Creating work vs. creating wealth

I saw a report some years back that studied the correlation between average global temperatures, as determined by ice core samples, and global economic activity (sorry I couldn't find it online). The conclusion was that there is a direct connection. Lower temperatures directly correspond to less trade. Higher temperatures directly correspond to increased trade.

Part of that may be psychological. People may be more sluggish and less productive when they're colder, but a big part of it is how resources are expended. One might think that snowstorms and cold weather are job creators and thus, good for the economy. But while colder temps may require more work, that work does not result in more wealth.

When you create something that is worth more than the sum of its parts, you have created wealth. Tie a rock to a stick and you have a hammer or an axe, worth more than a rock plus a stick plus some binding. When you provide a service that makes someone else more productive, you create wealth. If you deliver something for me, allowing me to continue to work on something more valuable than what I'm paying you, you have added value.

When I have to spend twice as much on snow removal this year as I did last year, that's not a creation of wealth, it's a transfer, and there is a net loss in the process. You get my money, but you have expenses, and in the end, the result is at best, a return to pre-storm status quo. No value has been added in comparison to last year.

This is a dynamic that the current crop of economic eggheads in Washington D.C. completely misses. They believe that any transfer of money is good for the economy. They don't recognize any difference between paying people to dig holes, then fill them back in and paying someone for something that's worth more to the recipient than it is to the provider. The latter is how free markets work. Both parties voluntarily enter into a transaction that leaves each with more value than they started with. The former is central control. It serves to keep people busy and has the added benefit of generating tax revenue, since whenever money changes hands in this country, it's usually subject to some sort of tax. It does not create wealth, it consumes it.

The challenge for the government now is not to "put people to work", but to enable wealth creation by allowing individuals to reap the rewards of their good ideas and hard work. To do that, they must enable individuals to choose what to spend their money on and when. They must also allow producers to offer their goods and services at market determined prices, with minimal government interference.

This is in direct contradiction to the nature of most politicians. They generally seek more control, not less. As long as this is the case, the global economic cooling trend will continue.