4/16/2012

The Road to Plentiful

The western world is awash in debt.

Why?

The world does not understand the economic concept of scarcity.

“The first lesson of economics is scarcity: There is never enough of anything to satisfy all those who want it. The first lesson of politics is to disregard the first lesson of economics.” Thomas Sowell

We have all been told by the purveyors of consumer credit, advertisers, and governments that there is no such thing as scarcity. We deserve everything and we deserve it now.

We are entitled.

So the road to plentiful starts with spending every penny we earn and then borrowing every penny we can borrow. This is now the norm. Saving money is something old people used to do, no longer relevant to a "modern economy".

Now once we spend every penny we earn and borrow every penny we can have we now found the limits of plentiful? Other wise known as scarcity.

Of course not.

We find someone to blame our temporary scarceness on. It's the bank's fault, the government's fault, my parent's fault, my employer's fault, my realtor's fault, my spouse's fault, my neighbour's (the Jones) fault, anyone but me.

We not only blame we demand reparation. We demand our bank lower the interest rate, forgive some principal. We demand the government "stimulate" us. We demand the government take some money from rich people and give it to me. We riot in the streets, we burn our neighbourhood stores, we fight with the police. We get a divorce, now that really solves your "temporary scarceness".

If all that fails to put us back on the road to plentiful we wrap the whole world up in a blanket of blame and declare bankruptcy.

Aha.... free at last.

Now we still have our job, we are free to spend again, we wait a few months, we borrow at an enormous interest rate to buy something that "repairs" our credit history.

This actually does work, credit card offers start arriving in the mail again. Scarcity is gone, we knew it, we knew there was no such thing, we are not only back on the road of plentiful, we are in the fast lane.



Scarcity requires individuals to make choices. If individuals make the wrong choices there are consequences. There have to be consequences or individuals will continue to make the same mistakes over and over.

There used to be debtor's prisons.

"Although a free market economic system is sometimes called a profit system , it is in reality a profit and loss system, and the losses are equally important for the efficiency of the economy because losses tell producers what to stop doing, what to stop producing, where to stop putting resources, and what to stop investing in." Thomas Sowell

Governments react, they don't think, they bail out some, they let others fail, they decide.

They destroy economies.

Choice requires thought and discipline.

So do elections.

6 comments:

Jules said...

The last time I said the same thing, I was called a cold and unfeeling bitch. When I lose money trading, and when I accidentally leave pages like "Do You Secretly Want to Lose All Your Money" opened, D thinks I am trying to make us poor to make up.

Solfest said...

You're not cold and unfeeling, capitalism is cold and unfeeling, and it's the best we have.

There are winners and there are losers.

Deal with it people.

DT233 said...

CHARTS! CHARTS! CHARTS!

Solfest said...

Where?

Anonymous said...

You would love Herbert Spencer (I don't!)...

If they [the poor] are not sufficiently complete to live then they die, and it is best that they should die.

He (to massively oversimplify) applied the theory of evolution to pretty much anything and everything, which I think makes AIG a dodo.

L&W

Solfest said...

You miss the point. If we let capitalism do it's job the "poor" will be better off, there will be more jobs.

I used to be "poor", I just didn't know it at the time as I was too busy working.

AIG should have died along with every other company that was bankrupt in the "crisis".