Comments on Economics

Economics is the science of distribution of goods and services. That is, it is a theory of how people will react to various method of distributing good and services.

In todays world it is almost universally assumed that goods and services will be distributed for money, and therefore, it is assumed that economics deals with money. However, there is one place where it is actually assumed that no money will change hands with the exchange of goods and services. That is in the home. A man or woman cleans the house, and does not ask for any money in return. Similarly in the preparation of food. Even if money is involved, for example in the buying of food, the distribution of the money has no relationship to the services received.

It would be possible to run an economy this way. That is, if everyone receives the goods and services they need and want without any money changing hands. The problem, of course, is that some people would take advantage of the system, and would take the goods and services without generating anything. Therefore a few people would have to generate goods and services for many. This is true of a slave economy. It is a fact of human nature that such inequity eventually causes the people who are the slaves eventually getting upset. Then they will either just quit working, or will rise up in open revolt.

Therefore it is universally assumed that money will be exchanged for the goods and services produced. In a capitalist society it is assumed that the money one obtains from the goods and services generated will be used to buy the goods and services needed. The assumption is that the more goods and service one produces, the more goods and services one must produce.

If this were the way the economy ran it would probably be a better world. Unfortunately, this is not the case. For example, some people get a lot of money, and sometimes a good education, from their parents, which they have not generated the goods and services to support. And to an extent that is a good thing, because if one could not partake of goods and services until the equivalent value was generated, then most people would starve before they would be a year of two old.

Therefore, the strictly capitalist economy really won't work. Of course, this is solved in part by the current exception to capitalism, the home. Therefore parents supply the goods and services until children are old enough to generate their own.

The problem here is that some parents lavish their children with money, other do not. While this may be due to differences in the way people want to treat their children, most often this is due the economic inequities of the parents. That is, poor parents cannot afford to give their children the privileges rich people can. Rich children get a good education which poor people don't have access to. (Note: this is not the case in every country. At least some European countries offer free education for everyone.) The education is not doled out according to who has the best chance of succeeding, but rather on how much money the parents have. Scholarships tend to change this, that is, good students can get a scholarship regardless of how much their parents make. Of course, student who are good, but not at the top of the class are allowed to go to college if the parents are rich, but not if they are poor. This is an inequity.

Similarly, rich children are allowed to go to events which are called "cultural events" because of the wealth of the parents - events they have not generated goods and services to justify. In fact, it has become the reality that an event is called a cultural event when rich people attend it, but if poor people attend something with the same with equal fervor, it is viewed as "not cultural" with the assumption that it is somehow inferior.

In fact, in justifying IQ tests, for example, references are made to these "cultural events" so that the poor don't do as well on the test as the rich. It is intended to be this way. A persons IQ is somehow assumed to be related to how many cultural events a person knows about. Think about it, if a person quotes Shakespeare, he is considered much more sophisticated and intelligent than the person who makes up many more quotes himself.

This demonstrates the inherent inequity of the current system. However, economics is a man made invention, and we can change the rules however we want. For example, we can declare that parents cannot give an unlimited amount of money to their children. That would not change the inequities mentioned above, but it would change at least the amount of money children are given, so even rich kids would have to generate goods and services to justify their existence. It doesn't even the playing field but at least it takes a step in that direction.

(This goes against popular wisdom, where it is assumed that taxes, particularly all taxes which redistribute wealth, is somehow thought to be anti-capitalistic. That is, it is assumed that the aristocracy, the rich, are somehow worth more than the poor by their very being. This goes against the famous quote from the Declaration of Independence, "We hold these truths to be self evident, that all men are created equal...")

I would like to point out another observation visa vie popular economics. In general, people assume that everyone is identical. This is not so. They are equal in worth, as the Declaration of Independence assumes, but they have different talents. That is, one person is good at selling goods and services, but not good at generating any. To be more precise, they are good at generating the service we call selling, but may not be good at generating any other service. Another person may be good at running a business, but not good at generating anything. Of course, what happens is that they will contract with other people to generate the goods and services they themselves cannot generate. And this is good, in this case each person is generating goods and services. The problem is who is worth more? The businessman, or the generator? The fact is both are worthwhile, and it is the declaration above that the founding fathers found this to be obvious.

Therefore, why does the CEO paid more than the person generating the goods and services he sells? In reality, the answer to this question is that most people today really do not agree with the founding fathers. They think people are not equal. The rich are somehow worth more than the poor. This is so universally accepted that even the poor would probably make this point, despite the fact that civics classes should be teaching them the exact opposite.

Of course, the Communists really won out. That is, currently people think the government needs to regulate business, and to a large extent this is true. That is, government enforce the rules that people have decided on, whether the rules are reasonable or not. In the case of the United States, the founding fathers recognized that the rules may not be reasonable, which is why they gave juries ultimate power. A jury decides that what a person did is reasonable, then that person should be able to go free. (Even this is not foolproof, as sometimes the jury can be so biased, for example, some of the racially prejudiced juries in the south fifty years ago.)

The really important thing to remember is that we made the rules, we, that is people, can change them, and should change them when they do not work. This should always be kept in mind.

(We also need to keep in mind what the law is that we're passing. That is, who are we subsidizing. For example, there is talk now of a special tax to build a new football stadium or the like. This is stupid, really. The only people to actually go to the stadium to watch football are those people who can afford to pay the ten to fifty dollars a shot for tickets. That is, people who are well off. Who do they tax? More than likely it is everyone, especially the poor who cannot afford the tickets. In reality, such a tax is an attempt by the wealthy to have the poor pay for their entertainment. That is what the law really is. [Of course the wealthy will say, "It generates more business" and the like. If businesses like it, why don't they pay for it.])