Money is Not Wealth

Tonight, I fully expect that President Obama will find fault with the United States, complaining of "inequality" as some sort of horrible disease that needs to be cured, rather than the natural and desirable result of the different capabilities, choices and chances that we take in our lives, and their economic results..

Thomas Sowell has a column out called The Inequality Bogeyman that takes issue with this view, and I think explains the issues beautifully. I quote a key paragraph:

"Money itself is not wealth. Otherwise the government could make us all rich just by printing more of it. From the standpoint of a society as a whole, money is just an artificial device to give us incentives to produce real things — goods and services. Those goods and services are the real “wealth of nations,” as Adam Smith titled his treatise on economics in the 18th century."

Inequality is common with movie stars and football players, and we don't seem to object, but if someone makes a fortune in a field we don't fully understand, like high finance, we are quick to condemn it, and loose the rhetorical attack dogs to assail the "crime" that must have been committed. As Sowell points out, those who become rich make their money as the result of providing something to someone who voluntarily pays for it.

The cure to our economic malaise is not to print more money, or "attack" some mythical "inequality". It is to work, produce, strive, and succeed. It is the job of all the people, and is best done when government gets out of the way, not by trying to micromanage outcomes.

President Obama is likely to propose spending more money that we don't have, to cure the nation's ills. This is Sowell's "printing more of it", and it does not work. While listening to President Obama's speech tonight, we do well to remember the wise words of Dr. Sowell.

Follow me on Twitter: @donlee1037