WEBVTT NOTE What is Wealth? 1 00:00:00.000 --> 00:00:05.000 The Nature of Wealth 2 00:00:06.000 --> 00:00:15.000 Most of us think in a sort of vague, unformed way that it would be delightful to be wealthy. 3 00:00:16.000 --> 00:00:23.000 Very few of us take the time to really analyze wealth or figure out just what it would mean if we did acquire wealth. 4 00:00:23.000 --> 00:00:36.000 It would be important for us to understand the nature of wealth, what it is, and equally what it is not. There are a number of confused ideas in this area. 5 00:00:36.000 --> 00:00:43.000 First of all, and perhaps most important, we should realize that money is not wealth. 6 00:00:43.000 --> 00:00:48.760 We usually think of money as being wealth because we think of people who perhaps have money in their 7 00:00:48.760 --> 00:00:58.280 possession or have access to it as being wealthy. But wealth is really not money or, vice versa, 8 00:00:58.840 --> 00:01:07.160 money is not really wealth. Money is a medium of exchange, a transfer agent. Actually, if you have 9 00:01:07.160 --> 00:01:12.600 If you have money, then you could convert it into wealth, or you could convert it into 10 00:01:12.600 --> 00:01:19.960 other things as well. So, if you think of money as a conversion tool, rather than an 11 00:01:19.960 --> 00:01:26.620 end product, and think of items of wealth as end products, then you would probably come 12 00:01:26.620 --> 00:01:35.620 closer to an accurate picture of what wealth is all about. In one sense, money can be classed 13 00:01:35.620 --> 00:01:43.380 as Wealth. And this is invested capital. Money that is being used as invested capital, when 14 00:01:43.380 --> 00:01:51.740 it is itself engaged in earning a return, could in a sense be classed as wealth. But 15 00:01:51.740 --> 00:01:59.300 since it is so readily transferable and can be so easily converted into something else, 16 00:01:59.300 --> 00:02:05.880 Human savings and investments are usually not classified as wealth. 17 00:02:05.880 --> 00:02:10.660 They are simply classified as money or as reserves. 18 00:02:10.660 --> 00:02:14.740 And when we are talking about wealth, we are talking in some other area. 19 00:02:14.740 --> 00:02:16.860 Wealth is the end product. 20 00:02:16.860 --> 00:02:23.480 It is the thing that you and I as human beings want in an effort to satisfy some particular 21 00:02:23.480 --> 00:02:25.340 desire that we have. 22 00:02:25.340 --> 00:02:33.700 Notice why we have to classify money and wealth differently. When we obtain money, the only 23 00:02:33.700 --> 00:02:40.620 reason we value it is because we anticipate getting something that we want when we get 24 00:02:40.620 --> 00:02:47.220 rid of it. Now when we obtain wealth, it's because the thing that we are getting is something 25 00:02:47.220 --> 00:02:54.060 that we want. When we value money the most is at the time we spend it. When we value 26 00:02:54.060 --> 00:02:59.100 To the good or service we obtain in exchange for money, we value that most at the time 27 00:02:59.100 --> 00:03:05.720 we obtain it. Just to illustrate what I mean, I think this makes the point. When my wife 28 00:03:05.720 --> 00:03:12.060 and I, well, prior to our marriage, when I was first courting her, she impressed me very 29 00:03:12.060 --> 00:03:18.220 profoundly by letting me know that she loved money. Now, in point of fact, I found later 30 00:03:18.220 --> 00:03:23.300 that she had deceived me. She didn't do it intentionally, and of course this is just 31 00:03:23.300 --> 00:03:27.780 sort of a family joke, but anyway, the fact is that I discovered after we were married 32 00:03:27.780 --> 00:03:31.880 that she didn't love money at all. She positively detested it. She wouldn't let any of it stay 33 00:03:31.880 --> 00:03:39.880 in the house. In fact, she was engaged in a constant daily program of seeing what money 34 00:03:39.880 --> 00:03:45.020 we had that she could get rid of. So I had to discuss the matter with her and I told 35 00:03:45.020 --> 