The Merits of Meritocracy

I remembered seeing a while back a statement that the United States has among the lowest rates of economic mobility of any industrialized nation. But for the longest time I could not find the reference nor the original source. Well, today I found an article that, if it is not the source of the original quote, it well could be. The economic mobility project, www.economicmobility.org, has published a number of reports on class mobility within the United States. Among them is some data comparing the United States to a number of other industrialized countries, mostly European. We are bested by seven other nations. The only other nation with a slightly more rigid class (caste?) system is Great Britain. On the other hand, many of the countries that are more meritocratic are markedly so. Canada has more than twice the mobility. Denmark, the highest on the list, is more than three times the American rate.

http://www.economicmobility.org/assets/pdfs/EMP_American_Dream_F3.pdf

Now some of the true equalizers among us would ask if that is such a bad ranking for the United States. They might argue that a society in which everyone is all about jostling to get one step ahead in the rat race isn’t the healthiest society. And while I might agree with that on some level, it is also observed in the same report that the historical levels of inequality in the United States are higher than they have been in many generations. So combining the two implies that the rich are getting drastically richer, and that for the most part, they are the same families who were already rich for the past couple generations. That does not sound at all equal or fair. The rat race may not be the highest priority in life, but the race should at least be a fair one where every rat has a fighting chance.

One interesting thing about this information is that it seems to be very strong evidence against the conventional conservative wisdom that a strong state (strong welfare state, strong regulatory state, high tax state) encourages dependency and squashes entrepreneurialism. If that were the case, then Scandinavian countries ought to be languishing in a backwater of class inertia, not multiple times more economically mobile than the good ole’ land of red, white and blue opportunity.* Correlation is not causation, of course, but one might be tempted to infer that a welfare state may actually help people actualize their potential and move to a different economic plane than their parents.

So, if our goal is to create a meritocratic economic system with a much higher level of equality of opportunity than our current one (which presumably would lead to a higher level of mobility because economic outcomes would be more authentically tied to effort), should we just beef up our welfare state? In some ways, yes. If people have their basic needs met then there is much more room to focus on more advanced impulses. Classic Maslow. But I’d rather have the economy do the work of providing stable, engaging, productive work and means of subsistence for its citizens. There’s always going to be some stigma associated with any forms of economic assistance, whether that’s deserved or not. (I see our welfare state as a failing of capitalism. Our economy should be able to provide enough living wage jobs for our citizenry and not to have to rely on government subsidies to keep the workforce alive by propping up poverty-wage or non-existent jobs. That’s the moral failing I see far more grievous than any “bad choices” on the part of the recipients of such assistance.) And there’s always going to be some sacrifice in dignity and autonomy when people ask for assistance. I don’t expect our public ideologies to change so dramatically that there will be huge turnarounds on those issues any time soon. If we as a society feel we are “giving” money to people who haven’t “earned” it, then we will feel entitled to intrude upon, judge, order around, and otherwise be disrespectful of the people we are “giving” to. So isn’t there a better way than that?

Even more importantly, how much human potential is being wasted by people spending significant portions of their lives struggling within a social service system rather than following their passions and putting their energy to productive uses?? Why as a society can’t we find better ways to tap into that human power and creativity and resilience?

I wish I knew of a better way. But clearly in a system where money makes money, those who start with it are going to be at an unfathomably big advantage. Something must be done to make the race more fair for the rats. Capitalism seems to be built to serve the needs of capital, and left uninterrupted it seems to create concentrations of capital (and thereby power). Those concentrations make the ideals of mutual benefit within the marketplace and equality of opportunity start to seem a bit shallow. And clearly, shallow is they are.

* Now, this isn’t to say that European countries don’t have some pretty significant economic problems right now. But didn’t the U.S. just shoot ourselves (and the rest of the world) in the foot with our free-wheeling, unfettered entrepreneurial investment creations??

