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Money’s sentimental education, or less is more

Indietro    Avanti

While the financial world is on edge wondering about mega-macro themes such as gross domestic output, we are moving into a world of more nuanced ways of measuring both production and the means of exchange we use.



A simple example comes from the way solar panels are installed on the rooftops of homes. Almost all of those in the northern hemisphere face south, for the simple reason that this maximizes the amount of energy they generate. However, to maximize the value of the electric power, panels should face west, as that captures the sunshine at the end of the day, when aggregate demand for power is highest.

Crunching American data, OPower, a software provider for utilities, found that

West-facing panels produce 20% less power over the course of a year than south-facing ones, according to American data crunched by OPower, a software provider for utilities. But the timed delivery of that power reduces the need for power companies to fire up their fossil-fuel burning generators for surge periods. As utilities ramp up smart-metering techniques to charge differential rates for access to the grid, this is an example of less actually being more.

Let’s switch to money, as in cash, which has become an unusually coveted good of late, not only for those who lack it but those who disburse it.

Most central banks – including right now the European Central Bank – are showing great interest in so-called “printing” money, a move they hope will spread it around and revive economic growth. Noting how this quantitative easing approach has given an enormous lift to asset values but only a modest one to GDP and a questionable effect if any on job creation, former U.S. Federal Reserve Chairman Ben Bernanke mused that it worked more in practice than in theory.

The desire to boost money supply even though it doesn’t offer a clear efficiency gain may echo the solar panel conundrum noted above.

Injections of cash are no panacea, just as the rage for solar panels may not mitigate the need for coal-burning electricity generation. It all depends on the context, which is the shorthand way of saying it’s really complicated.

Consider the move towards direct cash transfers rather than in-kind deliveries of food that are increasingly common in developing countries. Once again, the idea is efficiency. The World Bank notes that the cash in such programs ends up being spent mostly on better-quality food, thereby benefiting the recipient household’s health and ultimately opportunity to earn more money elsewhere.

That’s a rather top-down view, though. The real story is more nuanced.

This year Jean-Pierre Olivier de Sardan, a French anthropologist with experience in Niger, has published two papers on how cash transfers stoked jealousy and conflict between members of the communities where they were introduced.

First, locals are obviously far more attuned than fly-by aid workers to the realities of petty fraud – friendship with the village chief, for example, might skew the way aid is delivered. Ironically, experts may never learn of this because complaints are suppressed by traditional status norms that require deference.

Given that money is more fungible than direct food aid, its introduction as an aid instrument could very well end up triggering pathological overdevelopment of the brute power base undergirding social reciprocity schemes while at the same time removing the cyclical gift exchanges that used to offset the risk of unsustainable hierarchies.

Long ago this writer conducting anthropological research among untouchables in rural India, in a community where three so-called pariahs had been burned alive after daring to purchase land. In the aftermath, I noticed that higher-caste neighbors didn’t mind if I brought occasional bags of rich to the downbeat untouchables, but were seriously alarmed that I might somehow be giving them money.

Perhaps the problem is that money is by its nature, or in the way it has become embedded in contemporary popular discourse, all too easy to use as a tool for comparison – often with itself. The “more is always more” rule seems inexorable.

“It is quite possible for statistical averages and human experiences to run in opposite directions. A per capita increase in quantitative factors may take place at the same time as a great qualitative disturbance in people’s way of life, traditional relationships and sanctions,” observed the historian E.P. Thompson in his magisterial study of The Making of the English Working Class. “People may consume more goods and become less happy or less free at the same time.”

It may be time to get definitively rid of the theory that money – that for which less cannot ever be more – arose from barter as a way of making trade more efficiency. There is very little evidence of barter outside of extreme situations such as life in a concentration camp or high-security prison.

Remember, west-facing solar panels produce less power on their own but have a higher value impact from the point of view of an integrated energy system. In short, a systemic concern changes the mathematics of the individual unit.

Most economists today might wish to wonder whether they are like south-facing panels, good at producing lots of energy when little is needed, and find a way to pivot westward before their narrow concept of money reaches a tipping point.


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