Jack: Individuals CREATE Wealth

I'm going to try to offer only brief comments, but ones that may stimulate good further discussion.

I'm not into formalities with old friends.  If you find it comfortable to call me Jack, please do.

I think your definitions of wealth and happiness work pretty well; but would like to refine them further.  Individuals create wealth--they CREATE wealth--by combining resources and specializing in skills valued by others. I emphasize the creating, because God our Creator created us in his image and gave us the capacity to create.  Most of the wealth that exists today did not exist at all 1000 years ago, or even 100 years ago.  People created it.

They did this creating mostly as individuals, seeking profitable ways to meet the needs of others so they could trade for wealth that those others, with other specializations, had created to trade.  This will take us directly to a Justice argument, in which I would say that whatever you create, you have first claim to, prior to the claim of any human who did not create it.  This is both just and prudent--prudent because such a property right creates a natural incentive to create all you can, and the human race grows better off.

For a working definition, we could say that wealth is anything that can give benefit to people--either in itself or by enabling a greater productivity of other things that produce benefits to people.  We create it by producing more than we consume, and then using the surplus for the purposes above.  And your definitions of happiness seem nice; although they are hard to quantify.

When social scientists try to measure happiness (in order to correlate it to other things) I think they usually use self-reported questions:  How happy are you?  How bright does your future look? Things like that.  It's hard, though, to find other phenomena that consistently correlate.  One that has shown up in recent scholarship is a sense of "earned success."  Those who believe they have experienced success from their own purposes and efforts, also tend to rate themselves as happy. See Arthur Brooks of the American Enterprise Institute for scholarly studies on this.

About the film you asked me to look at:  Again, beautiful graphics.  BUT:  Look at it again and take note of the verbs he uses in reference to income and wealth.  He's arguing for injustice by talking about how much income different people "receive" or "get" or "take home."  He sees the great disparity as unjust.  Also, regarding wealth, he's concerned with who "has" it, or "controls" it.  (I think that's accurate; I didn't look at the film again before writing this.  But typically such arguments do use these verbs.)

The problem is that he ignores what caused the income, or the wealth, to exist in the first place.  An individual creates income by delivering a service to someone who places a higher value, on that service, than the money (wages or profit) he exchanges for it.  So both gain in wealth.  And we create or accumulate wealth by consuming less than we produce, using the surplus to form capital--items that multiply the productivity of labor and other resources.

My point is that people PRODUCE income; they don't just "receive" it.  They CREATE wealth; they don't just "have" it.  It's theirs.  Go through your film, or any text that makes the same point, and mentally substitute the words "produce" or "create" where the author uses "receive" or "have" or whatever.  It changes the whole tenor of the argument.  For example, if the top 1% PRODUCE 25% of the income (or whatever amount), you might tend to ask a different kind of question.  Instead of "why do we allow the injustice of those few "getting" so much," we might ask "Why do those few bear such a heavy productive burden, even though all of society benefits from what they've produced to earn that income?"  Or, "When will the other 99% get off their collective duffs to produce more?"  Or perhaps more compassionately, "What can we do to help those at the bottom to produce more, so they can relieve their poverty?"

The fallacy in the film author's argument, I think is common to such people as Jim Wallis et al:  They look at people primarily as Consumers, rather than as Producers/ Creators.  People are a liability rather than an asset; an appetite rather than a discovering, producing mind.

When Steve Jobs grew so rich, his high income and net worth took nothing from people in lower classes.  He gave more than he received; the reason he got so rich was that he managed to produce so richly of his gifts.  The same is true of the very richest of entrepreneurs--Bill Gates, Warren Buffett, John Rockefeller, the Vanderbilts, the Astors, Henry Ford, Thomas Edison, and so forth.  All of these people produced in order to trade, and all of them made everyone, at all social levels, better off economically.

I do want to respond to your answered objections: For #2: Economics is not amoral, any more than physics is.  Both are concerned with finding the truth, and we all should try to behave morally and rationally in reaction to what those disciplines reveal.  For #1:  you quote "some economists" suggesting that the poor are worse off than 30 years ago.  This is demonstrably false, both nation- and world-wide.  The pie is indeed getting bigger.  It is almost impossible to come up with even a strained measure that would suggest otherwise.  We all eat better, live longer, and have access to wider opportunities.  The only exceptions occur under regimes that seek to control people more tightly, ostensibly for "their own good."

But now here's Objection #3 for you, based on all the above:  A free market, more than any less free environment, delivers greater justice (to each his own) and greater human flourishing.  Individuals combine voluntarily in various companies, teams, and families, to produce as much as the earth will permit them to, motivated by the common and natural desire to improve their own lot and that of their families and neighbors.  All they need is Rule of Law and Property Rights, so that they can have confidence that whatever they create, they can keep and enjoy.

Your turn.

Jack