Sawhill, Isabel and Morton, John. Economic Mobility: Is the American Dream Alive and Well? http://www.economicmobility.org/assets/pdfs/PEW_EMP_AMERICAN_DREAM.pdf Accessed June 17, 2010.

What do you know?

Here’s a quick exercise. First of all, imagine a typical Twin Cities suburban resident. Probably white, definitely middle class, probably with a family with two incomes. Now write down at least 10 things that this person “knows” about the Northside of Minneapolis. Please don’t censor the list; go ahead and include things that may be stereotypes or have racist or classist assumptions. (It’s usually the knowledge that we don’t want to acknowledge that is the most important to look at.)

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Consider the list. Do you know these things to be true? Not true? Partially true? Or do you not really know?

Now make a list of 10 things that you “know” about the Northside.

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Then consider your list. Where does that knowledge come from? Is it based on first hand experience? Professional training? Political beliefs? Is your knowledge influenced by the stereotypes that society at large has about the Northside?

Now specifically think about what you “know” needs to be done to improve life on the Northside.

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Where does that knowledge come from? Is it based on first hand experience? Professional training? Political beliefs? Is your knowledge influenced by stereotypes that society at large has about the Northside?

Knowledge is something our society trusts an awful lot (think about how much time and money we spend on education). But sometimes it’s a blind trust and we would wise to step back from our knowledge for a while to gain some perspective on it. In the Zen Buddhist tradition, this is described as living in a state of Unknowing. Bernie Glassman is founder of the Zen Peacemaker Order, a group of people committed to Zen Buddhist religious practice and active peacemaking in the world at large. Glassman says:

“When we live in a state of knowing, rather than unknowing, we’re living in a fixed state of being where we can’t experience the endless unfolding of life, one thing after another. Things happen anyway—nothing ever remains the same—but our notions of what should happen block us from seeing what actually does happen. We get upset because our expectations aren’t met. When we can let go of them we are in accord with things as they arise.

…This [unknowing] is very, very hard. Many of our members have spent years doing social action and have extensive knowledge in community development, ecology and the environment, education, the business world, psychology, social work, medicine, or the arts. In the past they believed that the way to become more effective was to know more. But when they join the Zen Peacemaker Order they train in unknowing, in unlearning all their previous conditioning and preconceptions about how to make peace… We help them develop the openness to see things as they are.”

Glassman later clarifies that living in a state of Unknowing doesn’t mean discarding all of our knowledge. But it does mean discarding our certainty that our knowledge is complete, or that our knowledge applies to whatever situation we have in front of us at the moment. Instead, living in a state of Unknowing means being open to experiencing what is in front of us at the moment, and then, and only then, determining if what we know can help us respond to the situation.

Stepping back from our knowledge can be especially important for allies. By definition, we allies are involving ourselves in things we don’t have complete knowledge about. We haven’t lived on the Northside. So our knowledge is a mixture of observation, things learned in relationship with Northside residents, preconceived beliefs, and stereotypes. Our development as allies should involve a constant openness to ideas or ways of doing things that may not fit our usual patterns and expectations. We must be open to being wrong, being confused, to having our judgments challenged. In short, we must be open to not knowing.

Father Wresinski, a French priest who founded an international movement to eradicate poverty, once said, “[Poverty] forces us to stay as we are—men and women to whom the poor can say, ‘You can do all you want but you will never be able to understand because you haven’t experienced what we are going through.’ If they couldn’t say that to us, we wouldn’t be forced to give them the right to speak… The volunteers and the allies have the task of transmitting what has been witnessed. However, we cannot transmit what we have not really taken in; we have to take time to reflect and internalize real experiences if we are to convince other people. Otherwise, very soon, we will lead another struggle, and it will be our own. Then the poor would be merely the objects of our combat; they would no longer be combatants or masters of their own cause.” As allies, recognizing what we don’t know helps remind us that we do not own the struggle, but are allies to the cause.

