Friday, November 21, 2014

When money is too abstracted

Was a relief for me to sit down and process basic thinking on money, where I found myself focusing on favors, somewhat to my surprise, as I concluded that money lets you give an IOU that society makes good in exchange for someone doing you a favor. So at its simplest it's not that big of a deal so why do so many have issues with it?

I think the problem is that money is too abstracted. We need to bring money back to concrete reality.

One of those sayings that I ponder now is the claim that money is the "root of all evil", and I'm like, huh? Doing people favors is the root of all evil? I don't think so.

How did things get so distorted? How do you have people who will kill for money? Lie, cheat and steal for money?

Well, it's what you can DO with those owed favors. Like, feed yourself. Or have a home. Or buy luxuries. Or impress other people. Among many, many other things!

The monetary system allows society to have many people doing many things and facilitates transactions between people without which our modern world society could not operate as it does, and I don't think anyone has come up with a better way to do things.

Money lets you separate your action from the reward.

You can mow your neighbor's lawn, get paid some amount, and then get the return on that action, months later when maybe you use the money to take your wife to dinner. You then give that restaurant an IOU from which they can get their reward when they so choose.

That flexibility is unrivaled. It's a great thing.

The alternative is that you return the favor immediately. Or that they trust you to return it at some later date. But such trust is best between people who are close, like in a well-knit community.

Money lets you trust society to guarantee you will get a return on your efforts--not each and every individual within that society with whom you have a transaction, as they just hand you an IOU, which we call money.

So for you to lose a return on the favor your society would have to fail you.

That's why for instance legal tender in my country is backed by the US Government.

We need to talk more about money, and about doing things for others, and why giving a lot of other people something they want and getting an IOU in return is not necessarily a reason to flaunt it, put yourself above others, or do any number of things that really have nothing to do with money.

Like, imagine, you sing to a crowd of thousands and they show their appreciation with an IOU for you to use later, and that was a lot of people to whom you gave something of value so their appreciation has a great value as well!

If you see it that way, how might you think about how you get a return on what you gave?

And from there it's easy to consider where I think money does distort things, where my emphasis on money as an IOU on a favor really works well to explain some striking distortions in monetary distribution, as is a schoolteacher doing you a favor by teaching your child? Does a police office do you a favor when she protects you from robbers? Or a soldier protecting you from enemies foreign or domestic?

I don't think most consider serving your country as a soldier as doing a favor.

But with the money system someone who can do favors or as more people might consider it, give a service like a catchy song, can make much, much more than people who save a nation.

I think societies do try to make an adjustment though for those areas money is not designed to handle well.

That explanation isn't satisfying to me either, though I guess it makes sense. It's kind of unsettling so I find myself talking it out more. A person with a well designed product might sell it nationally. Today, because of the web it's easier and easier for products, like songs or movies, to go international, allowing so much more money in return. You're just doing that many more people a service and getting a return on it. It's about sheer numbers.

But for a schoolteacher? Even when lessons go online aren't they usually free? I think people just don't see lessons as a favor. So society still has to step into the breach to provide some form of support?

So community rises in importance yet again.

So much of how you see things is about community, and what values your community has given you.

To me, considering money less abstractly and concretely as an IOU from society as a return on a favor is very useful in explaining what it can bring, and also what it doesn't.

But maybe that explains why people can be most satisfied with their community regardless of money, when that community is supportive, well-knit, and most importantly its members know and trust each other.

James Harris
Post a Comment