The Two Economies

Some are in a rush to
 “reopen the economy.”

The economy.
As if there were only one.

But there are two economies:

• the Essential Economy, and
• the Luxury Economy.

Yes, the Luxury Economy is paused.
And yes, it is losing money.

But the Essential Economy is still operating.

And what a lucky, lovely, life-sustaining thing that is.

Ordinary people—those who work in fields to plant or harvest crops, who drive trucks, who stock shelves or operate cash registers in grocery stores, who keep our lights on, who patrol our streets, who fight fires, who drive ambulances, who operate food kitchens, who are doctors and nurses in hospitals and clinics and nursing homes—ordinary people are, each and every one, nothing short of heroes.

Heroism pervades the essential economy, where amazing souls risk and regularly lose their lives just to keep our essential services working.

We haven’t closed that economy.
So there is no need to speak of reopening it.

Of course, there are people suffering in the Luxury Economy. A great many. Not everyone who works for the luxury economy lives in luxury, so please don’t misunderstand.

But if the Essential Economy creates enough food, housing, health care, etc. to sustain us, then the rest of it is just a dance we do because we are not making our nation more fed, more housed, etc.

If we’re not part of the Essential Economy, we’re the entertainment, amusing them and perhaps ourselves, while we wait for a handout. They’re creating all of the essential value. At best, we’re left to creating “optional additional value,” but by definition nothing we can’t do without, or we’d still be doing it.

So we’re operating at a surplus, not a deficit, and the reason we know that is that the essentials are being met even without our whole population working. We’re just bad at dividing up our collective surplus.

The things society needs to do it is still doing, to the extent we ever were. We’ve always been far from perfect at that, but that’s topic for another day. Right now my point is that the Essential Economy isn’t shut down, only the Luxury Economy is.

And so, you see, to speak of “need” to reopen “The” Economy is a slap in the face to the contributions and, frankly, to the sacrifices made by these heroes.

Let’s be blunt: The whining is about when we luxuriate anew, when profit-taking can resume, when we can start polluting again, when businesses can get back to exploiting within impunity.

These things we so urgently need to get back to are not needs. These are just things that some among us are used to doing because money makes them feel important.

But these activities are not what is important—if they are even good for us at all.

We in the Luxury Economy are likewise not what is important.

We matter as individuals. I don’t meant to suggest we’re expendable. But what qualifies as hardship and what is mere inconvenience is something we owe scrutiny. There are some in the Luxury Economy sitting comfortably on accumulated wealth as others are panicked, barely getting by, worried about keeping a roof over their head or where their next meal will come from. But that isn’t a collective wealth problem, that’s a problem with how we distribute surplus.

Also, many of the people sustaining themselves on amassed wealth think of themselves as virtuous, that they did the right things, that they are deserving of their comfort now. But we see now more clearly that if they earned all that wealth in the Luxury Economy, they’ve provided none of the value that is now sustaining them. They’re just lucky they are now sustained. They are asking for handouts right now, just like the rest of us. They differ only in being more smug, in their sense of entitlement to those handouts they need as much as anyone.

We often run on autopilot, indulging the presumption that things are as they are for good reason. But based on an unscientific survey of my friends, most of whom are on the prowl for yet another Netflix series to binge, my guess is that we have time on our hands, time that could be spent contemplating whether we should ge back to familiar routines or get busy finding new ones.

And so, just to sum up…

The fact that many of us have jobs that do not contribute to essentials is proof of our collective wealth. When we need food we go to work—but not to make food, because there is enough, even if badly distributed and poorly shared. No, when we need food, we go to work just to make money, a dance we do to feel worthy of surplus food and essentials made by a few.

We who do not create the true value, the essentials that are largely and miraculously and heroically still available even now should be thankful supply lines are moving and should be asking how we can help that, how we can assure they are properly paid for arduous, dangerous, and relentless work, how we can make sure their families are taken care of while they do this, and how we can make sure their health care is assured, not whining about when we can resume pointlessness again.