Sometimes situations arise that give us no choice but to face our own unknowing. When we stand at a peace vigil for a young person whose life has been extinguished much too soon, we can’t avoid being confronted with all that we don’t know about violence and its tragedies. But when we let go of our knowledge, we open ourselves to thinking creatively, and responding authentically to the world out of our instinctive compassion and hope.

Sources:

Glassman, Bernie (1998). Bearing Witness: A Zen Master's Lessons in Making Peace. Bell Tower, NY, NY.

Anouil, Gilles (2002). The Poor Are the Church: A Conversation With Father Joseph Wresinski, Founder of the Fourth World Movement. Twenty-Third, New London, CT.

Would-be graduation speech

Here is the graduation speech that I "auditioned" to give to my classmates at Macalester College. But I didn't get picked, so this speech never got spoke. I'm not bitter about it (you did a great job Rachel!!), but I still really like what I would have said, so I'm saying it here. And since it's about hope, it seems kind of obnoxiously ironic to post it on April Fool's Day. ;) I mean what I say about hope, though, no fooling!

Hello my fellow graduates of 2005, faculty, staff, family and friends. I am very grateful for the opportunity to speak with you today, and I would like to use it to share with you a quote that has been important to me. I read this a couple of years ago in the Utne Reader magazine, another venerable Twin cities institution. The article was an interview with Tony Kushner, who you may know as the writer of the play Angels in America, which was recently made into an HBO movie. The interviewer asked Kushner where he draws his hope from. And this was his response:

You don’t look at it [hope, that is] as a feeling state; you look at it as an ethical obligation. You look at it as the thing that you generate in yourself by recognizing that despair is a luxury. Not for everyone. Some people are really burdened by life, either because of chemicals in their brains or terrible personal circumstances or social circumstances that make despair inescapable. But most people in this country aren’t. And since most of us aren’t, we have an ethical obligation to look for hope and find it. It isn’t easy, but that doesn’t mean it isn’t there. In fact, if it were easy, it would be less valuable. It’s like the Jewish search for God. One of the Talmudic ideas for why it’s so hard is that you create its value by the difficulty of the search. We all do it. That’s what our struggle is. We wouldn’t get out of bed otherwise.

When I first read that, I had a ‘hmm” experience. Hmm! Incidentally, that is one of the highest praises I think one can give to a piece of art. “Hmm” means something has startled you, snapped you out of chewing your mental cud. We college students are very adept at information grazing, just sort of mindlessly stuffing it in. But every once in a while, something suddenly tastes different, new, and it catches our attention. It’s something to chew on, as they say. And this quote definitely earned a “hmm.” It stuck around in my head for months until eventually I had to dig the magazine out from the mountain of junk mail on my coffee table and copy down the passage for my quote board.

I think the quote impacted me so because it totally reframed the debate. Hope as an ethical obligation. I’d thought about ethical obligations before. Some rather banal, like I have an ethical obligation to brush my teeth so I don’t waste all that money my parents spent on braces. And others rather profound, like I have an ethical obligation to promote justice in the world, in whatever ways I can. But hope. Hope I’d seen as sort of the limiting factor in all of this. You work as hard as you can toward meeting your ethical obligations, as long as you have hope. But hope is fragile, fickle; it becomes a liability of sorts. If it unexpectedly runs dry, you and your ethical obligations are out of luck. You have no choice but to give up and retreat to cynicism.

But Kushner flipped that all around for me. After reading that quote, I realized that hope is much more than just something else you need to get the project done, like paperclips or a fax machine. No, hope is the project. Hope is what we work toward, because in and of itself, it is transformative. Jim Wallis, who spoke here at Mac a couple of months ago, said, “Hope is believing in spite of the evidence, and then watching the evidence change.” Hope is what gets us out of bed in the morning, and hope is what changes the world.

