What Makes the World Go Round
Posted by hyperpat on January 24, 2007
Money is the root of all evil.
Just what would we do if we didn’t have it? Go back to barter? I’ll trade you one battleship for 3000 cars – and if you can make that work, you’re a magician. Money is a concept that facilitates civilization by allowing a proper evaluation of the relative worth of resources and labor, and allows an easy transfer between parties for those things that each party wants. And it is a concept, not the physical bills and coins that are material manifestations of it. Which is why some ninety percent of today’s transactions are actually accomplished merely by manipulation of some numbers in a computer somewhere. By having money, all the problems of barter can be avoided (just where are you going to store those 3,000,000 bushels of wheat you just traded your orange harvest for, and what do you do when you don’t have anything the other party wants?).
Now some people think that paper money must be backed up by some physical resource, such as gold, to retain its value. Not so. The only thing that really keeps ‘money’ valuable is trust by all parties involved that their paper bills can be traded at any time for the things that they really want. When a government starts printing paper bills without regard for whether the economy is actually producing goods and services, the net effect is to ‘cheapen’ the relative value of the currency. Taken to excess, this can lead to hyperinflation, and the eventual collapse of that ‘trust’ in the money’s value. Alternatively, if the bill-issuing authority doesn’t make enough new money to account for the value of new things that have been produced, we get too many goods chasing a relative declining amount cash, with deflation as the result. Also not a good thing. Somewhere in-between is the happy ground where the number of ‘markers’ (money) available matches the real value of the goods and services the economy produces.
When a government spends more than it gets in taxes, it is effectively printing money without regard to the economy’s productive output. Now a certain amount of this is actually good, if that extra money is spent on infrastructure and services that the country really needs (and often the value of what is produced by government spending is not counted in the net asset value of the government – when was the last time you saw a line item that listed the value of the interstate highway system?). But when the money is spent on projects that do not benefit the economy but only certain small special interest groups, trouble arises, as what is now being set up is a transfer of value from the larger population to a small group – and the larger group, when they get wise to this, quite naturally object, as this is effectively theft. Many a revolution has hinged on such inequities.
But is this caused by having money? Can we say that money causes people to act in unsocial ways, causes them to be greedy and insensitive to the needs of others? I don’t think so. People are people, and even caveman Ugh could be greedy, long before money was invented. I think I prefer to live in a world where my labor can be evaluated for its worth, and compensated for in a manner that makes it easy for me to obtain what I want.