Sunday, May 27, 2018

Neighbour vies with his neighbour as he hurries after wealth.

From Works and Days by Hesiod. Adam Smith in ancient times.
She stirs up even the shiftless to toil; for a man grows eager to work when he considers his neighbour, a rich man who hastens to plough and plant and put his house in good order; and neighbour vies with his neighbour as he hurries after wealth. This Strife is wholesome for men. And potter is angry with potter, and craftsman with craftsman, and beggar is jealous of beggar, and minstrel of minstrel.
It is a fundamental choice. Wealth can be taken through force and coercion (a zero-sum strategy which only divides a given amount of existing wealth) or wealth can be generated through competition and exchange, a non-zero-sum strategy in which everyone ends up better off.

Channelling energy into productive competition is the solution, but everyone has to agree that the winners and losers will be determined through unequally distributed advantages and/or unequally distributed chance (good luck of being in the right place at the right time.) The alternative is that winners and losers are determined by who is strongest.

Rule-constrained competition is always more productive and fairer for everyone in the long term. Seizure by force is always more destructive and more unfair for everyone in the long term. In the short term though, there will always be those unwilling to strive and compete and who are therefore more wed to the idea of coercion, confiscation and seizure. There will always be those seeking to mitigate the raw edge of competition by coercion, confiscation and seizure. They want to do short-term good but fail to appreciate just how finely balanced are the forces of productive competition and destructive coercion.

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