Portal:Economic Freedom

Wealth, Poverty and Freedom

Wealth and poverty are two sides of the same coin. If you understand wealth, you begin to understand poverty (and vice-versa). So, what is wealth? CW has its own concept of the meaning of wealth and it is that which we speak of here. It will be helpful to first say what it isn't. It is quite common to confound wealth and money. They are not the same. Suppose you have a large pile of gold coins. That makes you rich, but you have no wealth if that is all you have. Gold is a static asset. You can use it to buy things, but it does not create wealth. Once spent, nothing is left behind to generate a continuing stream of spending power or savings. George Gilder uses the illustration of oil rich countries. Several countries with the highest per-capita spending power are in the middle east. Their income and spending power come from their oil assets. They can buy Rolls Royces, private Boeings, and build office buildings. But those are perishable things which, in themselves, generate no further income 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 are rich, but have little wealth. Venezuela has much the same problem today, but is further down the road. They are a formerly rich country in the process of going broke. Wealth is having assets (or a capability) and capacity that will generate future income. Example, Steve Jobs had real wealth - arguably long before he was rich. His asset was useful knowledge, the vision to use it, the capacity to act on that vision, faith in the market place and a government that guaranteed him the freedom to create something that we did not know we needed until he presented it to us. Poverty can be thought of as lacking that which is wealth. Okay, that is somewhat simplistic. One would not say that rich middle eastern countries are living in poverty. But 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 we hope will be discussed in the articles assigned to this category. The economics and politics of wealth and poverty have much to do with freedom. One can have the potential for wealth without having the freedom to fulfill it. And the potential for generating wealth can be dulled or entirely squelched by government policy. This category is the place to insert articles about wealth, poverty, economics, and freedom in general and how they are 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.

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