How is wealth created in any society? You talk to a thousand economists and you will get a thousand different answers. The question I ask is all-encompassing in that it pertains to all societies in any time frame–whether 2,000 years ago, today, or 2,000 years in the future.
There are only FIVE generators of wealth in any society. These five are:
That is the list. Have you noticed what is missing? What is missing is the service industry. The service industry in and of itself is not a wealth producer. It is to be of service to one or more of the five wealth producers. As societies advanced and become more economically productive, the majority of workers are employed in the service industries. If you think about it, this makes sense, but without the five wealth produces the service industry would wither.
The above five are the “what” of the wealth producers. Now–who are they? They are those men and women who put their capital on the line to start a legitimate business. They are called entrepreneurs.
Society should encourage this type of behavior with low taxation with sensible rules and regulations. Unfortunately, in the United States we are going in the opposite direction, and society will pay the price with reduced economic growth and employment opportunities. There are no free economic lunches.