Tuesday, February 2, 2010

The Goose That Laid the Golden Eggs

Aesopean version:
A family has a goose that lays golden eggs. They decide to kill it, open it, and take the gold that must be inside. However, they find it just like any other dead goose. The End.
Modern version:
A family has a goose that lays golden eggs. One day, it suddenly starts laying only rotten eggs. The family attempts to mollify it. After a week, they are frustrated and kill the goose. The End.

7 comments:

Mom said...

Huuh???

Chops said...

I'm thinking about the US financial system. It, along with other corporations, has given us massive economic growth for over a century. There's a risk-reward tradeoff, and we've gotten a great deal of reward.

Now that the risk is kicking in - the housing crisis and recession - some people blame and/or want to cripple the financial sector and prevent it from taking risks.

You can have a riskless economy, but it's not going to grow much.

Carol L. Douglas said...

My mother and I were talking about this business of national debt. If Obamanomics runs its course, our debt will be 100% of GNP by 2012. The last time those levels were seen was during WWII.

But me mum is old enough to remember that time and she rapidly listed some fundamental ways in which times were different:

• Pent-up housing demand;
• Enormous manufacturing capacity in US;
• Minimal personal debt among Americans;
• Perception that we were the world’s economic superpower.

So…

Once there was a goose who laid golden eggs. Until the farmer, in a frenzy of efficiency, cut its feed so severely that it started laying brass eggs. Then the farmer got mad and killed it. End of story.

(My mother says any sensible person will spend every cent they have and borrow, borrow, borrow to buy tangible assets in advance of an inflation cycle. What do you think of that advice?)

Chops said...

Stocks and mutual funds should survive inflation just fine. Balancing your portfolio with international assets is always a good idea. Real estate is good for inflation, too. What you don't want to hold is currency or bonds.

I think serious inflation is unlikely. Back in the 70's, it occurred so much because government economists mistook a correlation (high inflation and high employment) with causation. They've since been cured of that mistake.

Carol L. Douglas said...

OK, my dear economist, how are we going to pay off all that debt without devaluing our currency and/or inflation?

Chops said...

By taxing workers. Lots of countries have much, much higher debt burden than the US and do not devalue (e.g. Canada, Japan). But the operative word is "burden"!

Our tax dollars at work.

Carol L. Douglas said...

In all honesty, I might be able to handle a greater Federal tax burden if I weren't straining under our state tax burden. But put one more matchstick on this camel's back and it will collapse.

And I find it difficult to imagine that anyone has ever accurately calculated our real tax burden. The way we collect it, in dribs and drabs here and there, would make it impossible.

Those countries also provide far more extensive services for their citizens than we do, of course. Whether they get value for their investment is another question.

Whether we get value for ours is yet another—the program I’m currently exercised over is SSDI. I have a friend who ended up homeless waiting for a determination, and she was one of the “lucky” minority who were approved the first time around. Still, it took more than a year, during which she was evicted and ended up couch-surfing.

If you get sick, plan to die. Don't be merely disabled; you'll be bankrupted before you get help.