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There Will Be No Recovery Without Production

THERE WILL BE NO RECOVERY WITHOUT PRODUCTION

Through most of the coronavirus crisis, those who have made the case for stay-at-home, reduce or stop work, and narrow the range of retail shopping to assure “social distancing” to reduce the spread of the virus have accused their critics of being more interested in preserving livelihoods than “saving lives.” But there is no preservation of any lives if people are not able to produce and work, without which none of the necessities and other wants of any members of society can be fulfilled.

Listening to many politicians and political pundits, and even some “economists,” you could easily think that 250 years of economic understanding had never happened. One of the oldest of economic fallacies is that money is wealth; that is, the notion that if you create pieces of paper, put some kind of government stamp on it announcing that it is “money,” and spread it around among the members of society, you thereby conjure up from nothing actual material and other forms of wealth.

Money is a medium of exchange, some commodity or other useful thing that is found widely advantageous to use as a convenient intermediary to better facilitate the exchange of other goods and services one for the other when more direct barter transactions are found to be impossible to arrange or more costly to carry out.

Printing Money Does Not Magically Create Goods

But increasing the number of units of the particular item used as money does not, in itself, increase the physical quantities of all the other goods that people want to acquire through exchange to satisfy their wants and desires. These other goods that people actually want must be produced, manufactured, transported and made ready in the forms and at the places desired by members of society.

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