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Across a population this kind of 'bad luck' can have huge economic costs, and is a massive drag on innovation and productivity.

It's not just about personal stories.

Falcolas might not have been able to borrow $100, and would likely have ended up somewhere very different.

And the startup economy would have been down by one potential developer.

You might think 'There are others' - and you'd be right.

But the effects scale. If enough people don't get a break, opportunities shrink across the landscape.



'And the startup economy would have been down by one potential developer.'

Not only the startup economy.

Brief thought experiment:

Imagine two people. Person A is a car mechanic. Person B is a software developer. Neither are employed but both are more skilled and likely more efficient than each other in their respective fields.

Despite the fact that A needs a website and B needs an oil change, A and B will likely end up performing the work themselves, not because they enjoy it, but because they can't afford to pay each other.

This is a vast oversimplification (in this case, they could just directly barter and exchange no funds, or even if they did exchange funds $50 would flow one way and right back the other).

But the economy dies with the middle class. When no-one can afford to partake in services, we all suffer.


This is called "comparative advantage". http://en.wikipedia.org/wiki/Comparative_advantage

This description of it by P.J. O'Rourke in "Eat the Rich" uses the respective talents of John Grisham and Courtney Love to explain it.

http://appliedabstractions.com/2004/11/30/ricardo-explained-...


> Despite the fact that A needs a website and B needs an oil change, A and B will likely end up performing the work themselves, not because they enjoy it, but because they can't afford to pay each other.

If they don't have dollars, they can pay each other in IOUs (which aren't divisible, but otherwise would work fine).


Well, that's basically what credit is. You expect to be paid in the future, so you can buy things now.

Affordability is about more than simply having some means to pay, though.

I often struggle to find a word that fits well here.

The dictionary defines afford to mean: 'to be able to do, manage, or bear without serious consequence or adverse effect'.

By that standard, some people who can't afford to go to college actually do. The means are available via loans, but there are serious consequences and they will be saddled with large amounts of debt. So what's the term for that?

I don't think 'afford' as a proxy for 'strictly possible' is very useful and I'd be glad to hear of an alternative.




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