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1. • CommentAuthorBigCat
   • CommentTimeMar 12th 2008

    # 1
   Money as an instrument distinct from the commodities and services in the conduct of commerce is roughly about 3k years in age. (Note: I discard the notion that money is cattle, shovels, grain, and other commodities - money in this discussion means cash, whether coins, bills, bank accounts, shares, etc.) Originally, currency was invaluable in growing trade and building ecomony. However, over the last two hundred years of its existence, money has taken on undesirable characteristics and perhaps facilitated some activities that impede growth and even threaten existence itself. The value of money in todays society far exceeds the intrinsic value (in contribution to society) of the people that own it. Money does not distribute - it pools, money doesn't grow where no money exists - it grows only where other money exists. Money supports and encourages criminal activity. The pursuit of money supports an entire strata of humanity that have no societal benefit, i.e., investment banking, hostile takeovers, etc. Finally, wars are conducted for the creation of wealth/money, and environmentally destructive practices are encouraged because of money. What is the answer?
2. • CommentAuthorAdam
   • CommentTimeMar 12th 2008

    # 2
   Personally i am in awe of the human invention of pricing system, which is the mechanism that ensure efficient allocation of resources in a society. I am not economics and academia, so i apologize for inaccurate explanation or lack of discussion of the various arguments in this field.
   
   I would say money is just the convenient thing to put blames on. Money is just the mean to achieve other motivations; it is just the surface of the problems. When we talk about money encourages criminal activity, ultimately it is greed that motivates the socially undesirable behavior, perhaps we can go further by arguing that it is the society's relentless pursuit of economic strength that generates a societal pressure on individuals to be greedy. But it is never exactly money itself.
   
   I also disagree on the point that investment banking and hostile takeovers belongs to the "strata of humanity that have no societal benefit.
   Let's consider an enterprise that generates societal benefit (e.g. hospital, schools etc). What do we do if this particular enterprise needs funding/investment? Investment banking is one of the entity that helps with the flow of funds in a society.
   Regarding hostile takeovers, these activities can be beneficial to the society. Let's consider an enterprise that has incapable management. Hostile takeovers enables someone else who has the capacity and capability to run the enterprise better and thereby generate greater value.
   
   However i do agree that there are probably too much focus on wealth in terms of dollars. Will capitalism bring about a better civilisation, a better home for everyone of us and for our descendants? If pricing system and wealth effect (which causes most of the problems related to money) are not sufficient, what are other systems that could propel mankind to greater heights?
3. • CommentAuthorkelvinq
   • CommentTimeMar 12th 2008

    # 3

   What is the answer?

   
   
   BigCat, I'm an idiot. But, what's your question?
4. • CommentAuthorkelvinq
   • CommentTimeMar 12th 2008

    # 4
   Adam -

   What do we do if this particular enterprise needs funding/investment? Investment banking is one of the entity that helps with the flow of funds in a society.

   
   I'm more of a socialist. I say that these functions should be taken care of by the state.
   
   The crap economy now that we're experiencing is mainly due to investment banks having too much liberty in inventing new financial instruments (and hiding fundamentally weak components).
   
   Of course, you can blame it on governments/regulatory bodies being too lax. But I dare say that the smell of cash has made many investment banks evil.
5. • CommentAuthorAdam
   • CommentTimeMar 13th 2008

    # 5
   kelvinq, i have no background knowledge on the different forms of government, though i will be very interested in talks on introducing political thinkings.
   
   This argument is always present - whether the state should take care of a particular function or should the function be decentralized to private entities?
   Personally I am in favor of the latter mode. However i do agree that there are certain area where there will be absolute negative consequence if the private sector is given the responsibility. In a stable environment and outlook where there is minimal uncertainty, a centralized (state-run) decision control is arguably more favorable, and in a complex and dynamic environment with much uncertainty, a decentralized (free market) economy is preferred. The intuitive explanation is that the state (a small limited selection of the whole population in the society) will probably have no capacity and possibly no capability to handle the task on hand, have not the specific knowledge that is crucial in arriving at the optimal decisions, even though the government can arguably be assumed to be a perfect agent for the society.
   
   the simplistic way of saying this is the state is probably not up to the task to handle the matter, and all of us can draw similar conclusion from what we see in the world now.
6. • CommentAuthorBigCat
   • CommentTimeMar 13th 2008

    # 6
   Thanx for your responses. Let me point out the money problem through a simple, and somewhat related (from the human side) analogy. We know that it is very human to give into pleasure and addiction. So, do we let people drink and drive? Do we let an under 16 years of age youth buy liquor or cigarettes? No, we don't, because we do not (as a society) uphold all human characteristics as being justification in themselves for behaviour. How we implement the checks and balances on the "undesirable" human characteristics depends on the characteristic. So, let's agree that greed is the characteristic in the human condition that drives crime and hostile takeovers, etc,. We know that the greed is targeting money. The mere fact that money is liquid, it pools, it grows with other money, is the trigger for the manifestation of that greed. Unfortunately, the disintegration of money does not just involve the greed of a few - it involves the quality of life and even health itself for most of the human (and even non-human) inhabitants of Earth.
   