So what does that mean for us here today? It means we have a project as we go out into the world to nurture hope in ourselves and to create environments that nurture hope in others. Do we have adequate preparation for this project? I’m not sure. We’ve been told time and time again what a good education this institution provides, ever since that first recruitment letter arrived in our mailboxes, up until today. And it’s true! Attending Macalester is a unique privilege, one that we’ve been lucky enough to have. The things we’ve learned here, the people we’ve met here have given us many skills to do amazing things in this world. But other skills, things like generating hope, are much less tangible. They don’t show up well on a syllabus. They’re hard to teach, and hard to learn. But they are the most important. I’m far less interested in our potential to be doctors, lawyers, presidents, whatever, than our potential to be decent, hopeful human beings. That is truly our project, whether we’re doctors or lawyers or teachers or business people or store clerks or pizza delivery guys. That’s our project as friends, as partners, as parents. It’s our project as citizens of our respective countries. And if we can complete our project, and learn to be hopeful, we will have accomplished something great.

I’m not going to tell you what to hope for, because that would be presumptuous. Nor am I going to tell you how to find your hope, because unfortunately I don’t know. I will simply tell you to believe that the value is made by the difficulty of the search. Have hope, spread hope, and if all else fails, brush your teeth.

Thank you for a great four years, and congratulations!

Tea Parties with Aristocrats (or not)

I have never understood how somebody who isn't rich could support conservative economic principles. I've always been baffled by the fact that people who work so hard to keep their families just barely above water could be supporters of the "free market." How could it not be blindingly obvious that the free market is a tremendous bully that doles out foreclosures to some and mulitple, multi-million dollar palaces to others? How could any human being be so superior to others that they deserve that kind of extravagance? How could any human being be so inferior to others that they deserve that kind of marginalization? And how could so many Americans not see through that?

I assumed that the only way this could have happened was that conservative politics roped people in with "social" issues, things like abortion or gay rights to which people had strong emotional and religious connections. Then the conservatives put their economic policies in the fine print and asked Americans to sign on the dotted line with assurances that the rest was just technical details. Call it the predatory lending style of political consensus building.

But the tea party furor doesn't really support my theory. Here is what appears to be a grassroots movement of hard-line conservatism that is animated precisely by economic issues.* These people have read the fine print, and they love it! So what gives?

Reading Politics of Inequality has given me perhaps a little more intellectual sympathy for the right wingers. Michael Thompson talks about how the fundamental impulse of the American Revolution was a rejection of European feudal society. America was going to be this bold new experiment in democracy. It was supposed to be the antithesis of aristocracy and entrenched political/social/economic power. This was a country of free individuals able to pursue their own destinies as individuals and as a new society. And this was a republic built on contracts, freely entered into: a social contract with the state, and economic contracts between individuals. Contracts meant choice and control and fluidity, as opposed to systems built on feudal obligations and encrusted tradition.

In some contexts, these ideas from our founding fathers (and mothers) make me feel gosh darn patriotic. When discussing political rights, I am as heartily anti-aristocratic as the next American. Birth should not determine one's right to participate in the political process. Where I begin to take issue is the assumption that our economic system guarantees a similar level of freedom and access. I don't believe that it does, or ever did. However, I can see how the anti-aristocratic sentiment could spill over into the economic sphere and rally people's support for "free" markets. There could be some people out there who feel that government attempts to intervene in the economic system amount to state interference in those private contracts we hold so dear. And if the government seems like some external, alien force run by disconnected elites arbitrarily impinging on your freedoms and taking your hard-earned property... well, that sounds alarmingly like an aristocracy. In this particular instance it happens to be an aristocracy that claims to have the common good of the public as its chief interest, but that's rhetoric that I don't even always buy into.

So it makes good sense that the tea party people have derived even their very name from an event of the earliest days of our republic's founding. They are hearkening back to a very fundamental American ideal of individual liberty against entrenched elitism. I still disagree with them quite intensely, but at least I can see a little more common ground. Although I heard a suggestion on the radio this morning that if we really want people to come together to discuss ideas and work out their grievances that we should have a beer party to lift people's spirits a little more than tea. Gotta say, I kinda like that idea!

