Is It Possible to Create New Wealth?

My fellow blogger, Lindsay Mitchell, directed readers of her posts to the maiden speech of newly elected ACT Party MP, David Seymour. I found the speech a little weird, to be honest, but that was more about Seymour's use of language than what he was trying to say. In the speech he posed an interesting question - is it possible for anybody to create new wealth?

If anyone has any doubts about the answer, they need only look at the graph below, which shows that as the population of the world has increased exponentially, income per person has increased at a much greater exponential rate [source].

Human Population Growth and Income Per Person Over the Past 2000 Years

Clearly wealth is not a zero-sum game. This is contrary to the dire predictions of those who believe in Malthusian catastrophe and the theory of limits to growth popularised in modern times by the doomsayers at the Club of Rome.

A zero-sum game view of wealth is the primary economic frame of reference for the political left-wing. Socialists believe that the wealth I accumulate I take from others. Clearly their view is not supported by the facts as the second graph below (ibid) illustrates - as global wealth has continued to increase exponentially over the past few decades, the number of people below the global poverty measure (in absolute terms, not just proportionately) has dramatically decreased. Note that this decrease coincided with the period of greatest economic liberalisation and retrenchment of the state in more than a century.

Poverty is Rapidly Declining, The Economist June 2013

So why do Socialists continue to claim that my gain is someone else's loss? Some of them just may be gullible fools and we can excuse their stupidity. The rest are frauds - they know better but advocate their doctrine out of a petty and spiteful view of humanity. These are the truly dangerous ones. Like the monstrous Ellsworth M. Toohey in Ayn Rand's novel The Fountainhead, the frauds claim to represent the poor and oppressed but actually are pursuing far less noble interests. They can't create wealth themselves so want to deny anyone else the opportunity to do so, preferring that everyone is poor than some people other than themselves are wealthy. Of course, they see themselves as running their utopian, egalitarian world, enjoying the benefits of wealth and power without ever having to earn it.

One of the reasons David Seymour is in Parliament, and we have a pragmatic, centrist government rather than a diehard Socialist one, is that in the recent general election New Zealanders rejected the politics of envy. They voted for politicians that they thought would allow new wealth to be created so that they themselves can enjoy the benefits of that growth. In other words, they recognised that a rising tide raises everyone's boat.

UPDATE: If you want a real life example of an Ellsworth M. Toohey, there is none better than Paul Krugman, the economist and New York Times columnist, who is now calling for the greatest innovator in the publishing industry in the last 50 years, a company that has enabled writers such as me to bypass the traditional book publishing oligopoly, to be hobbled by the US Government.

Self-Determination, Nationalism and Maori Treaty Rights

The New Zealand election campaign brought with it the usual xenophobia from looney right-wing parties such as New Zealand First and Conservative, and at the same time we heard that the Government is to guarantee the Maori tribe Tuhoe some degree of self-determination under a settlement of their Treaty of Waitangi land claim.  All this was against a background of the Scottish vote on independence from Britain and the territorial gains by the so-called Islamic State in Iraq and Syria (ISIS), and it got me thinking about self-determination and how far it should be taken as a matter of rights.

I am a keen student of American history and I am particularly interested in the Civil War, that most ignominious conflict in US history. At a political level the US Civil War was about self-determination - the right of the states to determine their own laws versus the right of the US federal government to impose overarching laws on the states. Of course, it was also about the morality of slavery but that was in many ways secondary as a cause of the conflict to the issue of 'states rights'.

My views on self-determination come from my libertarian politics and the Objectivist philosophy on which those political views are based. I believe that individuals are inherently sovereign and that governments are (to borrow a phrase from an important American document on the subject) "instituted among Men, deriving their just powers from the consent of the governed." This means that self-determination, if it means anything at all, must apply at the individual level - in other words I should be able to determine how I am governed. But many would say that individual self-determination is impossible, or at least in practice it would amount to anarchy. After all, how can the individual self-determination of 4.5 million New Zealanders (or 300 million Americans for that matter) possibly be compatible with good government?

The answer is, it depends on what you mean by "good government". The American founders defined the ideal as government that protects the rights of its citizens, that is the rights to life, liberty and the pursuit of happiness. To those good men, government had no other function than to protect the individual rights of its citizens. Good government is, by their definition, the collective expression of the self-determined and voluntary will of the people to protect their rights. They understood rights as being inherent in man and that the rights of one individual could not infringe upon the rights of another (their heinous error in not applying rights to slaves notwithstanding). They accepted that in order to maintain individual rights, governments must act to prevent individuals abrogating the rights of others and should arbitrate in disputes over rights between individuals. In other words, they understood that as long as governments only protect individual rights and do nothing else, there is no inconsistency between individual self-determination and collective government.

Taken to its logical conclusion, self-determination means that any group of individuals should be able to decide to opt out of any existing governing structure (be it nation, city or neighbourhood) and set up an alternative. This is, of course, exactly what the American founders did. Which brings me back to the Tuhoe, the Scots and ISIS. The problem with all of these groups' aspirations for greater self-determination is that none of them wants to protect individual rights. Tuhoe want to impose a traditional form of Maori government, wherein political power was seized by the strongest and most brutal members of the tribe, and women, slaves and outsiders had no rights at all. The Scots independence campaigners wanted to retain and enhance their socialist economy wherein taxpayers are forced to part with an ever-larger portion of the fruits of their labour to pay for whatever the government wants to spend it on. And the Islamic State rebels want to impose Sharia law wherein women and 'infidels' are second class citizens and no one is free to choose what religion they practice, who they marry and what they say. In all of these cases the alternative form of government is less protective of individual rights than the one they are seeking to replace. That is not self-determination in my book.

I have no truck with nationalism. All nation states are artificial constructs, no matter how old or grand they are, and there is nothing inherently good in one national structure versus another. I'm all for tearing down anachronistic national or empirical structures where they do not serve the citizens they should be serving. I believe that smaller, more local government is generally better at protecting individual rights because it is easier to hold accountable than larger, more geographically spread government. But self-determination is not worthy of the name unless it protects individual rights.