Friday, July 27, 2012
"I give back!" - What? Did you steal it?
"I give back" Give back. I often hear this expression, either from those that state it with a sense of personal pride, or as a stern petition from others who feel that the person that becomes successful does so at the "expense" of others. What exactly is one expected to "give back"? To whom? Not only is the expression loaded with ignorance in economics, it also suggests something more offensive: That people who gather wealth do so in a way akin to taking, or stealing. But not earning, it seems. The reality is that most rich people do obtain their wealth entirely through voluntary exchange. Unless the person is a true crook or a criminal, the only way he or she can create and accumulate wealth is by trading goods or services with people that want them. It is by creating value for others that one becomes wealthy, not by "taking." The ignorance behind the expression "you should give back" stems from a total misunderstanding of how trade and production works. It also stems from a misunderstanding of what is wealth. For many, wealth is money, not the stuff that is exchanged for money; meaning, the person that obtained the good or service is not wealthier, because he's out the money. So from this unbalanced view, some conclude that the person that obtains the money did so by taking it from fools that receive trinkets in return. How does a person become wealthier through simple exchange? The answer is that he or she becomes wealthier by making several exchanges with many trading partners. If a person can offer a number of goods to a number of people that want those goods, those persons will trade with him or her: