Sunday, March 11, 2012

Politics & money

     No, this won't be a rant about how much influence the moneyed have on politics. The only rant is this sentence:
"Politics is driven by misconceptions about money and wealth."
     Too many people think that money is wealth, and that therefore it should be hoarded. The phrase we use is "saving money", which makes hoarding money sound like a virtue. It's not. Our ancestors knew that: the money hoarder is a miser, a miserable Scrooge.
    Money is not wealth. Wealth is goods and services. Money and wealth flow in opposite directions: When I give you a $10 bill for a dozen used books at your yard sale, I have a dozen used books, and you have a $10 bill. You can now exchange that for something you think is worth $10, say a small roast and some mushrooms, from which you will make yourself a stew. The owner of the grocery store can use the $10 to pay an employee. Eventually, that $10 bill could show up in the hands of a neighbour who wants to buy a dozen used books from me at my yard sale. In the meantime, it has enabled a great deal of trading of wealth.
      If I hang onto the $10 bill because I think it's wealth, then you can't sell me your used books, and you can't buy the stew meat and mushrooms, and the grocery store owner will have to get $10 from someone else, and so on. Money is only good for one thing: spending. As long as people spend money, wealth will be traded. More than that: wealth will be created, because people want to trade it.
     In Cabaret, the MC sings "Money makes the world go around." Yes it does. Of course, we don't really need money, we could barter directly, or use IOUs, but money makes it much easier to trade with each other. Trading distributes wealth, which is a good thing. If we couldn't trade our wealth, if we couldn't make wealth to trade, we would each one of us have to find what we needed to survive. Just like the animals who don't have any notion of creating or trading what they need.
     Money makes it easier to share the wealth. That's all.

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