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On one side of the class war you have the folks who think the rich obtained their wealth by stealing from the rest of the world. Meanwhile, the rich accuse the poor and the middle class of supporting tax policies designed to take from the rich and give to the poor. Is this worldview - the view that others are trying to steal your stuff - an example of paranoia or economics or jealousy?

Obviously some rich people really are thieves, practicing insider trading, bribery, and other unsavory practices. And some poor people really are looking for a free ride. But I think we can agree that the bad apples in every wealth class are the exceptions.

I've met a lot of rich people, and as far as I can tell, they aren't addicted to money, power, or even prestige. I say that for the same reason you don't crave a ham sandwich at the moment you finish eating one. Once the rich become rich, their motives evolve.

My hypothesis is that the rich are often addicted to hard work itself. Once that hard work produces all that a person needs for personal use, the impulse for hard work doesn't go away. What happens instead is that the goal changes from becoming richer - which has a decreasing marginal benefit - to making the world a better place. People who are genetically inclined toward industrious behavior will keep working hard long after their persona needs have been met.  People don't change their basic nature just because their bank accounts expand. But people do routinely change their rationalizations, i.e. their stated goals.

If you travelled back in time and asked the 25-year old me why I worked hard, I would have said something about my dreams of someday becoming rich. If you ask me today why I work hard, I'll say something about making the world a better place.  That explanation might even sound reasonable, given that my comics and my side ventures are all designed to improve the world in small ways. But on some level I know all of my reasons are rationalizations. The core truth is that I'm genetically wired for hard work. It's simply my nature. I'm happier when I'm being productive.

I wonder if instead of dividing the world into poor, middle-class, and rich, we'd be better off sorting the world into people who create more wealth than they consume and people who consume more than they create. There might be a lot of power in that model. Let me explain why.

When we sort the public into wealth classes, we are lured into endless debates on who deserves what and who is stealing from whom. That can't lead to anything good. But imagine instead we focused on dividing people into net creators of wealth versus net consumers. The creators and consumers of wealth would be found in each wealth class. The goal would be to have more creators and fewer net consumers of wealth.

That might sound a lot like today's model, and perhaps it overlaps 90%. Obviously everyone wants a world with more creators of wealth and fewer net consumers of wealth. But I think this small mental change in how we sort people might change behavior.

By analogy, I remember seeing a study that said people use less energy at home when everyone in a neighborhood can see their neighbors' energy bills. As soon as you know you are being compared to your peers, you start turning off lights when you leave the room. Likewise, I think a focus on sorting people into wealth creators versus wealth consumers would change people's behaviors for the better.

Let me give you some examples of how this can make a difference. Suppose you are poor and a net consumer of wealth. Society has taught you to blame rich people for sending jobs overseas, blame the government for not doing enough, and blame your bad luck. That's not a productive view. Now let's say society agrees to define a person who is in school, or in any sort of training course, as automatically part of the creator class. That gives a poor person a clear path to upward mobility. Simply sign up for school or government-sponsored training and instantly become part of the creator class.

If you're a fat cat wealthy person who stopped producing anything of value long ago, how would you feel to be in the category of "Net Consumer of Wealth"? I think it would cause you to start investing your idle cash in something that would improve your social standing and make you a creator of wealth. To make things easier, let's assume we label as a wealth creator anyone who invests in a start-up, even if the start-up does not succeed.

What I'm suggesting might seem like a subtle or even trivial shift in how we look at the world. But that sort of shift can be huge in terms of how it changes behavior. Class warfare strikes me as a dangerous worldview. It encourages a win-lose approach to government policy in order to pursue the elusive unicorn of "fairness." A more productive way to view the world is in terms of net creators and net consumers of wealth, at least so long as society makes it possible for any net consumer to become a net creator by going to school, training for a job, or investing in start-ups. For the middle class, it might simply mean spending less than they earn.  I think this approach gets you to a healthy economy faster than a class war.

I know some of you will reject this idea because there's no clean way to know who is a net consumer of wealth and who is a net creator. But I think common sense gets you close enough.

 
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Dec 9, 2012
While the general idea of the article is correct, "wealth" is relative to an individual's frame of reference. One man's trash truly is another's treasure, and vice-versa. A lawyer's education is treasure to a lawyer, and trash to a guy who'd rather do manual labor. While I agree we ought to cut out the class-warfare rhetoric, therefore, I disagree with any plan that allows the government to impose any supposed one-size-fits-all definition of "wealth" on the rest of us. Also, as any number of rich and poor can tell you, hard work does not automatically equate to productivity: most of our politicians are very hard at work grafting and taxing and regulating the rest of us to death every way they can; how is that productive?

The real solution is to abolish all forms of income tax altogether, as they're nothing but a tax on productivity, and replace them with some kind of consumption tax instead. That way, productive people will be encouraged to produce as much as they can while lazy parasites (those "net consumers") will be encouraged to be more discreet in their sponging on the productive.
 
 
Dec 9, 2012
I don't know that "wealth" is quite the right word, since it's too easily confused with "profit" or simply "money". Perhaps "creates net benefit" would be more accurate, since it covers works of art and science that may have little direct economic benefit, but is is still a little awkward as a term.
 
 
+6 Rank Up Rank Down
Nov 29, 2012
The only sensible way to judge a political/economic regime is by looking at the incentives it creates, and the resulting wealth status. And the countries with the freest economies (meaning both the strongest protection for property rights and the smallest governments) have always been the richest, so much so that even the top 1% in socialist countries envy our welfare recipients.

Therefore, all advocates for socialism are either dupes, or barbarians who don't want to let anyone be wealthy. Read green-agenda.com for lots of leftist (and green) leaders admitting this.
 
 
Nov 28, 2012
@PhantomII

[My point is that wealth creation must create wealth, directly, or it's not wealth creation. Duh. ]

In that case what we're dealing with is a difference in how we define wealth creation. By your definition a whole slew of activities that are important to wealth creation-investment, building computer networks, roadbuilding-cannot be considered to create wealth. I think they should be considered to create wealth because the alternative is to consider the folks engaged in these activities to be consumers (i.e., moochers). Though I also agree with sizzlers observation that we need to be careful which of these activities we consider wealth creation.
 
 
-1 Rank Up Rank Down
Nov 28, 2012
@Phantom II .. 100
 
 
+4 Rank Up Rank Down
Nov 28, 2012
Hi Scott,

You started off by identifying the right issue to focus on wealth creators vs wealth moochers?.... However here are the flaws in your solution

"Now let's say society agrees to define a person who is in school, or in any sort of training course, as automatically part of the creator class. "

... How is this society labelling automatically make it correct ... what if going to school does not automatically make you a creator... you could still be a bum after going to a school you know... will you compel other wealth producers who even after dropping out of school found ways to earn to pay for this bums... do you see a flaw in your argument?

"To make things easier, let's assume we label as a wealth creator anyone who invests in a start-up, even if the start-up does not succeed."

Really if this carries on are you sure the wealth creator will be able to hold on to his wealth... Investors do take risks, calculated risks ... they would only succeed even with the occasional losses only when they are at liberty to choose whether and what to invest on.. you seem to be taking that vital choice away.

"A more productive way to view the world is in terms of net creators and net consumers of wealth, at least so long as society makes it possible for any net consumer to become a net creator by going to school, training for a job, or investing in start-ups. "

None of these things automatically make you a net creator, if I just attempt to go to a school that teaches drawing comics, will that make me automatically you (a successful comic strip writer)... will you part with your wealth to a person who assuredly is eating through it ... more correctly will you FORCE that on others?
 
 
Nov 28, 2012
[Did you ever think that entertainment creators (like cartoonists) are worse than wealth consumers? Yes they are, they encourage the rest of the population to be iddle (and watch their creation), instead of working hard. Therefore they contribute negatively to the wealth creation far more than any wealth consumer on government benefits or rich fat cat that sits by his hotel pool in the bahamas.]

rejuventating recreation is a moral good. it enhances uptime productivity and makes ppl happier.
 
 
Nov 28, 2012
@wittllnew,

I'm not sure what your objection is. If you could make it clearer, I could address it.

My point was that Scott's post tried to redefine what constituted someone who creates wealth from someone who takes wealth. He then said that someone who goes to a school that is paid for by someone other than themselves as someone who creates wealth.

