I’m not an economist; I’m just a country boy. But I do have a brain that I take out and use every once in a while. What follows are my own conclusions, after half a century of watching what goes on. Your mileage may vary – but I bet you can’t prove me wrong.
All biological systems require nutrients and environmental conditions suitable for growth. This is the fundamental basis for all wealth.
Any animal, or bacterium, or anything else, lives where it has nutrients to grow and a suitable environment, such as temperature conditions. A “wealthy” organism has these nutrients in plenty.
A crop of corn grown in rich soil is harvesting those nutrients in the soil, air and sunlight, and grows and produces bounty for other creatures. Often, a human furnishes a rich environment, and collects that bounty. He could just harvest what he finds, and for many thousands of years, that is how it worked; but we have learned that by adding work, other materials and intelligence, we collect even more bounty. Thus, the successful farmer is “wealthy”.
Anywhere humans harvest nature’s bounty, whether it is by hunting, farming, fishing, mining, drilling, or other activity, we find wealth. Some of us make our living doing exactly that. This is the genesis of all wealth – the harvesting of resources, usually enhanced by our labor and / or thought.
It is important to understand that ALL wealth is created in this way.
For instance, I work for a company that sells industrial pumps. We buy pumps, motors, and other items from manufacturers who, through a web of suppliers of their own, have invented, created, fabricated, and assembled a pump. We take that pump, and add value to it by applying our knowledge of pump systems, building a skid, mounting an electric motor and other necessary items, and sell the unit as a complete package. We add value by our labor, and reap the benefit of the value difference between just the components, and the finished assembly.
Notice that the materials the pump, motor and other components are made from are, ultimately, harvested from the earth. Without the existence of those primary resources, our wealth would not exist, and we would all have to go find some other resources in order to survive.
Sometimes people make a living without directly consuming physical resources; for instance, an author, or a football player, or a barber. People in those type of fields require customers who are willing to pay their salaries. At first you might think these people violate the “biological” concept described above, but this is not so. Here’s the thought experiment: Take one million each of authors, football players, politicians, economists, bankers, investors, lawyers and barbers, and put those eight million people in a closed environment without providing food or any other resources. Don’t allow any of them to grow or hunt food, because that would be changing their profession. In about a month, you’ll have about 8 million dead people, because they will all starve to death.
All people in those types of profession, rely on wealth generated ultimately by raw resource mining by others who do generate wealth. All wealth, therefore, ultimately comes from the harvesting of natural resources.
America has become the wealthiest country in the world for two reasons; ample natural resources, and the freedom of our people to figure out what to do with it and personally profit from it.
Now, my conclusions:
Oppressive, statist governments, such as the one Obama and Progressives want us to become, will never be wealthy because they, by definition, remove the incentive of personal profit. This is why capitalism works, and socialism doesn’t, In a socialist system, I have no particular reason to apply my brain or back to improve my situation, because if I manage to do it, the government will take away what I worked for and give it to others who did not earn it. By the same token, why work when I could kick back and let the government give me what others have earned? This is the John Galt phenomena.
Ultimately a socialist system devolves until eventually, the government tells the individual what his job is, where to work, and what to do, in order to keep the system going at all. When it reaches that point, citizens are nothing more than slaves.
Yet under capitalism, wealth can be generated by individuals and those individuals can profit from their efforts. This is why the U.S.A. is the richest country in the world; so far.
In either system you will have the poor. Under socialism, eventually everyone is poor except for the rulers. Under true capitalism, the poor consist of those who won’t work and those who can’t work. Those who can’t work deserve sympathy and we should help them. Those who won’t work deserve sustenance appropriate to their input – nothing.
And that is one of the main reasons I favor small government and a pure capitalist economy. Maximum freedom, maximum opportunity, and maximum wealth.