Perhaps this is the time to teach, or at least keep as an example, how an economy works, to those who believe that rich people got there by taking money that could have gone to a poor person in a fairer system. We are in a situation where money is being lost, and it isn’t going to anyone. Some people are not much affected, if whatever their income is based on is not interrupted. I am considered “essential personnel” and have work. I’m not sure I actually am essential, but they have to draw the line somewhere, and danger increases if the hospital as a whole does not do what it does. There may be a very few businesses that do better – online entertainments, delivery services. I can’t think of much else.
There will be some pent-up demand that comes upon businesses as restrictions are eased, as folks want to buy cars or go out to restaurants. But some of the non-buying today occurs because people now do not have jobs that are paying them, and they don’t have money to spend. The restaurants and car dealerships are not going to make that up later. The money is just gone. You can frame that as being lost or as being never created, but either way it’s just not there. It is relatively easy to destroy value.
I hope the lesson can be turned to show that it is difficult to create value.
8 thoughts on “Scrooge McDuck In Reverse”
Yes that is what I will take away from this that rich people have it tough.
This comes about because our Best & Brightest have forgotten something that would be obvious even to a full blown village idiot — Production precedes Consumption.
The smart people have got confused about the role of money — facilitated barter — and have confused the Financial economy with the Real economy. In the very unusual situation of the Great Depression, Keynes may have been right about the problem being lack of demand and the solution being to promote consumption. But our Political Class has since used that as an excuse to spend “money” they don’t have, and run up debts they cannot repay.
It is interesting that the response of our Congress-scum to the problem they are creating with their own over-reaction to a fairly mild virus is — to print & spend more “money”. This will not promote more production — which is the basis of the real economy. Al their money printing will do is create inflation. To promote production, they would have to start rolling back the excessive regulations they have imposed and simplifying the tax labyrinth they have created.
Money is meaningless unless there is a capacity to produce. Imagine using a time machine to drop thousands of gold bars outside a cave where our ancestors are huddling, cold & hungry. Would the gold bars enable them to get an iPhone, or even a wholesome apple?
Production precedes Consumption.
California is about to get a lesson in Economics, Good and Hard, as HL Mencken would say. The state exists on Capital Gains taxes, which will be approaching zero unless the economy revives.
those who believe that rich people got there by taking money that could have gone to a poor person in a fairer system
An excellent point, AVI. It is an oddly widespread belief in Europe because they often view the economy as a zero sum game. In Britain, I encountered those who disparaged self-made men for being “piggies,” whereas they had no problem with those who inherited wealth (“it’s not their fault”). It was at that time that I grasped the point of old-school conservatives who used to characterize some viewpoints as “un-American,” because that surely was an example in point.
I’ve maintained that money is not wealth. Under ordinary circumstances, money can be used to obtain wealth, but that’s not the same thing. Wealth is usable stuff. If you’re stranded on a desert island, someone who has a Swiss Army knife is wealthy. Someone who has a suitcase full of hundred dollar bills is poor.
We are “harvesting” two terms of Chicago Rule, during which the FDA/CDC collected Power and issued Regulations but did nothing about testing or vaccines. Much of the Wu Flu testing in Asia was done with American products that the Feds didn’t bother to follow in case those would be needed here. Those agencies are pretty much worthless at this point. The last time those agencies looked good was in the propaganda video, “Contagion” (2011).
I enjoy the frustration of well “educated” Americans with the testing delays. Virus identification is irrelevant to medical therapy. Viral pneumonia is viral pneumonia. And even then, the tests I have read about involve wet chemistry and time. Ain’t no APP for that.
The utility of the $100 bills will be in relation to the abrasiveness of the local vegetation and possibly the proctolgical health of the individual.
Trying to separate essential workers from the non-essential generally comes down to the prejudices of the person making the decision. Restaurants appear non-essential to someone that works regular hours in a fixed location and can easily brown bag it. If they were a truck driver, on the road for 3-4 weeks at a time they would think a little differently. Imagine having to make regular 5-6 hour drives where you had no place to leave your car or to find a restroom. Every worker that was bringing in a paycheck was essential enough that someone thought it was worth paying them. This is the fallacy of the planed economy, none of the people that want to do it know diddly-squat.
During the post-9/11 period, I worked with a guy whose background was with USAMRIID, the US Army biowarfare complex. He was a commissioned officer with a microbiology Ph.D, and a lot of work experience at the labs.
Due to the typical Army idiocy of “managing careers”, they’d stuck him out in the “real Army” for a couple of years, where he was doing time as an NBC staff officer. While the whole anthrax thing was going on, we did a couple of staff exercises that left many of us at loose ends, and the usual amount of water-cooler and coffee ritual bullshitting went on. I’ve always taken the position that if the Army was going to put me in close proximity to subject matter experts, then by God, I was taking advantage of that fact. So, when possible, I always tried to pick as many brains as I could.
The interesting thing was, talking to him? He was deeply cynical about our preparation for any kind of major epidemic, and about the problems we had and have staffing the agencies that are entrusted with dealing with this crap. His main point was that the majority of the really competent types were getting out of government work simply due to the enormous amount of opportunity out in the biotech industry, and that the only people left behind were the timid, the incompetent, and the sort of bureaucratic apparatchik that you absolutely do not want running things during a crisis.
That was one point–His other was that there was a crisis of imagination. He advocated for just the exact sort of survey program that that doctor in Seattle was running, and which the “authorities”shut down. He also said we very badly needed formal infectious disease forward intelligence sites in Africa and Asia, in order that we be able to see these things coming before they get out of control. Not to mention, close monitoring of the biotech industry, and a better set of controls on things. Given that the Australian mouse pox research had just been revealed, and it scared the crap out of him, I don’t think he was wrong in that. It won’t be too long before the tools to do that sort of thing are available to your average high school biology class…
He’d written up papers outlining all these issues, submitted them, and gotten absolutely nowhere. There isn’t a mandate, no budget, and nobody perceives the problems until they’re wrecking the economy.
Overall, he was pessimistic that much of anything useful would be done by anyone, until it was too damn late. It was interesting to watch the trajectory of the H1N1 flu response, and remember those late-night conversations over coffee. I think we need to do a wholesale purge of these agencies, fire a bunch of people, and start over with something that actually works.
On the topic of biology and biomedical technology, I just read Tom Perkins’ autobiography, “Valley Boy” and he was the guy behind Genentech and Google’s public offering.
He was an amazing guy with an MIT BSEE and a Harvard MBA who went to work for Hewlitt and Packard when they were beginning.
To see how to get it spectacularly wrong, I would suggest the book “Bad Blood, about the Theranos fiasco.
The latter’s board was filled with lawyers and retired government types who know nothing about biology or technology
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