Is Money The Problem?

In the Aspiring Martians Facebook group, economics is one favorite topic of debate – or was before the introduction of new rules meant to cut down on the trolling. Some members seem convinced that money is actually the cause of many of Earth’s ills and want it completely eliminated on Mars. I typically take the position that money is simply an inanimate tool that can function much like cars and chainsaws. Tools cannot possess intent that is either good or evil simply because there is no mind behind them until they are picked up and used. If you are familiar with the Bible (and, quite honestly, debates about religion can be worse than debates about economics so I just won’t go there), you know that 1 Timothy 6:10 is one of the most misquoted Bible verses there are. It does not say that money is the root of all evil. The English Standard Version of the Bible says, “For the love of money is a root of all kinds of evils. It is through this craving that some have wandered away from the faith and pierced themselves with many pangs.” Note the “love of money” part of that Bible verse. It acknowledges that money is just something you can hold in your hand and means nothing until people assign a value to it.

Whenever I see this debate come up, I sometimes consider the reaction that the caveman who first picked up a shiny rock must have gotten when he brought it back to his cave. His family probably had a language just sophisticated enough to get across the basic idea of, “Dude, what are you going to do with that? You can’t eat or drink it. Why did you even bother to bring it home when we’ve got rocks right here in this cave?” Eventually, though, they may have simply seen how pretty it is and eventually the use of gold evolved to include both jewelry and the first viable medium of exchange.

This is the purpose of money. It acts as a way to store value until you’re ready to use it. As a medium of exchange, it saves the inefficiencies involved when Sam has three bushels of avocados and wants a Persian kitten, Fred has a bicycle he isn’t using and wants some avocados and George has a litter of Persian kittens and wants a bicycle. They’re going to trade around until each has what they want. But maybe Sam wants to save the trouble of hauling a bicycle from Fred’s place to George’s place. It would be easier to sell some avocados to Fred and use the money to pay George for the kitten, and then George can go over to Fred’s place and buy the bicycle. This is the whole point of having a medium of exchange: so people don’t have to go through all the trouble of hauling often bulky items they never wanted in the first place simply for the sake of trading it.

Sure, but you don’t see many people carrying heavy gold coins in their pockets or purses anymore either. Currency itself is getting more efficient. China was considered advanced at one time, having invented paper currency among many other useful items. For all that boxes full of paper can be bulky and heavy too, it’s still not uncommon for people to pay for things using $20 bills. (I do know that Zimbabwe has a $100 trillion dollar bill. I’m referring to the U.S. dollar.) Newer innovations include credit cards and electronic banking. Now we have a new type of currency that seems to be specifically designed for the digital age. It’s called cryptocurrencies. Bitcoin to PayPal exchange is the most famous. The idea is that you could carry your currency on a convenient tablet or laptop and use it as easily as you would your credit card at retailers that accept your cryptocurrencies. Bitcoin works as a peer-to-peer medium of exchange that cuts out the banking system and permits buyers and sellers to keep more money in their wallets. This eliminates a lot of the obvious problems that caused the economic collapse of a few years ago; namely, arrogant bankers taking too many risks with other people’s money and leaving people who are just trying to save up for a rainy day out in the cold. If you want to make loans on sites like BTCJam, this will at least give you the benefit of deciding how much risk you want to take with your money without letting a banker who doesn’t care about your well-being make that decision for you. I’ve referred to cryptocurrencies as being both a way to escape the high interest rates of credit cards while still keeping the convenience and a way to take control of your currency for exactly these reasons.

People still complain about it because cryptocurrencies still count as a medium of exchange. They don’t seem to account for people’s greed. Even the most generous person in the world has a certain amount of greed. It must have started with our most primitive evolutionary ancestors knowing that they were hungry and they’d better eat this little bit of food before someone comes along and steals it. Many animals have evolved territorial instincts because they know that they have to cover a large range to have enough food. Even packs of wolves and prides of lions have territories even though they have evolved social instincts. So greed is an evolutionary trait that has been bred into even the most advanced animal (humans, if you like) and it’s the real problem if left unchecked.

You remember what the Bible said about the love of money and not money itself being the problem. Money can be good for giving the poor the hand up they need to become self-sufficient, giving people the tools they need to make real innovations like (hopefully) a cure for AIDS, and sending people to Mars. Easy sources of money also attracts the corruptible and lazy. We’re seeing that a lot with Bitcoin right now with the failure of Mt. Gox and criminals who used Silk Road to buy and sell illegal items. This doesn’t make the people who created Bitcoin guilty of anything more than attempting to revolutionize currency and the majority of Bitcoin users are pretty honest people who are more interested in maybe making a living using cryptocurrencies than in making a quick buck. Ask any one of them, and they’ll ruefully acknowledge that this is what happens when greed is allowed to run amok.

The people who bash money aren’t making any progress with people who truly understand economics. If someone creates a better fishing net than his neighbors have been using, what’s he going to do with it? Catch more fish, of course. Maybe he’ll trade the fish he knows he’s not going to eat for something he’s been needing or wanting. People are naturally going to be jealous because they didn’t think of that, but rational people won’t destroy his fish net. They’ll just pay him to create fish nets so they can catch more fish too. That’s how innovation works in a capitalist system that includes money. This allows economies to grow in ways that can benefit everybody.