Archive for the ‘Economics’ Category

prophetic use of money

Saturday, April 22nd, 2006

And I’ve just thought of something else (following what’s below). As a common bartering stock, money itself has a power over us. It is a god, a power. Its value can and should be contested.

Sometimes, we will acquire or give away things with complete disregard for the consequences to our accumulated bargaining stock (money). In that case, we are refusing to price the thing acquired or given away. That is, we are not measuring its value according to the universal system.

This has great prophetic value. It may remind people that money is not a trustworthy god, especially when the universal system is so dominant as to completely rule people’s lives. Jesus often did shocking or inexplicable things precisely because he was refusing to buy into the universal system of his day, pointing instead to another, God-like way of being Jewish. The church acts as prophet when it ritualises and enacts the disregard of money in preference for love, compassion and nurture. It denies Mammon in service to God.

Keeping one day in seven for a rest from the measure and use of money is one such enacted ritual. It says to the world, “money and economics may not rule all. There is another way. God has freed us from slavery, including economic slavery.”

Of course, traditional Sunday rest is not worth much if the other six days are characterised by money-ruled dollar-slavery. Therefore it is not to be a strange Church ritual isolated from the rest of life, but must stand as constant call, reminder and pointer to the rest of life.

As Isaiah said (how might we inhabit his words today?):

“Cry aloud; do not hold back;
lift up your voice like a trumpet;
declare to my people their transgression,
to the house of Jacob their sins.
Yet they seek me daily
and delight to know my ways,
as if they were a nation that did righteousness
and did not forsake the judgment of their God;
they ask of me righteous judgments;
they delight to draw near to God.
‘Why have we fasted, and you see it not?
Why have we humbled ourselves, and you take no knowledge of it?’
Behold, in the day of your fast you seek your own pleasure,
and oppress all your workers.
Behold, you fast only to quarrel and to fight
and to hit with a wicked fist.
Fasting like yours this day
will not make your voice to be heard on high.
Is such the fast that I choose,
a day for a person to humble himself?
Is it to bow down his head like a reed,
and to spread sackcloth and ashes under him?
Will you call this a fast,
and a day acceptable to the Lord?

“Is not this the fast that I choose:
to loose the bonds of wickedness,
to undo the straps of the yoke,
to let the oppressed go free,
and to break every yoke?
Is it not to share your bread with the hungry
and bring the homeless poor into your house;
when you see the naked, to cover him,
and not to hide yourself from your own flesh?
Then shall your light break forth like the dawn,
and your healing shall spring up speedily;
your righteousness shall go before you;
the glory of the Lord shall be your rear guard.
Then you shall call, and the Lord will answer;
you shall cry, and he will say, ‘Here I am.’
If you take away the yoke from your midst,
the pointing of the finger, and speaking wickedness,
if you pour yourself out for the hungry
and satisfy the desire of the afflicted,
then shall your light rise in the darkness
and your gloom be as the noonday.
And the Lord will guide you continually
and satisfy your desire in scorched places
and make your bones strong;
and you shall be like a watered garden,
like a spring of water,
whose waters do not fail.
And your ancient ruins shall be rebuilt;
you shall raise up the foundations of many generations;
you shall be called the repairer of the breach,
the restorer of streets to dwell in.

“If you turn back your foot from the Sabbath,
from doing your pleasure on my holy day,
and call the Sabbath a delight
and the holy day of the Lord honorable;
if you honor it, not going your own ways,
or seeking your own pleasure, or talking idly;
then you shall take delight in the Lord,
and I will make you ride on the heights of the earth;
I will feed you with the heritage of Jacob your father,
for the mouth of the Lord has spoken.”

Money-go-round

Saturday, April 22nd, 2006

I’ve never quite been able to grasp the way money circulates. I know that my company gets paid for making people’s publication of information more efficient and usable. Our clients pay us with money that they get paid by their clients, who get paid in turn by their clients, who get paid because they provide value to…and so on. But if everyone is getting paid by everyone else just so they can pay still others…well, at that point my brain sort of went “o help, I can’t compute this, it’s too circular and I don’t understand where it starts or what it means”. This has been bugging me since 5th Form!

This morning on the way to the office I finally got it.

Money measures the relative value of exchanges. If we didn’t have it, every exchange would be negotiated uniquely – by bartering what each party had. “I’ll give you three sheep for one of your pigs”. But when everyone agrees to measure the value of their stock (of sheep, or boxes, or hours, or pens) with coins, money becomes the stock that the buyer always agrees to exchange.

