Most discussions about economics begin with money. I think that’s a mistake.
In this video, I explain why money is not the economy, why wealth is not the same thing as money, and why economics has become obsessed with the wrong things.
Starting with a simple thought experiment about being stranded on a desert island, I explore what really creates value, why energy and human potential matter far more than financial wealth, and why money is simply an accounting system that allows society to organise itself.
Economic textbooks all try, really hard, to get the above point across. So much so that it’s actually the plot line of a Terry Prachett novel: “Making Money”.
Spud’s claim to being heterodox here is only, in fact, coming around to the standard view.
The whole point of a deserted island is that there is no one else there.
There is no trade, there is no one from whom to buy goods and services.
What would be more use ? Captain Sparrow’s treaure chest or his stash of rum ?
See also the B Ark and the leaf as basic currency.
Tricky. It might be possible to make a knife from the metal band on the treasure chest. The rum bottles would be perfect for storing water. The situation would dictate whether to drink or pour away the rum.
Struggling to think of a situation where I’d pour away rum…
“So I lashed all the barrels together to make a raft and used washed up ships planks and palm leaves for the deck.”
“Ingenious. But how come it took you three years to leave the usland ?”
“Well I had to drink the rum in the barrels first !”
Murphy is an uneducated, incurious, bloviating @rse.
There are umpteen novels, fairy stories, fables etc about greed which make exactly the same point. Any four year old would understand this.
Doe he really believe, and expect his readers to believe, that his asinine thoughts are original in any way?
It’d pretty clear that he does and equally clear that his delusions go far beyond the level most of us suffer from.
Given the examples we’ve seen, his readers have their own problems understanding things.
Absolutely he thinks every thought he has is original and has never been considered by humanity. Just yesterday he put a piece of ham between two slices of bread and called to his wife “come quickly, I’ve solved the worlds convenient lunch needs! I shall call it the Ham Murphy”
This is part of the trouble; it seems he really does believe that he is a brilliant original thinker.
And, as you say, he’s poorly educated and doesn’t seem to want to learn anything from anyone else (he seems to only read anything in order to make a straw-man attack on it).
The combination of lack of knowledge and huge ego means he can believe his every thought is a brilliant new insight, even when it has been proposed and disproved decades ago.
And that seems to fuel his problem, because it raises his own opinion of himself whilst reducing even further (if that is possible) the perception of him by anyone who knows anything about the subject, so increasing his paranoid view that he is a rejected genius.
At least his circle is perfect.
In his everlasting search for something to say on YouTube, Murphy discovers stuff he would have known since college if he hadn’t been too far up his own arse to read the books.
In his newly urgent search for ways to tax the south (successful and wealthy) to fund the north (useless client base), Andy Burnham discovers Land Value Tax.
Expect bastard hellspawn.
The problem is, unlike under previous governments, there’s no money left to tax. Deep into Laffer territory, we are.
Andeh can’t do anything except make it worse, because he’s a hostage of the muppets around him on the green benches, and they still think there are unsqueezed pips out there. The last Labour tax hikes caused mass layoffs, which are still going on across Britain. Next one will have similar second and third order effects, which will be felt across the economy lightning quick.
Doomed, eyelashes is. I’m expecting an IMF bailout by 2030.
I’m expecting an IMF bailout by 2030.
So, just after supper.
…unlike under previous governments, there’s no money left to tax. Deep into Laffer territory, we are.
Andeh believes we are “under-taxed”. While we are way beyond the optimal on the Laffer Curve, there’s more for him to tax….
And Andeh thinks energy prices are too high because of insufficient state control when government currently controls energy prices…er…duh!
…
Each one limbo dancing under our expectations since Cameron.
Since Cameron? Blair was the origin of our political woes…
It’s nice the former professor of economics is just now discovering, at the age of 69, some of the most basic principles of economics people have written about for centuries.
money is simply an accounting system that allows society to organise itself.
Prices are information? Money can be used to buy goods and services? Who knew?
Next stop: colours and shapes.
Yeah Steve. But he seems to have a lot of problems understanding those accounting entries do not relate to money can be used to buy goods or services
Miranda: Oh brave new world that has such people in it!
Prospero (sourly): It’s new to you.
Pratchett’s Interesting Times touches on this as well.
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I find Pratchett unreadable – and also most SF and fantasy….
I think this is probably your problem rather than Pratchett’s. Hard SF & fantasy enable exploration of alternative worlds to the one we live in. And the very best give an outsider’s view of ours. And as many people have said, it’s difficult to understand things if you don’t understand yourself.
I don’t need badly written or semi-literate fiction to explore alternative worlds. Quantum mechanics beats any fiction for that.
I’m with Theo on this. I have a very low tolerance for bad prose. So low, in fact, that I’m almost allergic to it.
Recently I tried reading Galactic Patrol by E.E. Smith, but had to give up on it. Trying to explore alternative worlds, I was.
It did not help that it was presumably intended for 14 year-old boys.
Years ago I tried The Da Vinci Code, and only got about eight pages into it before throwing it away in disgust.
And for some reason I cannot put my finger on I can’t abide Raymond Chandler. I realise that might raise hackles.
I prefer John D Macdonald to Chandler.
Stick to Murphy, old fellow
Of wealth is not the same thing as money then I guess there goes his wealth tax into the shitter.
Yes, money is an accounting system. This is not a new observation. Does he think it is?
No. An accounting system’s an accounting system. Take any simple transaction. You exchange tokens of value for goods or services. The tokens of value have no memory of where they came from or interest in where they’re going to. That is the purpose of money. That it doesn’t require an accounting system. It just requires the tokens.
I think you’re describing attributes of cash in particular rather than money generally. Even cash can be tracked (serial numbers on notes) so there is some level of “memory”.
No. I’m describing the attributes of money. It’s GCE O level stuff, mate. Accountancy entries are accountancy entries. Not readily exchangeable for goods or services.
Ah, try something a little more advanced.
I think I’m with BiS on this.
Money is a means of exchange. That’s what it’s for, and it’s very successful at it, so much so that nearly all commercial transactions (even illegal ones) are done with it (if we use a broad enough definition of ‘money’ that includes bank transfers as well as physical cash).
Everything else that it does isn’t its purpose, but is a consequence of it being so widely adopted, voluntarily, as a means of exchange:
Not quite, BiSD. Money is a token of value used to facilitate commerce. So there must be a direct relationship between the total value of the commerce being conducted & the total value of the tokens. Thus any “money” not being part of transactions in commerce can’t be money. Usually those book keeping entries are debt. They’re not directly exchangeable for goods & services.
Think of paying for something with your debit card. The bank relies on somebody else depositing money so it can honour your withdrawal. But if everybody simultaneously used their debit cards to empty their accounts, the bank would be fucked. It doesn’t have that money. So therefore your bank balance isn’t money. The balance is a debt the bank owes you. You can’t directly spend it.
And this is the thing Spud repeatedly gets wrong. He sees a book keeping entry & he wants to take & spend the money. But here’s no money actually there to spend.