Tweet [1]
… is from page 223 of my friend and old teacher Randy Holcombe’s excellent 2019 book, Liberty in Peril: Democracy and Power in American History [2] (emphasis added):
People can obtain wealth in two ways. They can produce goods and services, adding to the stock of wealth available to be consumed, or they can take goods and services from others, redistributing income but adding nothing to total production. Economic liberty provides the incentive for production because the only way people can enhance their economic well-being is by supplying goods and services that others want. Economic democracy provides the incentive for predation because it allows people to use the democratic political process to assert claims to the economic production of others.
DBx: I added emphasis to “that others want” in order to, well, emphasize that economic production is not merely a physical transformation of materials from one form into another form. Economic production occurs only when the transformation of inputs into outputs results in outputs that people value more highly than they value any of the many alternative uses of those inputs.
And the most reliable way – indeed, practically, the only way – to know what goods and services people want is to observe how individuals spend their own money unobstructed by barriers designed to make some purchasing options more costly than the sellers – the offerers of those options – would otherwise be willing to accept.