So tell me how someone whose education is being paid for by someone else is creating wealth? If you can do that, then I'll say I was wrong.

My point was that telling someone that black is white doesn't make black white. If someone in government says that taking someone else's money to give you something that you haven't earned is actually wealth creation rather than wealth consumption, then you have redeflined the terms to say that whatever you say is wealth creation is wealth creation.

My point is that wealth creation must create wealth, directly, or it's not wealth creation. Duh.

Saying that something may create wealth someday, even though it is consuming wealth right now is wealth creation, makes it pointless to define wealth creation in any meaningful terms. If anything can be defined as wealth creation when it is obviously wealth consumption, then you're saying that all that matters is your definition rather than the reality of what's going on.

My point was that this kind of doublespeak a la "1984." Telling people that taking other people's money by telling yourself that you really deserve it because it's somehow creating wealth is not only a lie but beyond specious.

If you think that the takers don't justify themselves by pointing to government's telling them this is their due, then you need to wake up. And Scott's redefining of the terms doesn't change the truth. Stealing from others isn't OK just because you redefine what stealing is.

 
 
Nov 28, 2012
@PhantomII

...Umm...I think you went off on a tangent shortly after the bit about the student. I mean, I can see that from one POV studying is not wealth creation (from another POV its just another form of investing, which can be considered wealth creation). But how you got from that to saying that Scotts post justifies an entitlement mentality is beyond me. Reading Scotts post he strikes me as discouraging such thinking.
 
 
+11 Rank Up Rank Down
Nov 28, 2012
When did "thieves" and "wealth redistributors" become the only two options? And why frame "poor" as net consumers of wealth? Some "poor" people would likely argue that they are less wealthy because they are under compensated for the value that they bring...and that (at least some) wealthy people are overcompensated.
 
 
Nov 28, 2012
Gee, Scott, I have an idea: let's call a cat a dog! That will make it much easier to not get confused over which is which!

The problem with your theory, as with most of the things you propose here, is that it requires the re-defining of terms. Let me give you an example: you say that, in your definition, all we have to do is say that someone who is using other people's money to get ahead - say, someone in school or a training class, is REALLY not taking other people's money, but in your world view, creating wealth.

The problem with that is simple: it is not true. The person who studies may be working on the road to creating wealth someday, but as he or she uses other people's money to get that education, he or she is absolutely, by definition, a wealth consumer.

To pretend otherwise is not only foolish, it is incorrect. It is what has led to the entitlement society. People who believe that if they just want wealth badly enough, it should be given to them.

In the old days, circa 1950, we had a thing called charity. It was based upon the religious teachings of Jesus Christ, who admonished us all to do our part to help the poor. This led to the rise of the Hospitaliers; people who established places for the sick to be housed, and a way for Christians to provide for those less fortunate or in need because it's the right thing to do.

The difference between then and now is that charity has somehow become a right, and because it's a right, anyone who wants it has somehow become entitled to it. In the past, when people received charity, they realized that they didn't deserve it just because they existed; they realized that they were being given it because someone who didn't have to do it decided, for whatever reason, to give them something they hadn't earned.

People who received charity were grateful, but they never thought it was something that they had coming to them. It gave them an incentive to get off of charity, and when they were able, to return the charity that had been given to them.

Flash forward to today. Today, the government has done what you have done, Scott. They've redefined what charity is. It is no longer something given freely; it is now something mandated by the government for reasons that are anything but charitable. It is theft to buy votes, plain and simple, and it has resulted in the destruction of our economy and our children's future. It would possibly be understandable if they were just using money they had, but they're not. Forty cents of every dollar they spend is borrowed, largely from the Chinese. Is there anyone who thinks that's a good thing, or that it's sustainable? If so, you need to take another basic math course, and get real.

So redefine any terms you want, Scott. Pretend you can build a strong house on a foundation of quicksand. But what you really are is part of the problem. If you can come up with a real solution that empowers the individual and stops the theft of other people's property, I would sure love to hear it.
 
 
Nov 28, 2012
@Stui

[Fair enough about hard to tell what people do, but how bout my other example? Nurses and Police?

Both funded from the public purse so they're net users of wealth. can you (or anyone else) see and explain how they could be considered wealth creators?]

