Tuesday, December 8, 2009

Agricola Urbanus - Problems of a Cash Society

We realize that money is a useful tool.  But there are some problems inherent in depending exclusively on a cash economy.  I'd like to list and illustrate four of those drawbacks.

1) Cash flow from employment and manufacture may be irregular.  Just about everyone knows someone who is unemployed.  Most of us have had periods of unemployment, though hopefully brief ones.  They are unsettling.  Our employment is a tenuous thing.  Are we ready to go without a job if need be?  An assumption that the paycheck will arrive regularly and become bigger year after year is not necessarily grounded in reality.

2) Everyone who produces something for sale wants to make a profit.  When you buy something you provide the profit.  This is good and right.  This is how all of us actually make our money.  What we do is worth more to someone else than what we think it costs us.  Yet it is something to remember when we are on the purchasing end as well as when we are on the production end.

3) The more people who work with products the more we pay.  If the product has been through multiple levels of resale before it reaches our shopping cart we may pay many times the actual cost of the materials and original labor.  It may have been transported multiple times, possibly across multiple national borders.  It's been packed, unpacked, counted, put on shelves, cleaned, any number of operations.  See point #2 above and do the math yourself.

4) Taxes and other government fees currently consume about 50% of a person's total earnings.  This means if you buy a $10 product you need to earn more like $20.  This in itself is daunting.

What's the bottom line?  Buy what you need, make it last, use it up, wear it out, and if you don't need it, do without.  If you can produce what you need yourself it may save you a surprising amount of money.  Simplicity has some serious financial benefits.

Dave Spotts
blogging at http://capnsaltyslongvoyage.blogspot.com and http://alex-kirk.blogspot.com

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