Wednesday, July 28, 2010

economics and behavior

Most people have a naive view of money based on the model of the household budget. They're not used to thinking about money as an artificial token of exchange backed by the totality of productive capacity in the economy, whose purpose is to allow people to incentivise others to do useful things for them, such that if an accounting imbalance makes it difficult to pay people to do the useful things they're capable of doing, one way to get them working again might be simply to create more money.


Economist: Keynesianism... what is money?

A profound - and fairly succinct - expression of an idea I've been struggling with: how can we see money as something other than stuff (which it stopped being even a stand-in/symbol/representation of in the '20s or '30s with the end of the gold standard)? It's more like a catalyst, and it's definitely a form of communication.

- the government is responsible, alongside others, to incentivize people to work. (yeah "incentivize" is a neologism. get used to it.)
- money is both a store of value (though this function may be vestigal??) _and_ a tool for use in creating value
- the public doesn't get this, and even those few experts and/or politicians who do aren't super sure what to do with/about it.


An interesting observation from the comments: politicians can't admit to this deep/subtle understanding of money when the masses don't get it. Thus, we as designers need to help bring this new perspective into the popular consciousness before our governments can act in accord with the attendant reality (which is still less than perfect - I'm definitely remaining open to a better one!)

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