Money is Not a Natural Resource

Can money be wasted in a global sense?
No, not like fuel is wasted. Money is neither
a natural resource nor a manufactured
product. There are no resource
limits, though there are social limits to
its quantity, and there are essentially no
costs to its creation and destruction. It takes the same
amount of resources and effort to issue a million dollars as
just one dollar. Money is all about power and promises,
about relations between human beings.
Of course, in an individual sense, you can “waste money”
by spending it to no good purpose, or by failing to achieve
your purpose when you spend it; but this is careless
speech—actually you are wasting only your opportunity,
your access to money, not the money itself. Say, for example,
you spend money on tuition to take the class I teach, and all
you learn is nonsense. You don’t feel good about your
expenditure, you feel you “wasted your money”—but lo!
There the money is, safe now in my pocket, ready to be
spent again. Therefore, as an environmentalist in a global
sense (as money is part of the environment), you should not
think of the money you paid for my teaching as wasted,
even though you learned nothing. Suppose I take that
money you paid me and pay someone else to teach me—
and also learn nothing. The waters continue to flow as clean
as before, the songbirds seem most unconcerned, and the
money sits safely now in yet another’s pocket. Only when
instead I buy the fuel I need to get to class, to teach perhaps
another load of nonsense—only then should you be concerned.
For in your view at least, that fuel is indeed wasted!
Burned, it is no longer available to anyone, and the fumes
pollute the air and water, and in your view, to no good purpose.
Once again, however, only the fuel is wasted, not the
money, which now safely sits in the fuel dealer’s pocket.
Let’s examine this more closely. You think the burned
fuel is wasted because you get nothing from my teaching,
and you are quite right! But I don’t agree, because I do get
something from my teaching—your money. More money
indeed than I need to pay for fuel to get to class, so for me
the whole enterprise is a valid business plan; in fact, who
knows, I might even get a bank loan against my car on the
strength of it, in case I have to buy fuel before you pay me;
so apparently the bank doesn’t agree with you either.
WHAT CAN BE DONE ABOUT THIS
DISAGREEMENT?
There is a market solution: you stop paying me, and then
my business plan collapses: no income, no bank loan, no
teaching, no fuel burned. This actually works if it gets me to
improve my teaching or do something else useful. Say that I
improve my teaching, can now teach you and thirty others
how to save fuel, and in the end, my teaching reduces students’
fuel consumption a greater amount than I burn to get
to class. This is what markets are supposed to accomplish:
you are happy about how you spent your money, I am
happy to earn it, and globally we end up with more
resources than we used in the enterprise. How marvelous!
What happens if the market solution doesn’t lead to such
a happy outcome? Perhaps I cannot improve my teaching;
perhaps I’m also a bit short on technical and social skills and
fail to retrain or find another line of work. In this case, the
graceful, environmental and social thing for me to do seems
to be to get out of the way—to commit suicide. This is the
ultimate, inescapable logic of those to whom private markets
are sacred and other institutions profane. For all but these,
however, there are also non-market solutions available.
Non-market solutions are less efficient, at least in theory,
but they can be more efficient than an existing status
quo (and certainly more palatable to me)! For example,
suppose you pay me to teach where I live instead of driving
to my old class: no more burning fuel. You don’t miss
me in class; for all you care I don’t have to teach at all, it
was nonsense anyhow; and while you are still wasting
your opportunity, and your access to money, (remember
you are not wasting the money itself—I’ll have it), at least
now no fuel is burned. OK, things are already better than
before; the water remains clean and the songbirds unconcerned.
A problem, though: why should you be the one
stuck with paying me? What about others? Here is one
reason we have taxes and “big government,” to spread the
responsibility of paying people to do nothing.
That is right: nothing, or at any rate, less, that is how
we save resources and reduce pollution without culling the
ranks of unproductive humanity. In our example, we prevent
needless fuel consumption. And remember, since I’ve
stopped teaching in another town, you’ll not only somehow
have to take care of me, but also the fuel vendor who,
however competent, has lost my business.
If you’ve read this far, you surely are wondering—are
these really the only choices? To pay me to teach badly or
pay me not to teach at all; to pay the fuel vendor either to
sell or not to sell fuel? Of course you are right to wonder.
To be sure, the amount paid need not be the same in either
case, so both the fuel vendor and I could have some financial
incentive to do our work well instead of not at all in
order to keep our jobs. Still we are left with the basic issue.
What about the happy possibility we discussed before,
the celebrated “market solution”, whereby we either do our
jobs better or switch to other jobs and end up making ourselves
both useful to other people and protective of nature?
Once again, that is always a possibility, but there is certainly
no guarantee. The main difference between the view presented
in this article and the economic analyses you are
likely to read elsewhere is simply this: less optimism about
the power of market allocation, however rational, and of
incentives, however strong, to make all—or even most—of
us worth a decent living; less optimism about the ability of
market forces to guide us all into useful activities consistent
with responsible stewardship of our resources and environment.
We need non-market interventions to keep masses of
people, unproductive for one reason or another, from
wrecking the environment and using up resources in a
futile struggle to survive. Let’s help ourselves and each
other survive in a manner less wasteful of resources, and
remember, as long as we share the cost burden in an
acceptable manner, there is no reason whatever to worry,
on a global level, that money itself is ever “wasted.”