There are times, like now, when we must consider the wealth something creates indirectly.

To understand this consider the internet. If you were to get rid of all the programming and data on our computers, devices and servers then network part of the internet (the fact that they can talk to each other at the rate of several megabytes a second) becomes worthless. Google, wikipedia, e-mail, etc. all directly create wealth but to see what wealth the networks that make them possible creates one should not consider the networks themselves but, rather, what is done with them.

Similar logic applies to police. They do not directly create wealth directly but in a properly functioning society they enforce rules that are necessary for others to create wealth, so they can be considered infrastructure. And the wealth they generate can be indirectly considered on that basis.

As for nurses, to the extent that people would pay out of their own pockets for their care if they had to they can be considered to create wealth too.
 
 
+1 Rank Up Rank Down
Nov 27, 2012
@whtllnew,

Fair enough about hard to tell what people do, but how bout my other example? Nurses and Police?

Both funded from the public purse so they're net users of wealth. can you (or anyone else) see and explain how they could be considered wealth creators?
 
 
+2 Rank Up Rank Down
Nov 27, 2012
" It encourages a win-lose approach to government policy in order to pursue the elusive unicorn of "fairness." "

Scott,
Your assumption is that the government is in the business of fairness. They are actually in the business of getting votes.

Bread and circuses.
 
 
Nov 27, 2012
@ceprn69:

But historically, it's a three-sided pyramid. Tip it over and you just end up with another pyramid.
 
 
Nov 27, 2012
@Smith25

[This concept scares me unless wealth creation is changed to something like "net world-benefiter." ]

I hear you but, unfortunately, this is too amorphous a concept for us to use. Some might even consider it controversial. Is a hippie who lives off welfare and spends all his time protesting for the environment a net world benefiter? How about a street preacher who lives off welfare?

[with an environmental and resource collapse approaching in the not too distant future, many wealth producers are shortening the time we have left for those of us who are happy with less.]

This can be accounted for in whatever criteria we use for the term 'Wealth Creation'.
 
 
+5 Rank Up Rank Down
Nov 27, 2012
This concept scares me unless wealth creation is changed to something like "net world-benefiter." Wealth is too zany a term to be useful and with an environmental and resource collapse approaching in the not too distant future, many wealth producers are shortening the time we have left for those of us who are happy with less. It's the whole insane Ayn Randian concept that production is always good. "More train tracks! More copper wire!"

If you talk to a real follower of any of the less tainted religious paths still surviving on earth, the key is to become neutral for production and consumption. Don't make more than you need and don't take more than you need. Farm your plot, meditate, enjoy the company of those surrounding you, and create things that require minimal slash/burning of nature to make. The idea that you can be a wealth creator, which is apparently inherently good, by making a coal factory to get rich seems sick. There's a lot of lives that will never get to happen or will be tragically cut short by this mentality.
 
 
Nov 27, 2012
@Igriot

[Did you ever think that entertainment creators (like cartoonists) are worse than wealth consumers? Yes they are, they encourage the rest of the population to be iddle (and watch their creation), instead of working hard. Therefore they contribute negatively to the wealth creation far more than any wealth consumer on government benefits or rich fat cat that sits by his hotel pool in the bahamas.]

Way to preach abstinence in a brothel!

So anything that distracts from hard work is bad? I don't want to live in your country when you become dictator. Assuming you'd keep working hours the same (isn't the 40-hour workweek a limitation on productivity?) what would I do during my off hours?
 
 
Nov 27, 2012
@Stui

[I work in Public Health, in a management role. I can't see how anything I do contributes toward creating wealth....I think the concept is too narrow.]

No, the concept isn't too narrow, you narrowed it. The concept of creating wealth could very well encompass what you do. Hard to tell from the outside, between the folks who say government workers are dedicated, hard working sorts and the folks who say they're lazy bums.
 
 
Nov 27, 2012
@paddington

It doesn't matter whether or not you're producing something physical, something artistic or something YOU would pay out of your pocket for. If whoever pays you is paying out of their own pocket it means THEY consider what you're doing to be worth it. Thats a sure sign that it has value and, therefore, is creating wealth.
 
 
 
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