00:03:51.420 her that she had led me to accept a false premise that here she was a girl that I thought 36 00:03:51.420 --> 00:03:56.860 love money, whereas in point of fact she hated it. And I told her that it astonished me to 37 00:03:56.860 --> 00:04:00.900 find the number of things that she would rather have than money when she had professed that 38 00:04:00.900 --> 00:04:07.960 she loved money. I'm laying this on a little thick, but the fact is that there is a profound 39 00:04:07.960 --> 00:04:13.940 difference from the way we look at money and the way we look at wealth. We get money only 40 00:04:13.940 --> 00:04:19.060 because we believe that we could get rid of it when we want to. But we get wealth with 41 00:04:19.060 --> 00:04:39.060 So, our way of looking at these two areas is entirely reversed, and we view wealth as the end product that is desired, and we view money as the medium in between our desire and the thing it is that we desire. 42 00:04:39.060 --> 00:04:48.060 Now, if we're going to be absolutely precise, I would have to point out that very few of us ever really desire the thing that we get. 43 00:04:48.060 --> 00:04:55.540 When you go to the store to buy a good or a service, of whatever nature, the chances 44 00:04:55.540 --> 00:05:00.580 are rather good that you don't really want the item that you're buying. You want the 45 00:05:00.580 --> 00:05:07.580 satisfaction that you think you can obtain from the item that you're buying. For example, 46 00:05:07.580 --> 00:05:15.180 I presume, just to give you a quick look at this, I presume that most of you have at one 47 00:05:15.180 --> 00:05:22.700 One time or another it had a soft drink that we call a cola of some sort. There are many 48 00:05:22.700 --> 00:05:28.580 types of colas. Let's just talk about Coke, which is perhaps the oldest beverage of this 49 00:05:28.580 --> 00:05:38.060 nature in the field. Is there anybody that knows what Coke is? I venture to say there 50 00:05:38.060 --> 00:05:43.060 isn't. We don't any of us know what it is. Well, why do you buy something that you don't 51 00:05:43.060 --> 00:05:48.060 I don't even know what it is, because it isn't that you want the coke. 52 00:05:48.060 --> 00:05:53.060 It's that you want the satisfaction that you think it will bring you. 53 00:05:53.060 --> 00:05:56.060 It isn't the coke that you want. 54 00:05:56.060 --> 00:06:04.060 It is the idea which has been captured by the advertising people who promote the coke and the other colas. 55 00:06:04.060 --> 00:06:08.060 They say it refreshes you best. 56 00:06:08.060 --> 00:06:14.460 it, whatever it may be, refreshes you. Refreshment is what you're buying. Will coke refresh you? I 57 00:06:14.460 --> 00:06:20.300 don't know. Refreshment is a delightful general term, and it has an emotional appeal. We'd all 58 00:06:20.300 --> 00:06:27.340 like to be refreshed, whatever that may mean. And so we buy coke as a means to get to a condition 59 00:06:27.340 --> 00:06:32.540 of refreshment, which sounds very attractive. Whether it does it or not, that's up to you, 60 00:06:32.540 --> 00:06:40.540 but that's how you sell coke. If you were to go on the air or if you were to put an ad in the paper 61 00:06:40.540 --> 00:06:46.860 and actually spell out the formula of coke, who would buy it? You're not interested in buying 62 00:06:47.740 --> 00:06:53.900 so many grams of this and that chemical. It wouldn't be meaningless to you. You buy it because 63 00:06:53.900 --> 00:06:59.900 it appears to you to bring you a satisfaction and that's why you do it. I once asked a class of mine, 64 00:06:59.900 --> 00:07:04.940 and all men, how many of them liked razor blades? It happened that with this group 65 00:07:04.940 --> 00:07:09.540 they all shaved, and I could tell it by their appearance, so I asked how many liked razor 66 00:07:09.540 --> 00:07:15.740 blades. And several of them admitted to having something of an affection for them. So when 67 00:07:15.740 --> 00:07:20.020 we got into a discussion on it, we discovered that actually most men didn't like razor 68 00:07:20.020 --> 00:07:24.220 blades at all. So I asked them why did they buy them? Well, it isn't that they like 69 00:07:24.220 --> 00:07:29.540 Like razor blades, it's that they would prefer to shave rather than to have the effect of 70 00:07:29.540 --> 00:07:30.540 not having shaved. 