The Creation of Growth

This may be the single most important topic of economics and the basis behind fundamental differences in schools of thought.

It is very simple at its base, there are only two ways in which any economy can achieve growth:

1) Increased efficiency.
2) Increase in useful natural resources.

That is it.  All sides to a large extent agree with these founding principles.  It's notable that there is little to no argument revolving around #2.  How to achieve an increase in natural resources is scientific and straight forward.  You find coal, you mine it.  You acquire land with a splendid aquifer... great! You have drinking water.  You discover a diamond mine.... you get the picture.  The only heads or tails situations that arise do so when weighing the cost of extracting the resources with the moral or possible future costs of doing so.

There is, however, ample confusion and difference of opinion on how efficiency is achieved.  Specifically, whether it is more efficient/effective for a centralized government to control the operation of an entity or whether it would be better off in the hands of private enterprise.  Then to a greater extent, the idea of whether or not the forced sharing of income of the wealthy with those less fortunate is beneficial to the well being of society.

It has long been tested and proven that in the majority of circumstances, government makes less efficient use of capital than the free market.  This is the basis of capitalism and why it has been successful in history.  I think it is also clear that prosperity aside, it is at least more efficient for the wealthiest to decide for themselves what to do with their money, if nothing else for the mere fact that handouts are a disincentive, and those receiving them are less incentivised to work.

However, from a prosperity perspective things can take a whole new form.  Is everyone, on average, better off if the poor are better off and more is taken from the rich?  This becomes a matter of opinion that is more difficult to apply scientific reasoning to.   Many, if not most, would be inclined to say yes we are all better off.  I believe it to be true.... if the excess wealth of the rich is spread among the poor, disabled, and underprivileged, equality and a greater prosperity ensues.

The issue with this is that the phenomenon is fundamentally and predictably temporary.  The better off the lower class becomes, the more incentivised a population is to become lower class.  This is never a big deal at the onset, but history has shown it to grow ominously over time.  It's a dangerous phenomenon in a democracy, because if the lower class beneficiaries ever outnumber those who provide the benefits, majority voting favors the side of sustained and increased benefits for the lower class beneficiaries.  This has not only been the driving factor behind numerous rises of socialist and communist movements throughout history, but part of the downfall of those very same movements.... because a nation of unincentivised workers is not nearly as productive as a free one.   It's an unforgiving circle:  The poor are disincentivised and become less productive, less production drains value from the economy producing more poor people and less benefactors, more people are in turn disincentivised and the process continues....  Its a deadly circus of dwindling prosperity... or "The Road to Serfdom" as Hayek coined it.  Its a deficit building, production unfriendly cycle that acts slowly but with a high degree of certainty.

I do not shun the idea of helping the less fortunate.  I merely implore that it should be done via choice.  The second that the redistribution of wealth becomes mandated through the process of democracy, the countdown to a lesser standard of living has begun.