What wealth is.

To really understand society, economics, and what makes the world better, you need to understand what Wealth is, where it comes from, what creates it, and what it is used for.  Wealth is not money.  Wealth is not gold.  Wealth is not natural resources.  Wealth is not assets, big boats, or the fastest cars.

Wealth is ideas.  More specifically, it is the real world realization of new ideas.  These ideas range from new products, significant modifications of current products, new or significant modifications of work processes, and any combination of all those new ideas.

The biggest problem with the conceptualization of wealth is that people trade things of value for wealth, so they confuse those things of value as wealth.  But money does not manifest new ideas into existence.  Only people do.  Humans are the only animal (that we know about) that rely on brain power instead of muscles to survive and advance in this world.  A pack of Orcas may come up with a clever way to round up fish, but they still rely on their powerful muscles to catch them.

Wealth is a rising tide that lifts all boats.  In a moral society, all transactions are made with complete free will.  And the transactions are made to the benefit of all parties involved.  The wealthy don’t exploit anyone because you can’t exploit someone who can choose not to participate at any time.  The wealthy man that wants to put a jetpack into every home can’t magic the jetpacks there.  He needs to trade earned (or borrowed) value for goods and services to create and distribute them.  This may sound very basic and simple, but it is not.  The amount of people it takes to get something as simple as a Coca-Cola starting at nothing and then into the fridge at your local gas station is staggering.

For example all the people that work in the corn industry benefit from Coca Cola being sold and distributed.  All the people at their local water plant benefit.  All the people at the local power station benefit.  All the people involved with the other natural flavors benefit.  All the people in the Aluminum industry benefit.  All the people that work in the coke manufacturing plants benefit.  All the truck drivers that ship coca cola benefit.  All the people that work in the oil industry benefit.  All the people that own markets, super-markets, gas stations or convenience stores benefit.  All the people that supply electricity to those markets benefit.

Hundreds of thousands of people, possibly millions benefit from getting you a drink.  And since no one is being exploited, and everyone is trading their skills for what they are worth, a simple product directly lifts up a significant portion individuals in society either a little bit, or a lot.  Then you consider that Coke isn’t even the only major soda.  There is also Pepsi.  Consider then how many people directly benefit from Pepsi itself.  Further, there are millions of more products in the world and consider how many people are involved to get each one to the market.

Once you understand that, you understand how wealth creation is good for everyone.  It is good for the teenaged floor sweeper looking to start his life.  It is good for the business executive trying to effectively run his company.  It is good for everyone.

But the most important thing about Wealth Creation is that it doesn’t happen in a vacuum.  Wealth is created in a society that is (hopefully) thrumming along at a fast pace.  Someone who has invented a new product out of nothing must offer more to the workers currently working on other products in order to get them to make his product instead.  So the other product manufacturer either has to replace the lost worker with a lower tiered worker or hire someone who is already out of a job, or counter-offer to keep the original worker.  Even someone as low on the totem pole as the already mentioned floor sweeper benefits from another firm creating wealth.

Wealth is the rising tide that lifts all boats.

 

 

First, I’d like to apologize if this came off like a Coke advertisement.  I just happened to have a can next to me so I could read the ingredients.

My next article will be about the “Redistribution of Wealth” and the destination of wealth.

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5 Responses to What wealth is.

  1. tiffany267 says:

    My dearest Danneskjold:

    Thank you for this lovely post. However I must challenge you to the extent that this version of wealth only reflects a state of affairs in a proper free market. It doesn’t work like that in the highly fucked up system under which we currently suffer.

    In this system, the federal government borrows heavily from a communist nation while stealing from its own citizens in order to fund subsidies for corn farmers, causing the price of corn to go down. Meanwhile it pays legislators to create taxes on imported sugar, leading most food manufacturers to switch to corn syrup in their products. This means that, despite many citizens being suspicious of the health consequences of the ingredient, alternatives are artificially expensive.

    We won’t even go into the USDA and the FDA shutting down healthy family farms in order to prop up factory farms which are known to produce disgusting, unsafe “food” products.

    Consumers are not really getting to choose what wins and loses in the market – our bureaucrats and politicians are.

    And that means that wealth is becoming rather meaningless, in the sense of the word that you have put forth.

    Creating, marketing, and distributing a quality product that the market wants doesn’t mean anything anymore. Today it’s all about cronyism. Wealth has been perverted to a sick form of partnership with tyranny.

    Since this disgusting model harms everyone, including unskilled workers, many are ironically clamoring for a taste of the dog that bit them, begging for a higher minimum wage, further distorting the concept of free trade and real wealth.

    I wish wealth worked as you described. It OUGHT to work as you described.

    But we don’t live in that world. We live in a world dominated by mystics and police states. By witch doctors and Attilas (yes I stole her phrase, and I’m far from the only one plagiarizing her unfairly).

    Thank you again for your happy post, and thank you for bearing with my pessimistic outlook.

    Yours truly in fond affection and admiration,

    In love of liberty,
    tiffany267

    • I agree Tiffany, for the most part. Either by collapse or by choice I feel that this country will swing back. This post was about defining Wealth in a free society in order to build a foundation. The next post which I am writing now will describe how the fight against wealth is destructive to a country.

      I do disagree, however, that these things and ideas become meaningless in the face of tyranny. In the darkness of tyrannical governments they mean more than all else.

  2. Pingback: The Foibles of the Redistribution of Wealth | Danneskjold Repossessions

  3. Pingback: Dear fast-food strikers | Tiffany's Opinions

  4. Pingback: A “Service” economy is a dead economy. | Danneskjold Repossessions

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