Scarcity is the Key

24.10.2016 • The Economy

By Bill Bonner – Bill Bonner’s Diary (USA) –

Only where love and need are one,
And the work is play for mortal stakes,
Is the deed ever really done
For Heaven and the future’s sakes.

“Two Tramps in Mud Time,” Robert Frost


bill bonner

BALTIMORE – “What are you doing? You’re making such a mess.”

We were sitting in the kitchen in front of an open fire. At our feet was a bucket of soapy water. In our hands were a dozen or so dirty sticks.

“I’m washing these old tobacco sticks,” we explained to Elizabeth. “I’m going to recycle them into balusters.”

“Why?”

“I’m creating ‘artificial scarcity.’ It’s a term I just made up.”

“Huh?”

“Scarcity is the key to progress.”

It’s part of my developing theory that economists have ruined the world. I’ve been writing about how they corrupted the economy with the fake dollar. And later this week in my monthly newsletter, The Bill Bonner Letter, I’m exploring how they corrupted America’s political system, too. Now I’m beginning to realize that they corrupted our whole society.

“Scarcity is the key. As long as Adam and Eve were in the Garden of Eden, they didn’t need to figure out how to plant wheat, build an internal combustion engine, or worry about getting arthritis.

“Outside of the Garden of Eden, it wasn’t so easy. They had to innovate, invent… They had to be careful with time and money. That’s the story of mankind.

“But the feds are undermining the power of scarcity. The post-1971 fake dollar, along with the Fed’s zero-interest-rate policy, give the false impression of abundance. You’re supposed to think that there’s more real money than there really is.

“At zero interest rates, it’s as though we humans had an infinite amount of time and resources. It’s as though we were still in Eden. That’s why people waste so much capital… and why the economy has slowed down so much.”

“Oh… I’ve got to run to the store… you can tell me more later…”

Need, Respect, Value

We could have just gone up to Home Depot and bought some new balusters.

But these tobacco sticks are much more interesting. They were hand split from oak and hickory.

Besides, we felt sorry for them.

Each year, maybe for 100 years, these sticks felt the embrace of a farmer’s rugged hands. He tossed them on the wagon and took them out with him into the August heat.

Each would get a steel spear point placed on its head so that five or six tobacco stalks could be impaled on it. Then it was hung across poles in the barn where it would carry the stalks for months before being taken down so the tobacco leaves could be stripped off, tied into “hands,” and packed into “burthens.”

The sticks were an important part of the process. They were needed. They were respected and valued. They were loved.

In the 1950s and 1960s in southern Maryland, you could tell which of the boys in high school were farmers’ sons. They had new cars.

Typically, the father would set aside an acre or so for his boys. All it took was a few years and a lot of hard work; by the time the kid was a senior in high school, he was driving on new wheels.

But the tobacco economy fell to pieces in the 1970s. Now the barns are derelict… and the tobacco sticks rot. Years go by when no human hands touch them. They just sit in piles, wasting away… like crippled old soldiers in a veterans home.

We decided to put them to use, to bring them in out of the cold… to rehabilitate them… and to make them part of family life again.

We’re renovating a funky house. So far we’ve found two uses for the old sticks – as balusters on the stairways… and for the headboard of a bed.

“Well, they’re certainly original,” Elizabeth rendered judgment.

Opinions are mixed. But to us, these recycled sticks are far more engaging than anything we could buy in the store.

It would have been easier to just buy a bed… and the twisty balusters took a bit of effort to get in the right place… but the end product is satisfying.

Economic Sabotage

Economists say the average American’s income may not have gone up over the last 30 years or so, but his “quality of life” has improved.

He has more gadgets. His truck has airbags. He may get more benefits from the government. He can sit in a carpeted, heated, air-conditioned office during the week and power wash his driveway on weekends after watching a football game on a big screen.

He doesn’t have to build his own bed or recycle tobacco sticks.

But economists only have numbers, and numbers measure quantity, not quality. So when they advise a president… or direct a central bank… they are not looking at quality but at numbers.

And they always want bigger numbers – more people working, higher GDP growth, greater productivity. More… more… more. They even want more consumer price inflation… because it gives the impression of more of everything else!

Prices go up… sales go up… GDP goes up.  Glory, hallelujah.

A man who recycles tobacco sticks – and spends no money in the process – is a sinner; he is practically committing an act of economic sabotage.

There were no sales taxes paid on the balusters that we didn’t buy. No orders were sent replacing the inventory. No profits were registered. And no wages were paid – neither to the person who didn’t sell them, nor to the person who didn’t ship them, nor to the person who didn’t make them.

Instead, we just scrubbed them down in our kitchen and recycled them as best we could.

“That’s the problem, isn’t it?”  Elizabeth reflected later.

“You can’t measure quality of life. Economists can only measure things in terms of money. But if a woman stays home to take care of her children, no money changes hands.

“The economists will say that is ‘bad’ for the economy. But what would the children say?”

More to come…

-Read more here (English)-

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