#9 Wealth-creation is righteous
By definition, wealth-creation brings something into the world that didn't exist before. By creating wealth, you grow the pie, rather than take from it. Steve Jobs became a billionaire not by stealing but by creating real value. This contradicts the idea that rich people have a moral obligation to “give back” to society. They didn't take anything from anyone. Rather, the richest people—the ones who create the most value—give the world more abundance and prosperity than anyone else, and get fairly rewarded for it.
Wealth and knowledge
The amount of wealth in the world is not stagnant. It grows as we increase the number of physical transformations we can cause. To cause certain physical transformations, we must discover the knowledge of how to do so. There's a deep connection between wealth and knowledge. The growth of knowledge fuels the growth of wealth. It is impossible to predict the growth of knowledge because if you could predict it, you would have created the knowledge already.
“Wealth grows in magic ways. No man can prophesy the limit of it.”
— George S. Clayson, The Richest Man in Babylon
Clayson is right about the unboundedness of wealth-creation. Since knowledge-creation, a prerequisite for wealth-creation, is inherently unpredictable, no one can prophesy the growth of wealth. Luckily though, there’s nothing mysterious about the growth of wealth. We know that there are certain circumstances under which wealth-creation is unlikely, if not virtually impossible. Authoritarian regimes under which everything is “planned” come to mind—in which there's distribution instead of creation of wealth.
Pessimists have long argued that if we continue on our trajectory, doom is inevitable. Their prophecies cannot possibly take the growth of knowledge into account. But only knowledge will enable us to solve the problems that could lead to our doom. Nevertheless, the pessimists argue for regulation, for coercive intervention. They argue for the very kind of thing that will suppress creativity and the growth of knowledge. The pessimists argue for ways to cause our doom.
An objectively better place
“Who benefited more from the iPhone, a billionaire or me?
I can talk to my kids from all over the world at a cost of nothing.
I have every piece of music ever written in my pocket.
Steve Jobs made this possible for me.
And you tell me the billionaires EXPLOIT us?”— Yaron Brook
Governments distribute wealth, taking it away from where progress is happening fastest and gifting it to where it’s not. Entrepreneurs create wealth. These are the ones who are actually making the world a better place. The average American today is in fact incalculably richer than John D. Rockefeller. 100 years ago, no amount of money could have bought the richest man in the world an iPhone. As Barack Obama said, “If you had to choose a moment in history to be born... you’d choose now.”
Progress and wealth-creation—which has to include the growth of knowledge—let us solve problems that arise inevitably. If we slow down wealth-creation, we may not be able to solve our most pressing problems in time. People create wealth when they are free to respond to problems they find interesting. This is what the world needs to create more wealth and to save itself from doom. Freedom.
In a previous newsletter, Logan Chipkin explains why the growth of wealth is not enough. Knowledge of how to transform the world tells us nothing about which transformations we ought to pursue. For that, we need moral knowledge—knowledge about what to want, and what to strive for. You can read it here.
Critical Finds
Reason Is Fun podcast by Lulie Tanett with David Deutsch. Listen to the latest episode on the “Fun Criterion” here.
How to Get Rich by Naval Ravikant.
GPT-4 Prompt Tries To Generate Fundamentally New Knowledge. We don’t think these outputs represent fundamentally new knowledge, as large language models create these inferences via induction (they interpolate between a dense manifold of training data). But one might argue that the connections they make are novel. The hard to vary explanation prompt is certainly useful for users of ChatGPT and other LLM tools.
Peter Thiel on monopolies in Zero to One
In a static world, a monopolist is just a rent collector [...] But the world we live in is dynamic: it’s possible to invent new and better things. Creative monopolists give customers more choices by adding entirely new categories of abundance to the world.
Also see Brett Hall’s summary of The Beginning of Infinity Ch 15 "The Evolution of Culture”
What We’re Reading
Enlightenment Now by Steven Pinker
Wealth, Poverty and Politics by Thomas Sowell
A quote that stuck out from the book:
“It is by no means obvious why we should prefer trying to equalize incomes to putting our efforts into increasing output. People in general and the poor in particular seem to ‘vote with their feet’ by moving to where there is greater prosperity, rather than where there is greater economic equality. Rising standards of living, especially for those at the bottom economically, have resulted not so much from changing the relative sizes of different slices of the economic pie, as from increasing the size of the pie itself — which has largely been accomplished without requiring heavy rhetoric, fierce emotions, or bloodshed.
Does it not matter if the hungry are fed, if slums are replaced by decent and air-conditioned housing, if infant mortality rates are reduced to less than a tenth of what they were before? Are invidious ‘gaps’ and ‘disparities’ all that matter? In a world where we are all beneficiaries of enormous windfall gains that our forbearers never had, are we to tear the society that created all this apart because some people’s windfall gains are greater or less than some other people’s windfall gains?”
Written by Arjun Khemani.
Edited by Logan Chipkin and
.Image by Gal Barkan.