One would be hard-pressed to name a topic that stirs up as many intense feelings and beliefs and is as often misunderstood as wealth. Thus, sorting out the subject could be useful.
According to the Webster Dictionary, wealth is the “abundance of valuable material possessions or resources.” A practical alternative for wealth is “having a lot of money.” The most common thing people believe about wealth is that they do not have enough of it. This suggests that most people believe wealth is a good thing. On the other hand, many individuals believe 1) that an abundance of wealth is a bad thing, 2) that having an abundance of wealth is a sign of having done bad things, and/or 3) that most wealthy people do not deserve their wealth. I’ve even heard people say things, such as “I did not deserve to be paid the amount my company paid me.”
Before we get into the meat of the subject, let’s discuss something odd and confounding about wealth. Anyone who has valuable material possessions or resources at his or her disposal that are not needed for survival has some wealth. There are places on Earth where someone who has one tenth the material resources of the average welfare recipients in the U.S. would be seen as having “an abundance of valuable material possessions or resources.” In this case, the welfare recipient would be considered by everyone around to be wealthy. On the other hand, the person on welfare in the U.S. (with ten times as many resources at her disposal) would be considered the opposite of wealthy by Americans. Similarly, most people in America would say a person who earns $200,000 a year is wealthy—and for good reason—but the lifestyles of people who make that much bear no resemblance to the lifestyle of Warren Buffett. If a space alien were to land in Buffett’s backyard and learn he is the richest person on the planet, a decent alien would keep to herself the thought, “Is this all you got?”
To navigate this topic despite the morass just described, I must simplify. When I use the term “the wealthy” in this blog, I am referring to people whose abundance of wealth is several standard deviations above the mean wherever they live.
Money can’t buy love nor many valuable things. By no means is the amount of wealth one accumulates a measure of the character or value of a person. Truly fulfilling and meritorious lives can be lived without accumulating wealth, and it may even be true that a staring artist can produce valuable art a satiated person cannot.
Creating wealth also has moral implications. A moral person will, if physically and mentally capable, produce more than he or she consumes. A moral family will, if physically and mentally capable, produce more than the family consumes. There are at least two parts to this moral obligation. First, not producing enough for oneself or one’s family imposes a burden on others to produce the things that person or family consumes. (Choosing to be a burden is a bad choice.) Second, when one caps production at the bare minimum, he or she is shirking a responsibility to help provide for the physically or mentally disabled.
So, if able, anyone who consumes resources should create resources, i.e., people are obliged to create or facilitate the creation of wealth. People can do their part in wealth creation in many and varied ways. For example, stay-at-home parents not only create human capital when they raise healthy and capable children (and human capital is the ultimate resource), they facilitate the production of wealth by the parent who works outside the home. The wealth I have created is in large part attributable to the tremendous job my wife did in this role on both counts.
Another moral aspect of wealth creation is that it very often, if not always, has positive and negative consequences. Even before carbon dioxide emissions were considered a negative externality, coal mining resulted in people living off the modern equivalent of $1 a day while wracked by untreatable pain, polluted skies, black lung disease, back-breaking and dangerous labor, and the depletion of natural resources. The industrial revolution which was made possible by coal production periodic relieved humanity from famines and plagues, massive infant mortality and short life expectancies, and enabled the modern technological wonders humans now enjoy.
Many people would add to the above list of externalities. For example, the use of coal fostered factory labor. Factory labor was dehumanizing, sometimes led to child labor, and caused many to leave their idyllic farm lives. Despite these negative results, people took factory jobs because they could live a better life than would be possible with their other alternatives. One should realize that having young children working on farms was already necessary for survival. At first there was nothing unnatural about children working as they had always done. Child labor only became dispensable after the factory machines (made possible and available by capitalism) improved the productivity of ordinary workers, so they could produce enough to provide for their families. Even then, there was not enough productivity to dispense with all child labor. The first child labor laws restricted the employment of children younger than 9 years old, and the next wave of laws only required employers to provide a certain amount of education to young workers. It took more than 100 years for capitalism to produce sufficient productivity per worker, so the legal age of an adult could be set at 18.
While I’m not a big fan of Thomas Hobbs, he got some things right. When speaking of the effects of war in Leviathan (1651), Hobbs wrote this:
“Whatsoever therefore is consequent to a time of war, where every man is enemy to every man, the same consequent to the time wherein men live without other security than what their own strength and their own invention shall furnish them withal. In such condition there is no place for industry, because the fruit thereof is uncertain: and consequently no culture of the earth; no navigation, nor use of the commodities that may be imported by sea; no commodious building; no instruments of moving and removing such things as require much force; no knowledge of the face of the earth; no account of time; no arts; no letters; no society; and which is worst of all, continual fear, and danger of violent death; and the life of man, solitary, poor, nasty, brutish, and short.”
Hobbs was describing the difference between states of war and states of peace. Note, however, how aptly this description applies to the difference between having economic prosperity and not having it. The economic wellbeing and connectedness of a common person today is far better than the economic wellbeing and connectedness experienced by the common person of the 17th century. It is so much better, in fact, that it would be fair to consider the lives of common people during good times in the 17th century as “solitary, poor, nasty, brutish, and short.”
With all its faults and narrowness of focus, the wealth brought about by capitalism has lessened human suffering, solved problems, allowed humans to flourish, and enabled billions of more people to partake in the joys of life.
Wealth cannot solve all human problems—not by a long shot. It would be hard, however, to find a cause or a pursuit of knowledge that would not benefit from more money behind it.
Having wealth does not necessarily lead to happiness. I’m not referring here to the rich person who is miserable because he is not as rich as someone else; that is a first world problem of little importance. I’m referring to a more universal problem with wealth. It ties into Jesus’s observation that the poor will always be among us. The main reason this observation is still true in a much more prosperous world than the one in which Jesus walked is because once a society has achieved a certain standard of living for the average person, absolute wealth is relatively unimportant. When considering air conditioning, cell phones, access to advanced medicines, the absence of a fear of famine, high quality news and entertainment available for a pittance, and willing and able wealthier people who want to help, etc., it appears that many poor people in wealthy nations today have a higher standard of living (they consume more and higher quality resources) than the richest people one hundred years ago. John Rockefeller, founder of the Standard Oil Company (which almost single-handedly put an end to the whaling industry), may have had scores of servants whose work was equivalent to a massive amount of power. But having the ability to flip a switch to turn on the lights, heat, air conditioning, or an entertainment system wields far more power. Still, poor people are justifiably unhappy, and giving money to poor people to try and solve the problem usually makes the problem worse. (The reason for this is a subject for a different blog.)
Despite its externalities, the creation of wealth benefits humans over time, and the faster the wealth creation, the better. The wealthier a nation is, the more wealth it can and will devote to the search for knowledge and the improvement of the environment and citizen safety. The same is true for scientific inquiry. Included in those inquires will be the search for ways to improve society and encourage human flourishing. No amount of research or innovation will solve all human problems, as achieving paradise is beyond humanity’s grasp. But with enough wealth creation, the standard of living enjoyed by our descendants (whether or not they have the sense to recognize it) will be so much higher than it is today that it will be comparative to the difference between the 17th century and now.
Because all innovators and scientists stand on the shoulders of the innovators and scientists who came before them, standards of living will improve exponentially more rapidly the sooner people innovate and make new scientific discoveries. Thus, we should support and revere the people and things that generate wealth now, but many of the demands people have for their politicians would result in precisely the opposite (but this is again for the subject of many future blogs).
UPDATE: April 9, 2018. A short video version of much of what was said above was just published. “As the Rich Get Richer, the Poor Get Richer“