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

Enough

A lot of the discussions we have about what's fair to tax seem to refer to questions of how people should “share the pain.” I don't like the way that discussion usually goes, but not because I don't think people should share pain. I just question the definition of “pain” that seems to get used.

And I should say at the outset that frequently when this discussion of alleged pain sharing comes up, a flat tax gets suggested as well. For some reason this is often asserted to be more fair. I don't think it is. But I'm going to assume a flat tax for presentation purposes here because a lot of people don't seem to understand how to visualize our present progressive tax system. Doing so won't affect any of the points I have to make.

Let's begin by looking at how this sharing of the pain is supposed to work. We'll imagine three different incomes of different sizes. We'll assume everyone is paying a proportional amount of their income. 15% is often suggested as an ideal flat tax. But it made my picture hard to annotate. So I'm going to use 30%. Again, it won't affect my point.

So here are some typical incomes. The green indicates the take-home that you have, and the gray is tax taken out. The longer bars are people making more income. The shorter bar is someone making less income. But it's all proportional, so it's all fair—right? Well, we'll come back to that.

Now the discussion is about the current suggestion that we take out more tax on people who have very high incomes. That would look like this:

The argument is made by those who might stand to lose that they're already paying a huge amount of tax. And now we want more. Oh woe is them. Look at that giant red bite. In fact, look hard at it. Focus on it. Be hypnotized by it. Especially don't look at the green part to the left of it because if you look there, you might not feel like the person who's complaining is hurting so much. Just look to the red.

Actually, that's not the real argument I want to make. But it is one thing that should already have you thinking “Maybe proportionality isn't all there is to this picture.” Those pushing proportionality would be happier with this picture because they like the idea of shared pain:

There's another concept I want to introduce at this point. I'm going to call it the concept of “enough.” We can have a discussion later about what that line is. But wherever it is, the line of “enough” is what I want to define as the line where people can reasonably live. It supports sentences like “I don't have enough.” or “You have more than enough.” It looks like this:

Right away, you notice that some people might not make enough. In this chart, everyone makes enough before taxes, but after existing taxes, one person is already hurting. I've marked that in red. And that's with the proportional tax. They had just barely enough, but merely asking them to participate in taxes meant they didn't have enough after all. I don't think people who make exactly enough or less than enough should have to pay taxes. It's a sham. If they're really not making enough, someone will have to help them—either another person or the government. Why take money away just to give it back? Unless people are making enough, there's no real money to take.

And if we want to add more tax, is that increasing the pain? Well, sure, for those who are not making enough. Because they're the ones whose needs are being cut into. Above the line of enough, I don't think it's fair to say you're experiencing pain in the first place, and unless the increase in tax causes you to cross the enough line, I don't think you get to complain about increased pain—or pain at all.

And this is the thing. Incomes scale but needs really don't. Oh, sure, we can all get used to having really big houses, vacation homes, jets, really nice clothes, etc. I think it's great to have things like that. But when you get to the point of not just having them but not knowing how you'd live without them, and not being willing to sacrifice some of that for the sake of others who are truly needy, you're pushing a line with me. Certainly, at minimum, if you claim to be experiencing pain because you don't receive money at quite the lavish level you've been used to receiving it, you've lost all touch. It's time to be reminded that you're behaving like a spoiled child and to be told that you should be ashamed.

Proportionality doesn't work without exemptions for the low end. That's why we have a progressive tax system.

And sharing the pain equally is meaningless because we're not all in pain. If you're making enough, at least have the courtesy to acknowledge the fact. You're not showing yourself in a flattering light when you behave like you're hurting if you're not. The world has bigger problems than your imagined pain.

Enough of that.

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Author's Note: If you got value from this post, please “Share” it.

Originally published August 10, 2011 at Open Salon, where I wrote under my own name, Kent Pitman.

This post was an Open Salon “Editor’s Pick”.

Past Articles by me on Related Topics
Tax Policy and the Dewey Decimal System
Redistributing Burden

Tags (from Open Salon): politics, fair tax, proportional tax, shame, ashamed, hurting, pain, share the pain, sharing the pain, proportional, proportionality, enough, not enough, more than enough, surplus, need, needs, want, wants, taxation

Redistributing Burden

McCain's near-spastic surge of emotional hotbutton issues is hard to follow, but among the spread spectrum of ideas he's been frequently hopping between is his allegation that Obama is a “socialist” seeking to “redistribute wealth.”

Get More: Comedy Central,Funny Videos,Funny TV Shows

A number of people are already doing a pretty good job of shedding sunlight on McCain's confused use, or cynical abuse, of the term “socialist.” For example, Stephen Colbert recently interviewed Brian Moore, socialist candidate for US President in the 2008 election. In the interview, he asks Brian Moore whether Obama could pass for a socialist.

I wanted to make a different point, though... that is, if you're done watching the video. Hello? Is this microphone still on? Ah, there you are. I thought for a moment I'd lost you. I should know not to put myself in deliberate competition with the likes of Colbert, especially to illustrate what I don't want to talk about!

What I really wanted to talk about is the notion of redistributing wealth. I want to suggest that's a bad paradigm for viewing the question, and suggest a way to reframe the discussion. I want to discuss “redistributing burden” instead.

