Welcome to Economic Fantasyland

For starters, there's a meme making the rounds today that inflation is really being caused by the price-gouging being heaped upon innocent consumers by greedy corporations.  Rather than cut back on government borrowing and the printing of "new" money, draconian price controls are the solution.  This must be smeared all over with Robert B. Reich's fingerprints.  Meanwhile, much of the current level of price inflation can be attributed to supply shortages...which would be made considerably worse by price controls.

The word competition is apparently not in Reich's vocabulary.  In the real world, people shop around and exercise consumer sovereignty — comparing their various options as to what they can do with their available purchasing power.  The debauching of our currency is still developing as a further cause of inflation.

Another current canard is that banks fail because they're not regulated enough.  Of course, politicians are always champing at the bit to pass more laws.  The magic word that would help out the world of finance is transparency.  It would be nice if banks and other institutions revealed the creditworthiness of those who owe them money, along with the usual balance sheet details and asset mix data.  For the general public, rating services such as Standard and Poor's can review such disclosures and put them into readable perspective.  Bear in mind, however, that it's still not a perfect world, and even honest referees can make a bad call.  Hence, caveat emptor

Then there's the false equivalence of money and wealth.  Money is, at best, a symbolic representation of wealth.  Wealth is all the actual stuff we need and want.  During the American Revolution and the early days of the republic, foreign currencies (pounds, marks, francs, etc.) were popular — as was barter — in lieu of scarce and unreliable government money.  The most popular barter commodity was tobacco.  Coinage in gold, silver, and even copper has real value and is easily fungible, since its weight and authenticity are right up front.  Modern coins are, however, just symbolic.

Perhaps the least realistic economic fantasy is that renewable energy will ever become both cheap and abundant.  Technology is completely captive to the laws of nature and not to the whims of politicians.  All "renewable" technologies require the consumption of immense portions of the Earth's surface — that is, if it is to sustain our current living standards.  Also, serious environmental damage typically accompanies the manufacture of much of the necessary components — hence, much of this stuff has to be imported from places that don't have American toxic disposal, child labor, and anti-slavery laws. 

But the biggest problem with renewable energy is that it's intended to solve an imaginary problem.  Atmospheric carbon dioxide is not a dangerous pollutant.  It is absolutely necessary for plant growth, which leads to the irrefutable axiom that all of the carbon in fossil fuels was previously extracted from the atmosphere via photosynthesis.  Carbon simply cycles around and around, over and over.

Dredged up from the bowels of the 19th century is the old saw of worker exploitation.  Why do people seek employment, often under less than ideal conditions?  And why do businesses bother to hire assumedly disgruntled workers?  Because both want to make money off of each other.  Years ago, when my brother's daughter graduated from high school, she was fretting over her lack of money necessary to buy all the stuff she wanted for college.  I suggested that she get a summer job.  "But there's nothing I like to do" she responded.  So I told her, "That's why they pay you to do it." 

Over time, technology has dramatically increased worker productivity, thus making a worker's time much more valuable.  True, it then takes fewer workers to make just as much stuff, but the world keeps changing and finding new things to do.  Back in the 1990s, the advent of desktop computers and mouse-driven screens (AKA Windows) put a lot of middle managers out of work.  They didn't stay idle for long. 

Now everybody's wondering about artificial intelligence.  Just like other technologies, A.I. will at least eliminate a lot of mindless drudgery — and will certainly render obsolete some job classifications.  But new fields of endeavor are likely to open up as well.  Researchers in the U.K. and elsewhere are already working on A.I. to improve the efficiency and reliability of medical diagnoses — another serious improvement in the quality of life.

Former House speaker Nancy Pelosi deserves special mention when it comes to economic fantasies.  During the recession of 2008, she made a public justification for a major splurge in the issuing of excessive unemployment benefits.  Not only did she extol the greatness of being able to live without working — and thus spending one's time painting pictures and writing poetry.  She went so far as to say that "for every dollar paid out in unemployment benefits, the economy expands by $1.25."  Were this even slightly true, we'd be so much better off if we all just stayed home, watched TV, and guzzled beer.  Hmmm, but then, who would produce the TV shows and brew the beer? 

I guess this is why they call it the Magic Kingdom.

Image: pasja1000 via Pixabay, Pixabay License.

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