Wednesday, 16 January 2013

Economic Thought Fragments

Some fragmentary thoughts that occur to me. I don't really have time now to explore them in detail:

1. There is a fundamental assumption in economics that all people are motivated by material
wants. It's a big motivator, but to ascribe all motivation as such is wrong, hence the continual failure of economists to correctly predict economic patterns and why governments are always surprised by economic events.
2. People -- especially economists and educated types -- do not really distinguish between
"money" and "wealth" despite the crucial fact that money is nothing more than a token representation of wealth. Officially acknowledged, the difference is immediately elided in all textbooks and completely ignored in daily life. Want to know why 10% of Canadians control 50% of the wealth in this country? Because they understand the difference.
3. Money is created two ways. Creation of wealth and creation by debt. We only use one nowadays: debt.
4. Economics textbooks ascribe to 'money' many properties, but all but two can be easily disproved: it is a medium of exchange and handy means of ascribing relative value.

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