The Economic Value of Civilization

Since capitalists value everything by the dollar, let’s look at society and civilization in that way.

A Small Businessman Example

In a BBC article, ‘Doomsday’ about Trump’s prospects in the 2016 election, a United States Hispanic voter, Mr. De La Fuente, is quoted,  “In my business 30% is owned by the United States government and 10% is owned by the state of California. I didn’t pick them as partners, but they sure know how to mess in my business.”

That’s a sentiment often uttered. Is that an accurate and fair statement?

Components of Wealth

Economists in the World Bank have collected economic data from countries around the world. The data is not precise, but it gives a relative significance to the components of wealth. In the United States, the average wealth per capita is estimated at $510,000. Approximately $100,000 comes from natural resources and the capital improvements we citizens have made.

USA Wealth Intangible components separated

Focus on intangible components

The pie chart shows the relative contributions of the components of wealth: natural resources, labor, rule of law, and international remittances.

The remaining wealth (over $410,000) is due to

  • 36% human labor (manpower and skills)
  • 57% to the social capital and the rule of law (efficient judicial system, clear property rights, efficient government and institutions, political stability, regulatory quality, control of corruption)
  • 7% foreign remittances

 

Nearly $237,000 of the American average wealth is associated with the rule of law and the societal institutions that support our personal wealth creation endeavors. As the following list of government services shows, the support of private property, the security of our individual wealth and safety from criminal injury are significant factors which lift average US wealth far above that of most of Asia, Africa, Latin America, and the Middle East.

A partial list of the social and governmental features that support wealth are:

  • An efficient judicial system
  • Clear property rights
  • Efficient government and institutions
  • Political stability
  • Regulatory quality
  • Control of corruption

To the extent these services do not meet their goals, that is reflected in less than optimal American wealth.

Referring again to the pie chart, the typical American gets 46% of their wealth through the social institutions of government, which taxes are used to provide.

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