I wonder if the OWS children got their idea of how the economy works from the board game Monopoly.
In Monopoly, unless you break the rules, your economy is limited to the amount of money in the bank.1 The object of the game as I recall it (haven’t played it in years) is to accrue to yourself as much unmortgaged property as possible and to build as many houses and hotels on that property as you can before the bank runs out of money, at which point the game ends.
The problem is that Monopoly, for all it claims to be about becoming a fat-cat businessman as portrayed on the cover of the game by its rich-dude-in-evening-dress caricature, isn’t even a crude analogy of how a capitalist economy works.2
As I posted over at Joe’s, the American economy is not a zero-sum game. If it were there would be no more dollars in existence today than there were at the time we declared independence.3 Clearly that’s not the case, and we can clearly demonstrate that Monopoly was not, is not, and never will be the way a capitalist economy actually works.
I also said (and now I’m pretty much quoting what I wrote there) it’s clear from the evidence that even many of our poorest families are significantly richer today4 than they have ever been before. Too many of them drive relatively late-model cars, have computers and big-screen TVs, eat relatively well for “poor” people, and generally are not dressed in hand-me-down rags to be truly described as poverty-stricken. (Yes, there are poor people in this country who unfortunately fit the “poverty-stricken” paradigm. “The poor will always be with you.” Sucks to be them, but their problems run deeper than “the rich have all the money”.)
The rich cannot possibly suck up all the money that exists, as seems to be claimed by the OWS children, because in the process of said suckage, they create more wealth for everybody who participates in the economy.5 Which means more money in circulation among the people who have to work for a living. This is what Wall Street does for us. It creates wealth, and wealth creates jobs, which in turn creates more pocket money for everybody. Everybody wins.
When the government steps in and imposes punitive taxes on the rich, the rich find ways to protect their wealth, which in the process limits the amount of money available to create new wealth. Which means less money in circulation among the people who have to work for a living, because gee, there are fewer jobs available and more have been lost because in order to pay the punitive taxes, business had to decide between paying x number of employees, or paying the government. Oh, and I should note, the rich also give less to charity under these circumstances. So: Everybody loses [and the economy does start to approach zero-sumness due to the loss, which doesn’t really get made back up because most tax revenues are wasted, cf. Solyndra].
If you don’t or won’t understand the foregoing, then you have no business participating in any discussion about our capitalist economy.
And if you are one of these uninformed “Occupy” people, you need to be demonstrating outside of the White House and Congress. Those are the bastards who are keeping you down, not the folks on Wall Street.
1 Let’s assume that you don’t have extra money packs sitting around that you break open once the bank runs low on cash. Play by the rules, damn it.
2 Although it does occur to me that perhaps the OWS people think the rich lock their money in big vaults below their palatial mansions and, like Scrooge McDuck, sometimes use those vaults as swimming pools.
3 Let’s not get into what the world economy would be like without capitalism. Maybe Og’s ancestors would have had all the rocks and he’d be king of the world while the rest of us scratched for berries and hunted cave bears with wooden spears and flint points.
4 Well, OK, they were before the Democrats took charge in 2006 and destroyed the economy.
5 This is why so many middle-class types are in the mutual-funds market. Every time some rich bastard invests in a fund that I own a piece of, I benefit.
I should note that this is an extremely simplified description on my part of a very complex subject in which I have only very basic formal training, so if you think I missed something important, please feel free to jump in.
You are absolutely correct.
If you play Monopoly with people who are real capitalists, or maybe just good at the game, there is not enough money to finish. You have to add money. Just as you indicate, real wealth grows and increases over time. Indeed, a rising tide does float all boats.
I agree completely with both of you. A lot of people don’t agree with the rising tide lifting all boats.
Here is my alternative explanation that might work better for them. The economy declines, and two guys lose their jobs. One has a year’s after tax pay in the bank. The other is living from paycheck to paycheck. Who is hurt worse by the loss of the job?
Or this scenario. Two guys start work for a company on the same day, one puts the maximum in his 401(K), and the other puts nothing in. One day 25 years later the company goes broke and they’re both out of a job? Who is hurt worse by the loss of the job?
So if the poor person is hurt more by a bad economy, is he not helped as much by the absence of a bad economy as the guy who is rich?
The political left thinks that people get rich by screwing the poor. The reality is that poor people are poor because they make poor decisions. Liberals used to endorse this idea because they thought education was the solution to poverty.
Monopoly was actually invented by a woman out to push the palpable lunacy that is Georgism and denigrate capitalism; some info here.
You, sir, clearly have the soul (or at least the insight) of a free-market economist. Von Mises is smiling.
Everybody Knows that the Corpos have obscure rooms with the mail slot at the top of the door, and part of the daily routine is for someone to come by several times each business day and shove bundles of hundreds in there when no one else is around.