The Economy and the 3 Farmers

Someone asked me what I think about the current economic situation in the US (just after Thanksgiving).

One way to think about the economy is to think about the story of three farmers. Each knows that they need to set aside 10% of their harvest as seed for the next season.

A. Farmer A reduces his consumption so that he'll have the seed for the next year.

B. Farmer B is extra hungry so he only saves 9%. Pretty soon his harvest is declining year by year and he is getting hungrier and hungrier and can no longer find grain to sell for the little extras his family had been enjoying.

C. Then there is Farmer C. This farmer is very aggressive. He tightens his belt and saves 11-12% of his harvest every year. As a result, he has more and more to eat and, when he trades some grain or sells it, he gets to have lots of new things to help around the farm and the house and he actually makes his land even more productive. He can now send his kids to school, etc.

Now we have a situation where the government comes along and decides Farmer A is too well off and they will have to take some of his crop (more every year) to help Farmer B who just isn't doing as well as B would like. Government believes outcome equality is more important than equality of opportunity.

So my view on the economy is we have the US government doing what I note above to Farmer A; and we have the Chinese encouraging its citizens to be like Farmer C (which they are succeeding in doing).