The Johnny Denovo Mysteries

I was talking with Johnny yesterday about the bailout package the US government just passed, and the word “bailout” got us talking about metaphors. Here are some of the things we talked about.

The current economic challenges around the world have been attributed to a crisis in confidence resulting in frozen credit markets. But money is itself a metaphor for value — nearly 95% of what we call money doesn’t exist in the physical world, but is stored digitally somewhere.

People use a variety of money metaphors, many of which lead to limited or misguided thinking about money:

• Our share of the pie is shrinking. The “pie” metaphor portrays wealth as finite. If you feel like someone is taking something you once had, you’re likely to want to fight over it. Not a helpful or accurate metaphor.
• Time is money. This metaphor suggests that any time spent on something that doesn’t result in immediate monetary payback is not time well-spent (notice, time is spent). This is a stressful metaphor. Reverse it (“money is time”), and you have a liberating metaphor. You can pay people to expand your capabilities.
• Money is food (bread, clams). This is a barter metaphor, and inaccurate. Money is fungible — you can take money earned from selling a car and use it to buy a television, for example. This is an obscuring metaphor.
• Money as substance (liquid, fire, blood). These metaphors are very common — liquidity, money burning a hole in your pocket, burn rate, underwater, bailout, meltdown, money as the lifeblood of business, float a loan, slush fund, pooled resources, hemorrhaging money. Thinking of electricity as a liquid helps your conquer a wiring diagram. Thinking of money as liquid, fire, blood, or another substance probably does little to guide thinking. Instead, these are emotional metaphors, and emotionalism is partly why we’re in such trouble right now.
• Money as heat. This metaphor is actually instructive. When economists talk about wealth and the GDP, they often talk about this being a measure of the heat in the economy. Heat disperses, can be shared, can be generated in many different ways, and can change with levels of effort and activity.

Money as a substance, food, or time doesn’t inform us about how to manage it. Money as heat does give us some guidance. The pullback of credit cooled the markets. Injecting more heat into the system may warm it all up again. And that’s why the word “stimulus” actually works well here.

Let’s hope this metaphor proves potent and correct.