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In every economy, there are those who contribute and those who do not. While some who do not contribute cannot contribute, there are others who can. These people, the ones who can contribute, but don’t, are economic parasites.
To explain why requires a dive into some economics.
Parable of the Agricultural Revolution
What is the ultimate capital? According to the “Father of Capitalism,” Adam Smith, it is productive labor.
I agree with his opinion, and this is why.
Assume, for the sake of argument, that you were magically transported back in time to 10,000 years ago, just before agriculture was first used. Everyone around you would be a hunter gatherer. In essence, there is no economy at all, and the people around you would just be working to survive, spending all of their time worrying about their next meal.
You, of course, would know that there was a better way.
So, when you go out to gather food, you look for something you recognize, and you find some random wheat. You gather it, but you spend some extra time gathering more than you need, and you dry the food you don’t eat. You do this, day in and day out, until spring arrives and you have the seeds you need to plant.
So you plant them, water them, etc., in your spare time until you have grown the first food through agriculture.
Congratulations! It turns out that the agricultural revolution happened because of you.
But there is something more important here: you have the food you need for the next year. In a sense, you are richer than everyone else because you have food, and they do not.
But you only have one kind of food. You would like a variety, so you trade some of your excess wheat for food of a different sort, something else that someone else has gathered. Everything is good.
Let’s step back for a minute and think about what happened.
First, you had nothing. You spent some labor by working in your spare time, and you suddenly had something of value: food. The food was always there, but it multiplied under your hand because of your labor.
Labor is the only capital I know of that can help someone with nothing get something.
Parable of the Shovel
Okay, now for a more modern example, let’s say that you had fallen on poor times and ended up on the street with nothing but $20 in your pocket. You know you need food soon, but you also know that if you just spend your last $20 on food, you are going to go hungry tomorrow instead.
So you go into the nearest Home Depot and buy a shovel. Then you stand outside asking everyone if they need something dug by hand. By some miracle, someone does, and he promises a measly $5 per hour to do it. You accept; what other choice do you have?
After purchasing what he needed, he takes you to the site, and you realize that he needs a long ditch dug in cramped quarters. Fair enough; that’s why it has to be dug by hand.
And you do it. It takes you four hours, so at the end of it, you have $20. And you can buy dinner, so you do, being careful to spend less than you have. Might as well start saving, if possible.
Now, you started with $20, but you magically ended up with another $20. Where did that extra $20 come from? Your labor.
That wasn’t the only ditch your employer needed you for either. He tells you to come back tomorrow for. And you do. And you make more money. And you save more.
This continues for several months, and you manage to save enough to buy a small tractor with a small backhoe. You can now do more jobs, and more people want you to dig for them. And you save more money.
This keeps going until one day, you have some of the largest backhoes in the world, you have a gravel pit, and you realize that you are a successful business man.
All of it was made possible through your labor.
Productive Labor Creates Wealth
Both of these “parables” illustrate the same principle: that productive labor creates wealth.
This can be done in many ways:
- Labor can gather resources, such as mining.
- Labor can take something worthless and make it worth something, such as carving unshaped wood into a chair.
- Labor can grow food, such as farming or herding cattle.
- Labor can move something worthless where it is worth something, such as shipping.
- Labor can create new inventions that will be worth something.
- Labor can enable others to labor more productively, like providing a service.
There is much more.
And since productive labor can create wealth, labor grows an economy. Back 10,000 years ago, there was no economy, but you spontaneously created one by doing some productive labor. You made the economy grow, through labor.
Unproductive Labor Destroys Wealth
There is a flip side to that coin however: unproductive labor destroys wealth.
This can be done in many ways:
- Destroying an object of value, like a window.
- Stealing wealth from others who have created it through their labor.
- Causing others to spend wealth on security to prevent any of the above.
- Spending money for that which does not serve a purpose.
- Spending extra money for a fancier item than a more plain version that would serve the purpose.
There are many more ways.
Now, when wealth is destroyed, the economy actually shrinks. This is because when the result of someone else’s labor is destroyed, it is as though it was never made (except for the value it gave while it existed). This is obviously bad, and as we’ll see later, it is bad for everyone, including the person who destroyed the wealth (if any).
But the important thing to remember is that when wealth is destroyed, the economy shrinks.
However, it is sometimes hard to tell when wealth is destroyed or not.
I’ll give an example: are the YouTubers on Hermitcraft creating wealth or destroying it?
Some are creating it.
I, for one, used to watch and listen to some of their videos while working, and they help me to keep working on something that does not keep my interest, but is still productive labor. Because Hermitcraft makes productive labor easier, it is productive labor itself.
This is especially true for the hermit called GoodTimesWithScar, who is disabled and still has found a way to contribute. He is awesome! Not only that, but his artwork (yes, it is art) in Minecraft is just breathtaking!
The general rule is that, if some labor makes productive labor easier, it is also productive labor, so long as it does not make more productive labor necessary.
Economic parasites are those who destroy wealth instead of create it. It’s that simple.
They are the ones that lie to customers to squeeze more money out of them. They are the ones who do not work when they can. They are the ones that steal from others.
Why would they do that?
Well, besides the ones who destroy wealth by, for example, stealing out of desperation because they are hungry, the only reasons people would destroy wealth are character flaws, plain and simple. Either they are lazy, or they are greedy.
That is the only way I can explain it because the end result ends up hurting them too.
When the economy shrinks, everybody is hurt because there is less wealth, and less wealth means less things of value for everyone.
There really isn’t any other conclusion other than “don’t be an economic parasite.” Be productive. Create wealth. The more you have, the more you can share with others, by charity, or by giving your wealth for something in return.