All the wealth we’ve accumulated is ultimately between our ears.
While working on my book, I read all these different accounts of where capitalism comes from. I was amazed by how many of them start from the assumption that wealth is … stuff. Depending on which Marxist you’re talking to, capitalism is the ill-gotten-booty of the Industrial Revolution, slavery, imperialism, and the rest. I don’t want to get into all of that here — there will be plenty of time when the book comes out.
But all of these assumptions are based on the idea that having stuff makes you rich. Now, in fairness, that’s true for individuals. But it doesn’t really work that way for societies. Writing about Venezuela earlier this week is what got this in my head. Venezuela is poor and getting poorer by the minute: Babies are dying from starvation.
Meanwhile, Venezuela has the largest proven oil reserves in the world. According to lots of people, not just Marxists, this should make no sense. Oil is valuable. If you have more of it than anyone else, you should be able to make money. For a decade, the American Left loved Hugo Chávez and then Nicolás Maduro because they allegedly redistributed all of the country’s wealth from the rich to the poor. These dictators were using The Peoples’ resources for the common good. Blah blah blah.
It turns out that the greatest resource a country has is its institutions. In economics, an institution is just a rule, which is why the rule of law in general and property rights in particular are the most important institutions there are, with the exception of the family. Take away the rule of law in any country, anywhere and that country will get very poor, very fast. Stop protecting the fruits of someone’s labor, enforcing legal contracts, guarding against theft from the state or the mob (a distinction without a difference in Venezuela’s case) and wealth starts to evaporate.
But even that is too complicated. Oil is worthless on its own. If you went back in time to the Arabian Peninsula before oil became a valuable commodity, you wouldn’t look at the squabbling nomads and call them rich, even though they were playing polo with a goat’s head above billions of barrels of oil. Go get lost in the Amazon by yourself. What would you rather have, a map or big-ass diamond? The diamond only has value once you get out of the jungle, but you can’t get out without the map.
Jonah Goldberg, “America and the ‘Original Position'”, National Review, 2017-12-22.
January 22, 2020
QotD: National “wealth”
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