I was first introduced to the intricacies of economics when I started my A-levels at the Allidina Visram High School in Mombasa. Our teacher was the wonderful Mr Joseph who looked every inch a professor as he guided us, with infinite patience, into the mysteries of gross domestic product, supply and demand curves, velocity of money supply and other brain-taxing subjects.
He had the knack of making even the most obtuse concepts appear simple and subject to common sense. But, try as I would, I could not get my head around the concept of 'wealth creation', once we had been informed that money was nothing more than a generally accepted medium of exchange.
During a break one afternoon, I decided to ask him pointblank how wealth was created, making sure I was well away from my classmates, who might otherwise have thought me silly for asking the question.
He smiled. "Excellent question. Now, what is this under my foot?" I looked and could only see the ground. "Just some sand and soil, sir."
"Exactly! How much will you pay me if I dig up this soil and offer to sell it to you?"
"Why sir, nothing. I'm sorry, but what would I do with a lump of soil?"
"Good! Now if I was to dig up this soil and shape it into a brick, would you pay me for it?"
"Well sir, if I needed a brick, and if I had the money, which I don't have, I would pay a fair price."
"There we are! If you needed a brick, or lots of bricks to build your house, and if you had the money, than this lump of soil and others like It, shaped into bricks, would have a price. They would acquire value. We would have converted this valueless lump of earth into something of value. We would have created wealth, out of virtually nothing! Does that answer your question?"
"Yes sir, thank you sir." But it took me quite a while before the idea sank In. I had always somehow believed that wealth was something fixed, that came to you from somewhere else. It had never occurred to me that wealth could be created by the simple process of taking something of lesser value and converting it into something that someone was prepared to pay for. Always fire-fighting
The notion that we could create our own wealth seemed laughable. True enough, people were making food and clothes at home and selling them; others were hawking fruits in handcarts...