Sunday, March 26, 2006

On The Economics of the Wilderness

My sons' yeshiva holds an annual Melave Malka for the boys in the upper grades. This year's event was held a few weeks ago. At the Melave Malka, the Menahel got up to speak. I don't really remember what the point of the speech was, but there was one part I do remember well.

He mentioned that his son asked him a question on Shemos (Exodus) 30:15:

The rich shall not give more and the poor shall not give less than the half-shekel...

His son asked him the following question... if all the Jews were rich when they left Egypt because of all the gold, silver, etc. that they took from Egypt upon the Exodus, then why does it say "the poor shall not give less?" Who was poor? Everyone was rich! Why does the Torah state "the poor shall not give less?"

The Menahel then said that it was a very good question and went on with his speech. I, on the other hand, thought it was a silly question. After all, was the Torah given *only* to the generation that left Egypt, or was it given to Jews of all time? Surely during the course of time, some would become richer and some would become poorer. The part of the verse that states "the poor shall not give less..." certainly applied to them.

However, even though I thought the question was a silly one, it started me thinking about the economics of the generation of the Wilderness; and in so thinking, I started realizing that certain assumptions that were inherent in the question were not necessarily so.

Firstly, the questioner states that all the Jews were rich. In fact, this may not really be so. After all, just because people have the opportunity to take gold and silver doesn't mean that everyone actually took the oppurtinity. No doubt some Jews were lazier than others, or maybe didn't have access to the same amounts of wealth to take as did other Jews. In addition, some may have lost some of their wealth in between the time that the Exodus occured and the time that the commandment to give the half-shekel was given? In short, there could be any number of reasons why some Jews were wealthy and some were not, or, at the least, not as wealthy as others.

Secondly, wealth is really a relative term. After all, what we call "the poor" in the United States today is really fairly wealthy when compared to other parts of the world. In a society made up exclusively of billionaires, the multi-millionaire lives in "poverty." So, naturally, even if *all* the Jews did take gold and silver from Egypt, there is no reason to say that they all did so equally. As I mentioned earlier, some may have simply been physically stronger (and able to carry more) while others may not have had access to as much gold as others. And those that had little gold were, in reality, "poor." This is all the more so in a closed society, as the generation of the Wilderness was; where there was limited contact with outside cultures and therefore limited opportunity to engage in commerce with people outside the group. Which leads to the topic of inflation.

Inflation, very simply, is when money loses it's value. The classic example of how inflation could occur is if the government would decide to simply start printing more money. The reason money is valuable is because it is scarce. If more of it suddenly appears, all of it starts to lose it's value. That's why the United States government cannot solve it's debt problem by simply printing up more money... becuase it would devalue the money supply that is currently out there.

The same principle, however, applies to any commodity. Gold is valuable for the same reason that money is... it's scarce. If someone were too (in a purely hypothetical example) find a gold mountain under the ice in Antarctica and bring all the gold here and sell it, it (and all the other gold in the world) would be nearly valueless, since the whole reason for it's value (it's scarcity) is gone.

Now apply this principle to the generation of the Wilderness. All of a sudden, everyone now has tons and tons (figuratively) of gold. Of what value is it? How are you to purchase anything with it? Let's give an example. Food and clothing, it seems could not be purchased in the Wilderness... why would you buy something that God is giving you for free? But perhaps pots and other vessels could be purchased. Imagine our ancient Israelite potter who toiled making pots for the Egyptians for years. Now a free man and loaded down with more gold than he can carry, he realizes that he may have a viable skill here in the wilderness. How much will his pots cost? Maybe in a "normal" society you might get three pots for a silver coin. But our potter has so much silver already! Is it worth his time to make three pots for a lousy silver piece? No, not really. Since he already has so much, you will need a lot more silver (and perhaps even gold) to make pot-making worthwhile for him. And so, inflation sets in. Whereas before a pot sold for a third of a piece of silver, now, because the money supply is so much greater, your piece of silver is almost as nothing. Now you have to use gold, and more of it, to purchase the pot. And so, the purchasing power (the true measure of the value of money -- after all, what good is money if you can't buy things with it) of the gold and silver has gone down. As a result, even if they all had a lot of gold or silver, so what? It hasn't really made everyone rich (unless compared to people outside the system - such as the other nations) - it merely redefined the value of the gold and silver. That's why the answer to poverty isn't to simply give everyone a million dollars - it doesn't really make anyone richer.

It seems that when Chazal stated that everyone who left Egypt was rich, they didn't really understand economics and how inflation works. Or, it could be, that they were speaking about the Jews being rich compared to the other nations. But within the Jewish nation, there certainly were still "poor" people, just as there are "poor" people within the United States today.

The Wolf


and so it shall be... said...

did the rabbi at least have an answer to the 'good' question?

Michael Kopinsky said...

First of all, depending how you learn the pasuk, that mitzvah be be referring to only the counting then, in the midbar.

In a society made up exclusively of billionaires, the multi-millionaire lives in "poverty." This brings to mind an article from the Onion. (No, I don't read it any more. ch"v) Something like, "Bush promised tax cuts accross the board from the billionnaires, to the multi-millionaires, and even the plain old millionnaires!"