Friday, 11 October 2013

THE WEALTH OF NATIONS REMAINS RELEVANT


Telephone banking, debit cards, PayPal: these forms of monetary transactions have been around for only a decade or so. Yet the underlying time-honoured principles of economics continue to work in the same way. Somebody pays with part of the reward for their labour for a product or service provided by someone else. That person is in turn paid for their work.

A book called The Wealth of Nations was written by a man named Adam Smith in 1773. It described the way commerce worked and how the balance of wealth benefited a nation's people. Smith also demonstrated through his examples how capitalism is the most efficient system for raising the masses out of poverty.

Beginning from primitive people bartering what they had in excess for what they lacked, Smith showed how humanity became progressively specialized. Folks used to have to make everything they owned, including tools. Eventually, those who were better at one craft focused exclusively on that and traded their wares for the goods of other specialized craftspeople. Today, folks have become so specialized that they would be hard pressed to harvest a crop without machinery or build themselves a house, let alone making every implement they needed by hand.

I see this fact plainly in my own life. I write fairly well and I'm becoming skilled in storytelling. But don't ask me to repair a car, fly a plane, or remove a brain tumor. I can bang nails into boards but I'm no carpenter. Likewise, the best I can do in regard to being an electrician is attaching ready-made plugs to electrical cords.

Additionally, Smith noted the power of self interest. People won't work for no reward but they'll give their best when the incentive to do so is held out to them. Whether it's volunteers at a charity or a rock star on stage, the passion of their activities drives them to continue on in spite of difficulties. Negative incentive also keeps employees labouring, though they might feel like they're only "working for the man." Even so, positive incentives such as fulfillment, fame, and royalty payments are more likely to produce good results than negative pressure.

Two-hundred-and-forty years have passed since the publication of The Wealth of Nations, yet Smith's observations continue to ring true. Socialism promises great things but it operates through confiscating wealth from its producers and giving to those who crave it. In fact higher taxation and regulation of industries dampens their output. This is why free enterprise and governments favourable to it tend to encourage economic growth whereas socialism stifles it.

Having self-published three books and sold many freelance articles, I know first hand about economic incentive. When a Man Loves a Rabbit: Learning and Living With bunnies sold relatively well since I knew people who loved their house rabbits. Deliverance from Jericho: Six Years in a Blind School sold poorly because most of the enquiries regarding it were from blind folks who couldn't read the paperback. I learned from that experience that knowing one's readership is crucial to increased sales. Details on these books are available through the links on the right hand side of this page.

How I Was Razed: A Journey from Cultism to Christianity, my most recent book, is available from Amazon, Barnes & Noble, or Virtual Bookworm Publishers.