I ran across this essay this week and after listening to it I was simply awestruck by it’s prophetic accuracy. The essay is titled “Egalitarianism and Inflation” and it was delivered by Ayn Rand, and it focuses how the federal government, through central planning, wealth redistribution, and currency manipulation is ruining the economy and sending us to a disastrous collapse. I would recommend that everyone read or listen to this piece, as it is absolutely astonishingly accurate as to what is actually happening today.
I realize that Ayn Rand wasn’t a friend of the South. It is my personal view that she simply accepted the historical myth of the 1800′s and didn’t truly investigate the circumstances of the time. However, the woman had a remarkable ability to take complex philosophical issues and break them down into simple and easy to understand, concrete examples. She also was a master at the art of debate and reason. In this essay, she uses the example of an agrarian economy built around self sustaining farms, something that any Southerner would have been able to relate to before the encroachments of the US government.
Let us start at the beginning. Observe the fact that, as a human being, you are compelled by nature to eatat least once a day. In a modern American city, this is not a major problem. You can carry your sustenance in your pocket—in the form of a few coins. You can give it no thought, you can skip meals, and, when you’re hungry, you can grab a sandwich or open a can of food—which, you believe, will always be there.
But project what the necessity to eat would mean in nature, i.e., if you were alone in a primeval wilderness. Hunger, nature’s ultimatum, would make demands on you daily, but the satisfaction of the demands would not be available immediately: the satisfaction takes time—and tools. It takes time to hunt and to make your weapons. You have other needs as well. You need clothing—it takes time to kill a leopard and to get its skin. You need shelter—it takes time to build a hut, and food to sustain you while you’re building it. The satisfaction of your daily physical needs would absorb all of your time. Observe that time is the price of your survival, and that it has to be paid in advance.
Would it make any difference if there were ten of you, instead of just one? If there were a hundred of you? A thousand? A hundred thousand? Do not let the numbers confuse you: in regard to nature, the facts will remain inexorably the same. Socially, the large numbers may enable some men to enslave others and to live without effort, but unless a sufficient number of men are able to hunt, all of you will perish and so will your rulers.
The issue becomes much clearer when you discover agriculture. You can survive more safely and
comfortably by planting seeds and collecting a harvest months later—on condition that comply with two absolutes of nature: you must save enough that you have enough to feed you until your next harvest, and, above all, you must save enough seeds to plant your next harvest. You may run short on your own food, you may have to skimp and go half hungry, but, under penalty of death, you do not touch your stock seed; if you do, you’re through.
Agriculture is the first step toward civilization, because it requires a significant advance in men’s conceptual development: it requires that they grasp two cardinal concepts which the perceptual, concrete-bound mentality of the hunters could not grasp fully: time and savings. Once you grasp these, you have grasped the three essentials of human survival: time-savings-production. You have grasped the fat that production is not a matter confined to the immediate moment, but a continuous process, and that production is fueled by previous production. The concept of “stock seed” unites the three essentials and applies not merely to agriculture, but much, much more widely: to all forms of productive work. Anything above the level of a savage’s precarious, hand-to mouth existence requires savings. Savings buy time.
If you live on a self-sustaining farm, you save your grain: you need the saved harvest of your good years to carry you through the bad ones; you need your saved seed to expand your production—to plant a larger field. The safer your supply of food, the more time it buys for the upkeep or improvement of the other things you need: your clothing, your shelter, your water well, your livestock and, above all, your tools, such as your plow. You make a gigantic step forward when you discover that you can trade with other farmers, which leads you all to the discovery of the road to an advanced civilization: the division of labor. Let us say that there are a hundred of you; each learns to specialize in the production of some goods needed by all, and you trade your products by direct barter. All of you become more expert at your tasks—therefore, more productive—therefore, your time brings you better returns.
On a self-sustaining farm, your savings consisted mainly of stored grain and foodstuffs; but grain and foodstuffs are perishable and cannot be kept for long, so you ate what you could not save; your time-range was limited. Now, your horizon has been pushed immeasurably farther. You don’t have to expand the storage of your food: you can trade your grains for some commodity which will keep longer, and which you can trade for food when you need it. But which commodity? It is thus that you arrive at the next gigantic discovery: you devise a tool of exchange—money.
Money is the tool of men who have reached a high level of productivity and a long-range control over their lives. Money is not merely a tool of exchange: much more importantly, it is a tool of saving, which permits delayed consumption and buys time for future production. To fulfill this requirement, money has to be some material commodity which is imperishable, rare, homogeneous, easily stored, not subject to wide fluctuations of value, and always in demand among those you trade with. This leads you to the decision to use gold as money. Gold money is a tangible value in itself and a token of wealth actually produced. When you accept a gold coin in payment for your goods, you actually deliver the goods to the buyer; the transaction is as safe as simple barter. When you store your savings in the form of gold coins, they represent the goods which you have actually produced and which have gone to buy time for other producers, who will keep the productive process going, so that you’ll be able to trade your coins for goods any time you wish.
Now project what would happen to your community of a hundred hard-working, prosperous, forward-moving people, if one man were allowed to trade on your market, not by means of gold, but by means of paper—i.e., if he paid you, not with a material commodity, not with goods he had actually produced, but merely with a promissory note on his future production. This man takes your goods, but does not use them to support his own production; he does not produce at all—he merely consumes the goods. Then, he pays you higher prices for more goods—again in promissory notes—assuring you that he is your best customer, who expands your market.
Then, one day, a struggling young farmer, who suffered from a bad flood, wants to buy some grain from you, but your price has risen and you haven’t much grain to spare, so he goes bankrupt. Then, the dairy farmer, to whom he owed money, raises the price of milk to make up for the loss—and the truck farmer, who needs the milk, gives up buying the eggs he had always bought—and the poultry farmer kills some of his chickens, which he can’t afford to feed—and the dairy farmer can’t afford the higher price of alfalfa, so he cancels his order to the blacksmith—and you want to buy the new plow you have been saving for, but the blacksmith has gone bankrupt. Then all of you present the promissory notes to your “best customer,” and you discover that they were promissory notes not on his future production, but on yours—only you have nothing left to produce with. Your land is there, your structures are there, but there is no food to sustain you through the coming winter, and no stock seed to plant.
Would it make any difference if that community consisted of a thousand farmers? A hundred thousand? A million? The entire globe? No matter how widely you spread the blight, no matter what a variety of products and what an incalculable complexity of deals become involved, this, dear readers, is the cause, the pattern, and the outcome of inflation.
There is only one institution that can arrogate to itself the power legally to trade by means of rubber checks: the government. And it is the only institution that can mortgage your future without your knowledge or consent: government securities (and paper money) are promissory notes on future tax receipts, i.e., on your future production.
Now project the mentality of a savage, who can grasp nothing but the concretes of the immediate moment, and who finds himself transported into the midst of a modern, industrial smattering of knowledge, but there are two concepts he will not be able to grasp: “credit” and “market.”
He observes that people get food, clothes, and all sorts of objects simply by presenting pieces of paper called checks—and he observes that skyscrapers and gigantic factories spring out of the ground at the command of very rich men, whose bookkeepers keep switching magic figures from the ledgers of one to those of another and another and another. This seems to be done faster than he can follow, so he concludes that speed is the secret of the magic power of paper—and that everyone will work and produce and prosper, so long as those checks are passed from hand to hand fast enough. If that savage breaks into print with his discovery, he will find that he has been anticipated by John Maynard Keynes.