Transfer of Money Parodoxes

[alan2here]

I often think that people think that the mear action of moving money around makes the world a better place.

 

Here is a theoretical and rather simplified economy to show my point.

 

 

 

The only requirement in my economy is food

 

Trawlers take little wooden spoons and sift though soil preparing it for planting seeds that will grow into plants.

 

trawlers

50% (half of all people)

 

other farming

50% (half of all people)

 

employed

100% (everyone)

 

output from farming relative to the population

80% (so 20% go hungry but 80% get enough food)

 

hungry people

20%

 

 

 

The plough is invented[edit], ploughing is more efficient than trawling so less ploughers are needed to get the same result.[/edit]

 

trawlers

0%

 

ploughers

10%

 

other farming

50%

 

employed

60% (40% now unemployed)

 

output from farming relative to the population

80% (exactly the same, only now there are spare people to do other stuff)

 

hungry people

40% (double)

 

The relative difference in hungry people creates the illusion that things are going really badly where as actually things are 40% better (40% of people are now unemployed and the output from farming is the same, so we should be 40% worth of effort better off)

 

The 40% better difference is real and the 20% worse difference is only economic. Amazingly the money moves about in a different and less productive way even though things should be better.

 

This leads to the argument that there should be more jobs, people rarely argue the case for more efficiency therefore by it's very nature less jobs even though this will eventually improve things for everyone.

 

During the depression everyone wanted work, everyone was working really hard as nobody wanted to loose there job, where as now many of us are lazy and leach, somehow things where bad. The fact that everyone wanted a job and everyone was willing to work really hard should have made things great, some time afterwards the economy picked back up again and then should have started falling as everyone got lazy again, however the economy does now work like that, something screwy was happening economically, the cogs in the big machine had got stuck and it didn't reflect the real world but it did effect it.

 

If the economy (the way money gets shunted around) is to some day work 100% well and the real world stuff is to stay the same then could we have enough for everyone to live like kings?

 

I think it would be quite nice to use something real as currency, like gold, only it would have to be something that cant be (to use a hacking term) spoofed, like silver (as nothing is more electrically conductive at room temperature), that would make for a rather impractical test, it's just one example. Another nice thing about using something real is that anyone could produce money, by it's very nature it would take as much money to produce it as it is worth and require no costly regulation.

[Klaynos]

The relative difference in hungry people creates the illusion that things are going really badly where as actually things are 40% better (40% of people are now unemployed and the output from farming is the same, so we should be 40% worth of effort better off)

 

Surely the output from the farm is reduced, but it's efficiency remains the same? The difference is important as shown.

[alan2here]

nope, the plough allows more work to be done quicker by less people than the old trawler method. Simply replacing 50% trawlers with 10% ploughers

[Dak]

Surely the output from the farm is reduced, but it's efficiency remains the same? The difference is important as shown.

 

in each case, the farm produces 80% of the population's dietry needs, so assuming the population remains constant the output is the same, but efficiency is greater.

 

The relative difference in hungry people creates the illusion that things are going really badly where as actually things are 40% better (40% of people are now unemployed and the output from farming is the same, so we should be 40% worth of effort better off)

 

The 40% better difference is real and the 20% worse difference is only economic. Amazingly the money moves about in a different and less productive way even though things should be better.

 

This leads to the argument that there should be more jobs,

 

there probably would be. when everyone needs to work on the farm, then everyone is employed as a farmer (and i doubt 20% would agree to starve, more likely everyone would eat 80% of a good diet); when only 60% of people need to work on a farm, then that frees up 40% of the work-force, who will likely get jobs doing something else: building, gathering rubbish, cooking, entertainment, science, etc.

 

OTOH, if you were to argue that, eventually, most things will be automated and there wont be enough jobs to go around then you might want to look into technocracy, which is a theryoretical solution to the theoryoretical problem you describe.

 

I think it would be quite nice to use something real as currency, like gold, only it would have to be something that cant be (to use a hacking term) spoofed, like silver (as nothing is more electrically conductive at room temperature), that would make for a rather impractical test, it's just one example.

 

why would a standard barter-material be better than currency?

 

Another nice thing about using something real is that anyone could produce money,

 

everyone can produce gold?

