Alternative View on Money- V

In my previous post on this subject, I have touched upon the need to have an economic system that is based on ensuring a high velocity of money, as opposed to concentrating large amounts of money with a few people. The two most common objections to my idea will be discussed in this post. Others will follow in upcoming posts.

My replies look at the mentality and thinking that create such objections. I do not want to criticize my skeptical readers, just point out their blind spots.

Objection 1: Money is no longer seen as a zero sum game.

While it is true that money is no longer a zero sum game, it is still seen by many as a zero sum game. Read the examples below and tell me if they are not based on a zero sum mentality.. I want to know.

If that was not the case, why would companies boost their short term stock prices by firing competent employees. Who benefits from it? and is it a viable longer term strategy? Why do companies reorganize departments based on MBA whim, when there is no good evidence that it increases productivity. Hint: It gooses up stock prices and options, at the cost of future productivity.

What economic good is served by poorly written laws, which beyond the basics, are created by lawyers to employ other lawyers? Does it serve any good other than making money for lawyers and their rich patrons. What public good is served by making some drugs illegal? Is it not cheaper to make them legal, cut prices and let people have their fill? It would cost the system less than incarcerating people and screwing up their lives? Why not pay a low level drug dealer the same amount of money, paid by the taxpayer to incarcerate him? He will likely help circulate money more than the prison-industrial complex.

What economic good is served by expensive medical systems, when all of the utility can be obtained for a fraction of the price? Why do physicians hate competition, who benefits and who loses? Iatrogenic deaths are at least the 4th leading cause of deaths, so they are not exactly competent. I have many specific examples in the field of medicine and pharmaceutical development (another post).

What is the social utility of an institution that can borrow at zero percent from the government (collective taxpayer) and lend it to the individual taxpayer at usurious rates (32%). It is no longer restricted to people “who cannot handle credit well” (sounds better than unlucky). What is the social utility of a system that has to be bailed out for trillions of dollars, but which then turns around and tells the taxpayer that they are fortunate to possess such parasites?

Why do people who get rich through a combination of fortuitous circumstances try to justify it as meritocracy, when it was really luck. Taleb says it it best “hard work can get you a BMW, a private jet requires luck”.

Objection 2: “They” do not deserve it.

Who are “they”? and what gives you the authority to decide what “they” deserve?

A couple of hundred years ago, all of our ancestors used to crap and piss in pots or outside the house. We have functional sewage and waste treatment systems.. Did they deserve it? The same goes for what we now consider utilities like clean drinking water, streetlights, public firefighters, public ambulances etc? Did the people of an era before such services became utilities not deserve it?

Many promoters of “pull yourself by your bootstraps” are either employed by the government or receive large concessions and bailouts from taxpayers. Who are they trying to fool? Even the few who are somewhat genuine are exceptions and not the rule. Was the west settled by rugged individualists or by people who rang up uncle sam’s army and used his largesse to build their fiefdoms? Now, they may pay sophists to write revisionist history, but the weight of documented facts speaks otherwise. I have many examples of this phenomenon.

Many ‘middle class’ people are concerned by ‘working class’ people enjoying decent food, videogame consoles and other electronics, cheap airfare and decent healthcare. Honestly, does screwing them over make your life any better? Does fellating the free market capitalism spouting owner of your company make him any less likelier to screw you over? In most cases, he has received multiple bailouts and pardons for behavior that might have ended your career (all because of an accident of birth and fortune). Does appeasing a crocodile by pushing the guy in front of you towards it, ensure that it be your best pal?

For all the antipathy by certain whites towards non-white people, what is the chance that a welfare bum will destroy you life (as opposed to your well dressed MBA-speak spouting boss).

Now that you you know it, is it really worth it?

I will address a couple more objections to my idea in the next post, specifically

Fiat Money vs “Gold”

Productive Jobs

  1. Alkibiades
    December 28, 2009 at 7:07 pm

    A high velocity of money does not guarantee there will be no concentration of wealth. Those with money will know how to hedge against the rampant inflation you are calling for.

    The rest appears to be short on proof and long on opinion. That’s fine, you are talking generalities. In a closed system with finite resources there really would be a zero-sum game. Much of what you see as zero-sum I see as competition for limited but as of yet not finite resources.
    Deflation in the cost of products/ services partially mitigates the effect of wealth concentration. I am not talking about a “perfect” system, merely one that is better than the status quo. Hedging is successful only if you are: lucky, an insider who can control the outcome. In evolving technological societies controlling the outcome becomes increasingly harder, just look at how easier it was for the oligarchs of the early 20th century (as compared to the oligarchs of today).

    Your version of proof is an interpretation of data (a viewpoint), my version of proof requires measurable changes and patterns of changes (once again, measurable). If any current economic theory (interpretations) worked, we would not be in this mess- but we are. I think you do not appreciate that most economic theories were crafted in an era unlike ours (gold standard, non-widespread industrialization, few secondary/ tertiary effects of post-industrialization, a mass media scene unlike ours). We live in an era in which many of those concepts have been abandoned or where secondary/ tertiary effects of industrialization have created situations not anticipated by theories of yore.

  2. Alkibiades
    December 28, 2009 at 10:56 pm

    Austrian theory does just fine.

  1. December 24, 2009 at 1:06 am

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