Why were there no billionaires in the 19th century? Tick tock, tick tock…
No doubt those with an Austrian or Monetarist School bent would say that the scarcity of billionaires was rooted in a lack of a central bank. They oddly, and insultingly, associate great wealth with "money creation," so-called "money supply," and currency devaluation. Yes, ridiculous.
In truth, the lack of billionaires two centuries ago was rooted in the lack of cars, phones, airplanes, computers, internet, WiFi, and all manner of other advances that figuratively shrunk the world. A lack of inequality is really and truly cruel.
In the 19th century it reflected the sad fact that towering genius was only able to touch the very few. In other words, Jeff Bezos would likely have been very rich had he been born in 1864, but not nearly as rich as he became for being born in 1964. If born in 2064…
Remember this as the Wall Street Journal’s Joseph Sternberg writes that falling birthrates in Germany are “terrible for Germany’s economy and therefore Europe’s.” As Sternberg sees it, fewer babies signal “looming fiscal crisis for Germany’s welfare system.” That’s one way of looking at it, but Sternberg could hopefully be convinced to turn his own thinking, and that of stadiums full of other economists and political economists who agree with him, upside down. And that’s not a critique of babies.
Instead, and in support of Sternberg, humans are an input. Always. They’re not a job taken as much as they’re an extra set of hands enabling the increasingly minute specialization of human hands and machines. The genius of work divided is well documented, and surely not lost on Sternberg.
Just the same, a focus on birthrates completely misses the production point. And as the growing interconnectedness of the world indicates, the ability of individuals to produce is soaring. Which is why neither Germany nor Europe’s economy faces a crisis, and it’s also why the welfare state for good or bad will have no future funding problems.
It’s rooted in the happy fact that genius, regardless of where it takes place, lifts the global economy like it never has before. This includes a skyrocketing number of mechanized hands and brains amplifying humans. Trillions worth, and likely more.
To grasp the above, think the impact of economic activity in California on the rest of the world. Yes, the explosion of AI. More pertinent to Sternberg’s expressed worries, the fact that California-based genius binds the world economically means the fewer babies being born in Germany, the U.S., Great Britain, China, Japan, South Korea, and countless other countries will produce on a level that makes past production by much more people appear impoverished by comparison. Fewer babies, exponentially more production.
Considered modernly in the U.S., who produces more: Larry Ellison or Baltimore’s roughly 566,000 residents? Hopefully the question answers itself.
Birthrate fears combined with odd fears about reduced government revenue consequently imply that consumption by growing numbers powers economic growth. That’s incorrect. No serious economist or political economist would ever even contemplate consumption. Keynesians, and their Monetarist inverts focus on consumption, and that’s why neither school of thought is serious. There’s production, and nothing else.
Crucial here is that innovation by the vital few touching literally all the world with their genius will drive future production to levels previously unseen. Consumption will be the always and everywhere mirror of the production, and it will be massive. And for good or bad, the welfare state will be more than well-funded everywhere it sadly exists.
