STREET DOGS

From the FT’s Alphaville: Let's get back to basics on the word “economy,” which has in some cases come to mean the very opposite of its original linguistic meaning.

The word stems from the Latin word “oeconomia”, meaning household management. But its practical use goes back to the 1660s when it was understood as general frugality and a judicious use of resources.

From this we can infer that an economy is delivered when the factors of production are organised in such a way that resourcesparing efficiencies are generated. Those efficiencies then allow for additional output to be created because freed-up resources can be dedicated to further production. The more economy, the greater the output, the bigger the wealth pie.

According to that logic "the economy" is a specific system by which savings are delivered through smart organisation, innovative techniques and resource deployment. When those savings are put to new use a wealth effect is experienced to the benefit of all.

Today, the word doesn't necessarily mean this. Instead, it is construed as a direct signifier of wealth irrespective of whether economisation is its source or not.

When politicians talk about "the economy doing well" or "growing", people don't think "oh yes, people are economising more and delivering surpluses". To the contrary, they equate it with the idea that we the people can now afford more nice things, leisure and luxury (all uneconomic by definition). How those nice things are sourced is largely irrelevant.

So we find ourselves funnelling more money into business models that transfer wealth from one sector of society to another, rather than those that create economies. We glamorise rent-seeking and pyramidal enterprises that focus on parting the gullible from their money, rather than calling them out.