A Grand Unifying All-in Theory of Economics

Before getting started with the birthing of this Grand Unifying All-in Theory of Economics, an unrelated preamble: Some of the things that I have silently thought true for my entire thinking life have recently been proven by my putting them into words outside my head.  I am startled by this development.  Let’s see if it holds up this time.

Allow if you will that economics is founded on greed.  There is simply no other excuse for currency.  And don’t get me started on this gold thing.  It is only lately in the history of humankind’s collosally stupid behaviour that gold has come to be useful in a technical sense.  For most of forever, gold has been valuable because cat-worshipping sun kings and long-nailed emporers wanted it for themselves (i.e., greed) and denied all others the mere possessing of it without express written permission.  (I made that part up, but it might be true.)  None of these kings spent any time determining the conductive properties of gold.  They didn’t melt into the holes in their teeth. They hammered out some third rate bracelets and wonky headbands.  (Pharaoh, baby!  I love it.  It’s just perfect for eternal life.)  See how ridiculous this is?  The shit was merely shiny and maybe a little hard to find by the side of the road, i.e., scarcity was/is a factor, but that’s for another screed, some other time.

Nope.  Couldn’t eat it and still can’t.  Couldn’t cuddle up and stay warm with it and still can’t.  It is useless in too many ways to count and yet it is the basis for currency, which is the instrument of greed which is the foundation of economics.   It’s parable time.

The harvest was bad again.  Hardly a harvest at all.  Almost everybody has left to find food.  Two guys are negotiating at a stall in the square.  One has two pieces of gold, the other has one loaf of bread.   The gold guy says, “I’ll give you one piece of gold for that loaf of bread.”  The bread guy looks around.  The square is empty now.  He knows he’s got a monopoly in a market for a very scarce commodity, and he can almost taste the profits.

“Two pieces of gold and you got yourself a deal, sport.”

The gold guy takes the deal, and heads out of town to catch up with the others.  He figures he’ll last a couple of days on the road with his loaf of bread and hopes to find more before he dies.

The bread guy has made an impressive profit.  He touches his tongue to the gold to taste it.

That’s economics for you.

Really, though.  I do have a theory and that is that there is one payer and it is me (meaning you, and him, and her, and so on.)  Not an original theory, of course, but folks either don’t know it or choose to forget it.  No, there is only one payer and greed beats payer every time.

Another parable and this time, you’re the star.

You put your payer’s retirement savings (if you’re are lucky/smart enough to have any) into the markets expecting them to grow like lettuce.  The people who represent you in this adventure, institutional investors with pockets to line, rain hell upon the mutual fund managers with pockets to line who in their turn rain hell upon the corporate managers with pockets to line if the lettuce doesn’t grow at the right pace.  The corporate managers freak and chop half the workforce to bring costs into line which induces a quick crop of the green stuff.  (It’s actually only ink on paper, virtual or otherwise.  Maybe it should be green ink, for the sake of metaphor.)  This quick crop seems satisfactory to the mutual managers and to the institutional investors and to you, the poor schmuck trying to get a jump on expenses in your doddering years.  Everything seems hunky-dory until you arrive at the shop to find you’ve been chopped.  Chopped down by the seed of your own greed.  And the good folks who represented you in this adventure are actually enriched, in terms of green ink, by your demise.  [For a corrective, see my archived post entitled Everything You Need, 30 July 2008.]

That’s economics for you.

Here’s a concluding admission: I have falsely claimed that I have a theory.  I have spoken of economics as if economics were actually subject to theorizing the way that quantum physics is subject to theorizing.  Quantum physics is all about invisible phenomena.  You float a theory about what is happening in the realm of the invisible – a theory that predicts repeated and visible evidence of the phenomena – and then you watch for it.  You can see that physics merits the act of theorizing.  You can see that economics does not.  Economics is right out there in the open for everybody to see.

I don’t have a theory.  I have a prediction: all things will be unified in greed.  And having now put it into words, I am not encouraged.