Every four years I get much more than usually interested in economic questions — mostly because I hear the politicians — of both major parties, and also the minor ones — harping on things that seem to me to be so clearly NOT THE POINT.
What’s becoming clearer and clearer to me is that the usual economic issues — keep the debt/GDP ratio down, more jobs in America — are off point and rely on a misunderstanding of the difference between money and wealth.
Wealth is what matters. Money does not matter, and neither do jobs. The old adage “it takes money to make money” is an illusion. The truth is this: it takes wealth to make wealth. Money is a useful tool, and a side effect.
Measuring money is easy: we know, for example what the national debt is, because it’s an amount of money. But what’s the worth of the national asset?
I claim that the national asset is worth a LOT more than the national debt, and it growing all the time, and faster than the debt. The problem is that it’s not denominated in money so it’s hard to measure. And people are not even trying to figure out how to measure it.
But in my opinion it’s a better thing to focus on..
Consider this thought experiment. Imagine we’ve cracked the energy nut, and the cost of energy has gone to near zero, without pollution; we’ve cracked the molecular manufacturing nut so we can assemble things right down to the atomic level so raw materials are no longer scarce; the cost of materials has gone to near zero; our robot slaves (or buddies) make everything that we want, for near zero.
In this imaginary world (and I will claim we are well on our way there) there are no jobs for humans. Technically there is no unemployment, because no one is looking for a job, because no one needs a job. If you have something you want to do because you like to, you just do it. And you don’t need to get paid a lot.
GDP measures money exchanged, and since everything that people need and most of what they want is getting closer and closer to free, GDP in this world will keep dropping, dropping.
So no jobs, and debt/GDP ratio is on its way to infinity. According to current measures — jobs and GDP ratio — this is a disaster. But it’s clear that if we could actually get there without killing ourselves, it would be more like utopia.
We are on our way to that imaginary world. It takes fewer and fewer people than ever before — including the people who run farm machinery, and the ones who build the machinery and the food packaging plants and all the rest of the infrastructure needed — to provide everyone else with food. So almost no one has to work to provide food. It takes fewer and fewer people doing productive work to provide the rest of us what we need and want — which is why we can “employ” so many people in unproductive jobs — in non-productive government bureaucracies and in non-productive activities in businesses to supply data for the non-productive government bureaucracies, and pay for unemployment, and social security, and the military, and the retired (after 20 years!) military, and fund a huge number of other unproductive activities, and STILL have a world that is rapidly getting wealthier.
So it’s wealth that matters. Not money. Not jobs. The questions in my mind are:
How do we measure current wealth?
How do we create more wealth, most effectively?
How do we share the wealth?
How do we get people to stop concentrating on the wrong questions, and start thinking about the right ones?