Punchinello’s Chronicles

October 31, 2008

What Creates Redistributable Wealth?

Filed under: View from the Bottom — Punchinello @ 2:52 am
Tags: , , ,

Note that in the title of this article, the question is “what” not “who.” We all know that people create wealth, but what drives those people? That’s what nobody seems to be getting into all that much.

Rush Limbaugh had a short comment the other day, that got me thinking. He said that liberals don’t create wealth, they only want to pass it around (or words to that effect). It got me thinking about the concept of wealth, and reminded me of a story Ayn Rand told.

Rand was talking about the nationalization of a refinery, I think somewhere in South America. That small country took over the business, threw out the Americans who owned it, and decided they would run it for themselves. As the business began to collapse, they brought in some engineers to help. During a tour, several of the S. African owners lit up smokes, despite all sorts of warnings posted about fire hazards.

Stunned, the consultants asked what these people were doing. Their reply was to the effect that the signs were all propaganda designed to make running an oil refinery look more difficult than it really was. “When the Americans were here, there never were any fires, so obviously these signs mean nothing.”

In all the campaign rhetoric over whether Mr. Obama intends to redistribute “the wealth,” or whether Mr. McCain won’t do such a thing, the big question is where did all this wealth come from in the first place? The first-tier answer is that people have the wealth, somehow. Those people must have made it or stolen it, somehow.

Mr. Obama and his ideology propose that rich people mostly stole “the wealth,” or took more than thair fair share, or were just lucky to stumble upon a field of “wealth.” Mr. McCain and his ideology propose that the government had a major part in making “the wealth,” somehow, but that corporations made it. Somehow.

Someone, I can’t remember who, once said that being rich is when you work for your money. Being wealthy is when your money works for you. (The operative word is “work.”) We all tend to sense a difference between being rich and being wealthy. We also tend to use wealthy more often in metaphors. We say having a great family makes us wealthy, and things like that.

Either way, when we’re wealthy we have abundance, peace, security, enjoyment of life, and all our needs and desires are easier to attain. Poverty tends to be the opposite of wealth, referring to lack of comfort and even the basic necessities in life. So where does this wealth come from?

We can look at a person who started a business, became successful, and became wealthy as a result. Sam Walton did this with Walmart, and became very wealthy. But what made Walton decide to start a business in the first place? Did he just happen to stumble upon a package of Walmart seeds, sprinkle them on the ground, wait for rain, and suddenly discover a store?

Profit motive refers to the underlying motive people have for actitives involving money. That means first understanding money. To understand money means to also understand the most basic concepts of economics and markets. We don’t need to know about high-falutin’ things like capitalism or communism to know that buying and selling involves money or barter.

The two most basic ideas involving exchange and markets are the profit motive or the altruistic motive. Some people feel good by helping others, and that’s the service they’re exchanging in the world. Others want to make money or get something out of the exchange. Those are the active motives.

Lazy people have no interest in exchange. They only want to be fed, clothed, coddled, and admired. They exchange nothing, only taking goods and services. The two categories there are that they’re unable to care of themselves, or they’re just lazy. (Being too stupid to care for one’s self falls under the category of disabled.)

Nobody can create anything if they have no desire to do so. If they’re lazy, without interest in producing anything, then that includes no interest in creating wealth. But everyone else does have an interest. What?

The most basic drivers come down to wanting anything at all. How much one “should” want is a moral question for philosophy. But the fact that all living things “want” anything at all is a simple fact of reality. Altruists want to feel good, everyone else wants some “thing” in exchange for effort.

What Mr. Obama seems to believe is that there are far more altruists in the world and country than people who want something for themselves. That’s the “what’s in it for me” quick reference phrase, which is indeed a legitimate phase.

From what I’m seeing, it seems to me that only altruists and lazy people believe that goods and services just fall out of the sky. They’ve been captured and accumulated by “The Rich,” somehow, and the majority of people on the planet haven’t been given their fair share.

Not a single person who understands profit motive could possibly have an interest in Mr. Obama’s theory. Yet reality shows that countless people who don’t seem to be altruists, nor are they lazy, still somehow believe that Mr. Obama is going to “fix” something, and make things more “fair” in the market place.

