Frederick Co. Md "Up and Coming" Young Democrats

Marley Pegler Bio

Spent, disappeared, or evaporated?

"Energy is neither created, nor destroyed, but only converted from one form to another…". As I sat in PC121, my Energy and Society class, my non-scientific mind began to drift from the laws of thermodynamics to economic theory. Has our capital truly disappeared, or perhaps, has it simply been used inefficiently ? Has our wealth disappeared, or evaporated? Could the laws of thermodynamics apply to economics?

I put on my scholar cap, and I say yes.

Capital provides the world financial markets with a continual flow of kinetic energy. This energy is first seen within the individual in the form of human capital, or skilled labor. The individual provides his employer with needed labor, and receives a paycheck for his services; this exchange takes place in the factor market. However, this paycheck cannot provide food and shelter for the laborer and his family in its current form. His paycheck must again be converted, or exchanged.

This exchange takes place in a new environment, the product market. It is here that the laborer (now a consumer) can convert his paycheck into consumable resources. The contracts between employer and employee, and consumer and producer sustain mutual relationships through a balanced exchange of capital. The efficiency of exchange is dependent on all components of the markets.

In our current economic environment, the employer has been forced to break his contract with the laborer simply because there is no longer a market for the latter's services; they are no longer viable capital. Yet just as an idling car continues to burn fuel, the unemployed, or idle laborer still requires food and shelter. The laborer is working inefficiently; he is producing unusable, or non compensable services. The car is burning fuel at 0 mpg. Both are producing heat energy.

During the fourth quarter of fiscal year 2008, the world's supply of liquid assets seemed to "disappear." Has our capital truly disappeared, or perhaps, has it simply been used inefficiently ? Has our capital disappeared, or evaporated?

Keep in mind that this is not a thesis, theory, or dissertation. I am neither an economist, nor a scientist. I am just a student, a student with a thought, a thought I'd like to share.

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