Wednesday, August 3, 2011

What's The Greatest Charity?

"Capital formation is the greatest charity of all."

F. A. "Baldy" Harper (1905-1973)

This is such a good thought. What is the best way to lift the masses, as so many "statists" think the gubment can do?

The best way is to let the free market develop capital.

Capitalism is so misunderstood as to be comically misapplied by people who derisively use the word "capitalism."

What is CAPITALISM? Capital is one of the four factors of production, along with land, labor and entrepreneurship (management).

Capital is anything that adds input into the production function!

Capital, in the form of machinery, can make land more productive. (Tractors)
Capital, in the form of machinery, can make labor more productive. (Printing press)
Capital, in the form of machinery, can make management more productive. (Computers)

But what is productivity? Simply - output per man hour. Shortening the time it takes to complete or produce something is productivity.

If you find a way to produce more bowling balls more quickly, buy the land to build a factory, risk your money to produce the machinery, hire people to operate that machinery and manufacture the balls, and have management find a way to distribute more balls, more quickly to more people - THAT IS PRODUCTIVITY! And everyone in that organization benefits financially. Such capital formation is a great charity program for all in that company!

Should capital be paid more? Of course! Properly employed capital returns more than was risked.

A company building roads with shovels will produce less road to the community than one building roads with mechanized pavers. And the final product of the mechanized pavers will be superior. Each company has employed capital. Which should have more return on its capital? The one that adds the most economic benefit to the surrounding area. More roads mean quicker and broader distribution of more things to more people. Everyone benefits! That's very charitable.

What is my capital as a home inspector?

  • Learned my trade as a general contractor and began home inspections before they became popular.
  • Helped to develop a computer program for organizing inspection results long before anyone else.
  • Improved my skills with educational degrees and continuing education, even now.
  • Gained experience as inspections were accomplished over the years.
  • Learned to use many tools to make my inspections more thorough and informational.
  • Marketing myself in various fashions, particularly utilizing the Internet's many opportunities.

I could probably go on. These things may seem like intangibles, but they are not. They are my capital. I am my capital. And when left free to operate in an environment conducive to business operations I can get more and more done. And I can do it better and better.

Can gubment do my job better than I? NO. Inefficiency is implicit and inevitable with size.


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