Three Ridiculous Economic Ideas

Copyright 2009, John Manimas Medeiros

I am suggesting here that ninety percent of our economic problems are the result of three ridiculous economic ideas. These three concepts dominate our economic and social system. They are deeply entrenched doctrines, so entrenched that they are seldom questioned. Or, perhaps they are sometimes questioned in a person's thought, but such thoughts are seldom voiced. Such challenges are received as heresy, as an offense against God. They are immediately dismissed by the experts and the public alike.

Here are the three ridiculous economic ideas that cause nearly all of our problems:

1) An individual citizen sells his or her labor on the free and open market, just like a haberdasher sells shirts and just like the owner of a factory sells shoes, hammers or wagons. The price (wages) that the individual can get for his labor varies in accordance with the "invisible hand" of Nature acting out a complex and spontaneous reality in the world of supply and demand. The difficulty that an individual may encounter in selling his labor (a supply of labor), and being employed (when his labor is in demand), as opposed to finding no buyer (plenty of other labor hanging around) and being unemployed (no sale), is similar and basically the same process as the manufacturer who sells a lot of hammers one year, but few or none the next. This economic idea is advocated and believed by economists and bankers and investors and politicians because it was observed by economists such as Adam Smith and Saint John Maynard Keynes. That last name is pronounced "canes," as in "Let me beat you with my Keynes."

2) An entrepreneur, or inventor, or businessman, or industrialist, or commercial bank, creates wealth (but nothing else, just pure, clean wealth) by virtue of planning and executing a "business enterprise." This concept is like a swimming pool full of pride and the capitalist (the entre preneur) swims in it. This concept is however, pure manure, and that is what the capitalist (and the entre manure) and all of us going along are really swimming in. This concept is so blatantly ridiculous that it is a discredit to the human species. All one has to do is ask the question "What is wealth?" and the absurdity of this idea becomes obvious. Wealth is relative, and the whole onion of the foolishness of this concept is that no one, not anyone anywhere could ever explain how a person or a group of people could create wealth without also creating poverty at the same time. Let's start off with this opposing idea: If there is a tribe living in a community where wealth is measured in cattle, and every household in the tribe has one cow for each household member, then who is "wealthy" as opposed to "poor"? Who has more wealth than another? Wealth is relative. I dare you to demonstrate otherwise. Therefore, it is impossible to create wealth at point A without also creating poverty at point B.

3) The common motive for starting a business is to make a profit. What? You ask. Is this man crazy? How can one question the profit motive? The profit motive was not founded by Saint John Maynard Keynes; it was founded by “God“ or “Human Nature.” If people could not make a profit, nobody would do anything. No one would work or invent or create or contribute anything to society if they were not rewarded with money for their work, for their efforts, for the risk they took by starting a business (even if their lonely business was the god-forsaken business of selling their own labor). Sorry, but I can show you easily, if you have an open-brain policy, that it is only investors who allow others to use their money in exchange for the promise of a profit. The true and only valid motive for going into business, or to pursue any economic enterprise, has to be in order to meet a human need or compelling human desire. This brings to mind the old saying that "Prostitution is the world's oldest profession (business)," because that idea is consistent with the common perception that sexual hunger is probably the world's oldest human need, after food of course, except that most lovers (and strangers) eat after sex, not before. So then, my challenge in a capsule is that any business enterprise has to meet a human need in order to survive and sustain itself. If it does not meet a human need (or significantly compelling desire), then it has no customers and we all know that no customers means no business. In fact, even a rough examination of human history, especially our economic and industrial history, will show beyond any doubt that every successful enterprise began with someone's impulse to do something better than it has been done before, or to make something better than it was made before, or to make a new product that is better, or make an old product faster, or make it for less cost, or make something entirely new that has never been made before that is interesting and attractive and useful to people. So, they pay for it. The original purpose of the enterprise, the labor, the planning, the execution, was the human impulse to be constructive, productive, inventive, creative, industrious, to add to the wealth and convenience of the community. The entrepreneur, the manager, the inventor, the business owner all may make a profit, but they have earned their monetary compensation because they produced some thing or a service that people need or want. This is the primary motive. Think of the winemaker or cheese maker who wins a "blue ribbon" at a fair, or a medallion asserting that their product was the best in the land. Will they then sell more? Of course. But, my position is you have to want to make the best wine in order to do so. You cannot make the best wine if your goal is to make the best money. Those who want to make the best money do not try to make anything. They gamble at the gambling table that we call the "stock market." When a business owner emphasizes profit, reducing the costs of production and getting the highest price the market will bear, that is the beginning of the end of that business enterprise. A business that focuses on the perfection of meeting the customers' need is a business with a future. Every business that is managed by a board of investors will fail because its motivation is not a proper business motive. It is an investment motive. It is no longer a business enterprise; it is a financial enterprise, a stock market, a gambling casino that uses everyone it can and plays its games in factories and on farms.

For government to support such businesses is like having the taxpayers finance a gambler. Why should the taxpayers finance a lazy gambler? If you want to make the best car, make it and enjoy the rewards. If you want to make a profit, you are on your own. You wanted to use the community for your own gain, and you miscalculated. Life is tough when you live alone.

These challenges call for some further elaboration, and solutions:

Challenge #1: What is a more sensible interpretation of what the individual is doing when they are "looking for a job" that is different from the ridiculous idea that they are selling their labor on the open market?

Challenge #2: What is a more sensible interpretation of what occurs when an "entrepreneur" or any business enterprise gets started, enters into the marketplace, and buys and sells and "makes a profit" other than the ridiculous idea that the business has "created wealth."?

Challenge #3: What can we do to better articulate and cope with the subtle but meaningful difference between the proper industrious business motive to meet a human need and the acceptable investment motive to make a profit?

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