What is wealth and where does it come from?

David Mamet corroborates my previous post on pp. 42 and 43 of his book, The Secret Knowledge:

The Left (as Thomas Sowell points out in Intellectuals and Society) believing in what it calls “social justice,” believes that wealth should be “shared,” but enters the discussion in its middle.  For wealth may or may not be shared (in fact, it is shared, as efficiently as possible, through trade), but the a priori question, to the Left, is unasked and unanswered: Where did it come from?

Where does wealth come from?  Great question.  So rarely is it asked and even more rare it answered.  Get ready.  Here’s the answer (in bold):

It was not, again, quoting from Professor Sowell, descended from heaven, like manna, and spread evenly over the ground.  It was created by individual expenditure of effort and individual willingness to undertake risk.

As my generation did not live through the Depression, World War II, and the agony of the immigrants who are our grandparents and great-grandparents; as we were raised in the greatest plenty the world has ever known and in the most just of societies, we have grown lazy and entitled (not unlike Marx, who lived as a parasite upon Engels, and never worked a day in his life).  The baby boomer generation, my own, is content, if of the Left, to live out our remaining years upon the work and upon the entitlements created by our parents, and to entail the costs upon our children–to tax industry out of the country, to tax wealth away from its historical role and use as the funder of innovation.

Risk taking and trial-and-error innovation.  That’s where wealth comes from.

It doesn’t come from laws or legislation.  It doesn’t come from taxes.  It doesn’t come government.

And, let me be clear on what wealth is.  Most people view it the state of being a rich person.  Here, I mean it to be our standard of living.

Wealth is what separates us from our hunter-gatherer ancestors.

They had the same 24 hours in the day that we have (plus a few microseconds).  But, they only managed to use those hours to eek out a sustenance standard of living or get just enough calories to keep from starving.

Most of us aren’t worried about starving.  We spend a fraction of the time getting more than enough calories and we spend the rest of the time doing lots of other stuff.  And we have a lot more time to do lots of other stuff, because we live longer than they did.  We survive illnesses that they didn’t.

All that separates us from the hunter-gatherer lifestyle is wealth.

That wealth resulted from innovation that was made sometime between then and now.

Those innovations resulted from encouragement individuals found in trading with each other and discovering that finding better ways to do things would enable them to move even further away from the life of hunter-gatherer grandpa.

Take a look at the products around you right now that make your life better than a hunter-gatherer.  Your carpet, phone, house, furnace, refrigerator, food in the pantry, the pantry, floor joists, electric wire and so on.

Consider that all of those resulted from an experiment — a risk someone took at some point in time.  It may have been an accidental risk.  It may have been planned.  But, it was a risk no less, because nothing is guaranteed to work or to be wanted.  Someone had to think of it and give it a try.  Very few of them came from a government project.  And even the ones that did were usually accidents that found an unintended purpose and what they have become had nothing to do with government.

When I drive around, I like to ask, “where did all these buildings come from?”  Each of those were a risk.  An individual or a group of individuals decided building that building would be a good idea. What things are in this world because you decided it would be a good idea?  How have those things improved your life or the lives of others?

Understanding what wealth is and where it comes from is important if you’re interested in continuing to improve everyone’s standard of living.

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8 thoughts on “What is wealth and where does it come from?

  1. Thanks for the comment.

    How was the manufacturing process discovered? How was it discovered that rearranging certain raw materials in certain ways would be something that someone valued? Were those discoveries provided as ‘manna from heaven’?

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