Hannah Blog

May 15, 2012

France appears not to be deprived. Why?

Filed under: another perspective,Economy,Notes from the Household — hannah @ 5:29 am

Economics is not concerned with the basics — i.e. exchange and trade of goods and services. Economics is concerned with what can be measured by counting the medium of exchange — i.e. the money. So, whatever activity doesn’t involve the exchange of money as a sort of middleman doesn’t count. What can’t be counted doesn’t count.

I do not know about France, but it is estimated that Spain and Italy have what is variously called an underground or shadow economy which amounts to about 25% of the measured activity — i.e. GDP. Greece, on the other hand, is even “worse” because their underground was running at 40%. In Greece it was admitted that the major concern was that the 40% wasn’t being taxed and, although this wasn’t admitted, not available to be tapped for a cut by the host of middlemen (bankster, financiers, insurers, traders, speculators, calculators, allocators) that have evolved to claim a percentage of what workers produce, thereby reducing what’s left to consume by the people who actually provide goods and services. All of these middlemen are classified as being in the service sector, but the added value they create is virtually nil.

I suspect that one of the main objections to socialism is based on the fact that when a large number of goods and services are delivered wholesale on the basis of need and taking advantage of efficiencies of scale, money changes hands less frequently. So, there’s less need for money and, concomitantly, transactions are harder to count and the accountants and economists don’t like that. In a sense, economics is suffering from the preponderance of form over function. There is more emphasis on quantity and less on quality. Economists ask “how much” rather than “how good.” Some don’t even consider “how” and simply equate “much” with “good.”

Also, because economists have not been able to develop models that predict trade and exchange with any kind of accuracy, many practitioners have focused on trying to manipulate human behavior to conform to their models. “Undeveloped economies” were those which were furthest from conforming to their models. The IMF was supposed to correct that, but starving people have been resisting. Getting hooked on money has not provided the expected boon. And, in the U.S. what OWS is mainly demonstrating is that people can get along quite well sharing and caring for each other without using money in direct transactions. That’s, of course, really scary from the perspective of Wall Street. If Greece now rejects the Euro it will be quite devastating to all the people who thought currency would be the ideal tool with which to control large populations without people being the wiser about who’s responsible for their deprivation.

Thanks for asking your question.

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