AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |
Back to Blog
Conspire etymology3/25/2023 ![]() ![]() It is, in fact, quite feasible to exclude somebody from the relevant benefits of the monetary framework: One simply refuses to exchange goods with that person. That everybody enjoys the benefits associated with being able to buy a new car whenever they wish does not mean that cars are non-excludable, because the car dealer can always turn down a trade with potential customers. But the same can be asserted about the existence of a flourishing automobile market. It appears as though money is non-excludable, because the existence of an advanced economy characterized by widespread indirect exchange (i.e., the use of money, as opposed to barter) benefits everybody who might wish to partake of that economy’s fruits. Is money non-excludable? This one is trickier. Is money non-rival? It seems obvious that if I am “consuming” a dollar (buying a dollar’s worth of goods and services), those benefits accrue to me, and thus others cannot consume that same dollar. Non-rival means an individual’s consumption of that good does not diminish anybody else’s ability to consume it as well non-excludable means it is infeasible to prevent those who do not pay for the good from enjoying its benefits, because such exclusion is prohibitively costly. Public goods are traditionally defined as being both non-rival and non-excludable in consumption. The chief problem with this argument is that money is not a public good.īoth professional economists and laypersons have an unfortunate tendency to be sloppy with their terminology when it comes to identifying public goods. Therefore, it seems especially important that the guiding hand of government is active in staving off money mischief. Money is essential to all economic activity beyond bare subsistence-level production an advanced division of labor is inconceivable without some way of comparing resource allocation along various lines of production, and money provides the common denominator with which such comparisons can be made. Without a public authority underpinning the stability of the monetary framework, that framework would be underdeveloped and unreliable. One primary argument against market-provided money is that money is a “public good.” Public goods, the argument goes, are inadequately provisioned when such provision is left to voluntary arrangements. ![]() The various rationales for doing so rest on a number of unsound premises and questionable reasoning, which I’d like to cover briefly. And all assign to public agencies, most notably central banks, the provision and oversight of money. We are at a crossroads.ĭespite the general market orientation of developed countries across the globe, all have rejected a laissez-faire approach to money. What role should the public sector play in an economy’s monetary framework? In other words, should money be provided by the market or by the government? Economists have been wrestling with such questions for centuries, but since the financial crisis and the ensuing recession, the question has become increasingly important.
0 Comments
Read More
Leave a Reply. |