*At the same time, liberals, in an effort to shore up an eroding economy, are looking more pro-business than I ever recollect seeing. But that's a topic for a different day. Actually, I already wrote about that. http://woperchild.blogspot.com/2009/06/perverse-production-incentives-and.html

Thompson, Michael. The Politics of Inequality: A Political History of the Idea of Inequality in America. New York: Columbia U, 2007.

The Radicalism of Adam Smith??

I have thought for a while (at the very least since reading The Divine Right of Capital by Marjorie Kelly) that a true revolution of the economic system to one that is more just will take an ideological shift as significant as the shift from monarchy to democracy. So I’ve thought sometimes that some of those classical texts about individual political liberties (Locke and Mill and all the others) could be well translated into a fight for individual economic liberty. But apparently, there may be a lot less translation necessary because those writers explicitly addressed economic liberty. Politics of Inequality by Michael Thompson traces the theme of economic inequality in the writings of political theorists throughout American history. He finds that there has been a consistent, if outnumbered, sect among the theologians of American democracy who have argued that severe inequality is no only a problem morally, but also a threat to the success and stability of our democratic system. They saw that government had a responsibility, therefore, to address inequality in order to protect and sustain itself. Economics was seen as a tool to maintain a healthy state, not the other way around. Pretty cool!

Now my one hesitancy with this book is whether it puts some of these classical theorists a bit ahead of their time. So for instance, it quotes a couple fun passages of Adam Smith about how laboring people should be treated fairly, and about how the political systems tends toward protecting the interests of the rich and so forth. However, as Thompson himself points out, the radicalism in Smith’s day (about the same time this country was being founded) was about an emerging middle class defending its own right to enjoy the fruits of its trading labor, since that new mercantile class was becoming a more and more prominent part of what had previously been a static, rigid, aristocratic agricultural economic system. There had always been traders, but they had been more or less on the fringe, since most economies were extremely local and self-sufficient. But as technology improved and trading became both more possible and more enticing, and as the money system loosened up, here came the capitalists. So Smith’s radicalism was about fighting for this emerging group to be recognized as a legitimate part of society, and in fact a contributing class of society. And, of course, that is still the archetypal hero of capitalism—the small scale entrepreneur.

But even as Smith saw the capitalist class breaking through the futsy aristocracies of old, he certainly wasn’t imagining any sort of socialist paradise where prosperity was shared by all. He saw the majority of people belonging to the laboring classes who, in a mature economy, would earn wages not too far above subsistence level. Now, as a matter of morality and political stability, he may have argued occasionally for the laboring classes to receive at least the bare minimum of human dignity (he was against slavery as an example). But he never imagined that his system of “perfect liberty” would give them any substantial levels of economic opportunity.

And should he have? He was already pushing the envelope, or at least describing how the envelope had already been pushed in a more cogent summary than anyone had achieved before. So can we cut him a little slack for being a product of his times? I’m willing to do that. But that means, as Robert Heilbroner points out in his introduction to excerpts from Wealth of Nations, that then we have to take his more radical sounding tidbits with a grain of salt. We have to realize that he could say what may sound now like radial socialist propaganda, but he could say that without being very inflammatory precisely because he never would have imagined that there could ever be a marked reorganization of society to benefit the laboring classes. So he could talk about how oppressive the wealthy class is not as an argument to overthrow them, but as a plea to the wealthy class to moderate their oppression. He just took it for granted that they would always be in a position to be severely oppressive if they so chose.

So then for Thompson to claim that there’s been this deep strain of interest in economic equality throughout Western and American thought seems a bit of a stretch. Are we talking about real radical equality here, or are we talking about a desire on the part of wealthy people to mollify the underlings enough so they don’t make trouble? Because if it’s the latter, undertaken by wealthy classes whose bottom line interest was preserving their own wealth and power from disturbances, then they don’t get a whole lot of credit for wanting “equality” in my book. When you say that inequality is at heart a political issue because it creates inequities in power, than the just position is to be defending individual liberty (of all individuals) against abuses of economic or political power, not conceding just enough to maintain the security and influence of the powerful. So while that doesn’t necessarily have to mean equality of outcome, it does need to mean equality of something. Not just a bare minimum of human dignity.

