The Crazy World Economic Bean Counting Game

I want to take a second to emphasize the “game” nature of economics… the fact that economics is about mutual agreements about how to count beans so that there can be winners and losers.

Get this. One of the big items on the table is the trade imbalance with China. Basically, we buy a whole lot more of there stuff than they buy of ours. So, our dollars end up in their bank accounts more than their Renminbi (translate you Yuan) end up in our bank accounts. But consider the case of the Apple iPhone. Here is the reality of iPhone construction. Parts are gathered up and shipped to China, where they are assembled into a working iPhone. The parts come from the United States, are the products of United States companies like Texas Instruments, and many are manufactured in the United States.  In fact, the actual contribution to the construction of the iPhone from China is about 6 bucks of Chinese labor to put the phone together.

Get the picture. Things are sent from the USA to China. China puts those things together and sends them back to the USA. So, how do the bean counters count the beans on this one? Well, the things being sent to China are not a finished product so they are counted as zero. On the other hand, the iPhone coming back is an assembled product so it is counted as about $150. The value added in China was about $6, but it’s counted as $150. That means the trade deficit from one iPhone is $150.

The point is that the way the beans are counted are outdated in a global economy… and when you think about it how do you count digital beans? The crisis in economic current events is that the economic game must change.

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Is The Economic House of Cards Collapsing

In the recent History Channel show The Prophets of Doom, the economic crisis was identified as on of the big challenges facing our civilization. Some of the others including global climate change, water scarcity, and peak oil. The economic crisis is unique among all the others because it is the only one that is not reality based. When there is no more clean water, there is no more clean water, period. When the climate has changed it has changed. These are real physical things. If there is no water, there is no water and you can’t argue about it. There either is water or there isn’t.

Economics is completely different because it is not based on physical reality, but, rather, on human agreement. It is, in the final analysis, a set of agreements about how something is measured. It’s a way of keeping score to see who has what… and some might argue that is a way of measuring social class.

Think about measuring things. If you are old enough, you may remember the debate between using the English system of measurement — pounds, feet, inches and so forth — and the metric system, which is neat and tidy for doing scientific calculations. Now, if you think of physical reality, something that is 1 inch long can be called “1 inch long” or “2.54 centimeters long” and the system of measuring doesn’t change the actual length of the physical thing. Even so, there was a huge debate about switching the USA to metric and all the problems that would come from it. The problems didn’t come from calling something inches or centimeters, but from the implications for things like wrenches and retooling.

Economics is even more interesting. Think about the game of Monopoly for a minute. There are a certain set of rules that determine the economics of the game. When you land on a property that someone else owns you have to pay them rent, for example. If someone changed the rules… let’s say you added the idea that people who owned houses and hotels had to pay taxes that were distributed to the people who were running out of money… then there would be a big stink raised by the Monopoly purists, but in the long run the world would keep spinning and eventually everybody would be playing Monopoly by the new rules.

Well guess what, global economics is really a big Monopoly game. As we are approaching 2012 and people are talking about current economic events that might lead to crisis or collapse, they are really saying that the way the game is being played is no longer effective… and that means that the economic rules are no longer effectively serving society as a whole. It’s important to understand that the economic rules of the game are not sacrosanct and certainly have not been around since time immemorial. Throughout history people have measured what economics measured and played the economic game in different ways. So, the rules of the economic game can change and the world will keep spinning.

The important thing to keep in mind is that the resistance to changing the rules of the economic game will come from the people who perceive themselves as the winners in the game. It’s basic. When you believe the rules of a game favor you, then you want to keep the rules of the game the same.

What does all that mean? It’s simple. When you look at economic current events, remember that solving the economic crisis and potential collapse requires a change in consciousness that will allow the rules of the game to be changed. The recent economic crisis and recession has many people questioning if the current rules of the economic game that favor the amassing of wealth into the hands of a small percentage of the population while doing things like tossing people out of there homes is an effective set of rules. Yet, because we lack the change in consciousness, very little changed to either correct or prevent the problems that led to the economic collapse.

Yet, like the game of Monopoly, the world will continue to spin if the economic rules change… and the change in consciousness that must take place is the assumption of endless acquisition and consumption. That is the challenge facing our species. We must come to grips with the fact that we live on a finite planet. The consciousness that say there will be more and more each year is simply dysfunctional and it must change for us to survive. Start changing your own consciousness about this now.

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