The computer is an amazing machine. With the exception of the airplane, the grilled cheese sandwich, and possibly the wheel, it’s man’s greatest invention. Computers allow us to communicate almost instantly with anyone on the planet; they’ve increased productivity in almost every industry while creating new, high-paying jobs. Oh yeah, and they offer us nearly unlimited access to mindless entertainment.
With all that computers can do, the most amazing thing is how they do it. You see, at the most basic level, computers can really only do one thing; they can add. Not only are they limited to addition, they only get to use two digits, 1 and 0, to do so. Actually, if you want to be picky, it’s just two electrical states, on and off. If you think about it, though, the principle’s not much different than that of a light switch. Programmers and computer engineers use this basic principle to make computers do all of the cool stuff computers do-computer aided design, complex structural analysis, Grand Theft Auto, etc.
If something as powerful and complex as a modern computer can be reduced to such a simple idea, maybe other complex things can be as well. Perhaps the key to understanding things like government and the economy is to ferret out these simple, first principles and understand them.
Let’s start with the economy. We’ll create our own little, imaginary economy and use it to try to understand the big economy which our government seems Hell-bent on screwing up.
In his book Basic Economics, economist Thomas Sowell defines an economy as a means for distributing scarce resources, so we’ll need some scarce resources and a distribution network. We’ll start out using chickens and sheep as our scarce resources, and our distribution network will consist of a couple of farmers, Bubba and Earl. In this sort of exercise, most folks would probably call their farmers Farmer A and Farmer B or some such. I’d like our economy to have a little more color, though, and I don’t know any farmers named A and B, so we’ll stick with Bubba and Earl. We will follow standard convention in not naming our sheep or chickens, however. We won’t even bother to give the animals letters as they’re really just extras in our little exercise and we don’t want to grow too attached to them just in case our farmers get hungry. We’ll have no vegetarians in our economy. It’s unnatural. If God didn’t want us to eat animals, He wouldn’t have made them out of meat.
Anyway-our economy. We’ll let Earl raise the chickens and Bubba can raise the sheep because, as we all know, you can’t trust a guy named Bubba around a bunch of sheep. It’d be like Temptation Island. Oh, I almost forgot to mention that our economy takes place on an island. This will be important later on. Right now let’s concentrate on livestock.
Earl raises sheep and Bubba raises chickens. But Earl likes eggs for breakfast and fried chicken for dinner (our economy doesn’t have any doctors, so cholesterol hasn’t been invented yet), and, as we mentioned above, Bubba is particularly fond of sheep. Bubba can’t raise sheep, though because he has no place for them to graze, and Earl can’t raise chickens because…well, he just can’t.
If Earl wants fried eggs and chickens, and Bubba wants companionship-I mean mutton, our two farmers must work out a deal. After much haggling, our heroes decide that one of Earl’s sheep is worth two of Bubba’s chickens and a dozen eggs. All is well in our little world. Earl has his eggs and yard pimp, and Bubba…well, let’s move on.
By and by, another farmer, we’ll call him Slash, washes up on our island. Now Slash doesn’t have a clue about raising sheep or chickens. Even if he did, it wouldn’t do him any good because the only thing he has to trade for the livestock is a small bag of dried beans that he managed to hang onto when he was thrown overboard (while Slash’s story prior to his washing up on our beach is full of adventure, romance and intrigue, it has little bearing on our current subject and so the telling of it must wait for another time). Even though Slash doesn’t know beans about raising livestock, he knows quite a lot about raising beans. And honestly, after years of eating nothing but chicken, eggs, and mutton, Earl and Bubba really need some fiber in their diets.
Since Slash’s beans aren’t magic, and our economy really can’t develop much farther until Slash gets his first bean harvest, we’ll have to leave off here for now. Don’t worry, though. Our farmers got together and invented credit so that Slash won’t starve before his beans come in. Bubba and Earl will trade Slash some chickens, eggs and sheep for bean futures.
Until next time, be well, be free, and be happy,
DW
