Tuesday, November 15, 2011

Voluntary Exchange And Wealth

" Before it can be exchanged, wealth must be created. Wealth cannot be created out of thin air. By definition, an economic good is “scarce”. If it were not, there would be no such thing as economics or exchange. Neither would be necessary because no effort or choice in the face of alternatives would be required in order to provide the GOODS which further our lives. Before we can talk about money and the VITAL role it performs, we must stress this point. Money is NOT wealth, it is the means by which wealth is exchanged amongst those who produce it. "
Bill Buckler*
So much recently we have heard that gubment needs to create jobs; this administration "created" this many jobs and that administration "created" that many jobs.

NOTHING COULD BE FURTHER FROM THE TRUTH.

If the gubment could create jobs, it would! Gubments all over the world would decide on how many jobs would be created and they would! There would be no unemployment anywhere. It would be a happy world of butterflies and rainbows and endless joy!

And what a mess that would be!

What if a gubment, in its infinite and wonderful wisdom, did not create enough of one job as opposed to another? Well, if too many doctors' jobs are created in a country and what would happen? Their economic services would not be as scarce and there would be less exchange per doctor. Doctors would earn less. One of two things would happen - they would leave the profession for something that provided them a more profitable exchange, or leave that particular country for another where their services are worth more.

They would go where more wealth would be created by their economic activity.

So, in order to create wealth, the role of gubment must be one of encouraging economic activity. How does it do that? By creating an environment - and there are many ways to do this - creating an environment which allows for more free and voluntary exchange.

That's it!

How can it do that? By getting out of the way. Increased and crushing regulation, prohibitive taxation, controlled licensing, profit disincentives, union favoritism, favors and benefits for politically "correct" industries or jobs, employment benefit rules - you name it - none of this gubment intervention creates an environment conducive to production and voluntary exchange. None of this gubment intervention creates an environment which creates wealth.

The west got rich by creating wealth. No country got rich by growing gubment.

* Bill Buckler is an economist and investor and publisher of the "Privateer Newsletter."

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