What Creates Wealth?

[Working Poor]

This is a short video that explains about freedom and wealth creation. I hope you enjoy.

Why are some countries rich and some countries poor? Is it access to natural resources? Is it tax policy? A motivated work force? These are important, but not determinative. The answer is deceptively simple – it’s what’s in our heads: knowledge. Thus, the surest way to promote economic growth is to cultivate an environment that encourages the spread of knowledge. Such an environment requires freedom, which is why the freest societies are the most prosperous. In five minutes, economist George Gilder explains why.

[ILUVRP]

sounds to me like more trickle down bs from rr/kudlow/lafer that never happened , that's why we lost the middle class , some of the countries like china have done well because of our rotten trade agreements , another one will come on board soon as it in now on fast track .

many countries benefit because they are not flooded with cheap labor , and they keep their middle class , the middle class is what makes all countries great , its not the very rich or mega corps .

w/o a middle class in a country what do you have ? the answer is a fascist country .

i do not agree with the thousands of pagers of regulations companies have to go through , we did need a type of dodd/frank bill to stop the bank/broker/insurance companies after glass/steagall was put away by the gramm/leach/bliley act and signed by bill clinton .

just my 2c , that's about all i have .

[NorthCarolinaLiberty]

What creates wealth in the US? Food and entertainment. If you want to still cash in before the slow burns even more, then open a fast food joint or produce a tee vee program.

[Acala]

Wealth is created by trade. When two people enter into a transaction, each trading surplus goods or services they want less than the goods or servies they trade for, the total satisfaction of the two people increases for having traded. That is the wealth-creation process. The ONLY wealth-creation process.

Whatever facilitates that process increases aggregate wealth creation. Whatever inhibits that process decreases aggregate wealth creation.

Increasing production so that there are more surplus goods to be taken to market and offered for trade increases wealth.

Trading surplus production for tools to make future production more efficient is investment in capital goods. This increases production and thereby increases wealth. This is how capitalism works.

Knowledge of how to make new, better things or make existing things more efficiently is a form of capital. You gain that knowledge by spending surplus goods or services on the accumulation of the knowledge. Just like a better tool or factory, better knowledge increases production and increased production increases wealth.

So some kinds of knowledge can increase wealth, but it is trade that creates wealth.

[oyarde]

Production creates wealth.

[Bryan]

To combine and add to the above two...


Fruitful production leads to wealth, in one sense, and to the ability to trade, which leads to greater wealth.

Owning property is key in production, as well as having work skills.

[tod evans]

Being able to freely produce on your property with your knowledge is pretty important too.....

[heavenlyboy34]

To combine and add to the above two...


Fruitful production leads to wealth, in one sense, and to the ability to trade, which leads to greater wealth.

Owning property is key in production, as well as having work skills.

Do you consider specialized knowledge a "work skill"? There are people who become wealthy simply by investing intelligently. RP, for example, used his knowledge to build an investment portfolio (gold and mining stock-heavy) that gains market value even during "bad" economic climates. Thnx.

[acptulsa]

Do you consider specialized knowledge a "work skill"? There are people who become wealthy simply by investing intelligently. RP, for example, used his knowledge to build an investment portfolio (gold and mining stock-heavy) that gains market value even during "bad" economic climates. Thnx.

As Acala said,, investing in new tools and more efficient production methods leads to more production, and therefore more wealth.

[heavenlyboy34]

As Acala said,, investing in new tools and more efficient production methods leads to more production, and therefore more wealth.

Natch. Thanks for clarifying.

[helmuth_hubener]

What Creates Wealth?

It's subjective.

[ILUVRP]

As Acala said,, investing in new tools and more efficient production methods leads to more production, and therefore more wealth.

therefor china is creating wealth as everything is made over there .

" Trading surplus production for tools to make future production more efficient is investment in capital goods. This increases production and thereby increases wealth. This is how capitalism works ."

then china is deep into capitalism .

everyone is thinking how america was before the 1980's .

[Bryan]

therefor china is creating wealth as everything is made over there .

" Trading surplus production for tools to make future production more efficient is investment in capital goods. This increases production and thereby increases wealth. This is how capitalism works ."

then china is deep into capitalism .

everyone is thinking how america was before the 1980's .

From a national perspective, China is being very capitalist. From a worker perspective, it's a bit different.

Technical, many things that say "made in China" are not fully made in China, such as the design of the product. This goes to HBs question.

[Deborah K]

Producing and saving.

[Natural Citizen]

From a national perspective, China is being very capitalist. From a worker perspective, it's a bit different.

Technical, many things that say "made in China" are not fully made in China, such as the design of the product. This goes to HBs question.

I think they just completed an agreement with Australia which gives Australia a wide open door to China's markets. Agriculture is the big one and, of course, that is a very tall glass of water itself given the state of that industry and restructuring of brics nations abreast with it.

[Acala]

It's subjective.

Yup. It is the subjective evaluation of improved circumstances that BOTH partners to any free trade experience. That is essentially the DEFINITION of wealth.

[Working Poor]

The main point I got from it is freedom creates wealth: freedom to have ideas, own property, and produce. Does anyone dispute that?

[helmuth_hubener]

Yup. It is the subjective evaluation of improved circumstances that BOTH partners to any free trade experience.

Well I agree with all that, certainly, but I was actually meaning subjective in an even stronger sense. To go even deeper with it.

