Canadian mennonite article series: #6: limits and wealth - some have more than others
"The process by which banks create money is so simple the mind is repelled."
John Kenneth Galbraith, Economist
Money is a difficult and complex topic.
At some level we understand that money is not “ours”, in that our skills, insights, and abilities are thanks to the gifts which God has given us. However, even more literally, much of the money we earn really isn't ours – do we really believe that it is merit or skill that allows someone flipping burgers in Canada to earn ten times the salary of a Bangladeshi labourer?
“You are a hard man: You take out what you did not put in and reap what you did not sow”, Luke 19:21
A significant fraction of Western wealth stems from the leverage with which technology and energy allow one person to accomplish things that would otherwise require many people – in other words, a backhoe operator (plus a backhoe and some diesel fuel) does what twenty people with shovels once did (or still do in other parts of the world). In addition, Western wealth is due to deliberate inequities in international trade and negotiation.
Yet despite the great wealth of Western countries, we are in the midst of a debt and mortgage crisis (mostly in the United States, but also elsewhere). The West overspends even the great wealth that it has. More than anything else, this makes it so clear how people and governments have an inability (or a lack of desire) to live within limits, whether ecological or financial.
Ironically, money is one of the few things which is not actually limited. The Canadian dollar is known as a fiat currency ...
“One thing to realize about our fractional reserve banking system is that, like a child's game of musical chairs, as long as the music is playing, there are no losers.”
Andrew Gause, Monetary Historian
meaning that it doesn't actually possess inherent value, rather that the government has to decree that this little piece of paper has value, as opposed to a currency backed by something “real”, such as gold, land, or oil. Money is unlimited because the government can choose to print it, in unlimited quantities, as happened during periods of hyper-inflation in Germany, Hungary, Bolivia, and currently in Zimbabwe.
In this light it is interesting to contemplate the price gyrations of oil. It is not so much that the price of oil has gone up. It is more that people, worldwide, are more inclined to buy oil (something physical, useful, in finite supply) rather than pieces of paper with US$ written on them (non physical, no inherent value, and possibly limitless supply).
Indeed, energy is slowly becoming the new currency. In contrast to paper money, energy is emphatically not fiat: no one actually declares oil, gas, or electricity to have value. However oil, for example, does have inherent value because it can do things for you (run a car, power a tractor, lubricate a joint). Therefore in many ways the price of oil has not gone up, it's just that the value of most paper currencies (and particularly the US$) has dropped (decayed by moth and rust, so to speak).
Why the focus on energy as currency? – In an industrialized world, energy is a proxy for what we can “do”. Whether it's the mining of raw resources, the production of fertilizer for food, keeping the Internet computer servers running, and the transportation of goods: all of these require energy. It doesn't matter how many dollars you have, what matters is how many litres of gasoline or barrels of oil those dollars can buy.
"Do not store up for yourselves treasures on earth, where moth and rust destroy, and where thieves break in and steal." Matthew 6:18-20
However seeing energy as currency or wealth has implications: Rich individuals, kings, and nations have long sought to acquire wealth by conquering, and to hold wealth by hoarding or by military defense. We can see the war in Iraq, and the terms in North American free trade agreement (NAFTA) to guarantee US access to Canadian oil as examples of the former, and strategic oil reserves (held by the US and China, plus other nations) and frantic buying of long-term oil contracts as examples of the latter.
We have enjoyed a century of unprecedented prosperity, subsidized by cheap, plentiful energy and by the subjugation of the rest of the world. In no way is the state of our society biblically defensible. There is no question, for example, that we have become highly dependent on energy, leading to an anxiety in future energy supplies (“No servant can serve two masters. ... You cannot serve both God and Money.”). Similarly we have built up a massive, advanced infrastructure to cater to our needs (“Do not store up for yourselves treasures on earth ...”).
Really, we should welcome a change to this situation: both the environmental costs of energy and the social/moral costs of subjugation are costs for which we should not want to bear responsibility. A future with reduced financial and energy resources is not necessarily bad – people the world over have lived wonderful, fulfilled, meaningful lives in the absence of these.
This doesn't mean that we shouldn't prepare ourselves – even Biblically, Joseph's graineries in Egypt and the virgins with their oil lamps were upheld as positive examples. However, our preparation is not so much about storing energy (batteries age, gasoline goes bad), rather a mental preparation, being prepared to live differently.
The more we (including the author!) are able to let go of energy treasures, the less anxious the future becomes.
At some point burger flipping will have to pay less than physical labour!