Teaching Notes: A Warning for the 21st Century

In my Introduction to Social Sciences classes, we are nearing the end of our Economics unit. A very bright and capable young woman who knew plenty of econ before entering the class called me over at the end of one session and asked, "Mr. Harris, do you think that capitalism could collapse? Are you worried about it?" I had to confess that I was, and we had a really good conversation, which led to my adding a section to the tail-end of my teaching notes for tomorrow's classes on Economic Indicators. I don't often use my teaching platform as a soapbox, but somehow in this case, I think it's a good idea.

A warning for the 21st century

Investors are understandably very interested in the rates of return on their investments

In today’s economic world, a lot of people make a lot of money by just moving a lot of value and pseudo-value around

And they do it very fast, in micro-seconds; trading computers are programmed with algorithms (formulas) that tell them when to buy, when to sell, when to do other things

These days, it’s all a speed competition = my computer is faster than your computer

Pseudo-value = money in the money supply that may have been created by government fiat in the form of currency, or by commercial banks in the form of loans (deposit multiplication), but that is not actually backed by real increases in the economy’s productiveness

At some point, all those billions and trillions of “value” that show up as digits on computer screens have to relate back to real people making real stuff for which there is or will be a real demand

Otherwise, the economy is an empty game and it will end badly