Tài liệu The Wealth of the People: Your Neighbor''''s Wealth potx

The Wealth of the People:Your Neighbor's Wealth An Inquiry into the Relationship between Wealth, Freedom, and Life By Fernando Urias * * * * * SMASHWORDS EDITION * * * * * PUBLISHED BY:

The Wealth of the People:

Your Neighbor's Wealth

An Inquiry into the Relationship between

Wealth, Freedom, and Life

By Fernando Urias

* * * * * SMASHWORDS EDITION

* * * * *

PUBLISHED BY:

Fernando Urias on Smashwords

The Wealth of the People:

Your Neighbor's Wealth

An Inquiry into the Relationship between

Wealth, Freedom, and Life

Copyright © 2011 by Fernando Urias

The author acknowledges the trademarked status and trademark owners of various products referenced in this work, which have been used without permission The

publication/use of these trademarks is not authorized, associated with, or sponsored by the trademark owners

Smashwords Edition License Notes

Thank you for downloading this free e-book You are welcome to share it with your friends This book may be reproduced, copied and distributed for non-commercial

purposes, provided that it remains in its complete original form If you enjoyed this book, please return to smashwords.com to discover other works Thank you for your support

It is not the purpose of this book to reprint all the information that is otherwise available to authors and publishers but instead to complement, amplify, and supplement other texts You are urged to read all the available material and learn as much as possible about economics and human organizations and tailor the information to your individual needs

Every effort has been made to make this book as complete and as accurate as

possible However, there may be mistakes, both typographical and in content Therefore,

this text should be used only as a general guide and not as the ultimate source on

economic or social organizations Furthermore, this manual contains information on economics and social sciences that is current only up to the publishing date

The purpose of this book is to educate and entertain The author and publisher shall have neither liability nor responsibility to any person or entity with respect to any loss or damage caused, or alleged to have been caused, directly or indirectly, by the information contained in this book

* * * * *

The Wealth of the People:

Your Neighbor's Wealth

An Inquiry into the Relationship between

Wealth, Freedom, and Life

The second book looks at the requirements for the wealth production process to continue when you find a neighbor in the island An agreement to respect life and

property emerges as a requirement for the wealth production process to continue and becomes a factor of production This agreement and other agreements that will be

discussed later can be grouped under the concept of "Social Capital", defined as the existence of agreements between two or more individuals that are needed for the wealth production process to continue Social capital becomes a requisite for the capital structure

to function and in this way becomes a factor of production and a determinant of the income that you and your neighbor can make

The rest of the titles of the "Wealth of the People" series are listed at the end of this book

Introduction

The second book of the series "The Wealth of the People" is about the relationship that you need to have with a neighbor in the island if you want to preserve and increase your income You have to make an agreement with your neighbor of mutual respect for life and property This agreement preserves the status quo so that each of you can

continue working in your respective wealth production activities Once this agreement is

in place, you will find out that you can increase your income through trade By trading products, your advantage in a wealth production process can be passed to your neighbor

in a voluntary agreement that occurs because there is profit for both parties A simple example shows that both of you can increase your income through trade It is an

economic conclusion of the book that it is to the advantage of both parties to respect each other’s life and property and to engage in free trade

* * * * *

The Wealth of the People:

Your Neighbor's Wealth

An Inquiry into the Relationship between

Wealth, Freedom, and Life

* * * * *

Your Neighbor

In book one you were alone in an island working hard to survive and building up your capital structure and one day you find out that there is another person living in the island How would you approach this person? The first question in your mind would be whether this person will be friendly or hostile Hostility is a real possibility Remember that the first people that Robinson Crusoe encountered in his island were cannibals You would want to know if your neighbor is a threat to your life or a potential friend

Maybe your neighbor is not a cannibal, but he might be tempted to steal your food and tools As a result of your work and your investment, you should possess some

perishable products, some durable goods and some tools Your neighbor might be

tempted to take them all away Would he be strong enough to try it? Does he have a superior weapon like Robinson's musket that he might be tempted to steal your

possessions with impunity? Maybe he is part of a tribe that might enslave you?

It could also be that your neighbor discovers that you exist in the island and he thinks that you are the threat Maybe he will be afraid of you and maybe you are the one that is capable of stealing his possessions

The Cost of Not Knowing Your Neighbor

Since you do not know your neighbor, you would have to incur costs to protect your life and property You will have to spend some time in surveillance to make sure that he

is not a threat You will have to think about investing in a weapon that you might need to defend yourself You might have to incur the cost of moving your shelter to a hidden or more protected area These costs will reduce your income because instead of producing other products that you want, some of your time will be spent in surveillance and weapon construction

The Poverty Resulting from Violent Behavior

The worst situation that you could have would be to find out that indeed, your neighbor is part of a cannibal tribe, just like it happened to Robinson Crusoe in his story

