The Sands of Timeby
Sean Corrigan
A very shrewd and evidently humorous correspondent from Turkey – where, one presumes, they know all too well about such things! – sent me the following mail:
Well, for the hunger-striker gag alone, I thought this merited a considered reply, and – for what it’s worth – I thought I’d share it with readers, here. As you say, Sir, what nonsense! Clearly, we all know that iPods will be cheaper next year and cheaper again the year after that; we all know that this season's must-have shoes will be 50% off, come the Spring; we know that, when the barely-discernibly different new model arrives, the perfectly functional car sitting on the garage forecourt today will be 10, 20, 30% cheaper than its near exact replacement; we all know that the presents we buy for our kids at Christmas will be practically given away by the stores on Boxing Day and – to adapt your marvellous bread analogy (which I will certainly plagiarize!) – we know that if we buy a loaf on the way home from work, rather than on the way to work, it can be had for a song – yet, still, many of us are compelled to buy the dearer product, precisely because we want it NOW!!!!!! All Keynesians and all under-consumptionists should be compelled to spend several weekends escorting their five-year-old nephews and nieces around the shops, in the run-up to the little treasures’ birthdays – let them see how much psychic pain is really attached to the matter of deferring the instant gratification of wants! As you also say, we live in a world so engrained with the effects of inflation that it is hard to envisage how things could be other than they are – much as a fearfully scourged galley slave would find it impossible to comprehend the voluntarism inherent in an Oxbridge rowing eight. Yes, in a world run on debt and dissaving, where instant credit means one never has to wait for anything and where assets are supposed magically to appreciate every year to offset the debt incurred by one's unceasing improvidence, generally falling prices would prove a formidable – if a temporary and wholly beneficial –hardship, indeed. But, even Heracles must have gotten his sandals wet when he cleaned the Augean stables! What everyone also forgets is that, in an unhampered market, as prices fall, costs are also likely to fall and that producers may therefore count on earning one of: (i) the same nominal profit per item; (ii) failing that, the same real profit per item; or (iii) a lower unit profit which is compensated for by the higher unit sales which a cheaper price usually occasions! What everyone also forgets is that as the money we hold and the wages we earn go further and further in the shops, we are therefore becoming materially richer and, therefore, we are likely to become increasingly less, not more, reluctant to consume. What they also forget is that because we can satisfy our existing consumption needs with less outlay today, we can provide for tomorrow's consumption needs more richly – i.e. we can save and invest more in an even more materially favoured, lower cost, more prosperous future and so we can begin to reinforce this wholly virtuous circle!
November 10, 2005 Sean Corrigan [send him mail] writes from Switzerland. Copyright © 2005 LewRockwell.com |
Thank
the Gods that Keynes only arrived to plague us at the very tail
end of our antiquity! Can you imagine how it would be had he been
borne a thousand years earlier? For surely, the authorities would
have seen to it that, in their struggle to plaster over and otherwise
deface the rich tapestry of technological progress and entrepreneurial
innovation with the ragged scraps of their ever more debauched money,
the real price of cakes would hardly have fallen from the one they
commanded when King Alfred himself was burning them, even as their
nominal price would have soared beyond all possibility of calculation!