Word Problem No. 1: It’s lunchtime for Mrs. Piketty’s second-grade class. Bobby has 20 Gummi Worms, and Jenny has 20 SweeTarts. Bobby and Jenny both like Gummi Worms and SweeTarts, but both like SweeTarts a little bit more, so Jenny trades three of her SweeTarts for four of Bobby’s Gummi Worms. Both are happy with this trade, so they do it again. Question: How many pieces of candy do the two students end up with for dessert?
Word Problem No. 2: Mrs. Piketty is unhappy with the inequality in her second-grade classroom. Jenny’s 20 SweeTarts are valued much more highly than are Bobby’s 20 Gummi Worms, trading at a rate of 3:4. To even things out, Mrs. Piketty gives Bobby a voucher for seven SweeTarts. Question: How many pieces of candy do the two students end up with for dessert?
Word Problem No. 3: Mrs. Piketty’s attempt to solve the problem of inequality in her classroom has yielded unsatisfactory results. Bobby has his 20 Gummi Worms, and Jenny has her 20 SweeTarts, and SweeTarts still trade for Gummi Worms at a rate of 3:4. So Mrs. Piketty enacts some new policies. First, she hires Bobby as a hall monitor and decrees that hall monitors receive a minimum income of at least ten SweeTarts or the equivalent value in Gummi Worms. Also, she decrees that the high price of SweeTarts — three of them cost four Gummi Worms — is oppressive, but she’s not an all-the-way-to-the-wall outright red, either, more of a social-democrat type with a subscription to The Nation, so she simply enacts some counteracting price supports for Gummi Worms, decreeing that they cannot be traded at a price less than 13/15th of a SweeTart. She enlists Mrs. Yellen from the next classroom over to provide zero-interest financing for the purchase of up to five SweeTarts per lunch period, increases Bobby’s voucher allowance to nine SweeTarts per lunch period, and offsets that on her budget with a “fairness” tax of two SweeTarts per lunch period on Jenny, who is the sole member of her tax bracket. Question: How many pieces of candy do the two students end up with for dessert?
Answers: (1.) 40; (2.) 40; (3.) 40. There are only 40 pieces of candy, and rules, vouchers, taxes, zero-interest loans, redistribution, and mandates do not magic more pieces of candy into existence. If Jenny does not like the trading price imposed by Mrs. Piketty, she can keep all of her SweeTarts, while Bobby gets none. If Mrs. Piketty sends out her second-grade tactical SWAT unit to seize Jenny’s SweeTarts and put some serious asset-forfeiture and social-by-God-justice up in her smug little 1-percenter face, Jenny can still leave her SweeTarts at home, eating them before or after school, and maybe even save them up in the hopes that her third-grade teacher next year will not be a howling moonbat. Faced with that inconvenient reality, Mrs. Piketty may demand the repatriation of these SweeTart assets and denounce Jenny as an “economic traitor,” but she does not have any real power outside her classroom. Plus, Jenny and her SweeTarts are sort of popular, and she’s a pretty good student to boot, and so there are other classrooms that would just love to have her, with Mr. Lee’s nicely air-conditioned classroom across the hall offering some very attractive laissez-faire policies vis-à-vis SweeTarts and confectionery gains in general.
Forty is forty is forty, 10 times 4, 8 times 5, 6.32455532034 squared, 23 plus 17. You can set the trading ratio of apples to oranges however you like, but if you have 20 of each, you have 40 pieces of fruit at any price — and the only way to bring more of it into the world is to plant trees, cultivate them, and pick the fruit.
Which is to say: Reality is not optional.
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Money is a symbolic system, the purpose of which is to facilitate exchange and to act as a recordkeeping technology. That money is so very important to our everyday lives and yet has no real connection with physical reality is the source of many apparent paradoxes and contradictions. These are the best of times, these are the worst of times.
Measured by money, things look relatively grim for the American middle class and the poor. Men’s inflation-adjusted average wages peaked in 1973, and inflation-adjusted household incomes for much of the middle class have shown little or no growth in some time. The incomes of those at the top of the distribution (which is not composed of a stable group of individuals, political rhetoric notwithstanding) continue to pull away from those in the middle and those at the bottom. The difference between a CEO’s compensation and the average worker’s compensation continues to grow.