It is always worth remembering that wealth is not about what you have, it is about what you do. Dollars, cents, and bars of gold are only shadows of the past, that to a greater or more often lesser degree help today's wealth open a door into tomorrow's. Economists forget this, and treat wealth as quantifiable and money as a store of value, when in fact value must be recreated every day. A nation's "stock of wealth" may be fifty trillion dollars, but wait and see how little wealth $50 trillion buys if that nation slows in the dance of producing and serving to meet its own wants and the wants of others.
Money is key to wealth for individuals and firms in a healthy, stable economy. Money is irrelevant to the wealth of societies at large. Economists err when they measure a society's "real wealth" by agglomerating the prices of things and adjusting for an slippery quantity called inflation. Real wealth is about matching the production of goods and services, or their sustainable acquisition through trade, with the very diverse wants and needs of people. Refracting these questions through the a fiction of dollars and cents provides analytical convenience but not accuracy.
|Steve Randy Waldman — Saturday July 29, 2006 at 2:39pm||permalink|