Off Topic Friday: Is it the Haves and Have-Nots, or the Will and Will-Nots?

I saw an interesting discussion on twitter last evening. As you might expect, there has been some serious discussion about the economy and the stock market (which are two DIFFERENT things BTW).

As you may know, twitter is heavily populated by “Web 2.0” types that know far more about social media and the internet that I do (or maybe than I ever will). They’re in lots of different fields, and many are actually (gasp!) using twitter and social media as a way to make money or at least  promote their cause to make money. I know, I know, the thought of actually making money when so many are suffering is scandalous.

In particular a pair of posts on the subject of the economy by someone that should know better stood out to me. He said:

“When wealthy invest in growth – GREAT! When wealthy buy up assets at rock-bottom prices cuz they’re the only ones who can: AWFUL!”

“Wealth doesn’t get destroyed in a depression — it just moves around. And by around, I mean “up”.”

I was very surprised to read these posts. I wasn’t surprised to see them on twitter, because the mush-brain socialist crowd is disproportionately represented there, but I was surprised to read it coming from that particular person because both statements show a fundamental lack of understanding of basic economics. Especially in this “internet age”, and especially when written by someone that’s using social media as a promotional tool.

Statement #1 is just bizarre – isn’t buying something low so you can at some point in the future sell it “high” one of the most basic fundamental tenets of the free market and capitalism? I think so – in fact my entire real estate business is predicated on that ONE idea. My client at work – the one that makes cars – thinks so. Starbucks, where I bought my coffee this morning thinks so. And the guy that owns the car wash that I went to yesterday thinks so.

In fact the ONLY way that a business can make a profit is to buy or create something and then sell it for MORE than it cost to make it. That’s the definition of profit. And that’s the definition of business.

And the bit about the “wealthy” being the only ones that can is a bunch of class warfare garbage. The fact is, over the last three years two things were widely available: 

1. ANYONE with a pulse could have easily built up a “portfolio” of unsecured business credit that amounted to hundreds of thousands of dollars (ask me how I know). I’m sure even the most ardent socialist would agree with me that that kind of capital opens lots of doors, and
2. ANYONE with a pulse could have bought investment real estate (aka “productive assets”) at rock bottom prices, and could now be reaping the benefits.

And statement #2 that wealth just moves up is – well – misguided. I was going to say silly but I’m stretching here to be as charitable as possible.

The truth is that wealth moves around all the time. Up down, and sideways. The people that produce know this in spades – they take calculated risks, and when the risks pay off then their wealth increases. When the risks fail their wealth decreases. That’s the nature of the beast.

Wealth doesn’t just float around in the ether waiting for a Vanderbilt or Rockefeller to come along. That’s hogwash. This economy both rewards and punishes risk taking (at least it USED to punish it).

So that even in a depression, wealth moves to the people that GO OUT AND GET IT.

The socialists and liberals would have us believe that there is an unequal access to opportunity in this country. I’m telling you that that’s a bunch of BS.

Because this is not about the Haves and Have-Nots.

Far from it.

It’s about the Will and Will-Nots.

When you understand the difference you can be successful in this country. Not before.