What is wealth, really?
It's value.
To create wealth, all we have to do is add value to
something, and then either use it or trade it. Yet when I hear politicans talking about economic fixes these days, I don't hear much discussion about this - the real answer.
Examples:
- If I own a printing company, I "create wealth" by taking blank, almost worthless paper and "adding" valuable information to it. The "price" of the paper and ink jumps dramatically when I print something on it that people value.
- If I own an oil well, I "create wealth" by pumping oil out of the ground, refining it, and distributing it where needed. I took something essentially "value-less" to humans (oil in the ground) and made it "value-able" (gas in your car).
- If I own a retail store, I "create wealth" by gathering the products people want into one place, adding "value" to people's lives by increasing their selection and lowering their costs.
At every level of our economy, from a roadside fruit stand to a Manhattan skyscraper; from the assembly line to the local bakery, the name of the game is creating or adding value. And the people who can do more with less (efficiency) create the most value and experience the most success.
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As I noted in Part 1, we need WEALTH CREATION in America. We need more people to add more value to more things. That's the only "stimulus" that will ever change our economic outlook. The problem is that our government is tempted to short-circuit the process by inserting itself into the equation. Consider:
The government isn't a wealth-creator, it's a wealth-rearranger. It doesn't "make money" by accomplishing things, it makes money by taxing wealth away from those who have produced it. Now, there may be some validity to that - after all, the government does add certain "value" to our lives - like security, regulation, etc. But the government can never meet the ultimate need of a struggling economy by rearranging things or dabbling in private business affairs. Taking wealth from one person and transferring it to others just makes those "others" temporarily happy - it doesn't add any new value.
Furthermore, government wealth-transferring can actually
reduce the VALUE the nation produces.
Think about that for a moment...what are the effects of taking wealth
away from the people who are experts at producing it and handing it out to
people who obviously aren't experts?
1. The experts have less to work with.
2. The experts have
less motivation to keep adding value to things.
3. The experts have to waste resources lobbying the government.
4. The non-experts start depending on the transfers.
5. The non-experts
start losing their motivation to gain expertise.
6. The non-experts vote for whoever promises to keep the transfers flowing.
7. The non-experts start to outnumber the experts.
8. The experts are
unhappy that they're getting robbed.
9. The non-experts
are unhappy because they're still not rich.
10. Less value, less motivation, less happiness. Less wealth for America and Americans.
I've got a better idea. If you government people are really serious about stimulating the economy and paying off generational debts:
Take action to help the wealth-creators do what they do best. Wealth-creators are the people who make what people VALUE the most. It's the companies that make the stuff you really want to buy. It's the inventor who upgrades your cell phone, the owner of the washing machine company, the farmer who grows your spinach. Take less from these people in taxes, and watch their productivity grow. (Side effect: they'll have to hire more people to grow their productivity!) Lower or eliminate the corporate income tax.
Help more "non-experts" become "experts" at adding value to things (that's education, yo). The real point of school isn't cultural awareness or trophy-winning; it's supposed to be where we train people to be "value-creators." If we re-purpose public education along these lines, watch out world economy. The US of A is back in action.
Let investors (people who put their cash on the line to help create new wealth) keep more of what they earn. The money most likely to create new jobs and products - it's taxed. Why? Especially when the markets are struggling, let's make it more attractive to invest by making it more rewarding. Elminate the captial gains tax forever, and behold a market miracle.
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Personal PS: If you want to be rich, all you have to do is
figure out how to add value to other people's lives. That's the beauty of free market capitalism.
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