The Changing Role of Capital In Society
"The arts community is generally dominated by liberals because if you are concerned mainly with painting or sculpture, you don't have time to study how the world works. And if you have no understanding of economics, strategy, history and politics, then naturally you would be a liberal."
This is a pitch for talking everyday economics. It's pointed at all my friends who openly say they don't like numbers. Contrary to popular belief learned in crap high schools, economics is a social science that is the only language we have for getting to the good life - the prosperity that we all have the audacity to want for Nova Scotia. Economics is the story we tell ourselves about where our wealth comes from and where it goes.
So economics is a story. And we’re all story experts. So we get frustrated when the story doesn’t make sense, when characters are left out, when plot points don’t seem realistic, when there's bad edits, when the bad guys don’t get their due and when the love interest isn’t brought forward to be central to the story. Then we stop believing.
It's All Economics
Whether we like it or not, it is a fact that the main issues of present-day politics are purely economic and cannot be understood without a grasp of that subject. Without an understanding of the main problems of economics citizens are merely repeating what they have picked up by the way, chasing self-interests without regard to the big picture, or worse ignorantly acting against their own self-interests. They are easy prey to demagogic swindlers and idiotic quacks.
Citizen gullibility and incredulity is the most serious menace to the preservation of our way of life, our resources and the shape of things to come.
Economics studies the decisions we make
Economics is about much more than accounting, inflation, and supply and demand. At its core, economics studies how people make decisions. Households, companies and whole societies face a series of decisions--what to have for dinner, whether to invest in new equipment, how to fund infrastructure. Economics provides valuable insights into how societies make decisions about their needs and wants and allocates the resources to achieve them.
Economics provides a framework for understanding the actions and decisions of individuals, businesses and governments. It provides a means to understand society and for analyzing government policies that affect the families, jobs and lives of citizens.
The biggest mistake in Economics
The study of economics in Nova Scotia is lazy. Where economics fails it takes too narrow a view and doesn’t consider the broadest possible implications of any policy or decision, now and into the future, for all groups rather than just a few. We want our stories to be inclusive not for just a few. Pick-a-winner crony capitalist economic development is perhaps the worst example of this. It has discouraged tens of thousands in society for every backroom boy it has helped.
We only have three resources
It's a classic hero's journey. Economics is the social science that examines how individuals, businesses and entire societies manage scarce resources. Resources can come in three forms: land, labour and capital. Resources are, by nature, limited. Only a finite amount of land exists, for example, and people do not have unlimited time to meet all of their needs and wants. Because no resources exist in unlimited quantities, societies must establish priorities and decide how best to allocate resources in such a way that meets as many needs and wants as possible.
Capital - Our Lost Treasure
A dramatically changing mix of resources used to create the wealth and prosperity we want is the hallmark of the modern age. Though the value of the natural resources in land remains the same it’s relatively less important. The role of labour has been steadily declining for 200 years and exponentially so today. The relative role of capital has become the single most important resource in wealth creation and increased prosperity. Capital, in economics, is the mix of technology, machines, intellectual ideas and knowledge, cash money, access to debt, markets and distribution that enables labour to add value to natural resources. The better capital is employed the more productive labour becomes. Today, globally, labour is very productive.
But in Nova Scotia, like in many rural regions, access to capital has not been much of a concern because we simply extract resources to be sent and processed elsewhere. We are far behind, and far less productive because we do not have access to capital, even in the form of our own wealth.
Capital is so rare and so drained from our rural region that the McNeil government, Ivany and the rest, like all Nova Scotia governments before it, can’t conceive of it. They stare Golum-like at the provincial treasury mistaking that for our wealth. It's not. They are wrong. It's not even a fraction of our wealth. They can only imagine adding more labour or drawing down more natural resources from the land to create more wealth. This will not work. This is not how the modern world works now or going into the future. The government’s austerity plan is all pain and no gain. Ivany’s adding of more labour is only good for land speculators, monopolists (like the power company) and government. It will not create new wealth for citizens – in fact, each citizen will be individually less well off. Real wealth is created by drawing down fewer natural resources, differentiating them, and processing them to their highest possible use using very limited highly-productive labour by effectively employing capital.
Getting Informed and Government
For society, economics provides a scientific approach to analyzing and understanding government decisions for ensuring stable economic growth with sustainable output and the highest possible level of employment. Economic methods also provide the tools by which policy analysts, and regular people, study the possible costs, benefits and effects of government policies in a range of areas, from the environment to health care and education. Economic principles can help guide the actions that help foster a prosperous society.
Economics is evolving and will help provide answers for dealing with policy issues that affect the future.
Writing about life, citizenship, and Nova Scotia.