Tuesday, January 23, 2018

You wanna count what?

Somebody once explained to me that the growth of debt (back then) was probably due to the increase of women in the workforce. When women were not working they couldn't even get credit. When they went to work they could and did borrow, could and did accumulate debt. Thus the increase in debt.

So: More people in the economy, working, and more people in the family, working, and still people had to take on more debt? I did not find "women in the workforce" to be a satisfactory explanation of debt growth.

It should be obvious that if there is debt, somebody must have borrowed it. You can take the "somebody" and give it a penis or not, if that's your thing. But if there is debt, I know that somebody must have borrowed it. For me the important thing is how much debt is out there and how much it costs the economy. Not whether the borrower has a penis.

When Keynes wrote his General Theory, the first of "three perplexities which most impeded [his] progress in writing" was "the choice of the units of quantity appropriate to the problems of the economic system as a whole."

Let me repeat that: The choice of units appropriate to the problem of the economic system as a whole.

After some preliminary thoughts, he said:

In dealing with the theory of employment I propose, therefore, to make use of only two fundamental units of quantity, namely, quantities of money-value and quantities of employment... It is my belief that much unnecessary perplexity can be avoided if we limit ourselves strictly to the two units, money and labour, when we are dealing with the behaviour of the economic system as a whole...

Money and labor. Not genitalia.

You could make the argument that not all genders receive equal pay for equal work, and that not all races have equal unemployment rates. I would accept these arguments as true. But the problem is not solved by making unemployment equal and high. The problem is not solved by making pay equal and low.

It will be easier to solve the economic problems of non-economic subsets of the economy if the problems of the economy as a whole can be solved. If we fail to solve the problem of larger scope, when historians one day look back at us, some will surely think it was "equal pay for equal work" that caused the fall of our civilization

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