Defining Economics

This is one hell of a big topic, there are social economics, political economics, Reaganomics (aka., supply side economics), Obamanomics (aka., socialism), diversified economics, free market economics and the list goes on for ever...

Every country and or government seems to want to define economics for themselves but you and I both know that wont work in the long run.

Every "thing" and every "word" ultimately has a purpose (definition) that is universally recognized. You and I are the ones responsible for giving meaning to the economy because we work for a living. Governments on the other hand play a game of chance (gambling with the stock market) with our working lives and that's what they mean by economics.

As I frequently do with subjects like this I start with the dictionary and see what "they say" about a word. So I found the Doubleday Dictionary and looked it up.

"Economics" is defined as:

1) The science that treats of the production, distribution and consumption of wealth.
2) Financial Matters.

The "Economy" is defined as:

1) The management of the financial and other resources of a country, community, etc.
2) Care and frugality in the use of money, time, resources, etc.
3) A particular system of producing or managing material resources: such as an "industrial economy."
4) Any practical organization of parts in a system.

I found the definition of an "Economist" rather entertaining, especially in light of our worlds economy and the present condition of the economy in the USA:

1) One who is proficient in economics.
2) A Frugal person.

After reading these definitions I was suddenly struck with an epiphany...

First, we don't have any real economists in the world right now and second...

Its no wonder the education system of America has been run into the ground by all the socialist reformers who want to teach "multi culturalism" over true American History and how to read, write and be competitive in the world in science and math. If our kids were to grow up knowing the real meaning of the words economy, economics and what an economist is, we would have no real choice but to fire 95% of our congress men and women at state and national levels as well as 85% of the Senators. If we were educated and applied these definitions to the real world we would immediately demand the resignation of the Federal Reserve Chairman and clean out the corporate heads of almost every major corporation, every bank, financial institution and brokerage firm on wall street.

Getting back to the definition of economics...

Often it is easier to point out what something isn't and then tell what it is, so I'll illustrate my point with a story about the game these people are playing:

Somewhere in America it's the month of July and there's a resort town sitting nestled on the shores of a lake. It's raining and the normally bustling little resort town looks all but deserted. It's been tough times so far this season with the price of gas over $2.50 a gallon, unemployment over 10% and corporations cutting back on the "extras" (except for the CEOs). The tourists just aren't showing up this summer like they have in the past and as a result, everybody is in debt and everybody in this sleepy little town is living on credit, waiting for the "stimulus package" to hit closer to their home.

Suddenly a "rich" tourist comes to town in his BMW and goes to the only hotel. Looking things over with an air of importance he walks up to the clerk at the reception counter and puts a hundred dollar bill on the counter while telling him that he would like to inspect the rooms in order to pick out which one he'd like to stay in. The clerk happens to also be the hotel proprietor and he quickly snatches up the $100 bill and points the tourist in the right direction letting him know the doors are all open and which rooms are the best. The tourist heads up the stairs and immediately the hotel proprietor runs out the back door with the hundred dollar bill to go pay his debt to the butcher...

The butcher takes the hundred dollar bill and runs to pay his debt to the local farmer who raises the pigs, chickens & cows...

The farmer takes the hundred dollar bill and runs to pay the supplier for his feed and fuel...

The supplier takes the hundred dollar bill and runs to pay his debt to the town's prostitute who because of these economic hard times has been giving her services on credit...

The town's hooker now runs back to the hotel and pays on her debt with the hotel proprietor for the rooms she had rented on credit when she brought her clients there...

The hotel proprietor lays the hundred dollar bill back on the counter as the rich tourist comes back downstairs, shaking his head but not suspecting a thing. He looks at the clerk, takes back his hundred dollar bill and lets the clerk know he isn't satisfied with any of the rooms. He then leaves the hotel and drives off in a cloud of dust.

This story is a perfect example of the kind of "economics" our government and many other governments around the world are running. They give their plans fancy names and polish the delivery of of their ideas with media hype and grand illusions of recovery while the truth is, Nobody is earning any Real money!

It would appear the town is now a little less in debt and to some there would be a note of optimism however they now wait for the "next" economic stimulus package (rich tourist) to arrive and hopefully before its too late.

This is not a "real" economy and it is not good economics in spite of the fact that for a brief moment some money circulated in the sleepy little town.

Our retirement accounts (if you still have one), our real estate mortgages (so called equity), our cars and even our children's educations are being played by a bunch of "economists" who never made a real honest living in the real world and are now setting policies and passing laws to bail out corrupt bankers, lawyers, Wall Street Commodity & Futures Traders, oil speculators, stock brokers and mortgage brokers.

True economics are, as the definition says based on a science. Part of this science is one of supply and demand and it depends upon free market trading where the people who do the work get the lions share of the profits.

Economics are about the exchange of goods and services for something of equal or greater value where the "True Value" of the item sold whether it is a product or a service actually exceeds the cost of goods sold. I like to call this "use value."

For example: An Eskimo would have a huge "use value" for a hunting rifle and some bear traps (or whatever). If I came to town with a collection of rare oil paintings , they might only be worth two beaver pelts for the whole lot of paintings. But if I brought a selection of new hunting rifles, tents, cook stoves and other products the Eskimo could use he may trade me his whole stack of beaver pelts just for one rifle which in turn, I may be able to re-sell the beaver pelts for $1,500 bucks.

Because the "use value" of what I sold to the Eskimo is far greater than the price paid for it, the Eskimo can now go out and collect hundreds or even thousands of more pelts and feed and provide shelter for his family for years to come. In turn I made a fair profit.

This "IS" the basis for good economics. In order for money to create true wealth, Money MUST come from a source where the exchange of value is similar to the one I described above. This is one of the reasons the current global "corporate model" is broken. Corporatism seeks to pay its employees the least amount possible for the value of the services the employees provide. Every chance a corporation gets a chance it is cutting this benefit, raiding that pension, or fattening the wallet of an executive who does not contribute to the bottom line. Additionally the corporations do all of this so they can fatten the wallets of "investors" who collect "unearned" profits (they don't do any work or provide any real service). This is the opposite of the example I gave of the Eskimo.

Good economics are simple and based on science. There are laws of supply and demand and there is the Law of Least Effort being applied when a value is exchanged that is real. People will work for food, sure they will and there is honor in doing so, in fact there is honor in earning an honest profit so when your work gives a greater value to someone in exchange for the money you collect (including a fair profit) you are contributing to the overall economy and can now get paid in relation to what your goods and services are worth. Good economics are therefor the foundation of Capitalism and Free Enterprise.