71 00:07:30.540 --> 00:07:32.040 Now, that's a matter of judgment. 72 00:07:32.040 --> 00:07:38.640 Some people prefer to shave and be smooth-faced, and others prefer not to. 73 00:07:38.640 --> 00:07:42.560 But in any case, you don't like the blade. 74 00:07:42.560 --> 00:07:43.560 Very few people... 75 00:07:43.560 --> 00:07:47.340 I don't know of anybody but the people who manufacture the blades that have any affection 76 00:07:47.340 --> 00:07:53.140 for them, the people buy them because they anticipate a benefit from the effect to be 77 00:07:53.140 --> 00:07:54.140 obtained. 78 00:07:54.140 --> 00:07:59.060 I thought that would be important to bring in when we're discussing wealth because although 79 00:07:59.060 --> 00:08:06.300 we would classify a razor blade as wealth, it is not something that you really have an 80 00:08:06.300 --> 00:08:14.340 affection for, it is something that you can use directly in the obtainment of a satisfaction, 81 00:08:14.340 --> 00:08:20.940 whereas money is something that you use indirectly to get a satisfaction, and that's the difference. 82 00:08:20.940 --> 00:08:27.920 So we classify them in different ways. Wealth is viewed as an end product leading to a satisfaction, 83 00:08:27.920 --> 00:08:33.180 and money is viewed as an intermediary product leading to an end product that will bring 84 00:08:33.180 --> 00:08:37.500 you a satisfaction. In the end what we want is the satisfaction, very well. 85 00:08:37.500 --> 00:08:46.360 Now wealth can be classified into three general categories. These categories are, one, customer 86 00:08:46.360 --> 00:08:59.720 or Consumer Wealth, 2. Entrepreneurial, sometimes called capital wealth, and 3. Political wealth, 87 00:08:59.720 --> 00:09:04.940 which could also be classified, I suppose, as economic waste. But these would all be 88 00:09:04.940 --> 00:09:11.040 types of wealth. Let me take them in order. The first type of wealth we will call customer 89 00:09:11.040 --> 00:09:18.080 Customer or Consumer Wealth. By all odds, this is the largest category of wealth in 90 00:09:18.080 --> 00:09:24.160 the world. The reason being, of course, that every one of us is a customer all the time. 91 00:09:24.160 --> 00:09:30.100 That is, we are all consumers. We can't help ourselves. Every living organism is a consumer 92 00:09:30.100 --> 00:09:36.320 and man who is the most consumptive of all consuming organisms has a vast array of things 93 00:09:36.320 --> 00:09:38.040 and the things that he wants to consume. 94 00:09:38.040 --> 00:09:40.480 And this is true of every living human being. 95 00:09:40.480 --> 00:09:45.140 Consequently, our demands for consumer goods are virtually limitless. 96 00:09:45.140 --> 00:09:51.780 And all of the things that are produced in an effort to satisfy, to bring consumer satisfaction, 97 00:09:51.780 --> 00:09:55.920 all of these are classed as consumer goods or customer goods. 98 00:09:55.920 --> 00:10:00.340 These would be such things, for instance, as food, clothing and shelter, whatever those 99 00:10:00.340 --> 00:10:03.680 things may be, whatever form they may take. 100 00:10:03.680 --> 00:10:08.680 Food would vary the world around, but you have to have some kind of food, because otherwise 101 00:10:08.680 --> 00:10:16.680 you can't stay alive. Then there would have to be clothing. There's some type of personal 102 00:10:16.680 --> 00:10:22.400 covering in order to protect you from the elements from climate and so on, also to give 103 00:10:22.400 --> 00:10:28.000 you some kind of a morale factor in terms of decorative facilities and so on. So these 104 00:10:28.000 --> 00:10:32.360 are items in great demand. Then also there