Wealth
Wealth is accumulated property. Individual net wealth is the property that an individual owns minus any debts that they owe. National wealth is the sum of the net wealth of all citizens and organizations.
Creating wealth is about finding ways to do more with less.
"Make-work" jobs destroy wealth
Creating inefficiencies to “create jobs” destroys wealth and ultimately destroys jobs.
You can create jobs by paying people to dig holes and fill them back in again, but when you finish digging the holes, you have nothing to show for the effort (no job and no asset), and a whole lot of wealth has been consumed in the meantime.
The only jobs that create wealth are the ones that satisfy a demand. The objective of employment is not to provide work but to provide products or services that people want and can afford.
Money supply and wealth
Money is not wealth. Money is a medium of exchange and a yardstick for valuation.
Monetary expansion (inflation) does not increase wealth. In the short term, it transfers wealth from most people and organizations to the beneficiaries of monetary expansion (government, big corporations, and their clients). In the long-term, it destroys wealth, through its inhibition and distortion of the market.
Mercantilism and protectionism
If money is not wealth, neither does it make us richer to try to bring as much money into the country and prevent as much of it from leaving. We all benefit from each country's comparative advantages through trade. We must buy other countries' products in order for them to have the money to buy our products, and vice versa. Barriers to trade impoverish us all.
Persistent trade imbalances are evidence of government intervention to prevent trade from achieving the natural, beneficial balance that must inevitably be restored. Such intervention is both harmful and pointless in the long-run.
Human wealth
There are many things in human experience that contribute to the quality of our existence, beyond those things that can be bought and sold. Like all experience and human valuation, they are psychological, subjective, mutable. Policy has no place in the purely personal.
The personal only becomes social when the individual experience involves others. Parties to an experience may agree voluntarily on their contributions, formally through markets or informally through friendship. Government has neither the right, nor better information, to justify intervention in voluntary cooperation, to try to improve the arrangements to increase the satisfaction of the participants.
Thus, despite the wide range of human wealth beyond economic wealth, human wealth is irrelevant to policy (other than as something that should not be diminished through intervention). Policy should only concern itself with that narrow band of human experience in which one person's act affects another materially and involuntarily.
Natural wealth
Something similar can be said for natural wealth. There is a difference between a natural resource in the ground, and a natural resource within someone's property, for which there is a demand that can be met economically. Only the latter can be considered as part of our wealth, and only where intervention is required to ensure that the extraction of this resource respects our property rights is this a matter for policy. This subset of natural wealth is also a subset of property, and needs no separate consideration from the broader consideration of property rights.
Creating the conditions for the creation of wealth
Our institutional framework for the protection of property rights is vital to the creation and preservation of wealth, but is not a part of wealth. We cannot regard the rule of law as the property of anyone or anything, and yet it is vital to our prosperity. The value of the important things provided by government cannot be measured by cost-benefit analysis. Governments should concern themselves not with the direct creation of wealth, but with the indirect creation of the conditions that enable people to create wealth. Wealth is created, not by someone at the top of the hierarchy deciding what is best for everyone below them, but by freeing everyone to pursue their own objectives within the constraint of respect for others.
Wealth as factor of wealth-creation
Individual and national wealth are important factors in the creation of more wealth. Wealth provides the security that allows people to take the risks necessary for innovation and economic progress. Wealth provides the resources (capital) to invest in new processes that create more wealth.
It is true that it is easier to create wealth if you have wealth. But it does not follow from this, as the Marxist fallacy would have it, that inevitably the rich get richer and the poor are left behind. Many a spoilt, rich kid has demonstrated that a fool can lose their wealth to others as easily as a wise man can increase his wealth. And without the wealth of others, from where would the impoverished entrepreneur borrow the money that enabled him to satisfy his customer's wants, and increase his personal and the national wealth?
Appropriation and redistribution of wealth is the surest way to destroy wealth. It is as much in the interests of the poor as the rich to protect wealth, to provide the conditions for the further creation of wealth.
Wealth as incentive
One of the most powerful motivating forces is the human desire to improve the quality of life and security of oneself and one's loved ones. If the proceeds of one's efforts and skills could not be translated into wealth held securely without fear of appropriation, one of the main motivating forces to the expenditure of that effort and skill would be lost. It may seem unfair that people can enjoy an advantage in life, unrelated to their abilities, through inheritance or bequest, but the consequence of trying to eliminate this advantage is to eliminate one of the main motivating factors for our wealth-creators. Not only their beneficiaries, but everyone would suffer from the dilution of the incentive to create and preserve wealth.
