The Dead Parrot Sketch

i. introduction.

An old Monty Python sketch illuminates the Dismal Science:

Pet Shop Owner: Oh yes, the, uh, the Norwegian Blue [parrot]… What’s, uh … what’s wrong with it?

Mr. Praline: I’ll tell you what’s wrong with it, my lad. ‘E’s dead, that’s what’s wrong with it!

Owner: No, no, ‘e’s uh,…he’s resting.

Praline: Look, matey, I know a dead parrot when I see one, and I’m looking at one right now.

Owner: No no he’s not dead, he’s, he’s restin’! Remarkable bird, the Norwegian Blue, idn’it, ay? Beautiful plumage!

Praline: The plumage don’t enter into it. It’s stone dead!

The “dismal science” is economics; Monty Python were a British TV comedy troupe.

And the analogy is exact.

This is too long to put into one post, but I’ll sincerely try to pare it to the bone.

Consider this Apocalypse Economics 101, or, the  Apocalypso the First (sans Belafonte):

So, for today, let’s start with the fundamental question:

• What is the Wealth of Nations?

(Hint, it’s not an Invisible Hand, although they seem to be everywhere moving our puppet-media mouths.)

The Wealth of Nations is ONE thing only: human knowledge applied. The matter is free. Humans supply the manner.

Fig 1. NOT real.

Everything that you have; all the stuff, all the cool techno-gadgets and the lumbering mills was, at the purely material level LYING AROUND FOR FREE.

Diamonds and diapers, cosmetics and cars, breakfast cereals and breakfast nooks, all and any — if it was made of matter, then some human had the knowledge to utilize and transform it into that useful “stuff” you spend your money on.

The wealth of every nation is its people. Period.

But, wait! Isn’t the wealth of nations its money? you ask.

Smart question. No. Money is merely a convenience.

• So, what’s money?

We have three kinds of “currency” that are constantly confused: “Real” money, make-believe money and actual human capital.

The last is real. The first is merely a form of liquid barter.

I have eggs. You have horseshoes. You want my eggs, but I don’t want your horseshoes. Barter has just broken down.

So, Tommy over there happens to have buggy whips, which is what I want, but he doesn’t want eggs. He wants horseshoes. But you don’t need any buggy whips.

We’ve got a problem.

We solve the barter problem by a general agreement: I will trade Tommy my eggs for buggy whips. And then he will trade you the eggs for horseshoes.

We each got what we wanted, but negotiations are already too complicated.

And, if we had to constantly engage in third-party trades, we wouldn’t have any time to check the hens.

So, virtually all human societies have come up with the neat lubrication of “money,” which allows you to pay me five dollars for my eggs, and for me to then pay Tommy five dollars for a buggy whip, which he then uses to buy horseshoes from you.

The money has CATALYZED all the barter, but, other than a little “handling” wear and tear, is exactly what it was at the beginning of the transaction. Abe Lincoln (the guy on the five dollar bill) has moved around the room, and, magically, we have all bartered what our skill and work has created for what the others have created.

That’s “real” money, which can be anything you want, as long as everybody agrees to it.

• Then what’s “make-believe” money?

Make believe money is stocks, bonds, investments, promissory notes, credit and all those derived paper and electronic means of multiplying and betting money. They’re sort of like poker chips: you buy them with real money, only in this casino, they can appreciate wildly, or they can suddenly turn to nothing at all, as Confederate citizens and GM shareholders both found out.

Twice in this decade, lifetimes’ worth of “real” money — i.e. actual skill and work put in to transform “stuff” into usable, finished goods (whether tangible matter or, for instance, the gray matter of students) — twice in this decade the “capital” of Americans has become worth MUCH less than the chips they originally bought at the cashier’s window. But the “real” money still exists.

It went somewhere.

Now, you might ask, well, hey, if REAL money isn’t “real” then what’s the problem?

The problem is that the actual human capital vanished in a transaction as dumb as selling a cow for a handful of magic beans.

STERILE magic beans, that is.

The parrot is dead, and I’ll tell you why tomorrow.

Courage.