 

by it's very nature it would take as much money to produce it as it is worth and require no costly regulation.

 

hang on.... why bother producing it if it's not profitable?

 

as for costly regulation, whatever you're using as currency you'll be subject to inflation and devaluation, (probably) requiring regulation to guard against.

[alan2here]

there probably would be. when everyone needs to work on the farm, then everyone is employed as a farmer (and i doubt 20% would agree to starve, more likely everyone would eat 80% of a good diet); when only 60% of people need to work on a farm, then that frees up 40% of the work-force, who will likely get jobs doing something else: building, gathering rubbish, cooking, entertainment, science, etc.

People still argue the more menial jobs argument where there is a shortage of skilled workers. "Don't spend recourses educating people when you could have them all work in a factory doing jobs that really ought to be automated and everyone can be employed" only they never word it like that.

 

technocracy

wow :¬) thats the key, someone make a technocracy political party please

 

why would a standard barter-material be better than currency?

At the moment there is an issue with banks and interest rates, people want the banks to change the interest rates to make them better, apparently this will make lots of people better off. This is the sort of economic issues that having a currency that is not just a set of rules like a scoring system with complected inter-country laws would solve. Please see the last paragraph in this post for more detail.

 

everyone can produce gold?

Everyone could make the gold into blocks\coins and distribute it. Not everyone would have gold and initially the mining community and jewelers would become very wealthy, this is not such a good thing, gold was just an example. At the moment a coin or note only represents the wealth.

 

hang on.... why bother producing it if it's not profitable?

The first few will be very profitable, the first one will represent all of the world wealth, after some length of time it will become not profitable, like when we have used up all the easily accessible gold.

 

as for costly regulation, whatever you're using as currency you'll be subject to inflation and devaluation, (probably) requiring regulation to guard against.

Deflation would only happen if people started loosing there gold (for example in the oceans) and not being able to recover it, unlikely this will happen very quickly or the rate at which it happens will change much. Importantly inflation would only happen when more gold was discovered, never for political reasons. No regulation is required if we can find a way to prove that it is gold, every shop would have to have a gold testing machine.

[alan2here]

bump

[Severian]

I don't think I am understanding your economy. Who decides who gets the food? Is it just divided among everyone equally (whether they work or not)? If it is, then only 20% go hungry in the second example, since you produce exactly the same amount of food as in example 1. Or are you saying that only those who work get food, so 40% (who don't work) go hungry while the 60% (who do work) have an excess.

 

In fact, the rational thing to happen in example 2 (assuming an infinite supply of ploughs and fields) is that you would scale up production to keep everyone employed. 100% employment would then mean that you produce 100/60=1.66 times as much food, so you are then capable of feeding 100*80/60 %=133% of the population. Then you can either store the extra grain or allow population growth.

[alan2here]

In fact, the rational thing to happen in example 2 (assuming an infinite supply of ploughs and fields) is that you would scale up production to keep everyone employed. 100% employment would then mean that you produce 100/60=1.66 times as much food, so you are then capable of feeding 100*80/60 %=133% of the population. Then you can either store the extra grain or allow population growth.

 

Hooray :¬) Yes, thats it. Great idea isn't it.

 

In the end everyone is more happy than before. In the real world the loads of employees at the car factory tend to not like it when all there jobs are replaced by a robot that does it all for them and is operated by one engineer, maintained by another and built by a small team of other engineers. In the long run more programmers, scientists and engineers and less people who love to do tedious manual work would make the world a much better place. This is a bad example as car factory's tend to do this, lots of other areas don't though.

 

It's understandable to think of personal gain beyond a better future, I think everyone probably does it to some extent.

 

lots of people not working has problems such as the ones indicated in the last post, how do you share the money out fairly and not end up with all the problems of communism? For this to happen I think the world needs to almost be able to tick over without to much work people need to be paid for (as opposed to work people do only because they enjoy it), thats not going to be the case for a long time.

[Severian]

Well, this was a hypothetical situation. One can imagine other setups which would be disadvantageous. For example, imagine that there were a shortage of fields, so production was not increased, and the food was only distributed to the people who worked for it. Then 40% of your population will starve while 60% have plenty. I would not regard this as an advantage over the first example.

 

So one has to be careful to consider all the factors.