Midas Fallacy

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Discussion

Mike Chege:

"Most of us are familiar with the Greek legend of King Midas. To many it is a cautionary tale about the dangers of avarice. For economists, however, the story of King Midas may hold another lesson. This is that wealth and gold (or money) are not the same thing. After all, here was the world’s richest man in danger of dying from hunger and thirst no different from a destitute beggar on the streets. The king was in danger of dying from hunger and thirst because everything he touched turned to gold, which meant that food and drink was also rendered inedible. Clearly, when Midas asked Dionysus for the power to turn everything he touched into gold, he was not interested in gold as an end in itself, but rather in the things that gold could buy.

The tendency to confuse money with wealth is what we are referring to as the Midas fallacy. Wealth may be defined as goods and services that satisfy material human wants and needs, while money simply represents a convenient if imperfect way to measure and exchange wealth." (http://firstmonday.org/htbin/cgiwrap/bin/ojs/index.php/fm/article/view/2186/2062)