In this situation, your neighbor is definitely a threat to your life Your wealth production capacity would be restricted because you would have to produce in hiding being careful

of not being detected The appreciation for human capital is so low in a cannibal and some other cultures of violence that a person life is not valued for the productive work that can be performed in a lifetime The life of any person becomes expendable In a productive society, the wealth production capability of a person is very valuable and it is

a great productive loss upon death in addition to the personal loss to family and friends The next worst situation that you could encounter with your neighbor would be that

he wants the temporary income that he can get by stealing your food and tools at the expense of your life if necessary This would be a very short sighted view of your

neighbor because the value of the assets is be very low as compared to the value that you can give as a productive person in free trade throughout a lifetime Nonetheless, this case

is still very common today since there are still many societies where people are killed for money, land, and power

Another less common but still existing relationship is if your neighbor wanted to enslave you If your neighbor has superior strength or a superior weapon he could be tempted to force you to work for him This would be a relationship with a great drop in income for both parties, because instead of having two people working hard and building their individual capital structures, one individual would be working with very low

productivity and motivation under the gun and the other would have very low

productivity holding a gun that does not produce wealth Slavery is a situation of low productivity for all parties

The next bad case and a more common situation could be that your neighbor wants the benefit of your assets but he does not necessarily want to kill you He would like to enjoy the temporary benefits of stealing your food and your tools He might not have a great use of your tools because a person of this mentality would probably not know how

to use them or would use them without maintenance until they will break down In this unfortunate case, he would take the physical things that you have and leave you with nothing Your neighbor would improve his income momentarily with the stolen food and

tools but he will drop to a level of poverty as soon as the food runs out and the tools break down Your income would drop immediately after the moment of the crime You would have to build your capital structure again and you would probably not do so until you can ensure that they will not be stolen again The first tool that you would probably build after this experience would have to be a weapon that you would use to defend yourself in case he comes again to repeat his crime You would have to invest time in the protection of your wealth production process.

The most common situation of violent behavior or implied violence would be if you neighbor wants the benefit of the wealth production capacity of your tools but does not want to enslave you or kill you If he has a superior weapon, he might decide to come to you periodically to collect part of the wealth that you are producing, probably in the form

of food or finished goods He would not be interested in taking your tools because he would not know how to use them or have no interest in working Under the threat of violence, he would let you know that he expects to have a certain amount of food ready for payment when he comes to collect The effect of this fee on your wealth producing ability will be that it will overcrowd your investment budget and eliminate your

willingness to invest The burden that your neighbor might require under this relationship might be so great that you will not be able to improve your capital structure

The Effect of Violence on Investment

A situation of violence or lack of protection of property is critical for the existence

of tools Since tools are physical items that can be stolen, they are very valuable for the service they provide, and they are costly because of the time it takes to build them, they will not be built in a society that does not protect them A society that does not protect life and property and the tools of production is condemning itself to poverty

If your tools were stolen in the island, your income would drop to the level that you had before you had your tools You would be thrown into a poverty level where all you could do is to produce the minimum amount of perishable goods that you could produce without tools You would try to produce with the minimal possible investment until you felt confident that any new tool that you would build would not be taken away from you You would not be able to produce the income that you would have been accustomed to

until you can recreate all the physical capital goods that you were using in your

production process

Violence Makes Weapons a Tool of Production

If you would experience violence in the island, you would have to invest time in a weapon to defend yourself and your tools before you could go back into a wealth

production activity Your weapon would be a necessary tool in your wealth production process If your weapon is a spear or bow and arrows, it could also serve as a hunting tool

Violence Increases Costs

If you are in an environment with violence, you would have to spend considerable portions of your time in surveillance or in escape, instead of using the time to produce goods that will satisfy your needs or investing in tools for better methods of production that will increase your income

Violence Reduces Human Capital

In the case of violent behavior, even your human capital would be adversely

affected Although nobody can take away your mind and what you think, the threat of a violent attack would distract you from productive enterprises and direct your mind to find ways of self-defense

The stealing of your goods or tools will make you fear that your neighbor will not respect your life A violent experience would instill fear in your find Your creativity to invent new and better wealth production processes would not be restored until you would know that you are no longer under the threat of violence

Although your neighbor would not be able to take away your human capital, what you have learned, and you would not start from zero to recover, you would have to invest the time again to produce the physical tools

The Violence Principle of Wealth Production

Violence is devastating for the process of wealth production Violence stops or

slows down the production of wealth It is not possible or very difficult to produce wealth under violent conditions Violence or the threat of violence makes the investment in tools stop because there is no motivation to invest large amounts of time on tools that will be taken away by violence.

The Low Cost Solution

If you could find a way to trust your neighbor and make your neighbor trust you, at least to the point where both of you can be assured that you are both going to respect each other's life and property, then you could maintain the wealth producing levels that each of you had achieved with your respective capital structures

Trust is much easier to achieve if you and your neighbor speak the same language, if you are from the same culture, or if you profess the same religion but these are not

necessary and neither are they sufficient conditions The condition that is necessary and sufficient is for both of you to want to become wealthy and to know that to do this you have to have a mutual respect for life and property

If you and your neighbor find a way to trust each other, your wealth producing capability will not be deteriorate when you share the island You could live away from each other and go on with your respective enterprises and live as is if the other did not exist You would avoid the cost of surveillance and weaponry

