"The Nobel prize-winning truth to what is a healthy economy."

Well, isn't that utterly ego-manical.

Bear with me here and see if you disagree.

Economists speak of "the cost point where marginal costs equal marginal returns". Or there's the "elasticity of demand" or "opportunity cost".

Meanwhile, our favorite two-faced say-whatever-it-takes-to-get-elected politicians are yelling how their part of the economy needs "growth". There has to be growth in jobs, growth in per capita income; just growth growth growth. Which means that if the country is up to its armpits with citizens barely with enough room to breathe, but the economy is still "growing"; then that is better than another country with a stable population and an economy in stasis also.

Uh-huh, sure.

This is not an advocation of population control to reach a healthy economy, I'm simply pointing out how people lose sight of the forest because of the trees. In other words, it's the quality of the economy's goods and services which matter, not the quantity.

Remember what economics is--the allocation of precious resources. If I'm building swords, then that is taking away from my ability to forge plowshares.

Now we need to define a healthy economy and this is quite simple:
• There are two forces at work in an economy:
  • Asset creation--the wealth of the economy which is its engine. This is reflected in the citizens' productivity.
  • Asset destruction--where citizens consume resources.
• A healthy economy has a net gain of asset creation over asset consumption. The economy grows as it should with real assets adding to its size and makeup.
• Part of the net gain is consumed by way of investment--better factories, education of its citizens, more research & development.

Now to explain:

There must be something produced (assuming the capitalist model is correct) for which the citizens have needs or desires. Cars, software, movies, houses, food--these all meet the requirements.

Meanwhile, there is asset destruction witb citizens consuming resources--food is eaten, cars wear out, houses become unlivable. That's pretty straight forward. The much more insidious aspect of asset destruction is the sheer number of jobs which are nothing more than overhead--people who get their cut for performing "important" jobs. Lawyers getting fees by way of superfluous lawsuits. Businessmen who dismantle and sell off companies' assets and take huge fees in the process. Stockbrokers getting a slice of the pie for merely making a trade happen.

Think about it.

Think about how many jobs which are nothing more than window dressing. At the core of the economy are those jobs which contain productivity by way of producing goods and true services. There has to be the true engine to the economy at its core. That's why I find politicians so laughable as they persue asset-destruction activities such as lotteries. Money is scooped out of people's pockets. A big cut happens as the lottery managers take theirs. A small portion is finally disbursed to lottery winners or state-mandated projects for "funding".

No new assets were created. An existing amount of money was gathered, it's dissipated thanks to overhead activities and remainder is frittered away.

Now if the moneies were put in a bank and lent to a businessmen to build a more efficient factory which produced better goods at a lower cost, then the money would have been seed money to make the economy truly grow thanks to asset creation. Thanks to a resulting increase in productivity, the economy has the room to allow other jobs to exist which ride the productive jobs' coattails. That way shops can exist which cater to the buffing and polishing of women's nails among other things.

You have to spend money to make money. There has to be investment for the future--new factories, new businesses filling new needs, an educated populace which can quickly become productive, and people's savings as the engine for the economy. Perfect example: Japan. Its citizens live on some rocky islands with next to no natural resources--except for a populace determined to do better. Education. Savings. Productivity. Concentrate on what is important. Look at their trade surplusses. That is not an accident for all these years. The Japanese apply themselves and reap the rewards. What can we claim?

So the next time a politician sings the praises of such-and-such jobs being created,
ask yourself:
do the jobs create wealth or do they simply transfer assets to someone's pocket so that person gets a cut in the process?

So the absolute and total key to the whole process is more activities of former and less of the latter. Look at any sick economy. You will always find overhead money suckers. Which is not unlike what is happening to America nowadays--stifling bureaucracy, layers of middle management, oppressive taxes. These are all nothing more than overhead--economic stiflers.

As long as the overhead blood suckers make a relatively small proportion of the country's goods and services, then it is healthy. It doesn't necessarily have to grow, the economy could be in stasis as they count up the goods and services. It's the quality of the goods and services rendered which matters.

Is the pie getting bigger or are people seeing how they can steal a cut of the existing pie? That's the key.

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