One way to understand American success is to look at its wealth, its poverty, and the nature of both. America has been unequaled in its ability to generate wealth and overcome poverty. Both wealth and poverty are badly misunderstood, which is a problem for honest politics. To understand them is to strengthen our basis for making intelligent political decisions and dispersing the fog of political marketing.
Wealth and poverty can be thought of as two sides of the same coin. If you understand wealth, you begin to understand poverty and vice-versa.
So, what is wealth? We'll start by drawing a distinction between wealth and riches.
It is easy to confound wealth and money and most of us do. They are not the same. A lot of money makes you rich, but not necessarily wealthy. Money can be a static asset. You can use it to buy things, but it creates nothing unless it is used to enable assets that do produce wealth. Once spent for consumption, nothing is left behind to generate a continuing stream of spending power. America has many families who have lost the knowledge necessary to perpetuating wealth. They may still be rich, but now in decline. They are being replaced by others, not yet rich, but possessing wealth in the form of knowledge and the ability to act on it. George Gilder uses the illustration of oil rich countries. Several countries with the highest per-capita spending power are in the middle east. Their spending power comes from their oil assets. They can buy Rolls Royces, private Boeings, and erect office buildings. But those are perishable things which, in themselves, generate no further income unless there are roads on which to drive and skilled people to use the offices, and unless they are put to use in wealth generating ways. When the oil is gone, those countries could become as poor as they were before the oil was discovered. They have more riches than wealth. Venezuela is an example - a formerly rich country, most of which came from oil, voted in a government that confiscated the country's wealth producing assets including the oil fields and drove out the people that knew how to employ them as generators of wealth. Formerly rich, Venezuela has recently imposed rationing for food and daily necessities. Russia relies heavily on its oil assets for revenue and finds itself in a bind as the price of oil falls. Countries like England, Germany, Japan, the U.S., and others have wealth generating assets that relegate whatever oil assets they may (or may not) have to supporting roles.
Real wealth is in the morale and ingenuity of people. It is a product of human thought and effort acting on the material world.
It is having the kind of enduring assets and capacities (work skills, schools, industries, roads, ports, airports, railroads, and an economically free, robust and honest society willing to work) that will generate future income and perpetuate wealth.
Wealth is a society that protects the fundamental human rights.
- Wealth can exist long before the presence of riches. Consider a person like Steve Jobs. He was not lucky, he had the assets of wealth before he was rich. His assets were useful knowledge, the vision to use it, the capacity to work for that vision, faith in the market place with no guarantee of success, and a government that guaranteed him the freedom to create something that we did not know we needed until he presented it to us. There are millions of other such examples created by more ordinary Americans who started from nothing and built their own futures - or maybe started with something and built something bigger. These are stories of wealth. In fact, wealth lies in the determination and work of every person, no matter the skill great or small, that freely renders and applies his work to a free market. There is a little truth to adage that "it takes money to make money", but it would be completely untrue to say that it takes money to create wealth. To paraphrase George Gilder , people and families--many of them first generation immigrants, many with little education, and most with no money to back them, but with determination and willingness, built America with small businesses. Which proves that an unnavigable gap between poverty and wealth is a myth. It takes a list of things that might be summarized as human spirit and work--much more so than money. This topic is about the real meaning of wealth.
Poverty can be thought of as lacking that which is wealth.
- Okay. That is too simplistic. One would not say that oil rich middle eastern countries are living in poverty. But, having riches rather than enduring wealth assets, they could slip back into poverty in the future if they are not able to transition to non-perishable income producing assets - all of which depend on knowledge, work, and a few other things that will be discussed in the articles assigned to this category.
Viewing poverty only as the absence of wealth denies us the understanding to be gained by looking at the coin from both sides. Just as understanding wealth helps to understand poverty, understanding poverty provides insights into creating wealth and it dispels some of the myth that surrounds both. Just as wealth is more than simply having money, poverty is more than simply not having it. You do not lift someone out of poverty by providing them with unearned money. You can pay their rent and buy their groceries, but they remain in poverty until they are able to create sufficient wealth to pay their own bills. It can be argued that, rather than eliminating structural poverty, welfare creates it where it may not have existed, by removing a welfare recipient's financial incentive to use their own modest wealth creating abilities.
A related subject is income inequality - a hot topic of today. Inequality is misunderstood just as wealth and poverty are misunderstood and for the same reasons.
Articles for this category
This category is the place to insert articles about
- wealth and poverty and
- income distribution and inequality
including their nature and their role in American success or lack of it.
- ↑ 1.0 1.1 Gilder, George. Wealth and Poverty. New York. Basic Books, Inc. 1981