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June 6 1944, D-Day | Main | Saturday Gardening Thread: Fiddling Around [Y-not, KT, Weirddave]
June 06, 2015

Fundamental Concepts - Money is Fungible [Weirddave]

Money is fungible. That's a basic concept that most people are familiar with. It seems that most people don't stop to consider the implications of that statement in the real world. That's a real shame, because failure to grasp this simple principle is what allows the government to get away with all kinds of financial shenanigans.

First of all, definitions: Fungible [fuhn-juh-buh l]  adjective, Law 1.(especially of goods) being of such nature or kind as to be freely exchangeable or replaceable, in whole or in part, for another of like nature or kind.

That means, basically, that ten dollars is ten dollars. One $10 bill is interchangeable with another. In addition, any ten dollars is interchangeable with any other ten dollars. Ten $1 bills is exactly the same as two 5s or one 10.

What does this mean in the real world? Well, first of it, it means that anyone telling you that money is going somewhere but " it won't be used for X " is full of shit. Abortions are a good example. " We're giving Planned Parenthood $100 million, but don't worry wing nuts, that money is reserved for mammograms for poor people, it absolutely can't be used to fund abortions ". If you understand the concept of fungibility it is obvious that that statement is absurd. It's like saying that something sounds green. PP pays for mammograms ( not many, but lets set that aside for a sec ). It also pays for abortions. Since money is fungible, there is no way to say that " this " $10 pays for mammograms while " that " $10 pays for abortions. You can't distinguish between the two. You might as well claim that this oxygen molecule will only be used for breathing while the one next to it will only be used for burning. If anyone tried to tell you that you'd look at them like they were crazy. Anyone claiming that some money can be separated from other money should be treated the same way.

Now that that concept is clear, let us take a step back and look at what money is. Money is nothing more than a convenient medium of exchange. Consider three people. One is a babysitter, one a gold miner and one a lawyer. Each of them produces a good or service that is worth some amount of the others goods or services. One ounce of gold might be worth 100 hours of babysitting and 20 hours of legal work. One hour of legal work is worth 1/5 of an oz of gold and 20 hours of babysitting, and so on. Multiply by thousands of different professions and the exchange rates become a nightmare. All money does is provide a universally accepted medium for all of these goods and services to be exchanged. In my example, a babysitter makes $10/hr, lawyer $200 and gold costs $1000/ oz ( I just looked up the price of gold. Goddamn if my off the cuff example didn't get the ratios pretty damn close )

Now let's tie it all together. What does it all mean in the context of government spending?
What it means is that any government assistance program is simply a check. It's a handful of dollars. It is nothing more than giving whoever money.

O.K. So?

I agree. So what? So, nothing. All the government is doing is giving people money. If that's what we as Americans want from our government, then fine. Government exists to give us money.

Many people believe this, and not all of them are receiving money from government. Some people who believe this are paying in instead of taking out, but since they are told that their taxes go towards something other than just giving money to others they acquiesce. Food stamps give people who can't afford to eat, access to food. Section 8 gives people living on the street housing. Head Start pays for education, and so on and so on and so on.

Its all sold as compassion and as an obligation we have as a prosperous society to poorer citizens. I actually don't disagree with any of that although I believe the charity should be from individuals, not government. No, what bothers me is the duplicity of it all.

Person A works for a living. The feds take 30% of his earnings through tax. His state takes 10% more. For every hour that he works, 24 minutes of his labor is taken from him. He's OK with this, because he's been told that it's his duty as a citizen to help those less fortunate than he is, and he agrees because he's a compassionate man.

He's told that almost half of his hard work should go to feed the hungry.

Except, as we've seen, it's simply a transfer of wealth from the person who worked for it to someone else.

He's told that almost half of his hard work should go to house the poor.

Except, as we've seen, it's simply a transfer of wealth from the person who worked for it to someone else.

He's told that almost half of his hard work should go to clothe children.

Except, as we've seen, it's simply a transfer of wealth from the person who worked for it to someone else.

See the pattern? Got me pegged as an evil, greedy, cis-normative white capitalist male yet? Well, you're wrong. I haven't condemned any of this spending (I could, but spending isn't the point of this essay). I'm simply pointing out that because most people don't really understand the fungibility concept, unscrupulous people are able to manipulate the population to steal their earned wealth by obscuring what they are actually doing. The mechanism they use to do this is government.

So I propose that we simplify the entire system, break it down to what it actually is. Set up the qualifications for government assistance, declare the dollar amounts that people qualify for based upon whatever metrics we chose (family size, poverty level income, whatever), and then just write people a check and be done with it. Just think about how much money we'll save on administrative costs! Now that we're no longer trying to hide what we're actually doing behind bullshit justifications we can save billions in administrative costs. Also, if we make it very clear exactly how much all men are paid for existing (and none are paying for their sins), then maybe we can have an actual honest national conversation on the welfare state. Yes, some folks will blow the entire check on meth on the first of the month and have no money for the rest of the month. That's their problem. If they have dependents, then those dependents go into foster care. We did our part.

Now obviously, I don't believe any of this will happen, but I proposed it as a mental exercise designed to help people understand the concept, and it is an important one. So much of what our government does would be met with screams of outrage, even from the LIVs, if this concept was universally understood. In fact, I would say that government, at least as ours is presently constituted, absolutely depends on people not understanding this concept. The next chance you get, educate someone. The country can only benefit.

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posted by Open Blogger at 11:35 AM

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