One characteristic which separates Republicans and Democrats in most people’s minds, is their attitude towards wealth. Democrats often believe that Republicans are biased in favor of the wealthy and against ‘the poor’, who are commonly imagined as minorities, women, and the elderly, and that Democrats stand for fair outcomes, so made by actions taken to punish greed. Republicans often believe that Democrats are biased in favor of special interest groups and against ‘working Americans’, who are commonly imagined as America in total, and that Republicans stand for equal opportunity, so made by elimination of subjective barriers and penalties used to punish business success. Democrats and Republicans both claim to speak for Main Street, although Democrats claim Republicans are buddies of Wall Street, Republicans claim Democrats are buddies of Broadway, and far too many members of both parties act like they live on Bourbon Street. This article is written to set out my understanding of how wealth is created and developed, and to begin a discussion on perspectives of the same concern.
There is a sense in the modern culture that money is a bad thing, and that rich people are bad people. Democrats promote this sense in politics by accusing business leaders and major companies of “greed” whenever the business community is opposed to a policy or bill supported by Democrats. Opposition by Democrats to financial success, however, does not appear to extend to criticism of celebrities and actors, to lawyers or doctors, or to special-interest groups which support liberal causes. This hypocrisy is salient to the matter, since it demonstrates that Democrats are inconsistent in their application of their theory, designating non-productive wealth as acceptable while maligning wealth from production of useful goods and services demanded by the public. America will not be in crisis if Michael Moore’s film fails, but as we have seen, it does fall into crisis when major auto manufacturers cannot produce profits. It should also be noted that it is inherently illogical for politicians, who receive money while producing no useful product, to sit in judgment of people and companies which do produce useful goods. That way lies madness and the myth of Man-created Global Warming.
The liberal lie about wealth depends on the zero-sum fiction of wealth. The idea is that there is only so much of any good thing, and it’s human nature to want as much of it as you can get. That’s greed, as they think of it. Everyone is entitled to their “fair share”, which is almost never how it works out in practice, making the real world “unfair” by their rules. The idea that everyone should have a share of something, even if they did nothing to create or build it, sounds a lot closer to greed than those people who work hard to make a thing themselves. And anyone who’s ever done farming understands that production is not a zero-sum equation. Come to that, farming is counter-intuitive in some ways. The idea that you take edible seed and bury it makes no sense until you understand how germination works. That’s why Agriculture is the ‘First Wave’ of technology mentioned by the Tofflers.
And Industry, by the way, is the Second Wave, and it’s no zero-sum matter either. Not everyone can make all the goods he or she wants and needs, nor equally well. Industry provides a means for a community, country or planet to raise its living standards and quality of life without increasing its cost of resources to the same degree. Capitalism works for many reasons, not least of which include the fact that major capitalist nations have healthier, happier citizens. One of the most basic laws of business is that to succeed, a business must have relatively low prices, superior features and convenience, or superior quality and customer satisfaction, or some two of the three if it wants to lead in its industry. Only a monopoly, like the Post Office or Congress, is immune to these economic laws, and even there, over a period of time degradation is inevitable. Anyone who tells you different is running for office with a jackass for a logo.
There are a few basic rules of how one creates wealth. One may receive it, as in inheritance; one seizes it, as in conquest or eminent domain or nationalization; or one may actually build wealth. Wealth is not simply manipulating numbers a la Bernie Madoff to create the illusion of wealth creation, nor is it the parasitical behavior of people living off other people’s work, like people who make money off things like ‘residuals’ and other gambling-based activities. Wealth creation only occurs when the net wealth of all stakeholders in an enterprise grows. This is why farms, savings and loans, factories, and corporate labs are good investments, while law firms, casinos, and eco-thug restrictions are generally liabilities for a culture. The farmer’s tools, land, and work combine to create food which is worth more than he puts into it. A savings and loan – properly run – protects savings and provides capital for worthwhile ventures, which grow to far beyond their initial investment and outlay. Factories produce products which improve the quality of life for their customers, employees, and communities, especially if they are run by people who live in those same communities, which creates a desire for good corporate citizenship. Corporate laboratories seek answers to pressing medical needs and provide improved options for people living with disease, impaired ability, pain, or other maladies. On the other hand, law firms not only consume assets while producing no goods or valuable services, they also leave impacts which damage communities as a whole. This is not to say that the law is not necessary, but it is abused by lawyers far more than communities are abused by businesses. Casinos also consume resources without creating any physical goods or valuable services; the net effect on a community with a casino is inevitably negative. And politics-based restrictions on corporate operations damages the effectiveness of those businesses, costs jobs, and consumes assets and resources with no production of goods or useful services. The point is that government, even when absolutely necessary, is by definition destructive, wasteful, and a liability to be minimized whenever possible.
All wealth creation involves risk. There is always the risk of failure, such as the farmer whose crops suffer from bad weather or insect blight, or the factory which must stay abreast of consumer demand and the cost-effectiveness of its methods. All successful corporations begin as small businesses, so protection of small business interests is not only quaint, it’s Economics’ version of Pediatric Medicine. As for public corporations, they exist under specific laws and requirements. A lot of people don’t seem to understand that what Enron did, for example, was already against the law, even before the passage of Sarbanes-Oxley. While there are crooks in business, there are crooks everywhere, as Congress and most city councils have proved well beyond dispute. There are far more good businessmen than bad, something Congress can hardly claim for itself. That’s not to say that business should operate without reasonable rules and laws, but there’s something very wrong with a Congress that knows so little about Economics and Business, with its own pallid record in Ethics, setting business leaders in general out as the enemy of the nation. And the results of the Auto Bailout in the year just past stand as a painful reminder of just how poorly Congress understands the effects of its actions. The Bank, Auto, and who-knows-what-else-is-to-be-bailed-out industries have not improved in financial stability or health, despite all the money poured into them. Because risk is not mitigated by government meddling, anymore than blaming Wall Street for blundering disasters in the White House is an effective means of improving job creation.
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