The Biggest Economic Fallacy of All — Money VS Wealth

An apple orchard, where a farmer grows wealth (yes, on trees), in the form of apples.
Money in-and-of itself has no value. It’s only a medium by which humans beings trade wealth.

The Fixed Pie Fallacy

In the political arena, I often hear people complaining about the rich hoarding money, along with various allusions to the “haves” and the “have-nots.” The rich are said to be getting to keep all of this money, while the poor are suffering. The implication being that if you are rich, that you are taking advantage of the poor. People will also talk about overpopulation, and about how we aren’t going to have enough food, water, and resources to go around.

Apple Pie, made from the farmer’s apples
The Hong Kong Skyline. Millions of poor people from all over Asia flocked to this free market Capitalist city, and their lives were greatly improved as a result.
If You Hate Poverty, You Should Love Capitalism
An Incredible Short Video on Economics in the Developing World. Pardon the unfortunate caption.

Overpopulation and The Environment?

At this point, many readers will have further questions about overpopulation, and about the human impact on natural resources and the environment. I have made videos about some of these topics before, but a detailed discussion of these topics is beyond the scope of this article.

One of two videos I made in response to Bill Nye’s misinformed claims about overpopulation.

So what is money?

I hate to repeat myself, but it’s important to reiterate and emphasize these points. Money is not wealth. Money is merely a convenient medium by which we exchange wealth. I sell my ability to create a certain kind of wealth to my employer, and they exchange the wealth I create for the money in my paycheck.

Scrooge McDuck swimming in pools of money

The Failure of “Compassionate” Left-Wing Government Policies

Now here’s where all of this comes together. In the United States, Leftist economic policies almost always focus on taking money from the “rich” and giving it to the “poor”. These government officials fail to distinguish the difference between wealth and money, and look at economics in terms of a “fixed pie”.

World-Class economist Thomas Sowell discusses wealth, poverty, and politics.

A Government Program That Was Actually Helpful

Ironically, the past few years have put a bad taste for government welfare programs in my mouth. We have well established data that shows that welfare programs only create poverty. But my personal experiences with welfare programs showed me first-hand how destructive they can be.

Conclusions

The big take away lesson here is that redistributing money is not a long term solution to economic problems. Money and wealth are two very different things, and when governments and citizens confuse the two, it leads to destructive governmental policies.

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G.S. Muse

G.S. Muse

G.S. Muse, also known as GreenSlugg on YouTube or simply as “Greg” is a lab technician, youtuber, author, and blogger. His work can be found at GreenSlugg.com