To follow the neoclassical Solow model, 2/3's of all growth is due to technology, and the other one third is devoted to increasing the capital stock of the country, including construction of manufacturing factories, machines, and other items created to enhance the quality of life in a country. Wealth is created through increased productivity, and any investment that allows labor to be more productive leads to an increase in wealth. The capital that aids the labor is traded off for more favorable technology eventually, but in the short run, fixed, though that doesn't change that there was virtually no capital, wealth, or middle class until mercantilism was ended, government control of food supplies became unnecessary, and the people were able to lead self-sufficient lifestyles through basic necessities as running water, heat, electricity, and the foundations of basic rights from civil to property. All these are set into motion to create an environment conducive to the acquisition of capital and the creation of wealth.
If I understand your position, in your view there is no difference between the potential and the actual. For example, one man on an island has the knowledge and skills to build shelter. I say UNTILL he actually builds it, it is not wealth. You seem to be saying because he has the knowledge and skills to build it, it is wealth already. Now if you do not agree with this example why not. I may have the skills to do allot of things, but if I do not use them they are nothing. My overall point: I am making a distinction between real wealth and claims on wealth. I am viewing it from a macro level and not the level of a particular individual. I would argue that a huge portion of what America does today is the shuffling of claims on wealth, not actual wealth production. I include in this group most of the legal profession, the field of finance, the welfare state, most of government, and many others.
No question that there is too much unproductive activity. America seems like that game show where people stand in a booth with money flying around, and they have 2 minutes to grab all they can. I am not making your distinction though, my distinction is between services and information (better terms than skills and knowledge). A service is some act that is paid for, and you are right - it must be actually performed in order to satisfy the customer no matter what the skill level of the performer. Entertainment, lawn mowing, and brain surgery are all non-entities that people will pay for, or wealth represented by service performance. Information though can have intrinsic value no matter what the skill level of the performer. You can come up with a new drug formula and put it on a DVD. That DVD now represents information that is new and valuable to someone else. It is why we have the patent system. You can sell that DVD without the performance of any more effort and the buyer could not care less about your skill level or the amount of effort you put into it- if it truly works. If you had the holy grail trading algorithm on DVD for sale, you could sell it for enormous cash. Nobody would ask any more work out of you and it would not matter if it took you 5 minutes or a decade. Usually it takes skill to come up with useful information, and I agree with you that skill alone is useless, it takes skill + effort to create wealth.
I suppose we could either produce products or market products. Since no one is interested in producing things, too much work, too many regs, not profitable (ie mfg) then we must be marketers. Since we produce nothing, we have to buy stuff to sell and be a middle man and re sell. (hence Chinese crapola). Wall Street does produce, market and export. Our main business is mfg any product that can be designed with paper and pencil (financial products). It's clean easy and fun. GS is the new GM. (What's good for GS is good for the country).
I am surprised no one has yet asked this question: Suppose that an economy has doubled (not in money terms) but in actual things that are produced and that no new money is printed. Should we not see the value of the money rise (double) relative to the things being produced, or put another way would'nt the prices be cut by 50%? In reality, the opposite happens overtime?
i think the real story is that the american is either stronger than all the asians and he bullies them into servitude or the american is smater than the asians and "talks" them into servitude
I'd say a pretty large chunk of it comes from exploiting other countries or continents labour or resources. As the power that is held to maintain the upper hand in the relationship between exploiter and exploited wanes, so does the wealth equation shifts. Dont you guys think its funny The US slaughters millions of Indians, imports millions of black slaves, and still many atribute the rise of the US as an economic and political powerhouse to individual freedom? The same goes for europe who have built their modern day empire largely on the back of it's colonies. It is estimated the Congo or the former Zaire since their independance (let alone before) in the sixties have seen 300 Billion USD (mostly commodity related) leaving the country into foreign bank accounts yet despite their resource wealth they can only provide their 60 million populace with a national health budget today amounting 20 million USD. But that's probably mainly because they are lazy, uneducated and corrupt right.... If we translate this line of thinking to today one could argue the days of Asian cheap labour are coming to an end and the rise in commodity prices allows Africa to talk tougher language towards it's foreign masters it's hard to see which prey will be hunted next as the source of western economic growth and wealth accumulation.
Of course you can say it, but it doesn't make it so. If slavery was vital, then why was the unslaved north prosperous and why did the US achieve most of its economic progress after 1865? It's fashionable to think like you, but it's quite specious reasoning. Cotton pickers of 1850 have nothing to do with airplanes, autos and computers. Of course it takes some natural resources, and there's nothing evil about it unless you are an earth worshipper. Really? So that great West German empire is the reason they prospered after they were leveled in 1945. You just gave great example of corruption, then tried to hand wave it away. Yeah right, just like when African nations demand access to western markets at WTO, or when India tries to stop american protectionism. The Saudi's tried an embargo once, they learned the hard way that they are nothing if they can't sell oil. Somehow, someway, the western left tries to call it exploitation when countries sell their goods to the west. Pretty lame.