Historians will look back on these times and elections, and marvel. Nobody in the history of humanity has ever been able to control “The Market.” Nor has anyone, regardless of how many guns and jails been able to force a motive in someone else. They can manipulate motives into existence, but not force motives.

Every national leader, local leader, and every nation in history who has tried to force business to continue to do business with no profit has failed completely. The Soviet Union, China, and any other country you can think of or name has entirely given up the delusion that business can be controlled by force.

Only in America, having never experienced the misery and failure of attempts to force business, do people imagine that business will or can be forced to do anything. The emergence of the global economy hastened the destruction of such foolishness.

Mr. Obama and a Democratic Congress can pass whatever laws, demand whatever demands, spend whatever money, shoot however many people, lock up however many buildings, and shut down whatever they want. They can limit, constrain, confiscate, and outlaw anything. None of it will control either business or the markets.

But I don’t seem to be hearing anything at all about what Mr. Obama intends to do to improve the business climate in America, attract foreign investors, expand the economy, or “do” anything. All I hear is what he’s going to take away, give to someone else, regulate, slow down, and equalize.

What’s in it for me?

Nothin’.

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4 Comments »

  1. Nice Site layout for your blog. I am looking forward to reading more from you.

    Tom Humes

    Comment by Tom Humes — October 31, 2008 @ 3:28 am | Reply

  2. You’re basically trumpeting the same thing that Mccain has been unsuccessfully yelling for two weeks: That Obama will “raise your taxes”, or that he “wants to spread the wealth”. The knee-jerk reaction from many conservatives is that surely, if large companies are taxes more, then their workers will be punished.

    That would only be true if money flowed in a parallel circuit. But it doesn’t. Where this assessment fails is in recognizing who earns and who spends. Large corporations earn. Working and middle class citizens spend and are the backbone of the US economy. Thus the other way to look at this situation is that if the middle class is taxed less, they will in turn have more disposable income. Models show that under Obama’s plan, those making under $200,000 will be paying as much as 1/3rd less than under the Mccain plan. That’s significant. To put this into perspective, consider the “stimulus” package passed awhile back. For most people, it meant they got between $300-$600 each. Chicken feed. Yet by looking at the GDP from the previous quarter, there is a perceptible blip as a result. Now consider what $2,000-$3,000 would do. It would be significant.

    Companies today aren’t failing because they are being taxed. They’re doing so because consumers have low purchasing power. Put the purchasing power back in their hands and suddenly they will spend. They will buy beer, cars, lumber, houses, and vacations. The middle class will essentially be back at the helm, companies will get more income, and the loop is complete. It is a cause and effect event.

    Most who revile the Obama plan seem to understand little in terms of economics. Their view is fairly narrow. Taxing large corporations is nothing new.

    Comment by bob — October 31, 2008 @ 10:37 am | Reply

  3. Where the comment succeeds is in failing to recognize that the article is about the nature of work, the nature of wealth, and the foundations of business. Mr. Obama says nothing at all about the critical necessity for America to attract more business, to increase our productivity, and to reduce our dependency on imports.

    To say that spending money is the backbone of the American economy isn’t right, and to claim that workers are the backbone of an ecomony is to completely ignore the core concept of economics itself. Africa has a vast pool of workers, and is the poorest group of nations on the planet, for the most part.

    Companies that are failing are doing so because of astonishingly bad management. The companies that are succeeding are relocating or staying here based on payroll taxes, wages, and national tax policies. If taxes go up too far, those companies will leave. If taxes remain the same, things will continue as they are. If taxes go down, international companies will flock to the country.

    Corporations pay zero taxes, never have, and never will. Any tax aimed at a corporation is simlpy passed on to the consumer. That’s a fact of economics. But this post is about what attracts business to America, not what we’ll do with the resulting wealth if it should be generated here.

    Comment by Punchinello — October 31, 2008 @ 2:01 pm | Reply

  4. Excellent blog! Interesting article and very informative! I will necessarily subscribe for this blog.

    Comment by bopdilly — November 13, 2008 @ 2:49 pm | Reply


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