   Investment banking exists for the sole purpose of creating more money. The reason why it works is because there are haves and have nots (of money). The haves "lend" it to the have nots so that they can implement some business or enterprise. In the example given earlier, ask yourself why the hospital needs investment banking in the first place - because there is no money. Why is that, when (1) there are thousands of people needing the hospital? (2) thousands of people who are qualified to work there?, and (3) its construction (and later demolition) would also involve thousands of qualified persons? There has to be a way to create wealth without leveraging the disparity of money in some sector or group of people.
   
   Actually, I can imagine a world without money. I can imagine a world where the infrastructure is developed enough that goods and services flow free without major interruption between countries. I can imagine a world where standing and quality of life is not dependent on money whatsoever, only on the realized contribution to society (in the long term that would mean that most contributions could be similar, with public service being the highest). I can imagine a world where the worst crime would be identity theft, and the instance of crime (in general) could be eliminated by about 50%.
7. • CommentAuthorAdam
   • CommentTimeMar 15th 2008

    # 7
   Intuitively, i agree with you BigCat, that human civilization with capitalism might not be the most perfect thing to do. There are many side-effects, and most of them are money-related.
   
   The thing that i am uncomfortable with, however, is the term "money". Money is simply a representation of goods and services. For example, S$1 may represents two hotdogs, or five visits to a public toilet. S$80,000 may represent a car in Singapore, or a month's salary for an investment banker. Money by itself has no material representation. If there are no other goods and services, money by itself does not mean anything, because even if you have $1billion dollars while i have only $1, we are still not able to "enjoy" the wealth.
   
   Money is just a mode of exchange. For example, I need food for next month. I have a service that i am able to exchange for food for a month. I find the counter-party, performed my service, and get my food. If money exist, it only serves to make these exchanges in the society easier.
   
   In the case of building a hospital. Yes there is some way to do it. But what is the way?
   One way: Get the qualified persons to construct the hospital first without any pay, and they will get their pay once the hospital earns money. Same thing for the people who are qualified to run the hospital. Then thousands of people who need the hospital will come and then profit is earned and distributed to the construction and operation people. The question is who takes the risk, the risk of plan falling apart? In this case the construction and operation people are the one taking the risk, but generally are they willing to take these risk? construction can take a long time, and their human capital are heavily invested in the construction, it is almost life and death bet for them.
   second way: Borrow money from bank. Same question, will the bank take such a high risk? it is almost as if the bank is the investor, and the debt issued is like an equity.
   third way: borrow money from government. Will government be willing to take the risk? probably, since the risk is shared among all citizens who pay taxes. Doesn't this explains why most large hospitals in Singapore are initiated by government? But, should government do the same thing to other ventures like high tech companies, construction companies? probably not.
   Are there any other way better than "leveraging the disparity of money in some sector or group of people"?
   
   Lets consider a world without money. If your assumption is that everyone on the planet has sufficient goods and services to meet their needs and wants, probably i can imagine a world without money too. But then the question comes: how do we achieve such a high technology advancement in the first place? Can we achieve it without greed? Without high technology, given the natural resources on earth, can all people on the planet live sufficiently?
   
   And how would a world with no money works? Let's say we want to build a hospital in this world. how do we go about doing that? There is no money per se to hire construction companies, to buy raw materials to build the infrastructure, to pay employees, to recognize as revenue from patients.
   
   If there is no money, people who used to pickpocket or rob the bank will now steal the goods (maybe a bread or a Gucci bag) or services (abduct an accountant and turn him to slave). What i mean is, money is not the source of problem. In fact, i believe that without money, the market will be inefficient, economy will do badly, meaning that there is no efficiency in allocating resources and overall, the society will deteriorate. More social problem will arise when survivability of individuals is threatened, leading to higher crime rate than that in a world with money.
8. • CommentAuthorkelvinq
   • CommentTimeMar 15th 2008

    # 8
   BigCat, would you like to tell us a little about yourself? I'm reading your comment together with Adam's and I figured that we need some context to take the discussion further.
   
   Heard of the concept of bartering?
   
   

   Barter is a type of trade that doesn't use any medium of exchange, in which goods or services are exchanged for other goods and/or services. It can be bilateral or multilateral as trade.

   
   http://en.wikipedia.org/wiki/Bartering
   
   That was the most common mode of trade before money was popularised. Were crime rates lower then? I doubt so. Greed still existed. I agree with what Adam has pointed out and I think this is a point that we should proceed from -
   
   

   What i mean is, money is not the source of problem.

   
   What do you think?