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September 10, 2004

A Brief Monetary History of Gilligan's Island

The Monetary Economics of Thurston Howell III asks if "fiat dollars be treated as valuable without the government around to enforce its fiat" (via ***Dave).

One thing Gilligan has, which Crusoe doesn't, is a shared culture with the others on the island. If Robinson Crusoe had been shipwrecked with a chest full of British banknotes, they wouldn't have done him any good. Friday would be more likely to trade for shells or gold than he would for the strange paper.

But on Gilligan's Island (and in the Kurdish rebel territories, and briefly in Baghdad), people who are already used to making their exchanges in slips of unbacked paper can continue to do so profitably without the hand of government. The invisible hand of the market serves them better -- even when dealing in government paper.

Posted by Ghost of a flea at September 10, 2004 09:03 AM

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Tracked on September 10, 2004 09:59 AM

Comments

This is a great little essay - I mentioned it in my TV column in the paper the other day. THIS is the way to teach people economic theory, methinks.

Posted by: rick mcginnis at September 10, 2004 09:42 AM

Even as a 10 year old child I automatically assumed the reason Howell's money still had value on the island was because the castaways always expected to some day be rescued and could then be millionaires. Howell wasn't throwing around $10hr jobs. He almost always offered huge amounts of cash. Academics think too much.

Posted by: Pat H at September 10, 2004 12:00 PM