Presuming that money is like bread

A relative of mine recently shared a gif on Facebook of ‘Five Best Sentences’. I try not to post whenever somebody is wrong on the internet, but responding to the list made me realize something about so-called economic conservatives:

Many conservative truisms only make sense if you assume money is like bread and that anything of value is like money.

To take the first half of that, consider this sentence from the list: You cannot multiply wealth by dividing it.

The platitude makes sense if you think of dollars like bread: When you get some, you can share it or eat it. The cliché that you can’t have your cake and eat it too applies. That accurate aphorism, along with the catchy wordplay, is what makes the sentence from the list sound common-sensical.1

However, that’s not how wealth works. The economy moves because of the velocity of money. The same dollar gets spent at a store, used by the store owner to pay a worker, spent by the worker, and so on. Wealth split up and put into motion grows.

Contrary to the sentence, then, you can multiply wealth by dividing it. What actual tax rates and government budgets should be is a difficult policy question, but this one-liner is no help in answering it.

Another of the sentences on the list is this: What one person receives without working for, another person must work for without receiving. And another: The government cannot give to anybody anything that the government does not first take from somebody else.

These make sense if you think that anything of value is like money. To make payments, you’ve got to have income. The point is especially vivid if you think of money as being a single-use consumable like bread. In order for somebody to eat it, somebody’s got to bake it.2

Here’s an obvious counter-example: Suffrage. Many people have struggled for other people to get the right to vote, but they didn’t thereby give up their own right to vote. And the government extending suffrage to more people doesn’t disenfranchise people who already had it.3

This image really goes with every post. (XKCD)

  1. Back in grad school, Ryan Hickerson introduces me to a game called Aphorism/Platitude. Take a pithy sentence that makes a general claim. Is it an aphorism which capture a legitimate bit of wisdom or a platitude that is some alloy of banal and false? I mean the words here in just that sense.
  2. You could make payments by going into debt, and debt can just be a tab without any money changing hands. Lots of money doesn’t exist except on ledgers. Try that with bread.
  3. Another, less-stirring example: Access to interstate highways.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.