How an Economy Grows and Why It Crashes

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S H A R I N G   T H E   W E A L T H
W
ealth is always a relative term. In a primitive 
society where little is produced, even the richest 
can’t match the material well-being available to the poor 
of an industrialized economy. In the Middle Ages, even 
the mightiest kings lacked the basic amenities that nearly 
everyone in the United States now takes for granted…
things like central heating, indoor plumbing, and fresh 
vegetables in the winter. And although Baker and Charlie 
would imagine that a two-fi sh-per-day diet was the height 
of luxury, from our perspective such a lifestyle hardly 
seems enviable.
But the fact that there are degrees of wealth has always 
struck some as being inherently unfair. Central in this un-
ease is the belief that the rich become that way because they 
take wealth from others, thereby creating the poor. In mod-
ern economics, some have even labeled this idea “the labor 
theory of value,” which states that profi t is created by paying 
workers less than they are worth. In this view, entrepreneurs, 
like Able or giant corporations for that matter, can get rich 
only if they succeed in making others poor. 
This idea has everything to do with moral posturing, and 
nothing to do with reality. The reason that the rich get that 
way (at least initially) is that they offer something of value to 
others. Able offers loans to those who have inadequate sav-
ings. If he profi ts, it’s only because the service he provides is 
valuable to others.