Financial Setbacks

The Daily Reckoning discusses Financial Setbacks:

The period 1980-2007 has seen more economic growth than any other period ever. More cars, more televisions, more highways, more hotels, more concrete, more Internet connections…just about more of everything was produced than in any similar 27-year period in history. In other terms, more money was invested and earned than ever before. And more people added more to their wealth than ever too.

The condition precedent for this explosion of wealth was that the world turned away from political change…towards market change. To the largest nation in the world, Deng Tsou Ping announced, 'to get rich was glorious.' All of a sudden, a billion people were bussing, humping, and schlepping - not to build a proletariat paradise, but to make money. To the north, the Soviet Union was never defeated…it simply fell apart, crushed by the weight of its own central planning. By the end of the '80s, it too pronounced itself in favor of making money. And by the early 2000s, Moscow was the most expensive city in the world…with so many millionaires its politicians couldn't shake them down fast enough.

Meanwhile, in Britain and America there were soft revolutions too. Maggie Thatcher and Ronald Reagan ushered in a new era where money and market solutions were said to be the cure for almost every problem. Regulations were eased or scrapped altogether. Marginal tax rates were cut. The 'spirit of enterprise,' as Reagan quoted writer George Gilder, would make us all rich. Those who could innovate would create new wealth. Those whom the spirit of enterprise did not touch directly could buy mutual funds. The market was the source of wealth. All you had to do was to be 'in the market' and you would get rich.

And yet we are on the descent into an economic depression. We have forgotten that wealth is created through human labour, nothing else. This will be a hard lesson to learn. There is no other way to wealth.