A friend of mine has forwarded this message to me with header “economy 101”. I have hard time understanding economics and how it work, especially to understand why some countries are poor and some are rich even having the same resource (human and raw materials). I guess it is the “effective mobilization and redistribution of resource” that made the difference as shown in this article.
“It is a slow day in a small Florida town and streets are deserted. Times are tough, everybody is in debt, and everybody is living on credit. A rich tourist drives through town, stops at the motel, and lays a $100 bill on the desk saying he wants to inspect the rooms upstairs to pick one for the night.
As soon as he walks upstairs, the motel owner grabs the bill and runs next door to pay his debt to the butcher.
The butcher takes the $100 and runs down the street to retire his debt to the pig farmer.
The pig farmer takes the $100 and heads off to pay his bill to his supplier, .the Farmer’s Co-op
The guy at the Farmer’s Co-op takes the $100 and runs to pay his debt to the local prostitute, who has also been facing hard times and has had to offer her “services” on credit.
The hooker rushes to the hotel and pays off her room bill with the hotel owner.
The hotel proprietor then places the $100 back on the counter so the rich traveler will not suspect anything.
At that moment the traveler comes down the stairs, states that the rooms are not satisfactory, picks up the $100 bill and leaves town.
No one produced anything. No one earned anything. However, the whole town is now out of debt and now looks to the future with a lot more optimism.
And that, ladies and gentlemen, is how the United States Government is conducting business today”