What is wealth? Well, that depends, doesn't it? Fundamentally, it's a state that someone enjoys. Eating Thanksgiving dinner with one's family, that could be true wealth to one man. Or not having a family to worry about and deal with could be true wealth to another. Working Poor says knowledge leads to wealth, but for another (probably crazy) person, they could prefer to live in a place where everyone had little or no knowledge, and so in that case being surrounded by ignorance would be wealth to them. Even one's own ignorance could be wealth -- I know I value my lack of knowledge on some things! (Some things you can't "un-see" as they say!) Material poverty and lack of comfort and everything normally considered wealth could be wealth to an ascetic.

Wealth could be a sunrise.

Wealth could be a walk in the woods.

Wealth could be anything. And depending on what the person values, what will lead to or create that outcome will vary. The sunrise is as beautiful in North Korea as in South. But because people will consider all different things to be wealth, it is safe to say that what will best enable them to gain that wealth in their life will be to simply allow them to be free to pursue it. Allow all men the freedom to pursue whatever wealth they may seek. Some will seek one thing. Some the opposite. Some to accumulate money. Others to get rid of it.

Everyone's life has a different purpose, at least in their own view. Everyone is seeking to answer a different question. And so that is why what Ernest Hancock always says is so true:

Freedom's the answer: what's the question?

[Acala]

Well I agree with all that, certainly, but I was actually meaning subjective in an even stronger sense. To go even deeper with it.

What is wealth? Well, that depends, doesn't it? Fundamentally, it's a state that someone enjoys. Eating Thanksgiving dinner with one's family, that could be true wealth to one man. Or not having a family to worry about and deal with could be true wealth to another. Working Poor says knowledge leads to wealth, but for another (probably crazy) person, they could prefer to live in a place where everyone had little or no knowledge, and so in that case being surrounded by ignorance would be wealth to them. Even one's own ignorance could be wealth -- I know I value my lack of knowledge on some things! (Some things you can't "un-see" as they say!) Material poverty and lack of comfort and everything normally considered wealth could be wealth to an ascetic.

Wealth could be a sunrise.

Wealth could be a walk in the woods.

Wealth could be anything. And depending on what the person values, what will lead to or create that outcome will vary. The sunrise is as beautiful in North Korea as in South. But because people will consider all different things to be wealth, it is safe to say that what will best enable them to gain that wealth in their life will be to simply allow them to be free to pursue it. Allow all men the freedom to pursue whatever wealth they may seek. Some will seek one thing. Some the opposite. Some to accumulate money. Others to get rid of it.

Everyone's life has a different purpose, at least in their own view. Everyone is seeking to answer a different question. And so that is why what Ernest Hancock always says is so true:

Freedom's the answer: what's the question?

I agree. And this is one reason why it is madness for government to second guess and interfere with people's choices.

[Acala]

The main point I got from it is freedom creates wealth: freedom to have ideas, own property, and produce. Does anyone dispute that?

Freedom allows trade to create wealth. But you can't measure it. Because, as my friend HH says, it is subjective. It is such a beautiful, liberating idea - only YOU can know what wealth is to you and NOBODY has standing to say you are wrong

[presence]

I thought wealth came from government granted monopolies.

[helmuth_hubener]

The main point I got from it is freedom creates wealth: freedom to have ideas, own property, and produce. Does anyone dispute that?

It is a very free market video. I liked it. At the end, Prof. Gilder over-emphasizes whatever market reforms might have been made in the US Reagan administration, in my opinion, but it's understandable why he does -- he wrote a bestseller in 1981 that made him President Reagan's most quoted living author. Also, I am not sure / was unaware that Canada got any freer during the 2000s. Did it?

Anyway, thanks for posting, Working Poor.

[Working Poor]

I thought wealth came from government granted monopolies.

LOL

[Natural Citizen]

I thought wealth came from government granted monopolies.

We tend to confuse a genuine free market with mercantilism. It's weird, man. I don't understand the phenomenon.

[Occam's Banana]

I thought wealth came from government granted monopolies.

Nope, you got it backwards. That's not where wealth comes from - that's where it goes ...

[heavenlyboy34]

We tend to confuse a genuine free market with mercantilism. It's weird, man. I don't understand the phenomenon.

Seems to be a combination of propaganda and ignorance (the latter usually deliberately inflicted by government schools and mediocre universities) from my POV.

[Henry Rogue]

Excess production.

After reading the posts, i like Acala's explanation far more than my feeble attempt.

[oyarde]

The main point I got from it is freedom creates wealth: freedom to have ideas, own property, and produce. Does anyone dispute that?

Sounds good to me .

[VIDEODROME]

It's subjective.

Partly perception? Or often an illusion?

Actually, is the image of America as a wealthy superpower mostly built on perception?

[H. E. Panqui]

Bryan asserts: Owning property is key in production,


('wealth' is completely subjective..and property/land 'ownership' is a myth..we merely 'rent'/lease our land, etc., here in Republicrat America..hint: 'property taxation'....except for maybe some 'Indians' on 'land untaxed'..)

Acala asserts: Yup. It is the subjective evaluation of improved circumstances that BOTH partners to any free trade experience.

(apparently 'slaves' don't/can't create 'wealth?'..apparently there is no 'wealth' where there is no 'free trade???')