Productivity and Thrift

Where does wealth come from? This is a mystery to many people. They think wealth is made by magic or something. Wealth is merely a matter of luck or trickery or whatever. Because people do not understand where wealth comes from due to their economic ignorance, they fall prey to every government scam and get-rich-quick scheme. Or, they simply consume themselves into poverty. This is because they do not understand that all wealth comes from productivity and thrift.

Imagine you are a cavemen. You want to eat. In order to get food, you have to pick berries and eat them. Or you can hunt and fish. Or you can take up farming. Food is wealth, and the means you use to acquire this wealth is production. The lazy caveman starved to death. The hard working caveman gets to eat. This is elemental stuff here, folks. From this simple truth, we get everything we enjoy today from cars to plumbing to the personal computer. Wealth flows from production. In order to have, you must make it or get it. In short, you or somebody else who cares about you has to work. This is immutable.

The flip side of production is consumption. We produce in order to consume. But we cannot consume more than is produced. In order to consume something, you or someone else has to produce it. When you consume less than what you produce, this is called "thrift." As we produce more than we consume, this creates a surplus. For the caveman, it might be enough for food for two meals. He can enjoy breakfast before embarking on tomorrow's hunting and gathering. Since he has more energy from the breakfast, he can gather and hunt more. He can make better tools or experiment with agriculture. The collection of these means of greater production is called "capital."

We can see from these elemental truths that in order to acquire wealth, we have to work and save. We have to produce more and consume less. If this seems like some unfair trick of life, welcome to reality. But if you embrace these truths, you can actually consume more. Your level of consumption is limited to your level of production. But if you work and save and invest, you can enjoy an ever increasing standard of living. In fact, this is why we live in the most materially abundant time in history. This virtuous cycle has brought us to this point.

The flip side of productivity and thrift is what I call "getting over." Instead of producing and saving, people acquire the wealth of others through fraud, theft, and deception. Though this may enrich the thief, this dishonesty decreases overall wealth. This is why kleptocracies are the poorest of nations. If productivity and thrift are punished, you will see them disappear. Socialism and communism are just another variety of kleptocracy.

The big dream of people is to be able to consume without producing and saving. This is why people play the lottery or try to become rock stars. This is also why everyone from big companies to the lowly street person all clamor for government favors. Ultimately, people want something for nothing. This can never be. There are no free lunches in life. For you to consume, you or someone else must produce.

These elemental truths escape the leftard. This is why they can demand all sorts of positive rights such as free healthcare, government funded retirement, free education, etc. But these are all wealth that is being consumed. To have it, someone must produce it. If it is stolen from them, their incentive to produce is taken away along with the wealth they produced. Eventually, this system collapses. This is why the Soviet Union collapsed. This is why European social democracies are collapsing. It will always be this way. Socialism always leads to diminished standards of living.

When the leftard is smacked in the face with economic reality, he or she can't grasp it. They think some trick has been played on them. Somehow, the evil capitalist system has fucked them over much like the goose that laid the golden eggs stops laying the eggs after it is cut open and eviscerated. So, they go live in tents in public parks giving each other TB and gonorrhea while protesting the system for not giving them their free goodies. At some point, they simply turn violent looting, pillaging, and destroying. This is because their basic nature and philosophy is parasitic and larcenous.

The laws of economics do not change because you don't like them. It is like protesting the law of gravity because you tripped and fell. People wonder why the middle class is disappearing. Part of it is due to the predations of the federal government and the inflationary monetary policies of the Federal Reserve. But the other part is that those who think themselves deserving of being in the middle class don't exhibit the virtues required to be in that class. To be middle class, you must produce more and consume less. Some people like the Tea Partiers already know this. The Occupiers don't. Prosperity is not a government check.

Posted in: