Economics - Prelude 1
Going to start with an assortment of observations. Reading Adam Smith's "Wealth of Nations" of late, with the benefit of a longer timeline. Had come to much of this before, and found Smith's observations added clarity.
Labor is the source of value
Constructive labor creates value. Was encouraged to find Adam Smith came to the same base, 250-odd years ago.
To be clear "everything" in economy follows from this base.
An optimal economy would always make full use of labor to create the most real wealth.
First line of the Constitution of the United States is important
Our country is a product of the "Age of Enlightenment" and established by a "Revolutionary War". Should keep in mind this country was a radical departure from governments of the past. Our Constitution puts the best life for a citizen (general welfare) before wealth, or aristocracy, or government. This was a radical new basis for government, at the time.
Money is weird
Seems we do not have a coherent(!) theory of money. (Yeh. This was a surprise.) If labor is the source of value, and you cannot store labor, a stable store of value is not possible.
Had the benefit of reading a recent book on the history of money. Somewhat to my shock, the working theory of "money" is not remotely an eternal truth, but has changed much even in my lifetime. Smith does a very decent job framing "money" from the evidence of history of his time. We have the benefit of an added 250-odd years, and more economic activity than all prior history, so we can get a bit further.
At the end of the day, we need a short-term common means to exchange value within a context. Context equals country (at least for the United States of America). This is a "common good", as in the first line of our Constitution, and thus the role of government. In turn, this means we want to select the best of us to govern "money".
Any proposal that wants to return to any of the alternatives our predecessors tried and abandoned ... fails to learn from history.
If our present seems not close to the above, you understood the problem.
Gold is not money
Smith goes in depth on this subject ... and even gets a bit spicy. In Smith's time gold (and silver) were useful commodities in exchanging short-term value between countries. In the present, US Dollars seem to have taken that role.
Rare metals could (once) serve as commodities for exchange between economic context, but are not stable stores of value.
If you suffer from confusion on this topic, keep in mind the god of capitalism thought you were an idiot - 250 years ago. Catch up.
Our theory of Economics is broken
During the 2008 economic mess, an imagined outside observer (who could not speak our language) would see us collectively freeze up for no reason. Nothing happened in the real world. California did not fall into the ocean. The problem was entirely within our (collective) heads. Put differently, we have a software problem.
An optimal economy would ensure that labor was always employed so as to produce the most real wealth. We are not yet good at this.
Cost of context
For rather a long time I thought taxation lacked a rational basis, as was near to random. Turns out, taxation can and should be a reflection of the cost of context. Saw a small building replaced in a (once) run-down space in downtown Los Angeles, which provided example.
There is great advantage in owning land or locating a business within the economic context of the United States. That context has costs. If you extract profit from that context, you should bear a fair share of the costs.
In present, the basis for taxation