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If you haven’t read my essay Corny Economics, you might want to head there next. This post was intended as a sequel, but I tried to write this on the assumption that you might read them in either order. Otherwise, I might have here used the parlance of Corny Economics, replacing “Essential Economy” with “Corn Economy” and “Luxury Economy” with “Harmonica Economy”.

The 1920 photo by Lewis Hine titled Power house mechanic working on steam pump was obtained from Wikimedia, which identifies it as being in the public domain.

The “drop caps” effect I used is a modified version of the helpful advice from Chris Coyier’s article Drop Caps at css-tricks.com, which I found in a Google search. He suggests it’ll work across multiple browsers, and it looked to me like it should. I used it in a span tag, since my use was a one-off and I didn’t want to fuss with style sheets. And I liked the color enough that it influenced some of the other design, and that in turn led me to the idea of working the entire piece in vary sizes and colors, so I evolved the article from there. I had been looking for a visual way to make some of the points clearer and this was one of several things that catalyzed the final result.

I find I often write text to fit visually, I don’t just mark things up after-the-fact. I change the lengths of sentences so that in plausible line-breaking on various browser settings, I expect it to look good. In cases where I am looking for a particular break, I experiment with reshaping windows and watch for widowing and often just replace spaces with non-breaking spaces ( ) so that if a line break occurs, it has substance and semantic units fall, perhaps more raggedly, in meaningful units.

Corny Economics

Sometimes we get so mired in the thick of things that we lose track of where we began and what we were about. I think economics is a lot like that. We’re all affected by it. We all have opinions. And yet we’re told it’s a vast topic about which we can have no opinion. It’s too big and complicated for us to understand if we haven’t studied it. I’m not sure I agree.

I want to begin by speaking in very blurry terms to reset the conversation. I think many of us have a problem of not being able to see the forest for the trees. So I want to zoom out to where the detailed view no longer holds us captive. Let’s talk in very broad brush strokes for now.

OK, so having zoomed our view of the Earth out to a resolution befitting an astronaut, let’s click the “Economic View” icon in the upper right corner, and see what the world looks like. I’ll interpret for you, since you may not be familiar with this view and I don’t have a handy screen image.

From this view, I see only two things: People and corn. That’s all there is in the world.

“Corn?” I hear someone in the audience asking “Why corn?”

I’ve chosen corn to metaphorically represent what we need to survive.

“What about beef? We’re not all vegetarians,” some of you are asking.

For the purposes of our conversation today, beef is a kind of corn. We’re too high up to care about the kind of detail that would distinguish beef from corn.

“Health care? Housing?”

It’s all just corn. From here, corn is enough. From here, corn represents everything we need to live.

“We must be awfully high up to think that. But it’s OK. At this altitude, I think the thinning corn is making me light-headed and it’s starting to make sense.”

Great. Now back to economics.

The first and most obvious observation is that there is either enough corn in the world, or there is not. If there is not, we have a serious problem. That would mean we are beyond the carrying capacity of the Earth.

“So that’s your model of the world? That all people do is make corn?”

Thanks for reminding me. Of course that’s silly. They also make harmonicas. Did I forget to mention that? People, corn, and harmonicas.

“I don’t know anyone that owns a harmonica.”

Well, I do. But it doesn’t matter. Harmonicas, iPods—same thing. From our vantage here, anything we make that we don’t need looks to me like a harmonica.

“Why harmonicas?”

They’re a way to pass the time between growing and eating corn. I divide life into essentials and leisure. After all, it takes only a fraction of the population to grow the corn we need. The rest of us just make—or use—harmonicas.

“Sounds like some of us are more necessary than others.”

Now you’re seeing my point. At the highest level, the problems are simpler. We don’t need everyone to grow corn because a few people can make enough for everyone. We’re an affluent species. We could just grow the corn and distribute it out and there’d be plenty for everyone.

