I read this on the Visionary Womanhood Blog...interesting
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by Bojidar Marinov, Sep 02, 2009
Several years ago a newspaper in Eastern Europe asked a socialist economist a question: “Why is it that the same worker works the same number of hours in Eastern Europe and in America but they make an average of $22/hr in America and only $1.5/hr in Eastern Europe? Where does the 15-fold difference in productivity come from?” The goal of the chief editor was to educate his readers with a short, easy to understand and illuminating article. The socialist economist replied with a 25-page essay full of religious . . . er, I mean, “professional” language that no one could understand, including the economist himself.
The chief editor filed the article in the round file, and called me, the Protestant missionary. “Bojidar,” he said, “I need an article. I need it quick, and I need it simple, digestible and informing. Do you have one?” I did. A good Reformed missionary always has a simple, digestible and informing article on every aspect of human life and action. If he doesn’t, he must go to his Reformed heritage. So I went to one of my Puritan ancestors in the faith, Daniel Defoe, and his character Robinson Crusoe.
Imagine Robinson on an uninhabited island. He has one immediate problem to solve: He needs to eat. He may have a few tools from the ship, but none of these tools give him any immediate solution. What gives him a solution are the few trees near the beach with fruits on them. There is a problem though: The trees are tall and difficult to climb. It takes Robinson one whole day of work to gather only as much fruits as to survive, and then go to sleep at night. He can’t do more than that, unless he wants to go hungry for one day.
Well, one day he has an idea and he really decides to go hungry for a half day. He spends that half day making a long 20 ft. pole to knock fruit down without having to climb the trees. The next day he tries his new production tool, and finds out that it has doubled his productivity: He can knock down the quantity of fruits needed for his survival in a half day instead of one whole day.
So, our first lesson about increased productivity is: It comes from sacrifice, i.e. from forbearing present consumption plus ideas and work. Increasing productivity always comes at a cost.
Now Robinson has several options. He can work a half day, have as much as he had before, and sleep the rest of the day. Or he can work one whole day and double his rations. Or he can work one whole day but eat as much as before, and save the rest—dry it and store it. He decides to take the last option. In a few days he has enough saved to be able to survive a few days without work, so he embarks on a journey to the heart of the island to catch a few wild goats. A week later he returns with two goats. Now he can gather fodder for them one hour a day, and milk them one hour a day, and have even more food than he had before.
Again, his increased productivity came from sacrificing present consumption and using the saved resources to explore and work.
Then one day Friday comes, and he is a good fisherman, but he has no boat. That’s not a problem because by now Robinson is productive enough to feed both of them and work with Friday for two weeks to build his boat and make his net. Now, with Friday’s productivity increased, they have enough time to apply themselves to even better use of their time. The effect of the original sacrifice can be multiplied many times over if they keep saving and use the savings in the right way—not for increased consumption but for more work and investment.
There is no other way to become more effective, more productive, and wealthier. This is how America became what it is today: The fathers of modern Americans sacrificed, saved, and worked, forbearing present consumption and looking to the future. America is rich today because it was founded on that Puritan spirit of self-restraint and work ethic, unknown to most European nations. It is as simple as that.
The editor liked my article, and by the response from his readers, they liked it too. Within a few weeks from its publication the article was republished on many web-sites and blogs online. Eastern Europe is learning from our American heritage.
The question is: Is America today learning from her own heritage?
She isn’t. For the last century Americans have gradually adopted an economic doctrine completely hostile to the spirit of their Puritan forefathers and to common sense in general: That not sacrifice, but consumption is what produces economic growth. We think we have found the way to both eat the cake and have it at the same time. If we eat more, buy new cars more often, spend more money on entertainment, these will somehow make us richer and more productive.
Our government is operating under that same doctrine more and more. Government projects for “creating jobs,” bailouts, “cash for clunkers” programs, printing more money, encouraging unrestricted expansion of money supply and credit—they are all offshoots of the grand illusion that sacrifice is not needed anymore, that utopia will come from unbridled indulgence.
If we look at our example above, this is equivalent to believing that Robinson will become more productive and better off by consuming everything he produced the day before, and even more than that, depleting his stores. Even simple common sense tells us that production for consumption and investing for economic growth are two completely different activities, and they compete for our resources. The more we consume, the less we will have to make our life better in the future. And vice versa, the more we sacrifice and save, the more we will have to invest and make ourselves more productive.
We don’t want to sacrifice anymore; we don’t want to pay the cost for real economic growth. We deceive ourselves that consumption comes at no cost. We are wrong. Both consumption and investment have costs. They both have costs, whether we realize it or not. Of course, we keep telling ourselves that in consumption we are transferring the costs to the future, that we or our children will pick up the tab in the future. But we are wrong. Gary North pointed to the fact that there are no future costs, all costs are present. (Gary North’s articles are true CR, I mean Chivas Regal: only appreciated 12 years after production.)
We need to go back and learn from the heritage of our forefathers. Our indulgence has cost us much so far, and it will cost us more and more. We need to learn to sacrifice our consumption and save. We have paid exorbitant amounts of money to self-destroy ourselves. It is time to start paying for rebuilding. If other nations are willing to learn from our history, we need to learn from it too.