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.