And Now For Something Completely Different

Austro-Keynesianism Rules, OK!

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About Edward Hugh

Edward 'the bonobo is a Catalan economist of British extraction. After being born, brought-up and educated in the United Kingdom, Edward subsequently settled in Barcelona where he has now lived for over 15 years. As a consequence Edward considers himself to be "Catalan by adoption". He has also to some extent been "adopted by Catalonia", since throughout the current economic crisis he has been a constant voice on TV, radio and in the press arguing in favor of the need for some kind of internal devaluation if Spain wants to stay inside the Euro. By inclination he is a macro economist, but his obsession with trying to understand the economic impact of demographic changes has often taken him far from home, off and away from the more tranquil and placid pastures of the dismal science, into the bracken and thicket of demography, anthropology, biology, sociology and systems theory. All of which has lead him to ask himself whether Thomas Wolfe was not in fact right when he asserted that the fact of the matter is "you can never go home again".

3 thoughts on “And Now For Something Completely Different

  1. Well made and funny, the Keynesian economics versus the Austrian school, but who is right and who is wrong. Or even better, who of these two is more right, and who of those two is more wrong? That’s hard to say because the economy is such a complex theme. The most simply manner to get to know what system will work best, is just to live by the different economic systems for a century or so, and then look which one is giving the best overall outcome. But that of course is impossible….
    So, its better to study the different systems.
    That does remember me, that when I was a schoolboy of about 10 years old, I did myself a sort of simple economic study, although most of my interests were in other fields of live. But I got fascinated by the fact that people worked hard to gain banknotes, and then were able to buy all kinds of goods with those same banknotes. I did realize that essentially, banknotes were made of almost worthless paper, but still people were giving away expensive goods in exchange for those magic pieces of paper. So, without the burden of any economic knowledge, I spend a lot of time thinking, trying to get to the very core of what money really was, besides just paper. Finally I came to the conclusion that money was “bevroren moeite”. This is Dutch and can be translated as “frozen effort”. Still after all these years, I believe that this is one of the better definitions of money. Money is a way to easy transfer effort from one person to another. And effort could be almost everything; the effort needed to manufacture things, the effort needed to heal a patient, the effort to kill someone etc.etc.
    So now we know that money can be seen as “frozen effort”, but what represents the value of money.
    Well, in my opinion, first of all the value of money is depending on time; how much time represent a certain amount of money(=effort). To put it simple; how much time does it take someone to gain a certain amount of money. You see, we talking here about income. For someone who is making 10 euros’ an hour with a certain job, 100 euros represents 10 hours of his effort (work). I think that if people are more aware of how many hours they really have to work, to earn the needed money to buy something they like, they will buy far less!
    Secondly, the value of money is depending on place. At different places on our planet persons who are doing the same job will have to work much less hours, or more hours, for the same amount of money (so money is representing here a different amount of effort). So, when you have a modest income in a place were people are well paid, and then spend that money in a place were people get far less, you suddenly can live the life of a millionaire. That’s just the way I feel when I am dining in a fancy restaurant in Chisinau, and get a bill that looks like it is one of an Dutch MacDonald’s. That the value of money is depending on place, is often the reason behind outsourcing.
    Enough unprofessional talk about money for now, I don’t want to upset Edward any further. But remember that money has its limitations. Although you can buy almost anything with money, even things like loyalty or even sex, you cant buy true love, that you only can give…
    Ron.

  2. Pingback: Hayek vs. Keynes | Eit stykkje av verda

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