For My Grandsons

My Thoughts On Economics

My opinions about the economics of nations are formed only at the very highest level. Although I am capable of using statistical functions in spreadsheet programs or writing some short equations, I have little to no economic education. I watch with some amusement, though, how highly educated professional economists appear on televison and debate from opposite ends of the economic spectrum. If Economics was much of an exact science, I don't think their opinions could be so different.

I have developed my own theory, most likely overly simplistic. Many conservative economists and politicians argue that it is wrong to pay out more money than what is being paid in as taxes. I support this line of thought in so far as I have noticed other countries that have chosen to try and just print money to buy their way out of poor economies have simply caused runaway inflation, effectively lowering the value of the overall money pool to where it started by making each unit worth less. But, how then did the United States, Germany and Japan overcome huge war debts after World War II and become leading economies. The US has huge natural resources and was a dominant manufacturer after the war, but also had huge debts and had been stumbling through a Great Depression for years. Germany and Japan were in shambles, physically and financially. The supply of money, gold, silver, platinum, iron, water and so on was limited. Yet populations grew, more people went to work, more money was paid to them on paydays. Where did it come from? From never printing more money than how much was coming in as taxes? By never printing more money than there was gold or silver to redeem with it? I don't think so.

I believe the supply of money is driven by work. The harder and smarter the population works, the wealthier the nation is. I think it is perfectly reasonable for a government to upgrade roads, schools, airports and other infrastructure that supports growth. I think people who are not working should be put to work repairing and upgrading infrastructure, similar to what was done in the Great Depression, and given food and shelter in return. I don't believe anyone should receive government support for not working, unless they are too old, too young or physically or mentally unable. But, I believe that governments should try to provide useful work to the able bodied who cannot find it elsewhere, and help the young, old and physically and mentally disabled if they are unable to do any work.

The problem with economies isn't from spending all the money in the vault, it is people with no incentive to contribute. The wealth of the nation comes not from how much gold it has in the treasure chest, but how much each citizen contributes.

While I do not believe communism is a good economic system, if you stop and think about it with an open mind, it is the less affluent everyday folk who make up the bulk of the military, police and emergency services. The world is not inherently capitalistic, that is just the economic system that best supports human nature. But not always or in all ways. A few people are much better at capitalism than most others, though they are not necessarily better at everything. The few great capitalists need the millions of nice guys who don’t play as well at business to man the armies and the police forces, and it is fair they should have to put in a little extra for the lavish lifestyle their protectors help them enjoy.

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