As a dreamer, I have always enjoyed a good Sci-Fi movie. Utopian worlds are interesting, and much blood and sweat has been spent by mankind in the quest for utopia. President Obama is a utopian, and he is always telling me how he can take my money, and with his infinite wisdom, he can build a better world.
Today I want to share with you my own vision for utopia, and I won’t take a penny of your hard earned money to achieve it.
In the Movie First Contact, Captain of the USS Enterprise explains Federation economics when Lily Sloane asks him how much the Enterprise cost to build. Picard says to her, “The economics of the future is somewhat different. You see, money doesn’t exist in the 24th century… The acquisition of wealth is no longer the driving force in our lives. We work to better ourselves and the rest of Humanity.”
According to the creator of Star Trek Gene Rodenberry, he want to show a very different world. He described it this way: “In the 24th century there will be no hunger, there will be no greed, and all the children will know how to read.”
The vision sounds great, the question I have grappled with is how do we get there? Can we get there? Would we want to get there?
The Bible teaches “For the love of money is a root of all kinds of evils” (1 Timothy 6:10). To get rid of these evils Rodenberry just abolishes money. Problem is without money you cannot have prices or price discovery. Without prices and price discovery, resources are allocated in some type of redistributionist scheme created by the mind of some scholar, or worse yet some tyrant.
Socialism is abhorrent to me. It is abhorrent because I forever imagine some nanny sitting in a gray government office building telling me what to do. How to live. Kind of like the way Mayor Bloomberg of New York and Michelle Obama are currently nagging us collectively to not eat fatty foods or drink sugary drinks.
When Michelle’s rear-end is smaller than my own, I promise to listen. In the meantime, please keep your opinions about my diet to yourself. (I wouldn’t say this if it wasn’t for her constant nagging and hypocritical lifestyle, because it just isn’t polite)
Price discovery allows us to judge two goods next to one another and decide which good we want to acquire. For example, to patch and repair the hole in my driveway is $600. It will also cost me about $600 to spent three days in Las Vegas next week attending the annual FreedomFest Conference. Because I know the prices, I can make better decisions for myself.
In the Star Trek economy, I would have no way of knowing how to compare these two desired goods.
And this gets me to the point of my entire column. I want to both repair my driveway and attend FreedomFest. How can I do both?
The answer is deflation. We are constantly hearing propaganda against deflation. I am so tired of hearing it. I had to write this rebuttal.
Deflation is falling prices. Falling prices are good. They are good for consumers, they are good for savers, and they are good for a society. The only group hurt by deflation is bankers and people that borrow more than is appropriate. They always want inflation so they can pay savers back with depreciated dollars.
Development and Growth bring down prices. Just think about our own history. The time period of the greatest growth in the U.S. was during the nineteenth century, from 1820 to 1850 and from 1865 to 1900. These two time periods are both connected with substantial deflation. During these two periods, prices were sliced in half.
This is the same way and Apple I-Phone 4 is half the price it used to cost.
Inflation is much worse than deflation. It robs wage earners and the poor. Central bankers printing too much money is the primary reason for inflation. It is also the primary reason for the growth of income inequalities. The rich have access to borrowed capital and get richer by borrowing money during inflation. The middle class sinks toward poverty as what money they have and earn loses value.
The next time you hear the word deflation, imagine how good I would feel if I could fix my driveway and attend FreedomFest for only $600. Instead I live in a country with a target goal of at least 2% inflation. In 35 years of 2% inflation my money is worth only 50% of what it used to be.
If deflation is pronounced enough, prices and wages will converge at zero, and we will be living in Gene Rodenberry’s 24th century. Prices will never reach zero, but with prices declining we will all have more goods and services for less money, and the worry and stress of life will dissipate.
This commentary originally appeared at CapitalHillDaily.com and is re-published here with permission.
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