Creating Wealth

Thoughts on a Free Market Economy…

“Creating Wealth”

By Phyllis Hunsinger


       Sometimes a phrase about economics is bantered about: “The rich are getting richer, and the poor are getting poorer.”  As Chelsea German pointed out in her article on “The Fixed Pie Fallacy,” the rich are getting richer, but the poor are getting richer as well. Not only has the income improved for the poorer segment of society, the purchasing power has increased because of falling prices.  Technology has become cheaper and so have many material goods.  All these factors point to an increased standard of living for the poor.

       A fallacy assumed by many is the idea that wealth is a fixed pie.  As Ms German explained, following this assumption means that someone can only become better off at the expense of someone else. Fortunately this does not hold true. This is not how the economy works.

       How is wealth created?  Wealth is created when many people work on various projects of use to the nation by using labor and capital and ideas by using raw materials. Wealth is not stagnant.  Theoretically, there is no limit to how big the economic “pie” can be.

       One of the most notable economists and social philosophers of the twentieth century was Ludwig Heinrich Edler von Mises.  He based his economic beliefs on the fundamental axiom that individual human beings act purposefully to achieve desired goals. He concluded that the only viable economic policy was unrestricted free markets and the unhampered exercise of the right of private property.

       The economy is not a stagnant number.  The economy grows and wealth is created through creativity, invention, and hard work.  Anyone who is working for someone else or for himself is adding value to the economy.  The ability to profit from our own ideas and labor is a good definition of economic freedom.  And with economic freedom, wealth is created.




, Phyllis Hunsinger © 2013 All Rights Reserved

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