Thompson, Michael J. The Politics of Inequality: A Political History of the Idea of Economic Inequality in America. New York: Columbia, 2007.

Smith, Adam. Wealth of Nations, An Inquiry into the Nature and Causes of the. In Heilbroner, Robert (Ed.) The Essential Adam Smith. New York: W.W. Norton, 1996.

My definition of an ally (to people living in poverty)

Essential definition:

An ally is a person who has not experienced long-term poverty, but actively seeks to partner with those who are experiencing or have experienced long-term poverty in order to end it. An ally develops personal, responsible, and mutually beneficial relationships with people who have experienced long-term poverty. These relationships are not necessarily friendships, but are at least respectful working relationships bound together by a common goal of ending poverty.

Essential to MY definition:

An ally supports the self-determination and self-efficacy of groups and individuals who have experienced long-term poverty, and as much as possible tries not to exert power over their decision making.

Secondary to the definition (definition of a GOOD ally):

An ally takes active responsibility for his or her own learning about classism and other forms of oppression in society. An ally tries to learn as much as possible directly from communities that have experienced poverty (allowing them to speak in their own words rather than through middle class “expert” conduits), but does not passively wait to be “educated.”

An ally believes that poverty is caused, at least in part, by systemic inequalities within our social/economic/political system, and is not solely the result of individual behaviors. An ally may work on assisting individuals, but understands that truly ending poverty will require adjustments to the system in which we are all a part.

An ally understands and takes responsibility for his/her own participation in an unjust social system which grants him/her privileges solely by virtue of his/her economic status. An ally does not deny privilege, neither believing that privilege does not exist, nor that he or she has erased their personal privilege by lifestyle choices. An ally may decide to make lifestyle choices to contribute less to oppression, but privilege is always there by virtue of personal histories and being a member of society. An ally accepts this, and is not paralyzed by guilt over inescapable privilege, but seeks to use privilege responsibly to expand access to all.

Money mulitpliers and economic parasites

One of the fathers of modern day economics, David Ricardo, was not a big fan of landlords.* He believed that they were an unfortunate drain on a productive economy. They were only involved in the economy by virtue of their ownership of land, which of course was (is) a necessary factor of production. So, as recompense for their ownership, a landlord charged rent to anyone who wanted to produce something that originated from the land. In Ricardo’s view, this was a drain on the overall economy and was unjust because the landlords did nothing productive—they simply sat idly on their ownership and profited from it.

In the modern era, land was privatized so long ago (at least in the Western industrialized world) that resentment has dimmed against its owners for unjustly privatizing what had been commonly owned. And these days, agriculture is increasingly concentrated in the hands of a few large corporations that direct the entire process of production of food and other natural goods. So a class of idle landlords, remnants from a feudal era, have been replaced with a class of agricultural industrialists distinguishable from other industrialists only by the sector of their activities.

But the general principle of an idle class of owners may still be very relevant to the modern era. In today’s economy, the scarce factor of production for industry appears to be credit. Money. Financing. And that, of course, has to be borrowed in one manner or another from somewhere.

I must admit that I find finance and banking absolutely baffling. Even the relatively simple concept of a money multiplier seems baffling. If I put my $100 in a bank, they’ll lend out $80 of it. Now, I believe I have $100 to spend, and someone else just got a loan so she has $80 to spend. Now the economy magically has $180 in it. And this continues ad inifinitum because that person with $80 will put it in her bank (or spend it and the seller of goods will put the $80 in his bank) so that bank can lend out another $64 of it. Now the economy has $244 to play with. Crazy!

Now this only works because the bank knows from experience that only about 20% of the people who have deposits in the bank are going to come in on any particular day and ask for their money (or people will only request 20% of their deposits on any given day—same difference). If we want more, we’re out of luck, at least until we appeal to the FDIC. Because the rest of our collective money is gone, out working in someone else’s interest.