So, one way of saying this is that money is the universally traded commodity which provides a common bartering stock.

To come back to the point, I was always confused about the circulation of money. But now I see that’s a red herring. Money ‘works’ because it measures how valuable the supplier’s stock is to the buyer. When an exchange happens between two free parties, one gives the other a measure of money in return for part of their stock of something. If that stock is worth lots and lots to the buyer, then the seller gets lots of money. He can then exchange that money for stocks of something else.

How do some manage to gather more money than others? Well, you might think it’s because the stock they sell is measured as far more valuable than usual. But many people have made lots and lots of money selling cheap stock (Stephen Tindall of The Warehouse; Sam Morgan of Trademe). The price of a stock is another red herring: the real secret is being able to keep part of the money that you’re given for your stock (of hours, or pens, or boxes, or sheep) as profit.

After all, you must have been able to create the stock you trade, right? Even the stock of hours you sell have been created by purchasing inputs from the food-makers, the house-providers, the health-providers, and the training-providers. You combine all these inputs into hours, and sell them to someone. But if you pay less for the inputs than what you get paid for your hours, you’ll have money left over (’disposable income’). You can spend this on consumable pleasures, you can use it to help others, or you can invest it into more (or another type of) input that you hope will increase the value of your stocks. For instance, you might spend some of your disposable income on a training course.

So, if you can do this profitable exchange again and again and again, you’ll be able to retain money each time – and you’ll build up a surplus. How great a surplus is a function of the profit each transaction creates multiplied by the number of times you transact. And that’s why some get wealthy: they make huge profits on a few transactions, or small profits on many. And it all comes back to the difference between cost-of-manufacture and value-of-output (cost vs. price). Cost is what you pay for inputs, and price is what you get paid for the inputs you provide.

So money is the universal measure of the value of the inputs. Whenever someone buys something from another, they’re buying an input for themselves (housing, food, training, pleasure, sheep) and measuring its value with money. So, the money-go-round is not really about circulation at all. It’s about the convenient measure of each transaction’s worth: that is what it ‘means’.

And despite (or maybe because of) constant circulation, money accumulates in lumps wherever someone manages to capture part of the price they get for their stock in profits.

Truth in packaging

Friday, March 31st, 2006

meal costs (via matt)

The responsibility of persons

Sunday, September 18th, 2005

American history and future reform of ‘the corporation’ via matt

Connectedness

Sunday, September 4th, 2005

In In Distrust of Movements (via Matt), Wendell Berry describes why movements almost inevitably fail. It has to do, he says, with the narrowness of their vision for a solution.

That is interesting, but it is not what I found the most interesting. The most interesting bits are when he applies his criticisms to actual, huge problems, like the way our economies use land. This is fascinating and insightful stuff.

My linking to it is a recommendation that you read it and ask, ‘what is my part’?

Social economics

Wednesday, August 24th, 2005

According to the Dominion Post, Dr. Brash has implied that he treated Helen Clark with greater respect and restraint during their first head-to-head leader’s debate, because she is female.

Ms. Clark has replied that she finds this ‘old-fashioned’ and ‘quaint’, while Winston opines that people enter politics not because of gender, but because of ability – and therefore he does not understand Dr. Brash’s point.

It’s a great shame that these people apparently consider that the only relevant difference between people is their ability to get the job done. This only demonstrates how much our social attitudes are being influenced by the economics of the production line.

We are becoming otherwise undifferentiated units of economic efficiency: being remade in the image of our chief god.

The result is a loss of genuine humanity, which respects the things that make us different and keeps us interdependent. Our lives are becoming shallow, plastic, fake, and mercenary.

My recommendation:
reclaim some humanity, reject the idol. Start treating people with respect for who they really are – in all their diversity, representatives of the creator God.

Greens and oil

Friday, August 19th, 2005

Green Party wants gas-guzzling vehicle owners to pay

Slapping gas-guzzling car buyers with super-high registration fees are among the Green Party’s tools for tackling rising fuel costs.

The “feebate” policy was among a “peak oil tool-box” of solutions to gear the country up for the end of cheap oil that were announced yesterday by party co-leader Jeanette Fitzsimons.

Those buying vehicles which were more fuel efficient than the New Zealand fleet average could pay no registration fees or even get a cheque, while those buying less fuel efficient models could pay up to $200 extra.

