“Anyone claiming to understand today’s world financial system is either delusional or dishonest.”
As an Economics student I realized Politics and economics have been presented in a way meant to complicate ideas and confuse readers.
The group that apprehends economic and political power in the World seems like it doesn’t want the common citizens to understand the workings of the political and economic systems. They deliberately complicate and muddle any discussion of politics and economics, keeping workers ignorant of what scams they’re perpetrating.
In August of 2007, Robert Samuelson, made it clear that the world financial structure was not meant to be understood. In an article entitled “Is the Global Economic Boom in Peril?” Samuelson made this interesting statement:
….the common person could not hope to understand the non-Federal Reserve System, the Wall Street crap shoot, or their accompanying scams. It’s not intended that the investor understand what he’s doing, he’s just supposed to put his money into the maw of the Big Money swindle and keep his mouth shut.
I created this blog with the hope that I can help the common person understand economics. In this article, we’ll examine the essence of political and economic ideas and practices, simplifying them so they become understandable.
Politics, simply defined, is the art or science of winning and holding control over a group or nation, either through influence or force.
Economics is the description and analysis of the production, distribution, and consumption of: Goods (fish, cooked meals, ships, fire-starting bow, etc.) Services (carpentry, fishing, cooking, etc.)
Economics
We usually think of economics in relation to a large culture such as the United States. But to simplify, we’ll refer to a fictional economy, that of the Boat-wrecked Principal Opondo and his friends, Nyongesa and Wanjiku, who live on Migingo Island. Opondo has skill in building boats, but he’s not proficient at fishing from the ocean shore.
Nyongesa is an expert spear fisherman, but lacks the skill to build large boats. Wanjiku, a female native, is skilled in cooking, which includes fire-starting. The three find that they can exchange goods and services to their mutual benefit, thus creating their own desert island economy.
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Migingo Island Economy |
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| Person |
Has these goods and services |
Wants these goods and services |
| Opondo |
Building large boats |
Fish and meals cooked |
| Nyongesa |
Fishing |
Large boats and meals cooked |
| Wanjiku |
Cooking (including fire-starting) skill |
Large boats and fish |
Opondo and his two friends are now exchanging goods (boats, fish, cooked meals) and services (boat building, fishing, cooking), so the services becomes a means of barter and the goods become a means of exchange–money.
Money is simply any object used in the exchange of goods and services. Over the centuries, many objects have been used as money: cattle, beads, gold, silver, paper currency, entries in financial records. A medium of exchange must be seen by all members of an economy as possessing value. For example, Opondo finds some old currency on the wrecked boat, but it has no value to him or the other two.
Goods and services are the products or activities of labor–the expenditure of physical or mental effort.
The Migingo island economy also has means of production: Opondo’s axe which he rescued from the wrecked boat, Nyongesa’s hand-made spear, and Wanjiku’s hand-made oven and fire-starting bow. A means of production is any object or process which is used to make goods or carry out services. The three members of this economy could own these means of production in one of several different ways:
Each individual owning his own means of production: Capitalism
All of the individuals owning the means of production in common: Socialism (Commonwealth)
A combination–some means of production owned privately and some shared: Mixed
An Expanding Economy
As this Migingo island economy begins, it is fairly simple, so the three members feel that they own and use things in common. But their simple economy soon begins to expand.
Opondo also finds clump, rum, a saw, a gun with cartridges, and a telescope on the wrecked boat; he can build simple traps to catch rabbits and squirrels for meat.
Nyongesa can provide not only fish but fresh water which he carries in coconut shells from a nearby stream and he can make rope from rough leaf fibers.
Wanjiku can make clothes and shoes from weaving fibers from certain island plants and she can smoke fish for storage
After completing the boat, Opondo is able to take Nyongesa around the perimeter of the island and select the best fishing spots. Nyongesa and Wanjiku tell Opondo that there will be a rainy season where they will not be able to fish or trap or gather, so they begin to lay provisions in store. Wanjiku finds a good-sized cave where they can store all the food and other goods they need.
Since Nyongesa and Opondo are usually busy fishing, trapping, or gathering, the three agree that Wanjiku will serve as the person in charge of organizing and maintaining the store of goods in the cave.
Wanjiku has become a storekeeper and performs one of the services of a banker: keeping custody of the means of exchange (money).
A storekeeper is simply one who has charge of accumulating, organizing, and distributing goods; in complex economies, the distribution is carried out through exchange of money.
A banker is a person who is in charge of the custody, exchange, loan, or issue of money
Wanjiku is now receiving some of the goods and services of Nyongesa and Opondo for performing the services of storekeeper and banker.
As the population of the island increases, trade with other islands is established, which requires political structures to organize and control the inter-island commerce.
Politics
The three could simply let things take their course, electing to have no formal government, setting up a form of anarchyAs we saw earlier, politics is the art or science of winning and holding control over a group or nation, either through influence or force. In our simple Migingo island society, direction and control of group actions could take place in one or more of these 
ways:
Opondo, Wanjiku, or Nyongesa could assert that he or she was the ruler, thus establishing a monarchy–a form of rulership whereby a queen or king, empress or emperor holds absolute or limited power, usually inherited.
The three could agree that they would vote on all activities, thus creating a commonwealth, government by the people for the benefit of the people.
One of the three could take power by force, either psychological force or violence, thus establishing a dictatorship.
If one of the three came to have a larger share of the money and used wealth to take control of the desert island society, that would constitute a plutocracy.
A More Complex Society
As the population of the desert island expands, the economic and political situation becomes more complex. When the population reaches a certain size, the inhabitants of the island decide to set up an executive group, individuals elected to direct and control activities on the island. They decide that they need a written statement of the policies which the government and the citizens will follow: a constitution and a body of laws. The islanders then elect representatives to create new laws and regulations as they are needed, setting up a legislature, and they elect individuals to administer the laws, establishing a judiciary.
They choose to establish a police force to maintain law and order on the island and they set up a military force to protect their island from foreign invaders. They decide that each islander will pay to support the activities of these government agencies, establishing taxation.
Modern Society
Our goal is to make political-economic terms and events understandable, so ordinary citizens can regain a grasp of what is going on around them. We’ve seen that most books on politics or economics do little more than complicate terms and confuse the reader.
Principal Opondo simplified Migingo island society contained all of the features of a more complex society:
A government: composed of the executive, legislative, and judicial branches
Taxation: required payments of citizens to support their government
Police and military forces: to maintain domestic order and provide protection from foreign invasion
Economy: a system in which goods and services are exchanged
Goods and services: products or acts of labor
Labor: the expenditure of physical or mental effort
Money: any agreed means of exchange–including salt, cattle, pigs, goats, tobacco, gold, iron, paper currency, metal coins, and bank debt
Storekeeping: the accumulating, organizing, and distributing of supplies
Banking: the custody, exchange, loan, or issue of money
Capitalism: each individual owning his own means of production
Socialism (Commonwealth): all of the individuals owning the means of production in common
Simple Economics 