So the economy’s just started coming out of the toilet, and now it appears we’re heading right back down, flushed away with all the other refuse from whoever is up there crapping on our heads. Economists worry that we will be entering a second downturn in the very near future, and these fears are not eased by a housing market that has taken a serious dive recently. But why? Why, ask so many people, should the American economy be failing after infusing something in the neighborhood of $1 trillion to prevent the implosion of the banking system and to stimulate jobs across the country? It’s a hard question to answer, but only because none of the people charged with giving the answer want to admit the truth: our economy is anchored almost entirely in nothing.
Adam Smith (the father of modern capitalism) and Karl Marx (the father of modern communism) didn’t agree on a whole lot. One area where they reached a consensus, though, was the source of wealth. Smith, in The Wealth of Nations, defined wealth as “the annual produce of the land and labour of the society.” Marx, in turn, described wealth in much the same terms in Das Kapital. Essentially, the two most famous economists in recorded history found common ground in the idea that raw materials + labor = material wealth. This can be anything from farming to manufacturing to the food service industry to performing services like cleaning, maintaining machines, or even creating art. For centuries, the nations that turned raw materials like lumber and iron into finished products like tools and furniture built massive amounts of wealth from this simple equation. All that is necessary is that something be changed from one state to another more useful or more appealing state through the application of labor, and then sold to someone who wants it. Through the lens of history, from this perspective, it becomes clear why America’s economy is collapsing. We don’t do that any more.
Okay, perhaps I have exaggerated a little. There are still a precious few products made in the United States, but there is absolutely no denying that manufacturing in America has been going the way of the passenger pigeon and the dodo over the past thirty years. Where exported goods used to be the backbone of the American economy, the biggest export we have now is jobs.
What, then, is the basis of our economy? The vast majority of Americans now work in the service industry. Now, there’s nothing wrong with the service industry per se. After all, someone has to fix cars, cook in restaurants, treat our illnesses, and teach our kids the skills they will need to pursue their career goals. These professions don’t necessarily create new products for sale, true, but they do turn previously unusable resources (broken cars, raw food, sick people, illiterate kids) into things with real uses and real value (working cars, etc.). Increasing the usefulness of items adds value to them, thereby increasing the net wealth of the nation. But those items have to come from somewhere before they can be serviced, and while it used to be that those products were created by America’s large manufacturing base, that part of our economy has gone by the wayside.
So who’s hiring all these people who work in service? The financial services industry. Don’t be fooled by their name, this segment of the country has nothing to do with productive service, adding value and therefore real wealth to the economy. Instead, these so-called “wizards” of Wall Street and their ilk take imaginary numbers in a computer system, and come up with bizarre and complicated equations to make those numbers bigger, with no goal in mind but to make the imaginary numbers bigger. Nothing tangible is changed through the application of labor, and therefore no real wealth is created. All that is happening here is that a bunch of Patrick Bateman wannabes are getting richer based on fictional gains, and using that pretend wealth to hire the rest of us to work at serving them. How far we’ve come. The top 1% are essentially paying us for service with monopoly money.
So there it is. Fake entrepreneurs (read: con-artists) are using higher math not to advance science or technology, but to make fake numbers get artificially bigger so they can hire us all as servants and pay us with fake money, thereby boosting the fake economy by creating fake wealth. And it all results in people feeling better because it increases yet another fake number that doesn’t represent anything real… GDP. I think I’ll go eat some psychedelic mushrooms and try to return to reality.