Tuesday, December 4, 2012

Allocation Of Wealth

"In an unmolested market economy - where all dealings are consensual - the 'allocations' of wealth is the result of transactions."

Sheldon Richman

Shop owners are hoping for allocations of wealth.
Product manufacturers are hoping for allocations of wealth.
Entrepreneurs are hoping for allocations of wealth.
Any dealing in a free market economy happens when wealth is allocated!

How does wealth get allocated?  When people vote for our good or service.  They do so with normal transactions.

My Oxford dictionary defines "TRANSACTION" as this:
1.  an instance of buying or selling
2.  the action of conducting business
3.  an exchange or interaction between people

In a free-market economy, which Sheldon Richman calls "unmolested," trillions of transactions happen in the most efficient way possible - voluntarily!  They are each guided by an invisible hand, as it were, where each decision maker evaluates their individual transaction(s) and decides in a way that is most palatable and beneficial.

Most of the unmolested activity takes place between people who never meet however.

How can I say this?

If you are wearing a shirt with a button right now, how many people did it take to get that button onto your shirt before you made the final decision to transact business to acquire that shirt?

But, remember, you have to consider that button from start to finish.

THE ANSWER IS MILLIONS!  MILLIONS OF PEOPLE!  IT TOOK MILLIONS OF PEOPLE TO GET THAT BUTTON ONTO YOUR SHIRT!

And each individual in the inception, production and distribution of that button likely knew few others in the entire process.  But each was acting in his own best interest, allocating resources in the most efficient manner possible, engaging in transactions along the way, before the consumer finally voted for that shirt and make the ultimate transaction to purchase it.

THE CONSUMER MADE THE DECISION TO USE DISCRETIONARY MONIES AND VOTED TO ALLOCATE PERSONAL WEALTH.

That is the guts of a free market economy.  It is the interwoven, connected and unconnected, steps of a long journey to convert natural resources into a consumer product.

A SINGLE BUTTON!

Wow, imagine how many people it required to produce that shirt!

That is a whole lot of allocation of resources engaged in trying to encourage the ultimate allocation of wealth in the pursuit of ... wait for it ... PROFIT.


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