Home > All, General Rants > Economists – wherein the most important syllable is CON

Economists – wherein the most important syllable is CON

December 22, 2010 Leave a comment Go to comments

I received one of those reports by serious economists commissioned by serious security firms for serious money. You’ll know the sort I mean. They state that if only we adopt this technology, or stop those bad practices, or prevent these bad people, then we’ll create this huge amount of wealth: probably enough to pay off European and North American national debts in just a few years.

Well, with all due deference and respect: baloney. You cannot create wealth. You can print or mint money – but that’s not wealth. Money is nothing more than a promise that is continually broken through inflation and devaluation.

I want you to consider the nature of wealth, and where it comes from. It is represented by money, but it is not money. It comes from trade. But where does trade come from? It comes from surplus food production.

Think about this. If you couldn’t go to the shops to buy food, you’d have to spend your time farming, hunting or gathering. It’s only because our farmers produce more food than they need for themselves that the rest of us have time and capacity to engage in manufacturing and trade. The better we are at the trade that is allowed by surplus food, the wealthier we become. There is, therefore, a direct relationship between wealth and food surplus: in fact, wealth equals food surplus. That is, there is a finite amount of wealth in existence at any time; and it is proportionate to the food surplus produced by the farmers.

If you think I’m wrong, try this thought experiment. Think of any industry you like, and imagine it ceases to exist for a year. Will the human race survive? Now cease all food production for a year. Will the human race survive? Quite simply, nothing whatsoever can increase wealth unless it increases or improves food production, upon which all else is built.

So what are the economists on about? ‘Economy’ as a science is simply the explanation for, and sometimes the facilitation of, the redistribution of the food surplus. Adopting this new technology will not increase wealth, it will redistribute what already exists. The difficulty with this approach is that if everybody adopts the new technology, then it will redistribute nothing – everything remains the same. That doesn’t mean you shouldn’t bother with the new technology; because if you don’t and your competitors do, then they gain advantage and the redistribution of wealth is from you to them. You lose.

So this is the contradiction in economic predictions. Adopting a new technology will not create wealth for you. It might redistribute the wealth of your competitors to you if you adopt and they do not; or it might redistribute your wealth from you to them if they adopt and you do not. It’s just a carousel of fallacious wealth – and the only group virtually guaranteed to accrue other people’s wealth are the eCONomists themselves.

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