is shelter. It happens that the weather of 105 00:10:32.360 --> 00:11:02.360 The nature of this world is at times relatively inclement and it is essential that we modify it for our own well-being so it works out that men have figured out how to do that and in very hot climates we air condition and in very cool climates we heat and we now heat with central heating units so that we create our own climate within structures that we build. All of these things are in demand. Everybody wants more of these things and there is a host of other things that we want. There would be vehicles to transport us 106 00:11:02.360 --> 00:11:32.360 at various ways, at various speeds, to various parts of the world, and then there would be other types of comforts and conveniences such as razor blades and curlers for the hair, and a barber shop experience, incidentally we classify services as wealth, even though they do not last, if you get a shoe shine, that is wealth, or if you get a haircut, or a permanent wave, or something of this sort, that's classed as wealth. Anything that you 107 00:11:32.360 --> 00:11:39.800 want, as a consumer, however you use it, knives and forks, that's consumer wealth, a camera 108 00:11:39.800 --> 00:11:45.180 that you take pictures of your friends with, that's consumer wealth, an automobile that 109 00:11:45.180 --> 00:11:50.420 you drive around in, a coke that you drink, whatever it is that you have that goes to 110 00:11:50.420 --> 00:11:57.160 satisfy you as a consumer, that is viewed as consumer or customer wealth and obviously 111 00:11:57.160 --> 00:11:59.180 that's what it's all about. 112 00:11:59.180 --> 00:12:05.980 The purpose of all production of any good or service is simply for the purpose of creating 113 00:12:05.980 --> 00:12:11.340 human satisfaction. That's the whole idea. And so the bigger we can make this column 114 00:12:11.340 --> 00:12:15.580 of consumer wealth, the better off we'll all be. And that's the general idea. 115 00:12:15.580 --> 00:12:21.700 Now, let's go to the next classification, entrepreneurial wealth. That's too hard to 116 00:12:51.700 --> 00:12:57.740 Money to bear in order to get the capital goods, but it is the entrepreneur who wants 117 00:12:57.740 --> 00:13:05.040 the capital goods. Well, what are capital goods? Capital goods are the tools of production, 118 00:13:05.040 --> 00:13:11.100 whatever they may be. Now, these are the things that you and I as customers probably don't 119 00:13:11.100 --> 00:13:18.460 want. But as producers, and each of us is usually during at least a portion of his life 120 00:13:18.460 --> 00:13:27.700 a producer. In our role as producers, we want this other classification of wealth. For example, 121 00:13:27.700 --> 00:13:33.700 the type of wealth that I'm thinking about here would consist of such things as a blast 122 00:13:33.700 --> 00:13:47.100 furnace, a mill, a press, a locomotive engine, a lathe, a linotype machine. There could be 123 00:13:47.100 --> 00:13:56.940 any number of items that we would think of as tools that help us in producing or providing 124 00:13:56.940 --> 00:14:04.540 goods or services. So whatever those may be, we would classify those as entrepreneurial 125 00:14:04.540 --> 00:14:13.420 or capital goods. To make it clear, very few customers would like to have their own blast 126 00:14:13.420 --> 00:14:19.400 Blast furnace out in their backyard. I doubt if you would. But if you're producing steel, 127 00:14:19.400 --> 00:14:24.340 then a blast furnace would be very important to you. Not as a customer, but as a producer. 128 00:14:24.340 --> 00:14:30.100 If you... I doubt if very many people would like to have a linotype machine for their 129 00:14:30.100 --> 00:14:35.380 very own right in their living room, or even in their bedroom. You don't want a linotype 130 00:14:35.380 --> 00:14:41.740 machine as a customer. What in the world would you do with it? But what you want is the newspaper 131 00:14:41.740 --> 00:14:46.980 that may come from it, or the printed book or pamphlet or periodical, whatever. You use 132 00:14:46.980 --> 00:14:52.220 linotype machines in production. They are not an item to bring customer satisfaction. 