How Important Is the Concentration of Wealth?

     Savings and investment are essential for the increased
productivity that yields an increased standard of living.  To
increase productivity someone must devote his present efforts to
making tools and facilities that will allow workers to be more
productive in the future.

     The saver has to be one who produces more than he
needed for survival.  The person who can produce only enough
to survive can't save and invest, no matter how much he might
want to.  He would perish if he tried to save.

     For various reasons, some are more productive than
others.  Those who can produce more than enough to survive
have the capacity to save and invest.  By saving and investing in
tools and equipment these investors increase their productivity.

     They can also allow others to use the savings to increase
their productivity.  A successful saver may be able to provide
more tools than he can use himself.  He can let others use those
tools to increase their productivity.  He is likely to require the
beneficiaries of the tools to give a share of the increased
production to the investor.  This is certainly reasonable.  The
user of the tools gained from the productivity and thrift of the
investor.

     He who saves and invests thus can increase his savings
and investment.  In turn he can provide even more tools for
himself and others to use.  There is no natural limit on how long
or how much the productive savings and investment can continue
to grow.

     The users of the tools increase their productivity thus
gaining the ability to become savers too, if they want to.  The
faster savings and investment grow, the faster prosperity grows.

     Those productive enough to save and invest don't have to
save and invest.  They can simply use their increased
productivity to increase their immediate consumption.  If
everyone quits saving and investing, society will use up its
productive tools rather than producing more.  Inevitably,
productivity and the standard of living will collapse.

     With no investment, tools will wear out and disappear. 
Everyone will be back to eking out subsistence with his bare
hands.

     Suppose that those first savers had chosen to be
philanthropists rather than saver-investors.  They gave away their
wealth so that everyone had an equal share.  It is obvious that
some people are inclined to save while others are inclined to
spend as much as they can.  It is also obvious that a person
living on the edge of survival will be most likely to spend new
found wealth on increased consumption, rather than to save and
invest.

     Thus, equal distribution of potential savings will
inevitably decrease, or even eliminate savings.  It is undeniable
that for a time the recipients of the lost savings could live better. 
The cost of the lost savings will be paid in the future. 
Productivity and the standard of living will either not increase at
all, or will increase very slowly.  Everyone will remain poorer
than if the potential savers had saved and invested.

     Accumulation of wealth by those who will save and
invest is essential to the future prosperity and well being of
everyone.  The poor who have little to invest benefit more from
the increased savings of the wealthy than do the wealthy who
already are well off.

     A very productive person who spends, or gives away,
everything and saves nothing contributes nothing to increasing
productivity.  He is of no more value to future prosperity than
the poor person who doesn't save because he has nothing to
save.  There are good reasons for looking on wasteful
spendthrifts with disfavor.

     We should not look with disfavor upon those who earn
and invest millions, or billions, of dollars.  They drive the
increase in prosperity that benefits everyone.  Eliminate
accumulations of savings and investment and we will all be
headed back to a very dark age.

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Copyright 2013
Albert D. McCallum