“The point at which we can best change New Zealand’s fuel consumption for the future is the point where a vehicle is brought across the border.”

An online database of fuel efficiency rates for vehicles would help people decide what to buy. Other policies included banning imports over seven years old and requiring fuel companies to sell renewable fuels. “Probably they would add an ethanol blend to the range of petrol sold and either blend biodiesel or sell it separately.”

Ahehehe.

Think Global Act Local, or Save SwanDri

Thursday, July 28th, 2005

SwanDri is pulling out, following a host of other excellent NZ clothing makers. The following is a quote from the News Service on TelstraClear. I am no automatic fan of the Greens but I agree that globalisation appears bad for us.

“The Timaru company has announced it is pulling out of New Zealand after 134 years and moving manufacturing to China.

Around 14 jobs will go as a result. Greens Co-leader Rod Donald says Swanndri is a New Zealand icon that has survived two world wars and several depressions, but cannot compete against Labour and National’s free trade policies.”

Mortgaging the future

Friday, June 24th, 2005

Bernard Hickey, in the business section of the Dominion Post, says

We are mortgaging the nation’s future by borrowing money overseas to push up the prices of each other’s houses.

There are a number of big issues in Bernard’s small sentance. Firstly, the problem of debt. We are borrowing money overseas because the banks we borrow from cannot find enough surplus within New Zealand. In other words, our kitty is bare, but we’re still spending. So, someone is gleefully plugging the gap – giving us all the credit we want. That’s going to need repaying, sooner or later.

Secondly, the problem of debt being used non-productively: not a scrap is added to the economy by bidding up the price of land. Thirdly, the problem of debt being used to add fake value. The true value of land is its value in use (the productive return from the land), and this does not change, no matter how high the price paid for it. Fourthly, the problem that our own people, not least our children, are the ones penalised by these high prices: they cannot access that most basic of resources. We, and they, are forced to pay a massive premium in the purchase price, a premium built on speculation of buyers everywhere that someone else will pay even more for their land – either in rents or in a subsequent sale.

This is exactly what occurred with the share prices of technology companies during the dotcom boom of the late 90s. Led by their noses by unscrupulous venture capitalists, people kept stupidly buying the shares of Really Bad Companies, Inc – simply on the basis that some other mug would pay even more.

But the reality is that the long-term price of an asset must tend toward its utilisation value – its value from productive use. This is because only that value will be consistently returned to the owner – and therefore, it is the only long-term basis for justifying the purchase cost of the asset.1

Now, in the dotcom boom of the late 90s, people were buying shares in companies whose long-term return was less than zero. The return was less than zero because the typical over-hyped Really Bad Company produced ’stuff’ at a cost greater than anyone would pay on the market. It was simple: their cost of production exceeded price of sale, and they were losing money. But so long as people and institutions kept ensuring a supply of credit by purchasing shares,2 the company kept going, throwing the money away but keeping their doors open.

When enough people realised that the internet, though seemingly a magical technology, could not magically help bad businesses make good money, and began to suspect that the money for speculation was running out, they began to get nervous. Very quickly, people lost confidence that the next mug would buy at a higher price than they themselves paid. So they sold out, as quickly as possible. Credit to these companies stopped. Virtually overnight. And the crash ensued, wiping out billions of dollars’ worth of speculative premium on shares: premium that someone had to pay for. Therefore, it wasn’t just ‘value’ that got wiped out, but many thousands of peoples’ financial well-being.

Now, consider our housing market. Although the utilisation value of land is greater than zero, the prices being paid for it are much greater still. There is a massive speculative premium built in, based simply on the fact that the next mug will pay more than the last purchaser.

What’s the lesson – not only of economic common sense, but of history? There is going to be a significant, as they say, ‘re-adjustment’.

And all those billions that have been borrowed overseas, and used to create that speculative premium, will need to be repaid. With interest. Someone is going to be left holding the can.

Christians, I hope, will not be among those holding the can, because Christians, I hope, will have been taught not to buy into a system that rewards (for a time) unproductive speculation for the sake of greed – and greed which, in the meantime, only robs our own people of purchasing power. The very antithesis of the Old Testament Jubilee, and the more generalised law, “Love thy neighbour”.

I hope.
———————————————————————
1. By using ‘productive use’ as a measure of value, I mean to include ‘quiet enjoyment’. This too is a non-speculative, legitimate value produced and returned to the owner by his or her purchase.
2. If the public keeps buying shares when they are offered on the stock market, venture capitalists and banks will lend even bad companies money, knowing that the credit extended will be covered by the ‘value’ of the shares to be sold.

Caesar and Taxation

Saturday, December 4th, 2004

The Passage

The oddest things happen while preparing for a shower. Two nights ago this passage suddenly resolved itself into clarity:

Then the Pharisees went and plotted how to entangle him in his talk. And they sent their disciples to him, along with the Herodians, saying, “Teacher, we know that you are true and teach the way of God truthfully, and you do not care about anyone’s opinion, for you are not swayed by appearances. Tell us, then, what you think. Is it lawful to pay taxes to Caesar, or not?” But Jesus, aware of their malice, said, “Why put me to the test, you hypocrites? Show me the coin for the tax.” And they brought him a denarius. And Jesus said to them, “Whose likeness and inscription is this?” They said, “Caesar’s.” Then he said to them, “Therefore render to Caesar the things that are Caesar’s, and to God the things that are God’s.” When they heard it, they marveled. And they left him and went away.

The Points

The point here is threefold. Firsly, there is a contrast of image, or likeness. Caesar’s image is on the coins. They belong to him. But God’s image and inscription are on his people. They belong to him. Jesus, confronting an Israel constituted and marked by Torah, drew the contrast.

Next, there is the contrast in the nature and scope of each realm. Caesar’s image is on a coin used for taxation in an oppressive, pagan Imperial system. But God’s image is on his people, and they are meant to be salt and light, used for the world’s liberation. Everything else is God’s too: the cattle on a thousand hills.

Lastly, there is the contrast of allegience. The coins authorised by Caesar and minted with his image are the currency of his Lordship. The Pharisees resented having to give up Roman coins to the Roman Lord, and wanted to keep them: by implication, to be part of the system. But Israel and the creation, stamped with God’s image through Torah, were called to be the counter-Imperial kingdom.

Therefore the question from Jesus’ point of view is not one of abstract law or principle about who has the highest authority to tax (God or Caesar?). The question is one to be answered prophetically, making an answer with a point: an image on coins is all Caesar has; therefore, Israel, give it to him. One can almost hear the assertion that Caesar is a beggar. But Israel was not part of that Imperial system, being stamped instead with God’s image. Therefore Jesus calls the Pharisees to decide the question of allegience with their coins.

The Effect

This enormously clever response achieves much. Firsly, it answers the question of loyalty to God and Torah without resorting to rebellious and confrontational tax resistance. This is significant in two respects: it avoids the legal trap laid for him (violation of Jewish law is he pays taxes, violation of Roman if he doesn’t). In addition, it provides Jesus with a way to rebuke the confrontational, constantly-simmering zeal for rebellion felt by the Jews.

Secondly, it provides an incisive commentary of the true poverty of Caesar’s realm. What is money, after all, and what is Caesar’s kingdom? Thirdly, it brings the Pharisees to crisis, precisely because Jesus casts Roman money as belonging to Caesar’s realm, and the desire to keep it as a rhetorical question: to whom do you belong?

And this is, I think, the question that we must face, too. I don’t think Christ’s response means that Christians are to abandon money. He was not laying down a timeless law, but responding to a specific situation with a prophetic voice. But because we may share that voice, his example shows that we too may strictly relativise the value we place on money. There are times when money, still the image and instrument of the state, may be relatively benign. At others, it will become the symbol of yet another poverty-stricken, oppresive Imperialism.

The way we confront that Imperialism, though, is shown to be quite remarkable. It is not by playing Caesar at his own power-game and seeing who wins. It is by giving him what he wants, as a testimony of his poverty, and alligning ourselves with a far richer, redemptive realm. In other words, we do and care for the things that really count as God’s image – and wait for the gates of Caesar’s realm to crumble.

The Challenge

To what extent today, when economic measures rule everything, are we therefore called to render unto God what is God’s, and to take up the prophetic voice with respect to money? How shall we gladly render unto Caesar what is Caesar’s, ceasing (as is common in Reformed circles) to grumble about taxation and to plot methods of reduction? We know that his kingdom is ended, his poverty is assured, and that we herald, to those in captivity, a better and more glorious King. What will we do and value to show this?

Economy of Thought

Sunday, November 14th, 2004

Defending Michael Cullen’s approach to the surplus
Think, or lose

Via Chud

Wednesday, November 10th, 2004

10×10 / 100 Words and Pictures that Define the Time
‘Economic Aid’ and the American Empire