Wealth is good.

Save it. Invest it. Lend it. Spend it. Donate it.

Wealth is good.

There are those that prefer to demonize the rich and label them the 1%, as if this is a negative connotation. This is pure non-sense. Demonizing the 1% is ignorant.

The by-product of accumulating wealth benefits others because value had to be exchanged for that wealth. Value must be created before it can be exchanged. Thus, accumulating wealth requires the creation of value.

Wealthy people make excellent employer, lenders, investors, benefactors, and customers.

Wealth is always good. In order to accumulate wealth someone had to have first earned it. Earning money is always done by trading money for some good or service at an agreed upon price. This means that both sides of the transaction benefit. Why then do we demonize the wealthy? Mostly because emotion causes failure in logic. Jealousy, envy, and feelings of inadequacy. Many people believe that the wealthy are cold-hearted and not generous enough. But the truth is that it wouldn’t matter if they were. Their being wealthy is a sufficient economic benefit to the rest of us. To the extent that we inhibit their accumulation of wealth we harm that benefit, regardless of what our emotions by lead us to believe.

Those who earn lots of money are inherently providing lots and lots of something to others for that money. They are givers of value as much as they are takers of money.

Heirs to wealth are often demonized for having not earned it. This is true, but someone had to have earned the wealth which they possess. Furthermore, the ability to pass wealth on to your heirs is a motivator to earn more money. Thus the fact that an heir has wealth means that someone at some point had to work for it by providing value to someone else.

Savings is a store of value. It allows you to weather the storms of a fluctuating economy. It allows you the freedom to spend time as you would like rather than as you must.

What can one do with their money that is bad? The answer is not very much, so long as you avoid breaking the law in some way. Sure some things may contribute to economic growth more than others, but as a general rule the more money that is earned, the more can be saved, invested, lent, donated, and stashed. It is better to have earned money to be able to do all of these things than to never have earned it at all.

1) Save it.

The money can be stored in cash currency which either grows at a very low interest rate in the bank or remains the same under the mattress. In either case the nominal value will not be reduced. Due to inflation the real value, aka the purchasing power, of the money can be reduced. But once money is saved, it can be used in any of the following ways, all of which are positive uses.

2) Invest it.

Money is invested for the purpose of providing a return to the investor. The by-product of the investment is that a business can grow and value can be created. In ideal situations, a long-term viable asset or business is created that can provide value and receive cash flows. This benefits all parties. In a bad situation, the investment is lost and the money spent on growing the business has only helped pay the people who provided goods and services to that business but the business itself will never generate a return. Even in this situation the money was not actually lost, it simply changed hands. But the mere possibility that the investment could have generated a return is sufficient motivation for investors to investors. On the whole, despite losses, investment will continue and wealth and value will be created.

3) Lend it.

This can be seen as an investment in the sense that the hope is to gain a positive return. The money that is lent can be used in any of these ways. In most cases it provides flexibility to enable another human to live longer so that they may at some point earn more money by contributing value or influence others to do so. Lent money can pay for a schooling, business growth, and other economically positive activities.

4) Spend it.

Aside from things that are illegal or used for illegal means, there are few things to spend money on that do not have some positive economic impact. If a wealthy person chooses to spend their money on Ferrari’s and yachts they are helping many hard working people stay employed. The same is true if they spend it on expensive food and clothing. And of course, the same is true when an average income person spends money on average things like food, gas, rent and entertainment.

4) Donate it.

There is perhaps no nobler cause then giving money to others in need with no strings attached and no person gain. Of course our tax code is such that donations do provide a person gain but that is besides the point. There are those that believe that the government can better allocate money in need than private organizations and charities. This may very well not be the case because money will only see those organizations that are decided on by bureaucrat rather than individuals. There ought to be a long-tail of donating activity just as there is a long tail of song purchases on iTunes. This way, money can end up in the far reaches of society and do the most good. Charities would compete for donation by spending it in more efficient and effective ways.

6) Destroy it.

One could burn their money which would destroy their potential to do 1-4 with it. Similiarly, one could bury, stash, or otherwise hoarde their money in cash for extended periods of time. This would inhibit the use of this money perhaps forever. Even in this situation, the money was earned and value was exchanged, but in destroying the money they are reducing the money supply. This stems inflation which is a good thing. It keeps prices down. One could argue that this would be a positive counterbalance to the debasing of currency caused by the excessive printing of new fiat currency.

In summary, it really makes no sense to hate on the 1%.