O’Reilly, O’Bama, and the O’Conomy

August 22nd, 2011 by Roy W. Spencer, Ph. D.

..or, It’s Not About Money…It’s Our Standard of Living

I just endured a rather inane discussion on the O’Reilly Factor with actor/pundit Wayne Rogers and economist/comedian/actor/pundit Ben Stein, over whether President Obama helps or hurts the economy.

The debate quickly turned, as it often does, to whether it would help the economy to tax the rich more.

What annoys me the most about such debates is that they equate “money” with our standard of living.

They are not the same thing.

If you think it’s about money, then let’s just have the government print a million dollars for every man, woman, and child, and we can all sit at home and order stuff over the internet.

Oh…except the stuff we want isn’t being made anymore, because all of the workers are at home ordering stuff over the internet.

The only way for us to raise our standard of living is for people to provide as many goods and services as possible to each other which are needed and wanted. (Money is just a convenient means of exchange of goods and services which almost never have equal value…otherwise, we could just barter).

And keeping our standard of living requires rewarding (1) innovation, and (2) efficiency. It almost always involves mass production…which means business — usually of the “Big” variety — which in turn requires lots of people having jobs.

Anything that government does which stands in the way of business being allowed to do what it does best hurts productivity, which in turn reduces our standard of living.

As long as people insist on arguing over where the ‘money’ will come from, rather than what needs to be done to raise our standard of living (or even just maintain it), we will continue to be misled by politicians who might be well intentioned, but are clueless about what is required for prosperity to exist.

You can learn more about such basic economic concepts — which have been known for centuries, but every generation seems to have trouble internalizing — in my book Fundanomics.

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