Hello.  Welcome to Can’t-Fail Economics.

I’d like to make a simple point: that all of the world’s problems are caused by our ignorance of economics.

Life here on our planet may be free, but we still can’t avoid using this God-awful thing called “money,” a necessity of everyday life that we don’t even fully understand.

The human brain understands economics backwards: the worst thing we can do is to compete to be the cheapest option. It’s actually very easy: we already know how to produce everything we need and want. (Remember, we went to the moon and back!)  It’s all clear once you understand this point, and I can tell you exactly what you need to get started.

First, we have to get rid of the Tea Party. We will never accomplish anything with radical conservatism, fighting to cut taxes and reducing the size of our government. Some time ago, our government abandoned regulation of the marketplace, and in response, the so-called “private sector” immediately sent millions of jobs overseas. Just think: at the height of World War II, we had high taxes and widespread regulation, and by the end of the war, we were the richest nation in the world. Having high taxes and a large government works!  Taxing-and-spending is positive economics. We have the ability to grow our economy to 100% employment and still earn high wages. (Really, the best economic situation we could hope for.) But Big Business will never push for 100% employment (or high wages) because they have economics backwards.  They just don’t understand that what goes around, comes around.

No intelligent person would choose to pay low wages. High wages make everyone (and their employers!) richer.

Full employment is the best situation for all of us—but it’s impossible without high wages, because in the end we all pay each other.

We have to get serious about this issue, and do it right.  Most people are influenced by personal economics, but personal economics and the larger economy are in fact very different. As individuals, we sometimes have to choose a cheaper product, but only because we earn low wages, and as we move up the income ladder, we are empowered to adjust our spending level to suit our lifestyle.

Present-day capitalism, in which we compete to be the cheapest at what we do, is nothing more than legalized slavery.  Slaves were only paid with room and board, and today that’s just as true for our poorest population. This is ridiculous! One person lives in grand splendor as a reward for forcing millions of people into poverty.

People don’t just live in poverty because of their own ignorance; they live in poverty because of intellectual ignorance. The intellectual elite makes all of the rules forcing people into poverty. If the rich really are so intelligent, then why don’t they share their wisdom with the rest of us? In competing to be the cheapest, we automatically lose half of our real ability. The industrial revolution brought about power from many sources, including machine energy. Everything we do is now refined to the point that our real expertise today is in how to put people out of work and forcing them down the economic ladder.

It’s an economic death march, and it will continue until we adopt more-expensive, higher wages. Cheating—and trying to win at all costs—will never bring real success—it only weakens us in the end. Just look at Mitt Romney, one of the most reckless executives in modern business… he made plenty of money for himself, but he did so by crippling businesses and capping the growth our economy.

We have the know-how and the ability to end poverty, and doing so will not cost a single red cent. In fact, getting people out of poverty makes everyone richer, and even fosters compassion between us. It’s that saying about teaching a man to fish, instead of just giving him a fish—don’t give me fish or money, give me knowledge. You don’t need money, but you do need knowledge.

It’s easy to hate taxes, but they’re not the problem. We need taxes: it’s like buying groceries at the supermarket—it’s just that we don’t call those taxes, and we get to bring those groceries home and use them right away. We rarely get to see where all of our tax dollars go. Taxes make us richer, and so does everything else we do: food, cars, trucks, airplanes, auto racing, basketball, football, and so on. Tax-and-spend policies foster a healthy economy. Simply focusing on increasing the size of our economy, alone, will never solve our many problems. Our biggest issue is our drive to be the cheapest, the race to the bottom.  When we compete to be the cheapest, it’s so easy to make mistakes. We accept mediocrity, but mediocrity keeps us from growing. We can’t go up when we’re obsessed with going down—cheap is the problem. Expensive is the solution. If we have any backbone at all, we will stop competing to be the cheapest, and instead deliberately make things more expensive—starting with high wages.

There’s no reason for low wages. Low wages bring poverty, and all the ugliness of poverty, including crime and terrorism. Poverty is a hell-hole for those living in it. Yes, it does cost money to get people out of poverty—but you must consider that all income comes from some cost, somewhere. We need to solve our problems with income, and that means we need more cost—because cost and income are one-and-the–same. We have to earn our way out of debt, and use our income to pay our bills—you can’t simply cut costs without also lowering employment at the same time. We love to save money, but not spending money destroys our economy and causes poverty. Throughout history, the lesson of economics is this: “what goes around, comes around.” Take, for example, a woman making $50,000 a year: that $50,000 of income “goes around” until it eventually comes back to her. At the end of the day, if you really think about it, everyone pays themselves. Spending money is the only way to make more money.

You can’t have it both ways. Each person in poverty has both knowledge and ability; we must help them make use of those two things if we don’t want those gifts going to waste and fading away. Sure, everyone wants to save money for that rainy day—and that’s okay—but our urge to save money pollutes our larger economic debate, poisoning our economy. When we the taxpayers pay to build a bridge, our first priority is always to control the final cost—and when we’re not happy with the numbers, we demand that the project be scrapped altogether. Yes, building a “bridge to nowhere” is not an example of good economic policy… but it is a good lesson. We have a surplus of knowledge and ability—a surplus which puts good people out of work unless we overspend on projects that we might normally reject, like going to the moon and back. The private sector could never go to the moon and back on its own, even though that effort makes us richer. No, we paid to do that (through our government)—but all of the money ended up in the private sector. After that, it was spent and re-spent, over and over again.  Money always reciprocates.

I prefer to overpay everyone. Overpaying is the only way you can be certain that you’re using everyone’s knowledge and ability. Wasting money is better than wasting economic production. The rich will wind up with an excess amount, but then we can tax it back, and send it around, again and again. That’s what economics is all about: keep the money, the products, and the services moving along. All of our economic problems are rooted in our desire to save money. First, by paying low wages—which increases the need for high taxes, which just increases our hatred of high taxes. This cycle cripples any attempt to do things well. When we go to build a school, we need to raise money… so how much?  We compromise the project before it even gets off the ground. We never do things right. We are lucky if we do things even 80% right. And then, when things don’t work right, or like we expect them to, somebody wants to fix it. But somebody else always complains, “Don’t throw more money at it.”  What do they want to throw at it? Even more compromised ideas?

When I say that I want to make things more expensive, I believe that we should move up the ladder until we reach our highest level of income. It is possible to make a particular item too expensive… but that’s irrelevant. We actually pay for everything with the money we earn working to produce it. It’s a tie game, but there’s so much movement back and forth that we can’t just see it for what it really is. It’s the sham economy. We have the stock market, where people build riches on a second, false economy that we just accept as truth—but it must still follow the real economy. We can’t pay everybody what they are worth unless we overpay them. By overpaying, we ensure the use of all of our knowledge and ability—and ultimately, encourage more knowledge and ability.

You can’t beat the truth. Are you prepared for the future? We are all a part of the problem… and we must all be a part of the solution. We do better when we work together, and we must prepare for the future together. Don’t get lost in the forest of indecision. Make yourself part of the solution now: rid yourself of ignorance, and make room for your true knowledge.

I do welcome your thoughts—please share them using the comment form below.

Harold Grisham