Explaining Economy to a Seven Year Old

Explaining Economy to a Seven Year Old

Kid: “Daddy, what’s an economy?”

Dad: “Well, an economy’s like a really big room that people trade stuff in.”

Kid: “What kind of stuff?”

Dad: “Well, people trade services, goods, talent and labor.”

Kid: “What are those things, daddy?”

Dad: “Well, a service is like what a plumber or electrician does. A good is like candy, fruits, vegetables or meat. Talent is like a painting or a pretty song. And labor is like sweeping the sidewalk, cutting grass or shoveling snow.”

Kid: “Why do people trade things, daddy?

Dad: “Because not everybody can do the same things, and there’s not enough time to do everything by ourselves.”

Kid: “How do people trade things in economies daddy?”

Dad: “Well, they use money to trade things.”

Kid: “Why do people need money? Why don’t they just trade without money?”

Dad: “Because the room is really, really big. The room is so big in fact that some people never even meet each other.”

Kid: “Wow…”

Dad: “On top of that, not everybody is in the room at the same time. Money makes it so that people can work together even if they never see each other or work side by side.”

Kid: “What is money, daddy?”

Dad: “Think of money like special tickets — kinda like the tickets we get when we win at the arcade. You know how we trade tickets we earn for prizes and candy?”

Kid: “Yeah! I love the arcade!”

Dad: “Money works just like that.”

Kid: “I get it! So the economy’s like an arcade!”

Dad: “Like the ticket counter in the arcade, but way to use connective reasoning, champ!”

Kid: So why are people always talking about the economy, and why does it go up and down? Why don’t people get it?”

Dad: “Ah. Great question. Well, remember the room we were talking about?”

Kid: “Yes…”

Dad: “Now imagine there were enough tickets in the room for everybody to trade with each other fairly…”

Kid: “Yeah…”

Dad: “Now that’s the way it’s supposed to be, right? But imagine a bunch of mean and stingy kids started stealing tickets from people or tricking people out of their tickets. Imagine that if instead of offering services, goods, talent or labor, they got tickets by gaming people out of them.”

Kid: “What is gaming?”

Dad: “Gaming is what you call it when people try to win things from each other instead of working together. Gaming is what you call it when you want to be better than someone, so you create ways to compete against them in order to get what they’ve got without having to trade with them, or give them something of equal value. Do you have any friends who try to race you all the time, or beat you at you different things?”

Kid: “Tommy, but I don’t really like him though.”

Dad: “Well, Tommy is just gaming against you. He’s trying to steal attention, power, respect and authority from you without giving you any of those things in exchange. He wants to take value from you without giving equal value back to you. And people like that tend to be pretty mean spirited.”

Kid: “So somebody’s gaming people out of tickets — out of money?”

Dad: “Exactly. Imagine the mean and stingy kids were playing this really mean spirited game in which they tried to outdo each other to see who could get most tickets — each trying to get more than they needed, and more than they could ever spend in their life. Now imagine those mean kids replaced all of the tickets they stole with a bunch of fake tickets — with little notes that said I.O.U. (“credit”). Now imagine those kids could randomly decide how much I.O.Us were worth, so that I.O.U.s could make some people rich, but keep other people poor.”

Kid: “This is confusing now. Why would somebody do that?”

Dad: “Because they’re trying to win a game that only matters to them. They don’t care about who or what’s affected by their game, they just want to win no matter what. They’ll destroy the whole world, themselves, and everyone and everything else just trying to win a silly game that nobody has to play.”

Kid: “But the room is for everybody! They can’t just steal everybody’s tickets and give people fake tickets! That’s not fair!”

Dad: “It gets even worse though, because the mean kids actually learned to LIKE taking tickets from people and making people sad, sick, hurt, tired and scared. And all of those I.O.U. notes they switched the real tickets with makes everything cost more. Tickets are supposed to represent services, goods, labor and talent, but I.O.U. notes don’t really represent anything. So the more I.O.U. notes there are circulating around the room is the less services, goods, labor and talent are worth — which means people have to charge each other more just to survive.”

Kid: “More tickets?”

Dad: “No, more I.O.U.s. It’s to the point now that people don’t know and can’t tell the difference between tickets and I.O.U.s. They’re treating tickets and I.O.U.s like they’re the same thing. The mean kids who did this ultimately want to steal everybody else’s services, goods, labor and talent, and keep everything for themselves. Switching tickets to I.O.U.s helps them do that, because they get to say how much I.O.U.s are worth and then tell everybody how much services, goods, labor and talent are worth.”

Kid: “But it’s no fair! So everybody’s sad and has to work more because these mean kids replaced real the tickets with I.O.U.s? Why don’t people just stop using the I.O.U.s?”

Dad: “Because the mean kids have kept everybody so confused with wild and crazy stories about the room, the tickets, the I.O.U.s and the actual value of services, good, labor and talent that nobody’s had time to think about it. Most people think the I.O.U.s ARE the tickets, and people are just trying to survive. The mean kids keep people so busy trying to earn I.O.U.s for survival that people never even question the game.”

Kid: “No fair! I want to sucker punch those mean kids! They’re bullies!”

Dad: “Calm down. Those mean kids are trying to win the only game they’ve ever known — the only game that was shown to them. Their whole life has been dedicated to winning this game, and they don’t understand how reality works beyond the game. You don’t have to punch the kids, just try to understand the game and explain it for what it is. Show people how it turns everybody who plays it into savage monsters.”

Kid: “The economy?”

Dad: “No, the game of collecting money for sport — the game of gaming people out of money for entertainment purposes, and devaluing services, goods, labor and talent in the process. The mean kids aren’t just winning at a game, they’re destroying the room that everybody trades things in for survival too.”