Tag Archives: economics

Why can't the poor be handed out lots of money to make them rich?

Answer by Yishan Wong:

Because money is not wealth.

This is a fundamental misunderstanding that many people have about money, and in fact probably stands at the center of why some people are good at making money while others are not, why some people are wealthy and others are not.

(First, set aside the issues of inherited wealth, or "unfairly earned" money.  Those are distortive effects, but let's focus on the dominant factor)

Wealth ("being rich") means producing things of value.  It does not mean "having lots of money."

The key word there is value.  That word is more important than wealth or money, it is the real central factor around which human endeavor and economies revolve.  Money and wealth are big words that get a lot of play, but value is a boring word that most people don't notice.  It is actually the important one.  Value is what is produced when you do work, mine resources, develop an idea, produce an invention, engage in mutually-beneficial commerce, etc.  Value is the "thing" that humans make (out of nothing) by working, creating, trading, etc.  Continue reading Why can't the poor be handed out lots of money to make them rich?

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