What Creates Wealth? | 5 Minute Video
Why are some countries rich and some countries poor? Is it access to natural resources? Is it tax policy? A motivated work force? These are important, but not determinative. The answer is deceptively simple – it’s what’s in our heads: knowledge. Thus, the surest way to promote economic growth is to cultivate an environment that encourages the spread of knowledge. Such an environment requires freedom, which is why the freest societies are the most prosperous. In five minutes, economist George Gilder explains why.
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Script:
Let me begin with what sounds like a very simple question: What is the most essential ingredient in wealth creation and economic growth? Almost everyone would answer: Money. Or having a lot of natural resources. But the real answer is . . . knowledge. It’s easy to prove. What is the difference between us and a cave man? The only difference is that we know a lot more. Biologically we’re the same. The neurons in our brains are the same. The physical world is the same. But our lives are infinitely better. Why? Because of knowledge.
You don’t have to go back to the cave man to prove this point. You could go back fifty years. New knowledge , say the discovery of penicillin or new algorithms that leads to a better search engines — always comes as a surprise. We call these surprises innovation because they are inherently unpredictable. New products burst on the scene seemingly out of nowhere. Suddenly, there’s electric light or an automobile or an iPhone. Now, of course, these products didn’t come from nowhere; they came from the synthesis of accumulated knowledge which led to these innovations, these surprises. By definition, then, innovation can’t be planned, it involves dislocation. The makers of buggy whips did not have a great future when Henry Ford introduced the first Model T and it always points to the future. Innovation — new knowledge — leads to not only new products but new companies, and whole new industries. And innovation creates wealth; wealth that is ultimately distributed all through an economy.
Here’s how it works. More freedom, more knowledge, more innovation. And more innovation leads to dynamic economic growth. Less freedom, less knowledge, less innovation, — less economic growth. So, if freedom promotes knowledge and innovation, which leads to economic growth, why don’t all people and governments embrace it? To understand that we have to return to what I said earlier about innovation being a surprise, being unpredictable. This unpredictability makes many people uncomfortable. Their goal is to eliminate surprise. One finds this is in all utopian visions from communism to socialism to the belief that through complex insurance packages bankers could protect themselves from a catastrophic mortgage meltdown. In Europe with its failing welfare states and more and more in the U.S., we see this desire to eliminate surprise in the ever expanding role played by government, bigger bureaucracies, more rules, more regulations. Every new crisis, real or imagined, brings ever more laws. A corrupt energy conglomerate, Enron, implodes in 2001. A year later the Sarbanes-Oxley Act is passed, adding thousands of new pages of regulations to the federal registry. In 2011, the 2,300-page Dodd-Frank Act is written in response to the 2008 financial crises. It has since grown to more than 8,000 pages.
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The Japanese don’t have a world class auto industry because of Adam Smith’s “invisible hand“ but because of the very visible hand of government officials and businessmen who created it with government money. The government did the research, engineering, designing and executing and it blocked foreign cars from the Japanese market until the industry has matured.
Government can play a huge role in developing industries and technologies.
Si lees este comentario, tus padres morirán dentro de los próximos 5 años. Para deshacerse de esta bronca, tienes que copiarlo y pegarlo en otros cinco videos
Soy una víctima, lo siento 💀
Labor with a driven path does this actually, the advancement of freedom allows more people to have a voice in the subject when they can access books written by labor, exercise rights maintained by the use of coercive force of laborers, and the uplifting of governments or businesses by their own piloting of laborers. Labor begets labor which begets all of these things, which can be in the form of physical labor or mental labor, both of which being instrumental to our collective progress. Economic growth comes from a continuity of labor by using raw materials to be made into a product or commodity by laborers, whether it be through democratic or coercive means in guiding it.
No offence asshole , but INDIA 🇮🇳 owns the Kashmir. Put the map again. Praise to Every Country in the world 🌍 & yeah Prosperity Everywhere ✨.
Correct, but to accomplish this the fed gov needs to get back to a rational interpretation of the Constitution, and be dramatically reduced in size and scope.
Productivity creates wealth. Diversity wastes wealth. Taxation steals wealth.
Socialism is not sociable just because they have the same root word. It is Marxism and all Marxism is slavery to elitist dictators.
What creates wealth
Labor creates wealth for the 1percent.
How are humans going avoid being made surplus to requirement by automation?
A discovery and use of petroleum created vast amount of wealth for limited number of people.It also created a vast amount of pollution it is suffocating our planet it is causing illnesses. What is more important the profits of a few or the health many?
"Physical world is the same" No, we have less oil than 3000 years ago, and ecological catastrophe is starting
Exporting,saving your money into saving accounts letting it grow interest,CD accounts saving pennies dimes nickels quarters half dollars and dollar coins, and hoard gold and silver
Specialization of labor is how wealth is created in the aggregate. Nothing else.
Thank you
sooooo much nonesense in just 5 minutes
Cool idea.
Every High School senior needs to learn this lesson.
Knowledge is all. Without it we're doomed and lost. So we are.
Any Society needs “Healthy” knowledge!!
There are many psychopaths with knowledge that create wealth in a “wrong” direction and not for the People (Society)!!
It's not just knowledge it is also having MANY MORE PEOPLE capable of putting that knowledge into effect. Population increases have had a great part in expanding knowledge AND in the ability to exploit that knowledge.
to me knowledge is too broad, i would say focus knowledge, that is expertise in something creates wealth
Should have included accumulated infrastructure
I'd say productivity is more important than knowledge for wealth creation. Knowledge that is purely theoretical and doesn't lead to an increase in productivity is of no use. This can be seen on an individual level: a person with a degree in something like Gender Studies has a lot of knowledge but that knowledge does not help them be productive at their job so they can't build personal wealth. The same is true at a societal level: there is a lot of knowledge to be learned about the world but much of it is theoretical in nature and doesn't help us produce more goods
Not Venezuela lol
You used the wrong map of India. It pisses me off. But still good video nonetheless
I would have answered productivity. After all knowledge itself is gained through the search to increase productivity. To make a nation more wealthy, you need only find out how to make each person more productive.
https://youtu.be/8bNI2PoOT1A
It’s no knowledge, it’s trust. Trust gives team work, and teamwork productivity and then comes wealth. Where comes trust? It comes from moral wealth. Moral crisis gives economic crisis. If you want to understand basic concepts you have to reduce it to the simplest concept; the individual concept. Who gives moral wealth? Only Jesus.