Charity is wonderful, and I’ll be the first to say we have an obligation to share our gifts, be they material, intellectual or talent oriented. Yet whether our redistributionist endeavor is charity — and charity is voluntary redistribution — or the less noble, coercive, outsourcing of charity known as government programs, there first must be wealth to redistribute. But where does wealth come from?
If we go back to biblical times and beyond, a man might be considered wealthy if he had 70 goats. In point of fact, the standard for wealth was so different that the US’s average middle-class person today — with his car, TVs, computer, refrigerator and many other luxuries — would have been considered wealthy for most of history. And our average “poor” man, who also usually has an old car and various creature comforts, likewise has a material lifestyle that would have been the envy of our forebears. The reason for this is simple: there is far, far more wealth in the world now than in ages past.
The first lesson this teaches is that wealth can be created. This happens when people find more efficient ways of raising livestock (so 70 goats becomes small potatoes) and growing crops, and when they extract raw materials from the Earth and use them to create the manifold necessities and luxuries we enjoy. In a word, it happens when people produce, which is why economists and businessmen will measure productivity. And how will people be encouraged to produce?
They must have an incentive, and this is where the profit motive comes into play. Ah, the much maligned profit motive. Let’s talk about that.
There are two extremes with respect to the profit motive. One is typified by some libertarian Ayn Rand acolytes who seem to treat it as the highest motivation; the other is far more prevalent today and is represented by another brand of “libs,” people who behave as if profit is something dirty (at least other people’s profit, anyway). But the balanced view is a bit different.
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