Ms. Orr needs an economics lesson

Entrepreneurs, it has been said so many times over the past 30 years, create wealth. Right this minute, the foolish government is sitting around, waiting with bated breath, for glamorous entrepreneurs to get on with doing just that. But there are no signs that a great boom in business ingenuity is on its way.

So why are entrepreneurs being so shy? Don\’t they want to create wealth? They probably do. But the fact is this: the entire entrepreneurs-create-wealth thing is a fallacy, and the government is wrong to place its faith in it. Entrepreneurs don\’t create wealth. Banks create wealth, only banks.

Err, no.

Not at all. Stick, wrong end of.

Entrepreneurs are those who move productive assets from lower to higher valued uses. This is the very definition of wealth creation.

Banks are useful in this process, as is money, the collation and allocation of it that banks perform.

But we had entrepreneurs and wealth creation before we had banks and we\’ll have it again even if we abolish banks altogether. Not as much as we have now with banks, sure, but that\’s because banks facilitate the process: but they are not the process itself.

11 comments on “Ms. Orr needs an economics lesson

  1. …..So a builder who turns a pile of useless bricks and bags of cement into an extension doesn’t create wealth…..

    …. A cafe owner who transforms low value bread into high value sandwiches is not generating value…..

    …..An inventor who turns industrial waste into salable Scandium is not doing anything to further society’s economic development…..

    Even for the Guardian, this ranks as ignorant

  2. Try getting rid of the state thieving and their moronic habit of using the money to create and enforce regulations that make it ever harder for people to start and stay in business.
    The silly cow.

  3. He’s obviously getting confused between credit creation and wealth creation, banks doing the former and occasionally the latter.

  4. “Only banks create wealth”
    In The Guardian? Am I dreaming?

    Next week’s Guardian Headlines:
    Gordon Brown: “I was wrong.”
    Abu Hamza: “I just hope my boy can find a nice Jewish girl to settle down with.”
    George Monbiot: “Nuclear Power is good.”

  5. “So why are entrepreneurs being so shy?”

    Because if you grow your business, you get shafted by tax and regulation.

    You can have a nice little business, £70k turnover, not much expenses, in partnership with the wife – no VAT, no PAYE, basic rate tax. Easy.

    But try to grow it a bit, and you’ve got to take on staff, so you’re hit with PAYE & employer’s NI. And then you’re over the VAT threshold so you’ve got that as well. And not just the payments but the whole admin, with HMRC inspections & fines if you get it wrong.

    Then you have to give the staff maternity leave, sick leave, paid holidays – and you can’t sack them when they turn out to be useless or idle.

    And after all that, if you do manage to make some extra profit, you’re hit with higher rate tax.

    No wonder so few small businesses turn into large ones.

  6. From the article:
    “What is our tax spent on? It is spent on just one thing. It is spent on ensuring that our potential for taking part in money-circuits is maximised, by educating us, keeping us healthy, maintaining the civic structures around us …”

    If only that were true!

  7. If Orr’s cretinous statement were to have any validity, it would indicate that the most important department at Apple Computer was accounting and not, say, engineering or product development.

  8. What’ Orr is describing is very like the MMT theory, or NeoChartalism.

    It’s like Keynesianism, only more amusing to read.

  9. Turns out she’s not Ms Orr, she’s Mrs Will Self the 2nd.

    Has she been having a smoke with hubby before she wrote her article?

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