It's time for another long article on worldviews and philosophies and how they form the foundation of our actions. Our underlying premise here is that your beliefs, your view of how the world works, whether you know those beliefs or not, determines how you act in the world. As opposed to your actions being simply random. There is a method to the madness. The reason I want to know how and why the world works, why I want a coherent and comprehensive worldview, is that I want to make informed decisions. The reason I want to know other people's philosophies is so that I can take their probable actions into account.

And here I must make an important distinction. A worldview does not necessarily conform to reality. That is, some people accept as fundamental truths things that are not true. But their actions may be reasonable based on that belief. The question is, what are those fundamental beliefs, both the ones that are true and the ones that people only think are true? What do people really believe? And is it really real?

Differences in what people accept as truth cause most of the partisanship in America today. The biggest point of contention is what to do about this economic crisis. On the right side, we have people saying that government regulation created a bubble that has now popped, and to fix it, the government needs to leave things alone and let the free market sort things out. On the left, people are saying that immoral capitalists created a bubble at the expense of everyone else, and to fix it, the government needs to take over everything to prevent any kind of unfairness. Both sides are claiming the other side's solution was the root problem.

Or at least that's what the people in general appear to believe. The Democrats in power seem to be playing by Saul Alinsky's rules, and while that says a lot about their beliefs, it doesn't say much about their beliefs about the economy. So what are people's beliefs about the economy? The ones they base their actions on, not the ones they just say they have.

We're going to approach this problem rather obliquely. And we'll start with a simple question: what is wealth? Wealth is stuff. It is the food you eat, the clothes you wear, the house you live in, your shiny baubles, electronic gadgets, tools, art, toys. Wealth is the physical things you consume or collect because you value you them for some reason or another.

I like this definition because it is both absolute and easily quantifiable. Absolute in that you either have a thing or you don't. You either have a big screen TV or you don't. Quantifiable because you can determine who has a thing and how good a thing is. Who has a TV and how big is it. I think most people accept this definition of wealth.

If that is wealth, then it follows that wealth is created when people make stuff. At the very front end, wealth is made from the raw materials found in nature, whether food from a fertile field, wood from a stand of trees, or metal from mined ore. The this raw wealth is combined and modified ad infinitum until stuff people want is produced. An iPod is a long way from the raw ore and oil that went in to its component parts, but that's what it was when it was dug out of the ground. Again, I think most people accept that for stuff to exist, someone has to make it.

But who gets the stuff? Do you get to keep what you make? Or do you put whatever you make in the global commons for whoever needs or wants it? Most people believe that the things you make are yours. If you make a bookshelf, it's your bookshelf. You may keep it or give it away or trade it as you choose. When you are talking physical things that an individual has made, people expect to keep and do what they want with what they have made. See this incident reported by House of Eratosthenes. And yet the idea that the things a person has made should be taken by the government and given to someone else persists.

Let's revisit our definition of wealth. Notice what this definition excludes. Money. Money is not stuff. It is a medium of exchange, a measure of the relative worth of the actual stuff. How many purses to the giant TV? A currency allows everything that people make to be ranked on a common scale. A person makes X number of purses and sells them for Y amount of the currency. That person then goes to someone who has a TV and buys it. He has effectively traded his purses for a TV. But the wealth is the purses and the TV, not the money used to make the trade.

But that means that borrowing more money or printing more currency doesn't affect the amount of stuff. Or even the relative worth of stuff. It just changes the absolute number at which the stuff is valued. You can only trade what you really have. If you have two purses, you cannot trade away three of them. When you trade for a TV, you want the TV now, not six months down the road.

This is our first disconnect. Some people see that money buys stuff, and the more money, the more stuff. If you stop there, then acquiring money to buy stuff is reasonable. It doesn't really matter where the money comes from, so long as your relative amount of it goes up. Take it from someone else, print more of it, borrow indefinitely, with more money you can buy more stuff. And with more stuff, your relative wealth goes up.

But in none of those do you actually produce any wealth. You merely consume. Conservatives believe that stuff is wealth. Therefore, to get stuff, you must make stuff which is yours, and then trade it around for other stuff that you want or need. Liberals believe that money is wealth. Therefore, to get money, you can print, borrow, sell, or steal, and then exchange it for stuff that you want or need.

This is why I have not been overly bothered by the current recession. I make stuff (software) that people want. I sell it to them (or strictly speaking I sell it to the company I work for, who the sells it to other people). I go buy things I want that other people have made. Nice, neat, and simple. And as long as I make stuff people want, I can get wealth.

But notice something else. Because I see wealth as stuff, borrowing means I take stuff from someone now and promise to make them stuff at some point in the future. Well, at that some point, that someone will want the stuff I promised them. If I can deliver, great. If I cannot, I am in trouble, because now I have stolen their stuff. So I try to borrow as little as possible. But if money is wealth, then you are not delivering stuff in the future, so you don't have to worry about making any. You can just give them money you got from somewhere.

But the problem is that people insist on having stuff instead of just a bank account. So everyone who borrowed money to acquire stuff is being asked to produce some stuff so that the lenders can acquire stuff. That stuff has failed to materialize, so people are trading stuff for stuff, instead of stuff for future stuff, and we've ended up with a huge market correction. And this problem will continue so long as people continue to confuse currency with actual, physical stuff.