Featured Post

I = S - M

The modern way of thinking about economics has been I = M - S Where I is the I as in me, M is what is 'mine' and S is what ...

4/15/15

"Are you saying that if I buy the latest gadget and don't use it, that that act alone will create unemployment?" asks a man at my talk in a badgering tone. 

"Undoubtedly." I answer.

"And you will probably say that it will take you too long to explain the mathematics of it?" he adds rather crossly.

"No," I say, "I can explain it in plain words in less than a minute."

"When you buy a gadget (or anything else) that you don't use, you divert resources away from their alternative uses. Resources used to make the gadget are now no longer available for someone somewhere in the world to use. Similar resources are now higher in price than before and hence more difficult to afford and acquire. With the higher price attached to these resources, potential users of these resources, on the margin, are no longer able to employ themselves in using these resources to produce what they would have in the absence of the purchase of the gadget (or anything else) and its lack of use. 

"Since resources are scarce, our acts of purchase without use always steal resources away from alternate uses, creating unemployment for someone somewhere in the world."

The questioner is silent. I have seen this happen in my talks and workshops before. I sense that he is becoming a conscious human being. I sense that I have made a new friend. 

The economy of use urges us to become conscious of our spending decisions by keeping only that which we use and giving away, in a creative way, that which we do not use. This is the only was to redress the imbalance that centuries of the economy of more more more has created on our planet and solve the problem of unemployment.