Coffee Time Economics

Had an interesting chat with the fellows this a.m.; the coffee clutch gathers in a parking lot to discuss the days events. A tug boat operator, a landscaper, a carpenter, a bricklayer, and yours truly. This is like church for guys: yak about politics, economy, news, events.

One fellow, the carpenter is a big supporter of the OWS movements. He’s a homeowner, a tradesman, union member, and considers himself fair minded, a universal bloke.

The landscaper is from the former Czech Republic. He was in the military, wounded, and ended up in Montreal.

The bricklayer is a city boy from “Tarana” (Toronto) who enjoys his work, likes his sports and coffee, and maintains an even attitude, probably due to some prior history.

The tug operator, you’d never know to look at him. He’s a real scavenger, beachcomber, but incredibly well read. Writes lots of letters to the editor. And constantly packs an iPod with ebooks and photos. What do you do on a dock all day? Whistle?

Yours truly is the token freak. The artist.

The carpenter feels the banks have ripped off the population. He’s willing to pay more in taxes if the money is distributed fairly—but, he says, “Do you know that in Norway, they pay 78% taxes? But they get everything looked after.” The group agreed. 78% in taxes seemed like a lot of money. However, we rationalized, Norwegians get healthcare, utilities, education, cradle-to-grave stuff. The oil is nationalized, so that covers a portion of the cost, but 78% who wants that?!

I said, “Why not? Sounds like a reasonable package deal.”

So I asked him, how much does he have left in cash, after you pay all your bills, do you save each month? (He’s a family guy, estranged, but healthy into the kids, school fees, sports, supplies.) He said, “Nothing.” I said, “There you go, you’re taxed at 100%. At least in Norway, I stand a chance of saving 22%. Even if I do eat beans.

Then we talked about money and how the dollar used to buy a gallon of gas, a bag of chips, and a chocolate bar. “Yeah, but who had a buck?” The group agreed. Paper money just isn’t what it used to be. I asked them to stop calling it money, “They are promissory notes, government checks, if you must. The paper currency does not meet the criteria for ‘money’ in economics.” I explained that paper represents a debt owed. And that debt is passed on from one individual to another so that people can buy stuff on credit. This strategy works if productivity and the rate of consumption increase by 8% per year. The government issues the stuff and expects an 8% return to cover the increasing cost of social services, administration, security.

The group balked, “Ha, who can get 8% a year?” I explained that the gap was the deficit. The debt is like the mortgage and the deficit is like the overdraft checking account.

Something dawned on the carpenter, he said, “If people have been paying all their taxes and expect to get a pension, they’re will be a huge tax revolt!”

I said, “The students are now discovering that the jobs aren’t there. Productivity was shipped overseas because consumers like it cheap. Wait until the labor force finds out the money isn’t there.”

The tugboat operator jumped in, “Hey, you know how someone can bury a copper penny and you dig it up a thousand years later and it’s still there, a museum piece. You can’t do that with paper money.”

“Stop calling it money,” I said.

“Yeah, yeah, lottobucks then,” he said.

We laughed. “Hey, remember Canadian Tire money in the eighties, you could spend it at the bar.” “Casino chips, that’s what I’m trading in for.” “Hey, you know, I took the two gold rings to one of those guys who had an ad, ‘Buy Gold’, I thought why not? So guess how much? Five hundred bucks!” “Not bad.” “Good scoop.”

“Tell you what,” I said, “I’ll take some my bogus government checks and go buy your rings.”

“Good luck,” he said, “that was a brutal divorce.”

We laughed. My Czech friend smiled and said nothing.


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