133 00:14:52.220 --> 00:14:58.500 And there's a whole host of goods that we have learned how to produce that don't really 134 00:14:58.500 --> 00:15:05.520 please customers directly, but which create the things that help to please customers. 135 00:15:05.520 --> 00:15:10.740 And that's what we mean by entrepreneurial goods. Incidentally, there are certain types 136 00:15:10.740 --> 00:15:14.440 and of course, there are three types of goods that will fit into both categories. 137 00:15:14.440 --> 00:15:20.020 They have no specific characteristics that would limit them to one particular column. 138 00:15:20.020 --> 00:15:22.060 For instance, take a chair. 139 00:15:22.060 --> 00:15:28.680 That's a ubiquitous sort of thing, wherever people are, you would certainly want one as a customer, 140 00:15:28.680 --> 00:15:35.140 you'd want to be able to sit down, but as say, a man in business or as any kind of worker 141 00:15:35.140 --> 00:15:39.520 in any kind of a job, you'd like to be able to sit down too. 142 00:15:39.520 --> 00:15:44.360 could be an item of production, and it could be an item of customer demand. 143 00:15:44.360 --> 00:15:47.840 So it could be moved either way. 144 00:15:47.840 --> 00:15:50.280 This would be true, too, of a number of buildings. 145 00:15:50.280 --> 00:15:55.320 You could have a building that people could live in, and as such, it's a customer item. 146 00:15:55.320 --> 00:16:00.920 But if a lot of people could live in it, more than, say, just one family or one unit, whatever 147 00:16:00.920 --> 00:16:08.000 that might be, then probably we would think of it as a production item, as an entrepreneurial 148 00:16:08.000 --> 00:16:13.500 tools such as a major apartment house or a hotel. We would think of that as a tool. 149 00:16:13.500 --> 00:16:19.920 You and your mate would probably not like to live just by yourselves in, say, a five 150 00:16:19.920 --> 00:16:24.620 hundred room hotel. It would be sort of meaningless. You'd rather have a house. So we think of 151 00:16:24.620 --> 00:16:31.320 a house as an item of consumer goods, but a hotel as an item of producer goods. That 152 00:16:31.320 --> 00:16:37.580 is, it's entrepreneurial. It's the kind of thing that men want to have when they're engaged 153 00:16:37.580 --> 00:16:42.380 in Business Activities or Industrial Activities, but not the kind of thing that they would 154 00:16:42.380 --> 00:16:48.100 want for themselves personally. Now if you happen to have a piece of paper and put these 155 00:16:48.100 --> 00:16:54.860 two columns down, label one at the top entrepreneurial goods or capital goods and the other one at 156 00:16:54.860 --> 00:17:02.340 the top customer goods, then you'll see as you extend these columns down and write down 157 00:17:02.340 --> 00:17:07.220 various items that you can think about and then classify them in one column or the other 158 00:17:07.220 --> 00:17:26.060 A man looking about him in the society he lives in begins to think that there is a particular 159 00:17:26.060 --> 00:17:30.840 good or service that people would like and that he can figure out how to provide. 160 00:17:30.840 --> 00:17:35.540 He has special knowledge, perhaps, or he has taken note of some particular requirement 161 00:17:35.540 --> 00:17:36.900 that people have. 162 00:17:36.900 --> 00:17:43.020 So he goes to work to produce a product. Let me just call it a widget. I'll use that term. 163 00:17:43.020 --> 00:17:47.340 It simply means a handy-dandy household item that everybody would like to have because 164 00:17:47.340 --> 00:17:51.560 it's so convenient, whatever it may mean. So here is a man who discovers that people 165 00:17:51.560 --> 00:17:56.940 would like to have widgets. At least he thinks they would. So he proceeds to make them. Now 166 00:17:56.940 --> 00:18:02.280 take a look at your entrepreneurial column. Put down widget. Okay. Widgets are being made 167 00:18:02.280 --> 00:18:07.560 by an Entrepreneur. Now when he gets some of them made, he takes them over to the column 168 00:18:07.560 --> 00:18:13.240 where the customers are, and he offers them for sale. He says, how about buying my widget? 