Wednesday, September 12, 2012

What it Means to Be Conservative - Part 3: Wealth Creation

So far, I've talked about how conservatives believe in limited government and free trade and how we are against the concept of elitism. The next fundamental difference between conservatism and liberalism is our view of how wealth is created.

Liberals behave as if wealth is limited and cannot increase. Thus, liberals see those with wealth as having taken precious resources from the poor. If there is only so much wealth to go around, those who have a lot must have accumulated their possessions at the expense of someone else.

However, we know that this is not the case. While at any one point in time there is a finite amount of wealth, the total amount of wealth on earth is not a constant. Wealth can be created out of thin air simply through human creativity, hard work, and free trade. A brief look at history will confirm that wealth has increased enormously over time (and often in great leaps as new technologies are developed). Thus, wealth is not constant and those who have a lot of wealth have not necessarily taken it from others.

So, while liberals view the rich as villains, stealing the bread from the mouths of the poverty-stricken, conservatives know that the wealthy (in most cases) are really heroes (from an economics standpoint, anyway). Those who have created wealth through their creativity and hard work have not only increased their own wealth, but the wealth of many others who have benefited from their actions. These individuals create businesses that not only make a profit for their owners, but employ many workers, who then have their needs met and have money in their pockets (making them wealthier). These people then spend money (giving it to other businesses) to obtain the things they want and need. That money is then used by those other businesses to pay their workers and develop new technologies that increase wealth. Thus, an increase in wealth by one business owner is not only helping that person and their employees, but business owners and employees of thousands of other businesses as well.

So here we see one of the biggest differences in views on how to grow an economy. Liberals see wealth as limited and thus want to punish the evil rich by taking more of their money to give to the poor. This seems, at first glance, to be a perfect solution. The poor need money and the rich have more than they need. Why not take a little from the wealthy to give to the poor? Problem solved, right?

However, there are two major economic problems with this redistribution of wealth (to say nothing of the ethical problems). First of all, taking money from the wealthy (business owners and investors) leaves less money for them to pay their workers, and less money is injected into the economy to help it grow. Thus you have less wealth created and everyone is worse off than they could have been.

The second problem with wealth redistribution is that, human nature being what it is (as I mentioned in Part 1 of this series), when you give people money for nothing, you discourage creativity and hard work. If a person can get money without working for it, why work? We humans are a naturally lazy bunch. Not only do those receiving this "help" have little inclination to work to create wealth themselves, but those who do work hard to create wealth, seeing the return on their hard work stripped away, often feel far less motivated to continue their efforts. In the end, everyone loses as the economy stagnates and less and less wealth is created.

The conservative plan for wealth creation is quite different. Conservatives know that wealth can be instantly created when people are allowed to create wealth through creativity, hard work, and free trade. They know that wealth creation helps everyone because there are more resources available - more money, more jobs, more technology, and more goods and services. Thus, conservatives want to reduce government intervention in the economy and lessen the regulations that stifle businesses. Conservatives want to make free trade freer (to encourage more people to trade), to protect the creativity of those who develop new ideas (by making sure they get a return for their hard work), and to reduce taxes (so that people keep more of their hard-earned money and can invest it back into the economy). These things do help business owners and investors, but they also help the workers. These plans also help create more jobs so that all people can earn the money they need. Everyone wins when there is more wealth.

Here is the third video in the series. In this clip, Bill Whittle explains how wealth can be created and debunks the myth that people only get ahead by taking from others.

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