In one ten-minute stroke, Bill Whittle once again gets to the heart of the political and philosophical divide over wealth and wealth creation.  Is the economic system a closed system in which wealth must be managed as in a shortage model, or is it an open-ended process that creates a natural expansion of wealth?  Whittle explains how the latter is true, and why, in his new Firewall video supporting the Tea Party grassroots movement:

This really is the fundamental economic divide between the Left and Right.  If one believes that wealth is a zero-sum game and that people can only accrue wealth at the expense of others, then redistributionism and socialism make perfect sense (except that neither works in practice, which comes into play in a moment).  If, however, wealth creation is an unlimited process and real wealth can and does grow, then open markets and something approaching laissez-faire makes more sense for an economic system.

Which one works?  All we need to do is look at history for the answer.  Bill provides one part of the answer by using the US as an example.  America has used open markets to drive its economy, sometimes to greater or lesser degrees.  During periods of the lesser degree — like now, for instance — growth gets stunted and economic recession and stagnation result.  For the most part, though, the American economy has not only driven a massive expansion of wealth and a world-leading standard of living, it has provided a lift to other linked economies around the world.

What about those nations that structured their economies and political systems on shortage models?  The Communist nations would be the best examples, and their systems entirely failed.  The Soviet Union collapsed, and China and other Pacific Rim nations following Maoist communism have or are transitioning to private-sector economies.  Instead of distributing a constant amount of wealth, the political structures required to enforce central planning and what was essentially rationing ended up destroying wealth, and not coincidentally, oppressing their populations and creating either accidental or deliberate famines that killed tens of millions of people.

The theft model wasn’t the one democracies used. And the failure of the zero-sum assumption at the same time that the West prospered and expanded shows that wealth creation does exist.  Therefore, it makes sense to structure governments and economies to encourage wealth creation by protecting creativity, complexity, and free trade — and the root of all these, private property.