Monday, February 16, 2009
Too many assets are not our problem
I have heard intelligent people propose burning down the excess inventory of the housing stock as solutions to the current "problem."
I have heard intelligent people say things like, "There are too many gas stations."
The idea that we could raise our wealth and, thus, standard of living as a nation, by destroying valuable, viable, assets is insane!
The housing stock of a nation whose population is growing is a valuable asset!
It looks like there are too many gas stations only because Americans are driving less, due to job loss and income loss.
The problem is not the supply of things.
The problem is that we do not use all the capital and resources and assets that we have.
As Adam Smith once said, "The wealth of a nation is not only measured by its gold, but by the abundance of its consumables."
There is nothing wrong with our economy. We merely have productive assets and capital that sit idle. The problem is our unwillingness to use all means to engage that capital to produce the wealth that it is capable of producing.
That is a an ideological as well as a psychological constraint. Nothing more.
The only thing that a society can have too much of is:
You can never have too much of the good things. That is the very definition of wealth.