I admit that I do not understand economics. I suppose I’ve had about as much education in the matter as anyone else (that being just about none). But many things are fun to think about, and hopefully I don’t overstep my knowledge.
One question gets me a bit interested in the entire subject of economics: where does our money come from? This seems rather pertinent because lately people have been quite surprised when the money has stopped showing up.
I’m sitting in Bradbury’s and I have purchased some whole bean coffee and a cappuccino; it came to about $14. I charged it to my credit card; they pay for it right now and I will get a bill in a month. Then I will have the money deducted from my bank account. Where does that money come from? Every month the university deposits money into that bank account (I’m employed by them); the money shows up every month and, because I’m salaried, it is deposited regardless of the work I do (this is an interesting experience given that in all my past jobs I had time sheets). This money comes from a university grant that my professor applied for and which he now controls. The grant money probably comes from donors and the state budget. We can then follow this even further and think about how the taxes people have paid, and the wealth some rich people have acquired provides me this cappuccino, but that would get pretty boring…
So, to put things simply: I have a patron. This is a relatively simple income source, compared to many others; I am paid at the convenience of someone who likes the work I do in his lab. If this ceased to be the case, the money would no longer be deposited into my bank account. Officially (or is that unofficially…) it took me a little less than an hour to ‘work’ for this trip to the coffee shop, but I would be hard pressed to actually show what I produced in that time. Academia is an odd place, after all.
Most people, especially those who work for private companies, are paid in a more complicated fashion. Say you inspect laptops for Dell. Your job is to make sure a random sample of laptops actually boot (I’m not sure if they do quality assurance in this way…but the particulars of the example don’t really matter). You get a paycheck from Dell every 2 weeks. This money comes from the various bank accounts in the possession of Dell and that money probably comes from a number of short term loans and indirectly from people who buy computers. Of course we can follow the chain of money further and find out where these customers got their money from in much the same way as we looked at my purchases here at the coffee shop. This simply becomes a mess. In a simpler economic system we can pinpoint our income source quite easily; I might grow my own food and barter a small amount of my crops to get some more complicated items. But at the end of the day my basic necessities are produced by myself (or more precisely my interactions with the world). This is not the case at all in our economic system.
Very few of us produce anything that we can use, if we even produce anything at all. And of those people who do produce things, most of them don’t own what they produce; they provide their labor in exchange for currency. I’m not saying that this is a bad system (I’m not a marxist). A lot of very complicated jobs need to get done in our society and the sort of specialization of labor is very important for that to happen efficiently. However, people shouldn’t be surprised when events that we don’t feel connected to affect us in very substantial ways. I think people don’t realize how precarious it is to have absolutely no way of providing for one’s needs directly; it means that you should have a good deal of currency stashed away in case your supply of it runs dry. Thankfully, in our case, we don’t have to worry about the worth of such a currency, because our government is so stable. If this were not the case it might be more helpful for me to cart chocolate around to wherever I go; everyone needs some of that.