Showing posts with label Economics for Kids. Show all posts
Showing posts with label Economics for Kids. Show all posts

Tuesday 6 September 2011

Out of the Crooked Timber of Humanity, no Straight Thing was ever Formed


this my comment at John Quiggin's Blog


What often disturbs me is that ideologues always assume that the core reason for the plight of humans or some group of humans is the application of the wrong political philosophy.
My daughter asked me last night to explain the difference between “left” and “right” in terms of economic policy.
Here was my answer – understand that she grew up on a SEA rice farm so my answer was based on her world view of food being central to everything. How quaint eh!

Imagine you are out walking one day and after a long hike you discover a huge valley filled with mangoes and bananas and other fruit as well as wild geese and pigs and everything you could imagine.
Nobody has ever seen the valley before. You are the first.
You think “I could take food to the market and sell it” – which is what you do.
The next day you take a big pack and go back to the valley, making sure nobody follows you because somehow you know what you have discovered is enormous wealth.
You fill your pack with delicious mangoes and return and go to the local market and sell your mangoes and make a lot of money because everyone can see they are really great mangoes.
You do this for several weeks before your sister asks you if she can sell some food at the market too – and you agree to let her in for 50% of what she can carry and sell (she is your sister after all).
So next day the two of you head back to the valley with you packs….
After a few months you have a number of family members all going to the valley with packs and soon with a cart and then with a horse and cart to fetch food to sell.
That is free market economics.
One day, the local head man approaches you and says “you have been selling a lot of food – you have to give me 50% of everything you make so i can help the poor families of the village.”
So now you have to give the head man half of everything you make and everyone has to wear a cut in income – but you have more horses now and all of the family and some distant cousins are all involved so it’s not so bad – you can live with it.
The head man distributes much of what he takes from you among the poor families of the village and his popularity grows.
So soon he is being approached by more people to get help for this and that – and soon he is back to you for a bigger cut of what you make from selling your fruit and meat.
This my dear daughter is the “left”.
Your clever cousin has watched your problems with the local head man and he decides that if he can get the other people from the market to vote for him to be the head man then he can give less money away and you can pay less.
He competes in the next village head-man election and wins – now you are paying less to the head man because he will only keep his job if he can get the people at the market to all vote for him.
That my dear daughter is the “right”.
At this point my daughter asked “what happens when all the food in the valley is gone?”
To which i responded:
That my dear daughter is the exact plight of the world at this moment.
Both sides – the left and the right - claim that the prosperity of the village flows from their superior management of the local economy.
The fact is that both sides are leeching and the only real source of wealth for all of the village is what the local environment can produce.
She asked me "why couldn’t people understand economics if it was so simple to explain?"
To which i replied:
My dear daughter – both head men truly believe that they are important and the people they talk to every day are convinced by their fine clothes and fine words that they are speaking truth.

see my short story: the Land of Skinny People

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