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Does Money Matter?

September 20, 2008

Recently I’ve been hearing a lot of people say things like, “Money doesn’t matter to me”, “The best things in life are free”, “Even if you don’t have much money, it’s the heart that matters”, etc.  I believe there’s a lot of misunderstandings in such statements.

Such mindsets lead people to view those who pursue money as shallow.  It’s almost as if when a person has dreams and ambitions that require money, they are less of a person, because they haven’t learned to enjoy the simple and free things in life.

I myself value knowledge and not money, but I do not adhere to such beliefs as those just stated.  I hope to show the faults in such mindsets by explaining what money actually is.

I have a lot I have to do today, so this entry is going to be brief, but let’s start off with some basic inquiries into what money is.

Basically, money is the system we use to manage scarce resources.  Think of a very abundant resource which near all of us have – water.  I know here in Missouri, few of us pay money for water.  At our house, we have a well.  Some people have their water provided by the city, and actually pay for theirs (very cheap), but most of us pay nothing for water.  We may pay for the electricity used to pump it to us, but we do not pay for the actual water itself.

Why is this?  That is because water is not a scarce resource. Little to no money is required to manage it, because everyone has it. For the sake of this example, let us say that everyone has access to water, so water has no cost in terms of money.

When a resource becomes scarce, and some people have certain things, and others do not have them, we enter into the world Greg and I refer to as “basis and agreement”.  In simple cases, such as we will be presenting, basis and agreement is the same thing as barter and exchange, so we will start with that.

With water, since everyone has access to all the water they demand, there is no need to interact with others in regard to water.  There’s no need to make a deal with another person, to trade this thing you have, for the water they have.  But in life, we do not have everything we could possibly desire, which forces us to deal with other people, hence why Greg and I refer to it as “agreement”.

In the real world, there is a concept called the “division of labor”.  There’s resources, then there’s labors people do to make resources into valuable products, and services people perform for one another.  Imagine a manufacturing company which produces cars on an assembly line.  Each worker on the assembly line performs a certain task.  Let’s say there is 100 employees, and together all of them working on this assembly line can produce 1000 cars in X time-frame.

If you were to take those same 100 employees, and instead of breaking the car making into the assembly line, we make each employee work entirely in isolation, doing each job himself, we watch productivity go way down.  Those same 100 employees, working the same amount of time, may only produce 100 cars, or maybe only get 10 cars completed within the X time-frame.  It’s much harder for each of them, because they have to learn each job, and due to limitations of human nature, they cannot learn the job nor do it as well as someone who specializes in one task, and masters his particular function.  The greater the series of steps and complexities in the tasks involved in the production, the sharper the drop in productivity.

This is not the only thing either.  If each person had to make the entire car himself, each person would need all the same equipment.  Instead of sharing the equipment, each of the 100 employees instead needs all the equipment from the entire assembly line.  This in itself is wasteful and time-consuming, not to mention space-consuming as each person would have to have his own car making factory in his back-yard.

Society as a whole is no different.  When we all do different jobs, and become experts in our specific field, we can produce a better life for all of us, and work less.  If we only have to learn one job, we can get to work on our job-function much quicker than if we had to learn everything.

But this naturally runs into some problems.  Different people want different things, and people are all working different jobs, so who is entitled to what scarce resources, including the products we produce?   The entire subject of economics is nothing more than how do we effectively get these resources to people, and bring about an overall happiness to all.  This may be a bit overly simplistic, but generally speaking, money is a numerical system of distribution of the scarce resources, and management of the labors and resources to produce things.

Now we come to some questions: What does it mean when you say, “Money doesn’t matter”.  Are you trying to say that who is entitled to what based on what job they work is a useless endeavor?  Are you saying that effective management of labor is unneccessary?  I beg to differ. I personally think that is one of the most important subjects of all.  How effectively we manage our resources is everything.  Also, freedom itself is based on what we have access to.  Money and how its distributed is to a large extent what freedom is.

If a person wants to be an artist, and for whatever reason they cannot get access to the food, shelter, and art resources they need to do their work, they have no freedom at all.  They are not free to live the life they want.  They will instead be forced to do something else.

When people say money doesn’t matter, and that the best things in life are free, etc., they are trying to get away from the world of division of labor, basis and agreement, and exchange.  That is complicated.  They do not wish to work with others, or deal with the complexities involved.  They instead want us to change our desires, and tell us to lay around idle, and watch the birds, because we all have access to the birds, and that requires no change nor effort on anyone’s part.  We should find complete fulfillment in simply having a wife or husband, and our family, and not worry about this other stuff.  Really, such mindsets are nothing but laziness, and running away from the complexities of social interaction.  They are trying to build a world where you do not need to deal with anybody else.

I was reading H.G. Wells Outline Of History just yesterday, and he was talking about how people rarely see outside of their family unit, and think on government and politics as little as possible.  They align themselves to some government and society, but it’s not a strong alliance.  They don’t really understand it much, nor how their labors ties into a bigger picture, but as long as they have their wife, their house, and their things, and relative security, that’s what matters to them.  It’s always been difficult to get men interested in economics and government, especially since they can be so complicated.  But this apathy of theirs leads to their own exploitation.

Even in old times people could have lived quality lives, but they did not, because their economic systems were all about propping up some king, or priest class, and gave them all the efforts of the people’s labors, instead of a better distribution.  They’d spend all their time plowing fields, and working day in and day out, instead of spending time and thinking whether they needed the priests or the gods.

Even in modern times today, I think we have a pathetic economic system in place, but we get away with it, and still live a pretty decent life, only because science and technology have been making various resources less scarce.  The things we have are becoming so easy to produce, that even with our crappy economic structure, we still have access to things.

When vehicles require gasoline to operate, and gasoline is a scarce resource, we need economics and government policy which makes sure people can get this resource effectively.  Instead, this scarce resource is manipulated and controlled, in order to benefit a few select people on top.  One day, if a free-energy generator is created, and can be placed in cars, which runs on some fuel source which is not scarce, such as water, we will not need economics in our energy policy, but until then, we’re forced to deal with it, and will have to think about it if life is going to get better.  These are the sorts of things I mean when I say our economic system is pathetic.

We see that money is very important.  You can act like it’s not, but when you’re buried in debt, and have no way to pay it off, and are stuck working in some job you’d rather not be in, and all of your money each month goes to interest, you’ll sit back and say to yourself, “I should have considered money an important subject.”

I think another thing that people mean when they say that money is not important is that they see the jobs out there which make money, and they are not interested in them.  If the job function they wish to do paid good money, I doubt we would even be having this conversation.  Money is an abstract concept, a lot like mathematics.  It is just a numerical relationships between two people trading goods, services, and labors.  Money becomes not useful to someone when the goods, services, and labors provided by society are worth less to the person than the things they are pursuing.  They then say, “Money doesn’t matter to me.”

But to advocate that mindset on others would certainly be a bad thing.  To tell people that they shouldn’t value money is trying to tell them what they should and shouldn’t value, which it is their personal freedom to have.  And I think more often than not, when it comes to money, people find working deals and collaborating projects with others to be complicated, so they instead create mindsets which say, “Money doesn’t matter”, which basically means, “I’m going to take a set of life actions which requires only me, and as little interaction and collaboration with others as possible.”  Few people ever rise to a level of social collaboration beyond immediate family (wife, kids, etc.)  I think these sorts of mindsets are just some of the many ways people run away from responsibility and dealing with others.

Strangely people say, “Money doesn’t matter”, when the job they want to work doesn’t pay good money, but that’s just the time when money does matter, and we need to rethink how money is distributed, and see where the money’s going, and how we want to change it – not run away.

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