Saturday, October 23, 2010

The Truth About Wealth Creation

You hear arguments that the rich are getting rich, while the poor are getting poorer. Is that really true? Not according to some researchers who have tracked average income per capita of various countries for the past 200 years. They have even animated the graph so you can see how the wealth of the world grows over that time. You will also notice that countries where they restrict free trade and personal property ownership are held back. Notice the countries where free trade and personal property ownership are highly supported by the rule of law become the wealthiest in the world. Capitalism isn't evil, and it isn't greed. Capitalism isn't perfect, but it creates an environment where wealth is created. Socialism and Communism on the other hand are shown historically to destroy wealth.

Under free markets and well supported private property ownership, the poor get richer and the rich even richer. There may be an increasing gap between the (relative) poor and the rich, but everyone is better off. The problem isn't the wealthy, it is the less wealthy (the poor) not creating enough new wealth.

4 comments:

SA Perillo said...

People use their credit cards for all expenses these days. I don't know anyone who pays in cash anymore, but is it really secure to have your credit card number exposed like that?

Jim Anderson said...

Actually, there are a growing number of people that are living without credit cards. I am one. It is possible. It is a lie that you can't. I use cash all the time for everyday expenses. The article you linked is NOT completely accurate in its advice. Debit cards work just like credit cards now and have the same fraud protection. Banks love to propagate that misinformation to get people to use credit cards. Just don't use it on your main checking account if you are concerned about fraudulent activity and recovering from it, set up a checking account that you keep filled with funds for debit card activity. The best thing about debit cards is you can't end up in debt with them because you don't borrow money when you use them.

David Oney said...

And are you okay with "fiat" currencies?

Jim Anderson said...

We would be better off on the Gold Standard. It keeps money creation under control.