Wednesday, July 25, 2012

Economics Not For Dummies part 4

The government prints money, but it does not create wealth. Way back in ancient history when dollars were first printed they were backed by gold. When that era faded into history the government backed dollars by silver. Of course there were the actual silver dollars that are so collectible today. But they were heavy and tended to wear out pockets. So the mint printed paper "silver certificates". These are collectible too. As the price of silver rose "silver certificates" were discontinued. Now-a-days dollars are backed by the promise of the US government. But the government doesn't actually promise anything.

So how is wealth created? You can create wealth with something new. New ideas have created enormous wealth. Look at Microsoft and Apple. Those two companies alone made thousands of people rich just based on new ideas. Those computer games that my grand kids so love to play are making people rich every day. Invent something new or better or faster and you can get rich just by selling the idea. Then the people that buy your idea can get even richer by implementing your idea. That's creating wealth.

So you can't come up with a good idea. Then you can make something but make it better than anyone else or you can make something that has a big demand. A lot of companies make razor blades but I doubt any company sells more than Gillette. They make a consistently superior product that customers demand. VW, Boeing, Prada the names are endless of companies that create wealth for their owners, for their employees, and for the people that take their products to market. Farming brings to market necessities but it can also bring to market quality products. Kobe beef and Cristal Champagne come to mind. That's creating wealth.

OK, you haven't an idea in your head and the only thing you can make is a lap when you sit down. Whats your next option? Simple. Do something so well that people will pay you enormous sums of money for you efforts. Sing, dance, act, play basketball, golf, tennis. People even get paid to go fishing on TV now. Even acting stupid in a "reality show" is a commodity today. Just in case you haven't figured it out, reality shows aren't real. Yeah, I knew that you had that figured out but I had to say it anyway. But your still creating wealth.

One last shot. No ideas, can't make anything, no talent, is there any other way to create wealth? You bet there is. You can dig for it. Almost anybody can use a shovel. Digging for gold or panning for gold is a huge weekend hobby practiced by people from New  Hampshire to California. Many people do well seeking out little things of great value. Gemstones are another favorite in many parts of the country. The first time I drove through Pennsylvania and saw little oil well pumps in yards at peoples private homes I was amazed. These people are all creating wealth.

There are probably other ways. But I think that most methods are just going to be variations on these four themes. But there is one strong uniting factor. These tasks are all performed by private citizens. There is not one thing there that is a function of government. There is not one thing there that a government is capable of doing. So when some major ego tells you that you need government to succeed. Well, you know what to tell him.

No comments:

Post a Comment