Saturday, 18 August 2012

Economics


The Girl is eight now and can read, so the signs on the road spark all manner of difficult conversations. Last week, gathering materials for her birthday party, we passed one of the giant office buildings that rise incongruously beside the houseboats of a canal village, and she read a sign on the surrounding fence: “NO ENTRY.”

“Are they still constructing that building?” The Girl asked. “It’s still empty, and they’ve been doing it as long as I can remember.”

They worked on it for years, I said, but around the time it came out some things happened that kept people from moving in.

“Like what?” she asked.

Well, suddenly no one had the money to move in, I said. A few years ago things began to change, and people had a lot less money than they used to.   

“What happened to the money?”

Few things cut through our Gordian problems like the questions of a child, I thought. Well, I said, do you know what gambling is? I said.

“No.”

You know what making a bet is?

“Yes. People should never do that.”

Yes, it’s never a good idea, I said, and we side-tracked into a discussion of why gambling is wrong, swimming against the current of the world.  

Well, let’s say we make a bet. We could bet that our neighbour down the road loses his farm – if he does, I get money, and if he doesn’t, you get money.

“That’s terrible!” she said. “Why would anyone do that?”

It’s callous, I said, but some people do that all the time.  

“So they lost their money?” The Girl asked.

Well, I said, they didn’t just lose their own money. See, they were playing with other people’s money.”

“How could other people let them play with their money?” The Girl asked.

The reason, I said, is that a lot of people who had a lot of money wanted to get more money, and so they let other people gamble with their money in the hopes that the gamblers would win their bets.  

“If they already had a lot of money, why did they need more?” The Girl asked.

They had a lot of money because they were the kind of people who wanted to make a lot of money, I said, as opposed to the kind of person who wants to give money to people who need it. In fairness, we have a lot of money compared to people in other countries, and we haven’t given most of ours away.

“So they lost everyone’s money?” The Girl asked.

Well, there’s one more problem, I said. The money that people bet – their gambling debts-- counted as more money, even if they didn’t have anything to bet when they made the bet.

“That doesn’t make any sense, Daddy,” she said.

Well, I said, what it means is that the world had a lot more gambling debts than it had real money, except the debts counted as money too. Except none of it had ever been paper or coins in people’s hands.   

“I don’t get any of this,” The Girl said.

It’s strange, I said. In other words, people are poor now because they lost a lot of money, except the money never really existed, I said.

“So how can they be poor now if they never really lost anything?” she asked.

It depends on what they expected would happen next, I said. You know how you’re expecting a birthday party today? You’d be very disappointed if it turned out we couldn’t have one, right?

“Sure.”

But tomorrow you know it will be a normal day, right? I asked.

“I know,” she said. “But I wish I could have a birthday party every day.”

But you know you can't, right? Sorry, but you know how tomorrow will be an ordinary day?

"I know," she sighed. 

Well, a lot of grownups right now thought they could have a party every day forever, I said. But they won’t. 

And with that we turned the conversation to the fields of broken stems all around us, the rapeseed harvested for its oil. The Girl commented how sad they look, and I reminded her that they would come back again in spring and make the hillsides shine again like polished gold.

Top photo: Houseboats along a canal. 
Middle photo: The building she asked about -- strange as it sounds, these two photos were taken about 30 metres away from each other, with only a row of houses in between. 
Bottom photo: The countryside in clouds.

1 comment:

Ronald Langereis said...

A very neat, succinct explanation. Many an adult may win by grasping its consequences, too.