Ideally, you would look for trust by a coincidence of values You would want to know that your neighbor appreciates life and has learned to respect property to the same level that you would so that you do in order to avoid the costs of surveillance and self-defense You might have differences in other values, but if you have coincidence in respecting each other’s life and property and in wanting to become wealthy, then you can have a wealth production process that is less costly

The Agreement to Respect Life and Property

To continue your wealth production activities, you need to approach your

neighbor and reach an agreement of respect of life and property You want your neighbor

to respect your life and property and you would offer in return to respect his This

agreement would allow both of you to continue your lives in the island producing wealth

according to each other's capital structure The agreement would be based on the

advantage that this agreement brings to both parties The agreement to coexist in peace is better for both of you than the violent alternatives The agreement is advantageous to both because both want to preserve your lives and engage in wealth producing activities

The agreement to respect life and property has to include the respect of property

An agreement to respect life without the respect for property would result in a fight that could risk your lives and would cause the same surveillance and weaponry costs in the wealth production process as if there was no agreement

The Respect of Life and Property Principle of Wealth Production

To preserve and continue to increase your wealth production capability in the presence of a neighbor, you have to make an agreement of mutual respect for life and property.

The Foundation for Law

If you make an agreement for respect of life and property, you would have the basis of the first law between you and your neighbor Laws are enforceable agreements between people that live together on the expected behavior in society Laws are

enforceable by the state but since there is no state and no police between you and your neighbor, the agreement is not yet a law but a voluntary agreement base on the common advantage and common trust There is no state to guarantee that it will be carried on You and your neighbor are the guarantee The main ingredient of the agreement is that the agreement is advantageous to both of you

The agreement to respect life and property, based on the knowledge that it is advantageous for both parties is the foundation of the law that can be written when a state

is in operation The lack of an agreement due to the lack of knowledge of the citizens of a country would make the law very difficult to enforce Education and knowledge is the basis for the law and the state can be tasked by its citizens to handle violations of the agreement as exceptional conditions

Social Capital

Before the appearance of your neighbor, your freedom was bounded by nature, your knowledge, and your capital tools With the appearance of your neighbor, you have

to make an agreement that will preserve the freedom and wealth that you might have achieved with your capital structure This agreement is necessary for the wealth

production process to continue and it is in this sense one of the means of production For this reason, it can be called "Social Capital" It is here defined as the existence of

agreements made between individuals in a society that are necessary for the production of wealth

In the island, this agreement is necessary to keep the status quo of your

independent wealth production efforts It does not improve your wealth production

capability but it is necessary to preserve it A state of war is a state of absent social

capital An agreement and behavior to respect life and property is the beginning of the establishment of social capital in a society

The Property of the Natural Resources

When you were the only person in the island, you could have thought that the whole island belonged to you With the discovery of your neighbor, you would need another agreement regarding the property of the natural resources, including the land, the water in the creeks, and other resources in the island You could get together and draw an imaginary line that would divide the island into two At the end, such an agreement would be arbitrary and would be only enforceable by fighting Due to the economies of your time and your capital structure, you should probably be possessive only about your respective shelters, tools, capital goods, and any piece of land in which you invested some time It would be more practical to consider the rest of the island as not having an owner and available for the hunting and fishing of both

You would delimit the smaller areas where you have set your respective shelters Robinson Crusoe was very clear on building a tall fence that required the use of a ladder

to go over it This wall gave him peace of mind over any beast that might approach in the night because he would remove the ladder once he was inside

Adding Social Capital to your Capital Structure

The agreement to respect life and property is a necessary condition for the wealth production process and becomes in this way a part of your capital structure Your capital structure requires social capital when you have a neighbor living close by Rather than being a third pillar in the capital structure, social capital can be more properly thought about as the foundation of your capital structure because physical and human capital are not formed if social capital is not existing You will not invest in a tool that you will not

be allowed to keep Social capital is a prerequisite for the formation of physical capital and its associated human capital

The Possibility for Trade

If you and your neighbor reach an agreement to respect life and property, then you could entertain the possibility of trading the products that each of you produce Such trade can occur if there is an advantage in the trade transaction

The Advantage of Trade

If you and your neighbor had exactly the same skills, the same preferences, the same physical capability, the same experience in producing products, and had invested in the same tools, there would be a possibility that you would both produce at the same cost and then there would be no advantage to trade But if just one of these factors is different, making one of you more efficient in any product, than there is an advantage in trading

If each of you was taking two hours to hunt a turkey with a spear and one hour to gather a pound of vegetables, then each of you would be spending three hours to collect the ingredients for a dinner of roasted turkey and vegetables If you invent the bow and arrow and invest in making a set, you might be able to hunt a turkey in half hour instead

of two hours Assuming that your neighbor does not copy your invention, it would be advantageous for you to hunt an extra turkey and trade it with your neighbor In the trade transaction you can transfer the efficiency of the bow and arrow process to your neighbor and be paid for it You could hunt a second turkey in half an hour and offer it to your neighbor in exchange for one pound of vegetables By doing this, you would reduce your labor of obtaining a pound of vegetables from one hour to half an hour Your total dinner expense would drop from one and one half hours to one hour by hunting two turkeys and