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One way to understand American success is to look at its wealth and where it came from and it's poverty and why it exists. 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?
It will be helpful to say what it isn't.
It is easy to confound wealth and money and most of us do. They are not the same. A lot of gold makes you rich, but not necessarily wealthy. Gold (or cash) is 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.
- George Gilder[1] 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 oil rich country, now in the process of sliding into poverty because their government confiscated their oil fields and what other wealth producing assets the country had and drove out the people that knew how to use them. 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.
Wealth is having the kind of enduring assets and capacities (work skills, schools, industries, roads, ports, airports, railroads, and a robust and honest society willing to work) that will generate future income and perpetuate wealth.
- 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. These are stories of wealth. 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. Let's talk about this within this topic.
Poverty can be thought of as lacking that which is wealth.
- Okay. That is somewhat simplistic. One would not say that oil rich middle eastern countries are living in poverty. But, having riches rather than enduring wealth assets, they have the potential to do so 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 also 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.
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 inequality - including their nature and their role in American success or lack of it, economics, and economic freedom, and how these things have been effected by government policy and social customs and mores.
It is also the place to put articles that discuss capitalism and socialism as contrasting approaches.
- ↑ Gilder, George. Wealth and Poverty. New York. Basic Books, Inc. 1981
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