Wednesday, July 8, 2015

Solving the Greek Debt Crisis, IV: Consuming What Isn’t Produced


What is the sound of one hand clapping?  How can you consume when you don’t produce?  Well, as we noted yesterday, you can’t.  Not unless you seize control of the language so that you can make words mean what you want them to mean.

"Define your terms...or stay out of my dictionary."
Of course, if you want to know what people are talking about, that’s probably not all that good an idea.  That is why we have to define Greece’s underlying problem very carefully before we can understand and implement the right solution — correctly.

We’ve already given the solution in general: don’t cut consumption, increase production.  Anticipating the look of skepticism from experts, we have to start explaining that right away.

"I said it's so, and it is, except when it isn't."
This is because conventional wisdom says that you can only increase production by cutting consumption.  As Keynes put it, “So far as I know, everyone agrees in meaning by Saving the excess of income over what is spent on consumption.”  (General Theory, II.7.1.)  The Great Defunct Economist then rattles on for about twenty pages or so explaining how all the people who don’t agree with this definition are stupid.

This, of course, rather begs the question: if “everyone agrees,” then who are these people who don’t agree?  What is the disagreement when everyone agrees?  We said this was going to get very Zen. . . .

As for “conventional wisdom,” that also gave us facts such as the sun revolves around the earth, heavy objects fall faster than light objects, and you own the money you paid into your Social Security accounts.

So is the real solution just to produce more?  Or is it to make it possible for people who are not productive to produce?

"Consumption is the sole end and purpose of all production."
In and of itself, production is rather meaningless.  As Adam Smith pointed out, the sole justification for production is consumption.  If you want to consume, however, you must produce.  Not somebody down the street or in another country — you.

By producing, you can either consume what you produce yourself, or trade what you produce to others for what they produce.  In either case, there must be production if you want to consume, and it must be your production.  As we quoted Jean-Baptiste Say yesterday, “it is impossible for them to purchase any articles whatever, to a greater amount than those they have produced, either by themselves or through the means of their capital or their land.”

Does that mean that people who cannot produce, or who try and fail are out of luck?  By no means.  Being productive is the ordinary and usual way people are meant to meet their material needs.  That’s simple justice.  If justice is insufficient, however, then charity takes over.  That’s what St. Paul meant when he said if you don’t work (i.e., produce), you won’t eat.  As Pope Leo XIII rather obviously explained,

Leo XIII
“[N]o one is commanded to distribute to others that which is required for his own needs and those of his household; nor even to give away what is reasonably required to keep up becomingly his condition in life, ‘for no one ought to live other than becomingly.’  But, when what necessity demands has been supplied, and one's standing fairly taken thought for, it becomes a duty to give to the indigent out of what remains over. ‘Of that which remaineth, give alms.’  It is a duty, not of justice (save in extreme cases), but of Christian charity — a duty not enforced by human law.  (Rerum Novarum, § 22.)

Trying to consume without producing, and to produce without access to the means of becoming productive is a bit like the sound of one hand clapping.  Something is missing.  The two halves of a whole aren’t there — and it’s a very singular sound.

#30#

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