169 00:18:13.240 --> 00:18:17.760 Well, the customer says, what in the world is a widget? How does it work? And it's demonstrated. 170 00:18:17.760 --> 00:18:21.200 And the customer says, gee, I'd like to have one of those. Fine, says the fellow who has 171 00:18:21.200 --> 00:18:26.600 made them, that'll be $10. And the customer says, what in the world is $10? Never heard 172 00:18:26.600 --> 00:18:31.960 of it before. Well, says the entrepreneur, I'll tell you what you do, since you don't 173 00:18:31.960 --> 00:18:38.040 I don't have money. Let's work it this way. You come on back to where I produce widgets, 174 00:18:38.040 --> 00:18:43.980 and you can go to work helping me make widgets, and I will pay you $100 a week. And it only 175 00:18:43.980 --> 00:18:51.160 costs $10 to buy a widget. So after you've worked with me for a week, or as long as you 176 00:18:51.160 --> 00:18:58.120 like, you could afford quite a number of widgets. So you come over and give me your services, 177 00:18:58.120 --> 00:19:04.680 and I will pay you in money and then you can buy widgets and wadgets and blidgets and blodgets and 178 00:19:04.680 --> 00:19:09.480 gidgets and gadgets and whatever else is available because you'll have the money not only to buy what 179 00:19:09.480 --> 00:19:16.360 we make but what everybody else is making as well. So that's what happens. The goods are taken from 180 00:19:16.360 --> 00:19:22.440 the entrepreneurial point of origin and moved over to where there may be a demand and then the 181 00:19:22.440 --> 00:19:27.680 The person wanting and making the demand has to have a tangible demand. That is, he has 182 00:19:27.680 --> 00:19:33.040 to be able to command an exchange by virtue of the fact that he too has something that 183 00:19:33.040 --> 00:19:38.280 the fellow wanting to sell the widget wants. In this case, the fellow wanting to sell the 184 00:19:38.280 --> 00:19:44.200 widget wants money, but the customer doesn't have the money, but he does have service. 185 00:19:44.200 --> 00:19:51.240 He has energy and time. So now the widget maker hires him in order to provide the service. 186 00:19:51.240 --> 00:19:58.560 He pays him with money, now the money flows from the point of origin over into the customer 187 00:19:58.560 --> 00:20:04.240 area and the man having the money now spends some of it to buy a widget and the money flows 188 00:20:04.240 --> 00:20:05.240 back. 189 00:20:05.240 --> 00:20:11.460 So if you followed me here, what you will see is goods moving from the entrepreneurial 190 00:20:11.460 --> 00:20:16.640 column into the customer column, services moving from the customer column into the entrepreneurial 191 00:20:16.640 --> 00:20:22.640 and Money Moving from One Column into the Other and Back. 192 00:20:22.640 --> 00:20:24.640 And that is the way it works. 193 00:20:24.640 --> 00:20:28.640 In other words, there is a mutual exchange of goods and services 194 00:20:28.640 --> 00:20:32.640 facilitated by a mutual exchange of money. 195 00:20:32.640 --> 00:20:38.640 And if you have a free market and there are no inhibitors installed 196 00:20:38.640 --> 00:20:40.640 to prevent this free exchange, 197 00:20:40.640 --> 00:20:43.640 then you will tend to have a maximization of both columns. 198 00:20:43.640 --> 00:20:56.640 More and more goods will be produced because more and more persons will be willing to exchange their time and energies for the money that it takes to buy the goods and the services once they're provided. 199 00:20:56.640 --> 00:21:05.640 And so you tend to maximize human well-being by taking off the restraints and letting people go ahead and produce and buy what they will anywhere in the world. 