I think the difference between what you describe and what DSYoungEsq describes is that his is a pure service economy and yours is a manufacturing economy. If everyone is doing service for each other (e.g. washing laundry, shoveling sidewalks, mowing lawns), no wealth is created. This is not the case if someone is growing food, sewing clothes, or manufacturing tools.
This sort of reminds me of this old puzzle.
The US is pissed at Canada so we devalue their dollar to be worth only 10 cents. In retaliation, Canada devalues the US dollar to 10 cents Canadian.
Bob, the border crossing local drunk buys a 90 cent beer in Canada and pays with a dollar bill. The bartender gives him a US dollar in change, since it is only worth 10 cents. Bob drinks up, stares at the dollar and crosses the border and buys a 90 cent beer in the US. The barkeep hands him a Canadian dollar as change. Everyone is happy. Repeat. What drives this system?
Dennis T
The world is a closed loop, and yet wealth is created.
And not just from extractive industries, either: If you create a way to make someone more productive, you’ve created wealth in that their time now produces more value, whether that’s in the form of a good or a service.
If anyone’s driving the system, it’s the two governments, who are both willing to give away foreign currency for less than its real-world value. If, as is more likely, they aren’t actually willing to make trades in that direction, then their edicts about the value of each others’ currencies will be ignored, especially near the border, and merchants will continue to use a free-market exchange rate, and Bob can’t buy his beers.
Right. Wealth is created any time you do a job for another person such that they can do something more valuable with their time. You don’t even have to be more efficient than they are–you just have to free up time that they could be spending on a higher-value activity.
You could arrange a loop such that each neighbor is a tiny bit more efficient than the next, and so it makes sense to pass the laundry on–except when you get to the last guy, who must be so absolutely awful compared to the first that it eats up all the efficiency gains made among the remainder.
A closed economy is certainly viable on a large scale. The whole planet is a closed economy (until we start trading with aliens.)
I tell that joke about Portland. The economy is based on everyone reading each other’s blog.
That’s a good point: Early in the days of the dotcom bubble, everyone was trying to make a living by taking in each others’ laundry. Or less figuratively, by taking ads for everyone else. There were a few major players like eBay and Amazon who did have a legitimate non-advertising revenue stream, but not nearly enough to support all of the rest. Which is, of course, why the bubble collapsed.
I’ve got a case where it does create efficiencies: when each person is better and doing their neighbor’s laundry than they are at doing their own. Not sure why this would be, but in that unusual case, it would create wealth.
Or when the barber is better at shaving other customers than himself?
How about this for a plausible equivalent situation. It’s easy to imagine that I’m better than you are at proofreading your writing, and you’re better than I am at proofreading my writing. Therefore, we’re both better off if we proofread each other’s output.
True, also, lawyers lawyering for each other, even within their own specialties.
Getting back to the OP’s question about the use of this type of anecdote, a variant on it was used by the Alberta Social Credit Party in the 1930s to try to explain the theory of social credit.
Interesting. I wonder if Heinlein heard about it via the Social Credit vector - he was a proponent of that theory.
Mack Reynolds used to toss stuff like this into his stories: talking up “a picture of two persons in the bottom of a well, selling hats to each other and both getting rich”, say. And figuring that a psychiatrist “treats a popular artist and at the end of the year sends him a bill for $25,000. Without flinching, the artist pays up and later sells the doctor’s wife a painting for the same amount. Lo and behold, the Gross National Product has been increased by $50,000.” (“I am reminded of the young lad who raised two $25,000 cats and traded them for one $50,000 dog.”)
There’s more than 30,000 acres of park land in New York City, with a population of 8.538 million. That works out to more than 150 square feet of park land per resident. And that’s just city parks, inside the city limits. If the OP is talking about a state park or a national park, it could work out to several acres per person.
I immediately thought of that when reading the OP. I believe it was something like “If you dropped two [Loonie Chinese] in the middle of a crater they’d get rich selling rocks to each other while raising huge families.”
Yep. Just the quote I was thinking of.
I think there’s a key difference: one of the functions of a lawyer is to provide objective advice, separate from all of the client’s personal baggage. Assessing the strength of the case, the economic value of the contract, and so on.
That’s not something that I as a lawyer can provide to myself.
That is the case for the legal services example: each lawyer can provide better objective advice to another lawyer than they can provide to themselves.