Lets Make Money
If you ask me to name the proudest distinction of Americans, I would choose–because it contains all the others–the fact that they were the people who created the phrase ‘to make money.’ No other language or nation had ever used these words before; men had always thought of wealth as a static quantity–to be seized, begged, inherited, shared, looted or obtained as a favor. Americans were the first to understand that wealth has to be created. The words ‘to make money’ hold the essence of human morality.
If I created a business, say a shoe factory, I would need to buy the things I need to produce shoes on the open market. I would need to rent office and factory space. I would need to hire workers. I would need to pay lawyers and government officials. I might need to borrow money or sell shares in my enterprise to have the cash to make it all happen.
If, after I have spent all the money needed to produce shoes, I can sell the shoes that I produced for more money than they cost me to make, I made money. I took a certain amount of money, mixed it in an alchemists carafe and poured out more money.
How do I know my production was worth more than my consumption? I freely traded on an open market. Anyone else could have rented my production and office space by bidding a dollar more than I did. Anyone else can rent similar space at near equal prices. My employees voluntarily worked for my wages. Anyone else can hire similar employees at similar wages. Everything I took out of the economy was voluntarily offered to me in exchange for my money. My product, shoes, were offered for purchase. No one was required to buy at the price I offered. Every customer thought that the shoes bought were worth more than the dollars paid for them. So I bought a pile of goods and services at the fair market rate, which package could have been bought by any other person, and produced something that is objectively worth more than the cost to me of producing it. I made money.
You can see this most clearly when the value added is most dramatic. When Picasso buys pigment and canvas, most people realize that what he produces will be worth more than the ingredients. Yet Dell and Boeing do the same thing. I can purchase anything Dell can (maybe they get a discounted for large purchases but that is part of the fair market price) but probably I cannot produce as much value with my purchases.