200 00:21:05.640 --> 00:21:09.640 Now that would be the ideal. That would be the maximization. 201 00:21:09.640 --> 00:21:14.840 Unfortunately, however, there is this third column of wealth that I mentioned. This is 202 00:21:14.840 --> 00:21:21.360 the political column, the political area, where we have a special type of wealth. Now, 203 00:21:21.360 --> 00:21:27.440 this particular type of wealth is not entrepreneurial and it is not customer. It's the type of 204 00:21:27.440 --> 00:21:37.080 wealth that people want when they are engaged in their role as a politician. Now, a political 205 00:21:37.080 --> 00:21:43.720 Political Activity is a very interesting one because it is a consumptive activity. 206 00:21:43.720 --> 00:21:54.120 The politician is engaged in the uses of power and his function is to exert power, to regulate, 207 00:21:54.120 --> 00:22:00.720 inhibit and control others. So he needs certain types of equipment and things to do that. 208 00:22:00.720 --> 00:22:11.760 A typical type of political good would be, say, an M1 tank, or an atom bomb, or some 209 00:22:11.760 --> 00:22:20.640 other item of military hardware by means of which he could intimidate or kill anyone who 210 00:22:20.640 --> 00:22:27.360 disagreed with him. Now, that way he is able to obtain greater and greater power, and the 211 00:22:27.360 --> 00:22:31.920 The more power he has, well then the better off for him as a politician. 212 00:22:31.920 --> 00:22:38.480 So this is the kind of good that will tend to accumulate in the political column. 213 00:22:38.480 --> 00:22:46.880 It would be the human inhibitors, the various tools and items of equipment by means of which 214 00:22:46.880 --> 00:22:54.800 one man's will can be invoked and then overimposed upon the wills of others. 215 00:22:54.800 --> 00:23:00.280 Thus in the political column you would find such items as a pentagon building and tanks 216 00:23:00.280 --> 00:23:09.280 and atomic powered submarines and dive bombers and fighter bombers and all kinds of ballistic 217 00:23:09.280 --> 00:23:13.640 missiles and warheads of a thousand varieties and so on. 218 00:23:13.640 --> 00:23:18.800 Now these are things obviously that customers don't want and note the difference between 219 00:23:18.800 --> 00:23:23.720 an item of political good and an item of entrepreneurial good. You see, the customer wouldn't want 220 00:23:23.720 --> 00:23:27.400 Money, the One. There isn't any customer that would like to have his very own little 221 00:23:27.400 --> 00:23:34.040 blast furnace in his backyard. Equally, a customer wouldn't want his very own M1 tank 222 00:23:34.040 --> 00:23:40.520 parked in his basement. He doesn't want that. It's not a convenient item to bring him satisfaction. 223 00:23:40.520 --> 00:23:45.500 But the difference between the blast furnace and the tank now must be seen. If you have 224 00:23:45.500 --> 00:23:52.720 a blast furnace, you can produce items made of steel that customers want. But if you have 225 00:23:52.720 --> 00:23:59.000 have a tank, you produce death, and customers don't want that. So in point of fact what 226 00:23:59.000 --> 00:24:05.480 you have here is an item, I'm speaking now of the political, the items in the political 227 00:24:05.480 --> 00:24:12.480 column, you have items of production which are not wanted by producers because they don't 228 00:24:12.480 --> 00:24:18.960 produce anything excepting unwanted conditions, that is they produce death and destruction. 229 00:24:18.960 --> 00:24:22.960 And that isn't what you and I want as customers. We don't want that. 230 00:24:22.960 --> 00:24:28.760 So we have death and destruction producers in this area. They don't produce satisfactions 231 00:24:28.760 --> 00:24:33.880 for customers. They produce dissatisfactions, but at the same time they are non-productive. 232 00:24:33.880 --> 00:24:37.740 They don't produce goods and services, and they don't satisfy customers. Now, when you 233 00:24:37.740 --> 00:24:42.440 have entrepreneurial goods, that doesn't satisfy customers, but it does produce goods and services 234 00:24:42.440 --> 00:24:47.660 that will satisfy customers. In the end, the purpose of the market is to satisfy customers. 