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From: condict@csd1.UUCP (Michael Condict)
Newsgroups: net.politics
Subject: Re: PWhat if They Threw a War... - (nf)
Message-ID: <135@csd1.UUCP>
Date: Wed, 30-Nov-83 13:08:29 EST
Article-I.D.: csd1.135
Posted: Wed Nov 30 13:08:29 1983
Date-Received: Fri, 2-Dec-83 00:11:03 EST
References: <389@pyuxa.UUCP>
Organization: New York University
Lines: 72

It always befuddles me how people who know a little (or even a lot)
of economics can let it lead them into gross violations of common sense.
It seems that talking about M1 vs. M2 money, reinvestment of deferred income and
all sorts of abstract financial concepts makes one forget a very basic fact:
money is not wealth, it is just a rather bizarre and complicated
symbolic representation of wealth which people manipulate and abuse in order
to attempt to acquire real wealth, which is of course measured by standard
of living and the ownership of luxurious possessions.

Now to the point.  The claim seems to be that it doesn't matter what we
spend our money on, for instance missle silos and all the other nuclear crap,
because the money isn't really in the silos -- it got respent and reinvested
by all the lucky beneficiaries of the original funds.  By this reasoning
we can afford to buy or build anything whatsoever, because the money is never
used up!  How can any reasonably sane person entertain any such notion!

When dealing with such reasoning I find it best to take the discussion outside
of the realm of economics (and thus back to the real world) by pointing out
that: (1) it takes materials and labor to build things, (2) both of
these are available at limited rates, whether or not they are inexhaustible
in the long run, (3) things like homes, cars, tvs, and movies that you
enjoy did not grow on a tree, their production consumed some part of the
available labor and materials.  There is an obvious sort of conservation
law in operation here: output=input.  From this, without knowing whether
the economy functions by money or by barter or by theft and coersion we can
all the same quite easily conclude that (4) the higher the percentage of our
available materials and labor we spend on sending somebody to the moon or on
putting missiles in a silo, the less is available for building cars, tvs and
all the things we the common people actually use.

This logic is irrefutable, yet apparently impenetrable to many economists.
In order to help them understand it a little better let us just carry their
view of the world to its logical extreme.  What would happen if suddenly
(or even gradually) we shift the economy to a state where every available
material and every working body is being used in the production and
maintenence of nuclear weapons?  Obviously we would all starve and freeze to
death rather quickly.  What is wrong then with your inexhaustibly reusable
money argument?  Isn't it obvious?  Of course money is reusable and never goes
to the moon.  But that is because it is only a measure of the exchange and
ownership of wealth, not the wealth itself.  Saying that it is reused
is just like saying that the number 43 can be reused again and again no
matter how many times it is obtained by others as the result of a computation.

Now it is true that certain activities, like developing technology for space,
can produce, as side effects, an increase in the efficiency by
which materials and labor are converted into things (for example, by improving
the state of automation technology).  This will increase the standard of
living without any need to increase labor.  Fine, wonderful, but this is not
the argument that was put forth.  That argument, as with most widely held
fallacies, has some basis in fact.  It is certainly true that if someone (the
govt. or a big business) spends a huge amount of money on a totally useless
project that is concentrated in one geographical location, the sudden demand
for products and services in that location can boost the standard of living
there.  But this is at the expense of the standard of living averaged over all
the people who are paying for the useless project.

Furthermore, it is certainly true that
the availability of materials and labor changes over time (both usually
increasing).  This does not magically refute the argument that right now,
today, there is only a certain amount available, and we have to choose amoung
the options for using it -- there is not enough materials and labor to do or
build everything that we want to do or build, and probably never will be.
We can and should choose what to build based on long term expectations like the
survival of the free world or the side effects that a particular technology may
have, but I worry greatly about the future prospects for our economy when
people in power think that somehow the standard of living can be raised by
building something that is totally useless (as are nuclear weapons until they
are used).

M. Condict	...!cmcl2!csd1!condict
New York Univ.