The stock market is an even more baffling manifestation of the same concept. If I put my $100 in the stock market instead of a bank, I’m going to expect that when I’m ready to take it out, my investment will be worth more than I originally put in because someone somewhere will be willing to pay more for my stock, based on the assumption of still further growth. So if I see that my stock purchase of $100 is valued at $150, I will feel as though I have $150 dollars in my possession. Just like the magical bank example, money has mysteriously grown from nothing. And like the magical bank example, this only works when more people want in to the market than want out. If too many people try to simultaneously cash in on their earnings, the market will collapse and those earnings (and much of the original investment) will disappear.

Unlike the bank example, no one has any responsibility to pay anything back, however. In the case of the stock market, I am in a sense “loaning” my $100 to a company for its responsible use in the course of doing its business. But unlike that $80 loan that the bank made based on my deposit, the money I shared with the business never has to be paid back. Rather than expecting the loanee to eventually pay me back (with some interest as recompense for my willingness to part with my money for a while), I am expecting that I will be able to recoup my investment by passing it along to someone else.

I can understand the concepts simply enough, but it just strikes me as fishy, because it feels as though these magical multipliers are unaccounted for in the elementary parts of economics where everything is about goods and services and economies actually produces stuff rather than just figures on paper. There are these nice, neat little models in the book that show circular flow between businesses and individuals.** Consumer spending becomes business income when we buy firms’ goods and services. Businesses then use that money to purchase the things they need, the raw materials, labor, etc. that they use. From whom do they purchase these things? From individuals who own them, of course, so we’re back where we started. Even business profits go to the individuals who own the business—outright or as stockholders. So now individuals have more money for consumer spending, which becomes business income, which businesses use to buy the things they need, and the oceans evaporate and form clouds, which rain and water falls back to earth, where it collects in rivers and runs out to the oceans, where it evaporates and forms clouds which rain and water falls back to the earth… In economics or climatology, it’s a nice little model well suited to fourth grader diagrams. But it’s a closed system, where money is finite like the number of H₂O molecules on this planet. And that doesn’t jive well with magical multipliers. Unlike water, money apparently is not permanent and finite. It is not constantly moving through this neat little diagramable system of purchase of goods and services and factors of production. It occasionally gets diverted into shadowy underground reservoirs where it inscrutably reproduces itself and bubbles back into the economy through untraceable springs.

Then, the question becomes, how could one incorporate these reservoirs into our neat little diagram? And what is the overall effect? Are we at a net creating value for the economy, as measurable in the actual goods and services and labor we are able to produce/employ (since these concrete things make up standard of living, and as such matter much more to the common person than abstract figures on paper)? Or, like rent to a landlord, are we diverting money out of the productive parts of the economy to simply reward idle ownership? Since the systems of bank multipliers and stock transferability only work when a majority of the population leaves their deposits/investments untouched, wouldn’t it seem as though we might be better off keeping our money above ground?

These are some pretty huge questions that probably require a more sophisticated knowledge of the financial system and macroeconomics in general than I have to answer. If anyone has figured it out, please tell me. I will simply leave it at: I’m suspicious. Having seen the recent devastation of the reservoir caving in (in the form of the financial crisis of confidence that sparked the recession), I wonder if the financial system is truly a life giving part of our economy, or a parasitical aspect that we all put up with because occasionally we are rewarded with our own little allowance of blood money. If so, like all parasites, we unwittingly run the risk of killing our host, or at the very least, sapping its vitality to a point that benefits no one. Let’s hope we’re smarter than that.

*Heilbroner, Robert. The Worldly Philosophers: The lives, times and ideas of the great economic thinkers. Rev. 7^th Ed. New York: Simon & Schuster, 1999.

**Downey, Matthew. Contemporary’s Economics. Chicago: McGraw Hill Wright, 2007