235 00:24:47.660 --> 00:24:54.460 So here you have a column of wealth that is dysfunctional and destructive. In fact, the 236 00:24:54.460 --> 00:25:01.460 better it is, the bigger it is, the more of our wealth that drifts into this column, the 237 00:25:01.460 --> 00:25:06.420 less we'll have in the other columns. Now here's an interesting thing. Where does it 238 00:25:06.420 --> 00:25:13.180 come from? Well, the items in the political column are also produced in the entrepreneurial 239 00:25:13.180 --> 00:25:21.140 Entreprenuers make customer goods, and they make political goods, and they even make their 240 00:25:21.140 --> 00:25:27.260 own entrepreneurial goods, because all production occurs in the entrepreneurial column. But 241 00:25:27.260 --> 00:25:33.300 there is a profound difference as to the effect that this has on the market when entrepreneurial 242 00:25:33.300 --> 00:25:40.620 goods are stockpiled. You see, to begin with, the businessman, the entrepreneur, can't 243 00:25:40.620 --> 00:25:48.420 really tell the difference between an ordinary customer, you and me, and a politician, because 244 00:25:48.420 --> 00:25:55.840 both are making demands upon him. If anything, the businessman tends to favor the politician 245 00:25:55.840 --> 00:26:03.320 because he's a better customer. He's got more money, and he can afford to buy just 246 00:26:03.320 --> 00:26:08.900 a whale of a lot more things than you and I individually as customers. So, you see, 247 00:26:08.900 --> 00:26:14.400 A businessman, if he could line up with maybe two or three politicians, well, he doesn't 248 00:26:14.400 --> 00:26:18.960 have to really worry about an awful lot of other customers. He's got two or three really 249 00:26:18.960 --> 00:26:25.700 big order men in the bag, so to speak, and so he tends to cater to their wants. But here's 250 00:26:25.700 --> 00:26:32.100 what happens. As he begins to provide the goods and services that the politician wants, 251 00:26:32.100 --> 00:26:38.100 then he has to turn off the amount of goods and services that he otherwise could have 252 00:26:38.100 --> 00:26:44.980 provided for customers. And over a period of time, the customers get less and less in 253 00:26:44.980 --> 00:26:50.140 the way of satisfactions, and the politician gets more and more. 254 00:26:50.140 --> 00:26:58.740 Now, this is readily seen in countries other than ours. Ours is an extremely wealthy country, 255 00:26:58.740 --> 00:27:03.740 and the consequence is that this peculiar phenomenon is not as readily grasped here 256 00:27:03.740 --> 00:27:09.420 as it is in other places. In most places, you'll hear it said constantly that there's 257 00:27:09.420 --> 00:27:15.300 a big argument between guns and butter. In other words, that's a way of saying, will 258 00:27:15.300 --> 00:27:21.920 the marketplace produce satisfaction for customers, called butter, or will it produce satisfactions 259 00:27:21.920 --> 00:27:28.620 for politicians, called guns? In this country, we seem to have the ability to produce an 260 00:27:28.620 --> 00:27:35.040 in abundance of both. And so people think, well, we can do both. But in point of fact, 261 00:27:35.040 --> 00:27:40.040 every time we produce something for the political column, that means that there is something 262 00:27:40.040 --> 00:27:46.040 that is not being produced for the customer column. And what it really boils down to, 263 00:27:46.040 --> 00:27:52.860 and the way we discover it here, is that there is an increased price in the customer column, 264 00:27:52.860 --> 00:28:00.040 And we think that that's what it is, but the increased price in part comes from a scarcity 265 00:28:00.040 --> 00:28:05.100 of customer goods that otherwise could be present. It's an extremely important point 266 00:28:05.100 --> 00:28:07.100 to keep in mind. Thanks very much.