Seems very good. It works even with money. We meet, each thinking our good is worth $1 per days worth, but that the other’s good is worth $2 per days worth. After exchanging a days worth of goods we each, by our own evaluations, have gained $1, and the global economy increased by $2.
Somehow people fall into the trap of thinking the Earth is a closed system. (This is a core mistake for some creationists, as well) Money is a representation of value, and as time passes, people work to create value. We also consume valuables, but not necessarily at a pace equal to our production. There is not a finite amount of value, and therefore money, on Earth. This is why everyone in the first world lives much better than royalty a few hundred years ago did, and why it’s ok if the Chinese, Indians, and Africans improve their standard of living. They’re not going to take all our money away, we’re making more of it.
It is true that our system is not perfect. There are all kinds of ways people can make money without producing value, and those people make life a little worse for everyone. And it is true that proportions of money can shift between groups of people. Maybe the rise of the developing nations is happening faster than would be permitted by the slow movement of the global economy, and that those nations are taking some of the 1st world’s wealth. But issues such as these will not be solved if people do not correctly understand the fundamental system we are working to optimize.
I don’t want to devolve into talking about petty details, but I feel a need to point out two of the obvious conclusions from this understanding of the economy. I’m gonna state them in the positive, but their negative corollaries are also true and useful to think about. One, business, in general, is good. It’s never as simple as two people exchanging goods in the real economy, but usually, when money trades hands, it is good for the economy. Two, money is lost in inefficiency of getting stuff to the people who value it most. This means systems of finding what stuff is available, and how much people want stuff, are good.
Just think about it some, even if you think you’ve got it. And that comment button down there works if you need it. Aunt Sandra has tested it.