To start, let's look for a moment at the process of summarization. There are a lot of ways to summarize an issue, even something that seems so simple you can just count it up. Depending on what you count or how you count it, the answer can be different. For example, we have a Senate and a House of Representatives in part because one of them counts up what states think, and one counts up what people think. It was believed by our founders, and I think they were right, that sometimes one of these is the right way to count, and sometimes the other. But the point is that they're different, even though they're at some level both counting up the same thing, that is, “how much will the nation has on an issue” or “how much need the nation has.”

So it is with wealth and burden. For some things where money is involved, wealth may seem an inverse measure of burden. That is, if you have a lot of wealth, you have less burden. But the problem with that is that it sounds like it's all proportional. Wealth uses words like “more” and “less.” People who claim they have no wealth at all are rarely sympathized with, even though the use of the word is probably correct, but rather they are quibbled with. “What are you talking about? You have a family. Isn't that a form of wealth? You live in the richest country in the world. Isn't that a form of wealth?” (Given our debt burden, I'm not sure I'd call this the richest country in the world, by the way, but you still hear people say it.)

Sometimes the word wealth is a relative measure. We cannot all be wealthy because we don't all live in Lake Wobegon (“all the children are above average”). It's a necessary fact of relative wealth that for some people to have it, others don't. Now, it's certainly true that there is another kind of wealth, an absolute kind, that says that if you have more than you need to survive, you're also wealthy. And that kind of wealth we could theoretically all have at the same time. We just don't. We have many people who have enough to survive, and more, while we have many others who don't have enough to survive, to care for their families, to address medical issues, etc.

So when it comes time to pay the nation's taxes, the question is what the burden is on them to give up a little of their money to help with that cause. The answer is pretty plainly right now that there are people who are barely getting by, if at all, who are being asked to pay money they don't have in order to help with that. For example, for Sally making $30,000 to pay $3000 in taxes while Bill making $1,000,000 pays $100,000 might seem a simple issue of scale. Both pay 10%. But the $3000 that the Sally is giving up might have been just enough to afford some critical expense, perhaps a health care plan. While at his income level, Bill is at no serious risk of not being covered by a health care plan. So it's not that there is a proportional burden. Sally's basic needs are not met and Bill's are. It might not even be the case that Sally's needs were met with no taxes at all. $30,000 is not much to scrape by on, especially if she has a family. But I'd argue Bill could still manage to raise a family even if he paid $103,000 dollars in taxes, so that Sally had to pay none. Or even if he paid $130,000 dollars in taxes, so that ten Sally's had to pay none.

I hear murmurs of “he's redistributing wealth” but that's my point. I'm not necessarily redistributing burden. At least, I'm not creating a burden on anyone that didn't have it; I'm just removing it from someone who did. If Sally pays no tax, so keeps all $30,000, she's not made rich, she just fails to be quite so impoverished. And if Bill pays only 3% more in taxes, which is $30,000, he's not impoverished by that. He's just slightly less rich. Before the change, 10 people might have been struggling and 1 surviving (well). After the change, 11 people might be surviving. That's a big benefit. The mathematics of burden redistribution are very different than the mathematics of wealth redistibution. Speaking in terms of wealth rather than burden can muddy things a lot by focusing on things that don't matter at the expense of things that do.

“But,” I hear you protest, “she doesn't have to pay taxes and he does.” Not so, I claim. She pays a tax. She is poor. Being poor is a tax. (On another day, I can perhaps even explain that might be quantifiable. But today you can just assume I mean that being poor is no fun, and that Bill won't trade places with her if he has the chance. So saying Bill is enduring an inequity in this arrangement is disingenuous.)

And yes, we can argue where the line is between rich and poor, but we should not argue that there is no such line. Surely there must be some amount of money beyond which if you have it, you're set. Just as surely is some amount of money below which if you don't have it, you're in bad shape. The precise amount may differ with time and geography and other factors, but we shouldn't let that uninteresting fact distract us from admitting that are real effects worthy of discussion.

And please note well—I'm not saying that the wealthy need to just give all their money to the poor. The capitalist system is about the hope that the opportunity to get rich will cause people to work hard for that goal so that others will benefit. But we need to watch that in fact the others do benefit. If we allow the one person (or a small number of people) to get rich at the expense of the others, then capitalism hasn't done what it set out to do. Those who have succeeded under our system need to remember that this is a society in which the populace, by majority vote, chooses how we run things. And if that group gets things to the place where a majority of voters think they're not doing well, they should expect that such an unhappy majority has good reason to start pulling plugs on the process. That's what I think is in play right now, and what will continue to be in play until a basic fairness to the original premise that we should all benefit to a reasonable degree from the success of the few.

A bit of enlightened self-interest on the part of the rich would go a long way just now. Holding firm to the “it's mine and you can't have it” line is not going to serve the rich well when talking to people headed for the ballot box.

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Author's Note: If you got value from this post, please “Share” it.

Originally published October 30, 2008 at Open Salon, where I wrote under my own name, Kent Pitman.

Tags (from Open Salon): politics, economy, wealth, burden, needs, basic needs, health care, food, redistribution, redistribution of wealth, redistribution of burden, income redistribution, tax, taxes, taxation, regressive tax, tax fairness