Thinking Citizen Blog — Three Words, Three Premises, Three Truths

Thinking Citizen Blog — Tuesday is Economics, Finance, and Business Day

Today’s topic — Three Words, Three Premises, Three Truths

Definitions are all important. If we could only agree on the meaning of a few key terms. For me, growing up three words were the source of tremendous confusion: money, corporations, and selfishness. What exactly is money? Is it really the root of all evil? has it always been so? will it always be so? and what are corporations? are they the incarnation of evil? is “corporate money” evil squared? and why are some people so selfish? wouldn’t the world be a better place without money, corporations, and selfishness? Today, a few notes. Experts — please chime in. Correct, elaborate, elucidate.

MONEY IS A TECHNOLOGY THAT MAKES A BETTER LIFE POSSIBLE

1. Without money, there is barter.

2. Barter is dependent on a double coincidence of needs.

3. Money is one of the greatest inventions of all time.

CORPORATIONS: VOLUNTARY, LIMITED LIABILITY, UNLIMITED UPSIDE

1. Voluntary is better than involuntary

2. Limited liability makes possible the impossible.

3. The most successful corporations are the ones that do the most for the most people — by providing smaller, faster, cheaper, better ways of increasing pleasure or reducing pain.

SELFISHNESS: UNIVERSALITY, HUMILITY, GRATITUDE

1. Don’t kid yourself. We are all selfish. In the language or religion, we are all sinners. In the language of economics the best simplifying assumption is that we are all rational utility maximizers. The supply/demand chart is not some figment of the imagination. It is not fake news. It’s a fact of life. It is picture of the “invisible hand,” of the paradox of self-interest. By pursuing our own self-interest, we maximize the general welfare.

2. Humility is about recognizing this ineluctable fact.

3. Let’s be grateful that selfishness can be channeled for good. This is what free markets do.

FINAL WORD: Yes, government is necessary. But government is evil. It is evil because coercion is bad, because power corrupts, and absolute power corrupts absolutely. Voluntary, collective action is on the other hand a good thing in itself. Let’s harness our shared selfishness for the benefit of all. Let’s incorporate.

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YOUR TURN — Please share:

a.) the coolest thing you learned this week related to business, economics, finance.

b.) the coolest thing you learned in your life related to business, economics, finance.

c.) anything at all related to business, economics, finance.

d.) anything at all