State of Mankind

A New Way Of Thinking

National Debt and the Economy

The National Debt and the Economy


“Pay the debt thou hast contracted….Release thyself from bondage.”  (D&C 19:35)

A very astute friend recently asked why a financial meltdown would need to affect the economy.  Why does money matter?  We still have the people, the equipment, the resources, in short everything we need to keep going, so why worry about the money aspect?  Why not just keep going?  In order to understand the monetary aspects of economy and to see how the various views of the debt reflect different people’s political and economic ideals, we will go to a theoretical economy called Joe’s Burger Shop.

A long time ago, in a galaxy not so far away was the Joe’s Burger Shop economy.  In this economy, simplified for easy understanding, there existed ten people, and the burger shop produced ten burgers, and there were ten space bucks.  Each person had one space buck and purchased one burger every day to survive.  The burger-backed space buck had a fixed value of one buck per one burger.  There were among the ten people a couple of innovators that learned how to increase the output of burgers to twenty.  There were now twenty burgers and ten space bucks.  Burgers now cost 50 cents.  The innovators now invented Coke to drink with the burger, and due to the popularity of the product, their income went up.  The two rich innovators now made $1.50 per day, while the poor workers made only slightly more than 50 cents.  The rich could have multiple burgers and cokes every day, while the less fortunate could have only their burger and a coke once in a while.

One particularly intelligent person then convinced this society that they needed to borrow money to solve the various problems they encountered.  He would simply print more space bucks and loan them out with minimal interest.  By doing this, the society could buy more and more burgers and even give extra money to the less fortunate to buy cokes.  After some time of this space buck printing, there were 100 space bucks, of which our central banker had 30, the innovators had 15 each, three managers had 10 each, and the remaining four workers had 2.5 each.  With an economy of 100 space bucks, 20 burgers and 10 cokes, burgers or cokes cost 3.3 space bucks each.  Our central banker could buy 9.  The innovators could buy 4.5.  The managers could buy 3 and the workers were at 3/4 burger per day.

Unable to live on their small portions, the natural thing for the four workers to do was to vote for a change of system.  The current system used the distribution of money to determine what percentage of the economy was owned by whom.  Their system would have everything owned by everyone in common so everyone got 2 burgers and 1 coke, in theory.  The innovators felt they could design a way to make more burgers and solve the problem.  The managers generally stuck with the innovators.  The central banker saw a real threat to his system and also a real opportunity.  The workers lacked votes.  The central banker offered to help the workers with a slightly different system.  He would vote with the workers and get one of the managers to join and he would run the whole system and guarantee that everyone else would get one burger and one coke every day.  He, the central manager, would get extra, but everyone else would benefit with his guidance.  Besides, he had loaned everyone 90 of the 100 space bucks and therefore owned 90% of the economy (See chapter X of the review of Tragedy & Hope for information about the pluralist economy).

The innovators started a movement called the ‘coke party’ and claimed that they had earned extra for everyone with their innovations.  They pointed out that everyone was able to have at least some coke before the central banker got his hands on the economy.  What good would innovating be if they were stuck with one burger and one coke per day?

Now, to come to our galaxy and our time, which isn’t so far away.  We have the poor, who find it increasingly difficult to cope with economic challenges, due mainly to inflation while their wages remain somewhat stagnant.  There are also the workers who think they are poor, but are actually closer to middle class.  They would like to continue debt spending to help them, because they feel the upper classes have the money to pay the debts and are obligated to do so.  Increased debt, in their view, will simply re-distribute some wealth to them.  They rarely worry about financial collapse because they have been taught that the deep pockets will prevent it.

The next group is often allied with the poor or the middle class unions.  These are community organizers and union bosses and leaders.  They are often true socialists and organize the former group and give them information to use them to push their agenda.  They want an increase in spending, both to redistribute wealth and to collapse the system.  In their view, and it is quite possibly correct in the short term, the economy can survive a financial meltdown.  Property simply must become public (business owners and investors would simply lose out) and the government must force everyone to work and keep things going.  There would be a period with a ‘dictator of the proletariat’ and then true socialism would prevail.

The innovators and small business people generally embrace the free market.  These want the budget balanced because the burden of the debt and social programs stagnate the free market, hurt their profits, and take away the incentive to run a business.  This part of the economy will not survive a financial collapse.  It is based on private property and incentive.  We hear the Tea Party shouting for fiscal responsibility.

Finally, we have the Elitists, represented by our central banker.  These are not really liked by anyone.  The free market people call them Communists because they want to centrally run the economy which would largely destroy economic freedom.  The true Socialists look at them profiting on everything and call them Capitalists.  They would like the monetary system to collapse because they could then claim they own almost everything anyway.  Society cannot pay them back.  To be nice, they’ll keep everything going and take care of everyone, but they will have the ownership and the power.  The Progressive movement in our country is the team made up of the workers and the Elites, generally smoothed out by the community organizers and union leaders.  They don’t want the exact same end, but they both want to increase spending, one looking for a handout, the other wanting power.   Elites don’t care too much if everything is government owned or privately owned (they pretty much own the government).  They just need to get rid of the free market that they can’t control.  Perhaps the (far leftist) Invisible Committee explained it best in their book The Coming Insurrection when they described the collapse of the Soviet Union:  “When it proclaimed the end of socialism, a small fraction of the ruling class emancipated itself from the anachronistic duties that still bound it to the people.  It took private control of what it already controlled in the name of “everyone.””

Where should we stand?  It depends on what we want.  If the Elites and organizers destroy the free market, there could well be an interesting battle between them and we could end up with total meltdown, socialism, or being slaves to Elites.  I believe history shows that the free market has not only made life better for everyone, but that economic freedom is necessary to our individual liberty.  If we depend on another for food, are we free to plan our own family?  If we depend on another for clothing, can we wear what we wish?  If we depend on another for paper, is there freedom of the press or speech?  If we have no excess to help another, are we free to have charity?  If the collective owns the meetinghouse, how can we control what goes on inside?  If the excess of my labor must support the conscience of another, is there religious freedom?

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