This post from 2015 addresses just how far away from decency we have strayed by considering money, not people, as the core of the economy.
What is money? Your answer may depend a lot on how much of it you have. Ultimately, the main purpose of money is convenience. A system of barter works pretty well when two people have things each other need – someone with chickens meets up with someone else who recently slaughtered their pig and both have bacon and eggs. But if you can also exchange those eggs for money you can save it up to buy something different or bigger.
As we’ve concluded before, Adam Smith was right – money is a matter of belief. Whether it’s gold, Euros, or Canadian Tire Money it’s worth whatever you believe it is worth. Our own US Dollar is backed by the “Full faith and credit of the US Government”, which is scary if you think about it.
But money is more than convenience and faith – it’s what it takes to make things happen. And that’s worth thinking about some more.
Economics is nothing more nor less than the study of the primary way in which people connect with society and get on with their lives.
In everyday life, you may interact with a few people – family, colleagues, and friends. But through the process of eating and paying the mortgage you interact, at some distance, with hundreds more. Because this interaction is entirely through something called “money,” a way of keeping score, it’s very tempting to look at it entirely through numbers. The dizzying details of tens of millions of exchanges every day makes a top-view in bulk the most desired method of analyzing how things are going.
Yet this process has proven wrong over and over again. The failure of economics, particularly macro-economics, is the primary reason why the only true study of an economy has to be a People’s Economics.
Summer re-run season has me terribly bizzy. This is a repeat from eight years ago which informs the basis of People’s Economics.
The art and skill needed to put knowledge to practical use is more than just what technology is really about – it’s generally seen an increasing share of our economy. The term “Knowledge Economy” comes from Peter Drucker in his 1966 book, “The Age of Discontinuity”. It includes this:
“In a knowledge economy where skill is based on knowledge, and where technology and economy are likely to change fast . . . the only meaningful job security is the capacity to learn fast.”
True enough, since a lot of knowledge applied as an art went to revolutionizing economics itself since that time. But as many of us have learned, the ability to think fast means nothing without the right connections.
The hardest thing to change is often perspective. To see the world from a different angle requires either movement to a new position or an out-of-body experience.
Given how frozen our identities have become in political tribes, it is almost certainly easier to pull someone’s consciousness out their daily routine than to call them over to a new position. Where new perspective is essential to understand radical change in this world, the first step has to be a separation from conventional language and thought. Everything has to be unlearned.
So it is with People’s Economics. Longtime readers will be familiar with the concept that has been developed in real time here on this blog. Now that the camp has been set up in the middle of the dark woods, it’s time to light a fire. People’s Economics is now the Camp/Fire for Barataria, aside from period asides which will in other ways help the promote the general concept of developing new perspective.
As this year develops, the economy is stronger than it has been in a long time. Yet the process of spreading out the wealth and creating strong growth has yet to come together. While there is little doubt that our image of the economy is changing, some important things have not. The most important aspect of our economy, that it works for everyone with some degree of equity, is not changing much. That will keep our politics in turmoil for some time to come.
The reason for this is simple: the US Dollar is incredibly strong and is likely to remain so for years. This means that manufacturing, the life blood of the heartland, will not return soon. The anger over this, blaming China and Mexico and everything except the automation and accumulation of wealth which really drives it, will certainly continue.
This is a repeat from 2013. What’s amazing is that the Underground Economy, that part which is off the books, has not been studied properly for a solid five years. It may still be 12% of GDP, but we don’t really know.
It’s good to have a lot of money, assuming that not everyone has a lot. Inequality is apparently bad when it gets too big, but it also makes the whole economy possible in small doses. But how much money is really out there, and where is it going? It turns out that this is more complicated – and hidden – than most thought.
The rapid pace of change has created a world filled with excitement and energy. At the same time, it’s created a world filled with anxiety and fear. At the intersection of both of these is hatred, distrust, disrespect, and every other force you can think of which can divide people. Rather than bring us together, closeness has us running to define boxes to hide in, regardless of how small.
The great force which should unite but instead often confuses and separates is the driving force of our time: technology. That one simple word is the savior and excuse all at the same time. But what is it, really?