What are the habits of production?

 

via EconomicPolicyJournal

This series, titled Uncommon Knowledge, hosted by Peter M. Robinson and often showcases Thomas Sowell, is always excellent and gives any listener an opportunity to learn of Sowell’s terrific economic insights and astounding breadth of knowledge covered in his books.

Excellent question to open with . . .

What are the habits of production?  No fixed amount of wealth. If you see someone with money or hear about millionaires, you too can earn money.  Lots of it.

Does inequality dampen economic growth?  No.

Income inequality is bad for democracy.  The ugliness of our politics is closely tied to the inequality of income.  The people who have the most influence are not interested in having good public services, because they don’t use them.  You just get a bad society.

Three kinds of lies: lies, damn lies, and statistics.

Welfare state reduces incentives to produce human capital.  And receiving the products of someone else’s human capital is by no means as fundamental as developing one’s own human capital.  Human capital is the ability to create the material things that constitute wealth.  People are puzzled by the fact that after a major war the economy gets restored in a few years.  Destroying physical wealth is not nearly as devastating as destroying human capital.  Same thing with stealing.  All you can confiscate is the material wealth.  You cannot confiscate the human capital, the knowledge that people have between their ears to build and create.  True wealth, enduring wealth, the wealth that leads to the wealth in the world is what’s between people’s ears.  Why does the welfare state suppress incentives for poor people to develop their human capital?  You can live off of what other people have produced.  Not just the welfare state.  Nations too.  Spain received in the 16th and 17th century received gold by the tons, 200 tons, from the western hemisphere colonies.  1800 ounces of silver.  And so Spain didn’t have to develop its human capital.  And it didn’t.  It bought whatever it wanted because had all of this.  But when all of that money was spent, and the colonies broke free, Spain had nothing. And so Spain is today one of the poorest countries in western Europe.

Be sure to check out any of his book.  Great economist that Thomas Sowell.  Love these Hoover Institute interviews of him.

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