A youth pondering what is economics

Long ago when I was a youth - and I was an unusually smart youth then, before getting knocked in the head - I pondered economics. How does it work. Say, a town has a farmer who raises potatoes and another who raises chickens, and they sell to the grocer. The grocer sells the food to the shoemaker who pays for the food by selling shoes to someone else. Each person has to provide enough value added from his/her specialty so as to pay for what is needed to be received from the other townspeople.

There is some barter product swapping, but mostly all exchanges go for a liquidated value as a price in cash. Each person has to use their skills and physical resources to add to the value to ask a higher price for the resulting product and thus become earnings, which are then used to buy things needed that they themselves cannot produce.

The town as a whole provides most of what they all need, but sometimes the town does not produce a product or service that is needed, and has to buy from some other town; and similarly the town as a whole has to produce items of equal value to the other town as a swap, probably again using money as an in-between quantity of value.

Another part of the picture is that sometimes somebody collects more money than spends on what is needed, and either directly loans out that money to someone else or assigns it to a bank who lends it out, all for an expected profit from the value-added by the user of the temporary money supply, called "interest," some of which is profit by the bank and some of it is shared with the person who provided the excess money in the first place.

Those are value-added monetary equivalents of increase in value of resources modified by the value-adding person's skill application effort.

However, there are the basic resources not of the human resources type, such as land territory with its specific reception of solar energy and precipitation, and also mineral resources that can be extracted thus adding value to it and then being sold to someone, thus receiving money in exchange for parts of that resource territory, such as iron ore mined or oil pumped out, all given over permanently to someone else for money.

A portion of land area can be divided into portions, and housing structures be built on some of those portions, and the whole sub-section of land with its value-added house upon it, for money.

The construction of transportation paths between the homes and farms and towns is started as a business, but when it expands to encompass a huge number of homes and towns and businesses, the paying of a fee for right to pass between each place, paid to the various road owners, can bog the system down, so an over-arching business is formed that can negotiate between the various towns and states, and instead of having the infrastructure to collect a fee at every little bit of road paid in return for right to use the bit of road each trip, all the people pay into a common fund that covers the cost of building and maintaining the whole road system.

Education of the children also starts with local schoolhouses and paid for the townspeople with children, but people move from town to town and standardization of what is taught so the graduates will have a variety of useful skills, also becomes an over arching activity like the road system, and given enough of those common needs, they eventually avoid becoming all bogged down with all the collectors of expenses of each little routine service done, that an entity is formed called "government" that figures out what it all costs to do it efficiently, and assigns a payment for getting the roads, education, etc done equitably and efficiently for all to use, and assigns that as a specific tax to the users of the system, as averaged over a lifetime.

Some people are able to save money either under the mattress or in a bank, so that when they grow too old to work easily enough to earn a living, they have that stashed money to pay their living expenses for awhile; but large numbers of people are just employees of businesses, so part of their pay is automatically saved out and sent to the government to be the saver of the money, and when the workers retire, the government pays enough for survival level money for those retired folks to live.

People sometimes get sick or injured, and others apply their skill set to help those people get well; this too is at first an individual thing but sharing of skill knowledge among medical practitioners is most efficiently handled by the government too, paid for by the simple one-quantity per year tax system. Adjacent territories are set up by other governments, and sometimes the excess specialized produce of one government is sold to another government, in exchange much as originally between the farmer and the shoemaker.

But occasionally some of the folks in some government decide that it is more efficient to go raid their neighbor's fields, than to buy what is needed. So each government needs to hire professional raiders and defenders, to provide that function for the whole governed territory, so that any small part of the governed territory immediately has that hired group of raider-defenders go assault the invaders, thus the local invaded people do not have to do that themselves, and would surely lose against the larger assaulting force; but when backed up by the larger group of defenders, they can fend off the invasion. The cost of supporting this force of invaders-defender professionals is also paid for as part of the taxes collected by the government.

This whole system is like some complex clock that when wound up, busily ticks away and things move here and there like the clock's hands, things proceed as a complex process.

But there is another phenomenon observed in such larger system functioning, in that some people provide their value-adding function by hoarding and reselling at a higher price without adding value to the hoarded items. This way they can acquire huge sums of money with little expense or effort, other than to do the information gathering and having the buying and selling processes done that provide the squeeze on those who need the resources.

Sometimes following a principle of charging what the market will bear, besides hoarding, some items acquire a value by being one of a kind, such as works of art by a deceased artist, and trading these items back and forth, each time increasing the price per what the market will bear, usually only a game among those who had gotten wealthy by similar means and hoarding and reselling at what the squeezed market would bear.

Sometimes a wealthy person will have a business using the skills of some people who set up a business territory, protected by the government, and sell the product at a price that the market will bear, but which costs the owner of the company very little as compared to what the owner pays the helpers for their work; the users could have been charged a much lower price and all would have been paid equitably, but the business owner elects to charge what the market will bear, with its government-protected business territory, thus becoming wealthy vastly beyond what they can possibly use to live on. This money came out of the resources of all the users of that product, so they as a group become poorer and the rich become richer, there being a constant amount of money in the system.

There becomes a living wage gradient among the working class, and some people fall clear off the scale and become unemployed, no work is offered them that they can do, while their needed livelihood income is stashed by the ultra-wealthy few folks.

Each of the interlocking systems from road building to price fixing eventually gets given over to the government as the only unbiased participant in it all. But maintaining an unbiased state of government is difficult, as the establishers of the rules by which government is done, can get changed by those responsible for maintaining the government; elections pick who does that governing function, but then special interests ply those elected ones for special favors; if it gets too unbalanced, different people get elected, in hopes that overall the system will become on average equitable.

No means for creating an equitably unbiased government have yet been devised, given that the system's needs are ever changing, as the system needs to respond to the ever changing world of physical resources and human skill resources.

So that seemed to be the basic idea of what economics was about. When taking a course in economics in college, it seemed to only focus on a few of those aspects, not the whole interlocking system.

Now, no longer the youth, and in fact on the other end of a lifespan, in which I live below the poverty level in retirement, glad for the government's retirement money so as to pay the bills, clearly I did not know how to interact adequately with that economic system. I had thought that I would do the grunt work for employers to pay for basic expenses in life while in my non-working hours I created some innovative concept to solve a major problem the world clearly seemed to be headed for, but found that getting paid for that key I eventually created, is not part of how the system of economics works. Someone else will hoard that knowledge and then when I am gone will demand a huge sum for it, and then it will go into part of the game of the wealthy, trading back and forth for every higher prices, none of it going to the original creator of the item, such as is done for other kinds of works of creative art.

Even as a senior I still ponder things, and at this time it may seem that life is not always fair; but in the long run, lifetime after lifetime, the pendulum of karma will swing. In some other lifetime I will reap the reward for creating the keys to help civilization. But in this lifetime, I must be reaping the reward for being a too shrewd ruthless businessman in a previous lifetime. Somehow, all this keeps mankind interested in busying at the drama of it all.