“That would mean some wouldn’t have to work.”

Right. And that would drive some others crazy from an equity standpoint.

“So how do we solve that?”

We ask them to make harmonicas.

“But that won’t feed anyone.”

No one needed to be fed. There was already enough. Making harmonicas doesn’t make us more able to feed people, it just soothes our primitive emotions, making it seem that people aren’t getting something for nothing. If they make harmonicas, we tell them they’re entitled to food. No harmonica, no food.

“That seems a bit harsh. And does the world really need that many harmonicas?”

Well, that’s what got me thinking. I have a friend who knows someone named Joe who’s living on welfare. She thinks Joe should get a job. I started to wonder if that was really true.

I imagined Joe getting a job making drink umbrellas.

“Drink umbrellas?”

They’re a kind of harmonica. But don’t interrupt.

Mind you, as with all harmonicas, the world doesn’t really need drink umbrellas. They offer very little value, they mostly just go straight into the trash, and they add to landfill. Plus Joe will burn corn getting to and from work so that he can make this product that adds to the landfill. And someone will have to drive the product to market so that someone else can drive to the store and buy it. All of these activities threaten the corn supply. On net, I’d say, they make us poorer.

Or it might be no one even wants drink umbrellas. We might need additional people to work at a marketing firm in order to figure out how to get people to buy them anyway. Those people would have to expend fuel driving to and from work. They need heat or air conditioning while at the office. They need an internet connection. Expense is layered upon expense just to get society to create and tolerate things we don’t need. And why? Because without all this expense, we wouldn’t feel good giving Joe some corn for free.

I’m not sure any of that makes good sense. None of it will make us more able to feed Joe. It will only make us more willing to feed him.

We don’t end up caring whether the job Joe takes burns more resources to earn the corn than he would burn if we just gave him the corn. In fact, we don’t account carefully for the resources used by our society at all. We take it on faith that resources are being used well because we imagine that when everyone makes purchases that each individually make sense, the entire system will somehow, magically also make sense. But what if that’s wrong? What if there is no such emergent effect? What if being down and dirty in the details obscures our chance to create any global coherence?

We created money so we could keep track of traded value, but somehow things have gone awry. I’m not advocating an end of money, but I am advocating a hard look at the assumptions we make about its effect and about the goodness of the things it buys. I’d like an end to the blind trust in money, as it were.

There may indeed be things we could be doing in our society to make the world better, but merely looking at where there’s money to be made might not answer that. We have erected a consumer-driven society in which we incentivize the making of things. But I suspect we will not have a sustainable society until we start to incentivize the “not making” of things we don’t need.

Maybe there are other ways people can provide value, maybe not. But if there can be such gigantic questions of what’s the right thing to do in the world, can we at least agree to feed everyone in the meantime while we sort it out? And by feed, I really mean feed, clothe, house, and take care of them. I think we’d be able to do it. I think so because I think we could do it if people would just make more harmonicas.

If we’re prepared to do something important if only our people do some utterly irrelevant act, I think we’re prepared to do it regardless. Why not dispense with all the corny excuses and finally just do it.

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This article has a sequel/companion, published in 2020:
The Two Economies.

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Author's Note: Originally published May 27, 2012 at Open Salon, where I wrote under my own name, Kent Pitman.

The graphic was added in June, 2025. The initial design was created as two separate images with the help of abacus.ai using Claud Opus 4 and Seedream. Neither was exactly right, so I had to manually fuse them and do other post-processing manually using Gimp.

Tags (from Open Salon): place to live, housing, house, home, healthcare, health care, health, drink umbrellas, drink umbrella, blind trust, trust, obfuscation, excuses, excuse, extra, surplus, leisure, luxuries, luxury, non-essentials, essentials, essential, wants, needs, housing, shelter, clothing, clothes, clothe, food, feed, harmonicas, corny economics, economics, corn, corny, politics