It’s so obvious when it’s personalized. It’s dinner-time for the family. Let’s say that you have five mouths to feed, but as you check the cupboard you see that you only have food for three.
So here are your options:
- Purchase more food, either from a grocery store or a restaurant.
- Have two members of the family not eat.
- Have everyone eat three-fifths of a full meal.
- Some combination of the three options above.
If the family is doing well enough financially and everyone is healthy, they may go out for dinner or someone makes a run to the grocery store to stock up for this evening and possibly the next several days or so.
If the family is not doing well financially, it’s probably options two or three. And if things are really desperate, there may have to be another choice, where dinner consists of less than the food for three that’s in the cupboard because the food has to be stretched into tomorrow’s meals (or possibly even longer).
We can follow this concept on the family level. But, when it comes to looking at a large group of people such as the population of a country, we get befuddled and have difficulty seeing our options. As opposed to providing for everyone in a nation, there are no political philosophies involved in feeding the family. The self-interest of the political parties rears its ugly head in much of political discourse.
As we’ll examine later, a governmental entity such as the United States has a big advantage over the family; it can print money; a blunt way of saying it can go into debt, almost as much as it wants to.
The rules of supply and demand apply to how we operate families as well as a country. We can say that our supply of anything comes from providers, or worker bees. Our housing stock, automobile inventory, bushels of corn all come to us from people who are working to produce them. Other worker bees produce services: physicians, attorney, architects, and teachers.
The sum total of what we produce is a function of how many people we have producing and how efficient they are. The extent of their job is to provide for the needs of everyone in our society. “Society” can be as small or large as you want to define it; from a family to the world’s population. However big it is, it will only be healthy if enough is produced to sustain it.
Numbers are key to telling us how healthy we are in providing for our population. For example, when Social Security began operation in 1935, there were 35 workers paying into the system for every person receiving benefits. What’s more, individuals didn’t collect until they were 65 years of age and the average life span was 62 years. Social Security couldn’t have been healthier.
What looked like endless solvency in 1935 is somewhat precarious seventy-five years later in 2010. Now the ratio of workers to beneficiaries is three to one; a drop of 91%.
Each of us is, to one degree or another, both a producer and a consumer. But we’re not all equal in that regard. An infant may produce joy for others, but nothing to wear or eat. A senior citizen confined to a nursing home may bring gratitude to a son or daughter, but will never provide another meal.
A farmer in the middle of Iowa may grow enough food to feed 1,000 people; a physician may provide primary care for a similar number. What they give society is far greater than what they consume.
As with a family, if a society is to function well there needs to be a sufficient number of producers to provide necessities for themselves as well as everyone else who is not a producer. The status of each individual as a producer and/or consumer is dynamic; it changes every day. In order to live we must consume; we only produce when we’re capable of doing so and inclined to do so.
Obvious times when we consume but don’t produce include infancy and childhood, old age, infirmity, injury, and times when we want to work but are not employed. For a society to be viable, the producers have to crank out everything they need to keep themselves going, plus what is necessary for the aforementioned groups who are not producing.
A key component to a healthy economy is to have a high enough percentage of the population producing goods and services that the people in the country need. This is not as easy as it may sound; we will continue exploring its dynamics in future posts.
Images by Annie Nieman