Dakota Beacon

Yes indeed. Wealth creation beats socialism every time! The first builds and grows. The second confiscates and redistributes ruthlessly. Given the fact that most folks cannot explain how wealth creation takes place, a brief reflection would be in order.

Public schools are known for many things, but teaching economics is not one of them. Whether this situation is by design or default can be debated. I know economics was not taught in my metropolitan high school many decades ago and the situation has not improved. No wonder public discussion of economics, if it takes place at all, is trite and inane.

First, a wee bit of wonkiness. Wealth creation is a core idea in economics. Wealth is created when resources are used more productively or moved to more valuable uses. Wealth creation works like this. Resources (land, labor, capital) are organized by entrepreneurs; improved through innovation and investment; transformed into goods and services; and traded in markets ultimately creating something of greater value to others.

A key point, seldom mentioned, states that wealth is not a fixed pie. Wealth is based on productivity. Consequently, wealth is “expandable”. That means one person getting richer does not automatically make another person poorer. Economies grow when productivity increases. Bottom line: wealth is created when resources are used more effectively to produce things people want.

Now to explain wealth creation in layman’s lingo. P.J. O’Rourke helped remedy economic illiteracy in his treatise designed for the layman. In his best seller “Eat the Rich: A Treatise on Economics,” O’Rourke addresses wealth. What is it and how do we get it?

O’Rourke conveys his message with humor. “Giving power and money to government is like giving whiskey and car keys to teenage boys.” “You can’t get rid of poverty by giving people money.” “When buying and selling are controlled by legislation, the first things to be bought and sold are legislators.”

Thomas Sowell, American economist, was born into poverty. Early in life he was fascinated with the ideas of Karl Marx. Sowell became a committed Marxist attracted to socialism. As an undergraduate at Harvard, he wrote his thesis on Marx’s “Das Kapital.”

Sowell eventually lost faith in Marxism. Working on his doctorate at the University of Chicago, Sowell came under the influence of Austrian economist Friedrich von Hayek. Sowell’s reason for rejecting Marxism? “[He] believed that the most knowledgeable [people] on earth…could not devise a better system of resource allocation than capitalism because the collective wisdom of individuals within the marketplace is superior to any single individual intellect…” Sowell in his own words: “Socialism sounds great…It is only when you go beyond rhetoric, and start looking at hard facts, that socialism turns out to be a big disappointment, if not a disaster.” He discusses his migration away from Marxism in his 1985 book “Marxism: Philosophy and Economics.”

In short, Sowell's explanation is that wealth is created when people use knowledge, capital, labor, and institutions to produce more value than previously existed, especially through innovation and voluntary exchange. A famous Sowell quote summarizes his views. "Socialists have a remarkable lack of interest in how wealth is created. As far as they know, wealth just exists somehow, and the only interesting question is how to redistribute it."

Sowell’s contemporary, Walter E. Williams, explained wealth creation like Sowell's, but in more direct terms. He argued that wealth is created by serving other people through voluntary exchange in a free market. Under capitalism, people become wealthy not by taking from others but by producing goods and services that others want and value.

Williams’s view argued, "Prior to capitalism, the way people amassed great wealth was by looting, plundering, and enslaving their fellow man. Capitalism made it possible to become wealthy by serving your fellow man." He also argued, "Wealth comes from successful individual efforts to please one's fellow man ... that's what competition is all about: 'outpleasing' your competitors to win over the consumers."

Socialism exists as authoritarianism imposing government’s control over people’s lives. Subtly people may transition to socialism by electing lawmakers who pass legislation transferring to the government greater control over people’s wealth and lives.

For example, Obamacare was never about healthcare. Environmentalism was never about the environment. These were the means to an end. As Machiavelli said, “The ends justify the means”, i.e., to get power.

Why the allure of socialism to so many young people today? The allure is not so much economic or political theory as it is a social predisposition. Socialism seems “fairer,” there are “no losers,” there is no better system for “caring for the poor.” Witness historical amnesia on full display. When education omits the historical truth that 100 million people were killed under one form of socialism, i.e., communism, little wonder young people become susceptible to socialist myths.

Without economic truth, students wallow in propaganda. And propaganda creates fuzzy feelings – not wealth. Naive young adults will awaken when their wealth is finally taken.

            Remember to gather friends and neighbors on November 3rd and go vote.

Dennis M. Patrick can be contacted at (JavaScript must be enabled to view this email address).