Water comes not from wells, but from those who dig them

As the COVID crisis has made economic conditions difficult in country after country, governments have been struggling to find ways to respond. The predominant approach has been to give cash directly to ordinary citizens with a high propensity to consume, thereby sustaining the economy through consumer spending. This line of argument developed into the idea of a “disaster basic income,” and from there both the ruling and opposition parties have gone further to advocate a “national basic income.” Yet some have raised concerns about whether such a solution is feasible in a country like ours, which does not produce even a drop of oil. In terms of national policy, distribution policy is extremely important because it shapes people’s incentives. Now, when the economy is stagnating, is precisely the right time to reconsider the basis and direction of distribution.

Through this COVID crisis, people have had a very valuable experience. They have seen that even oil—something no one in the world can live without for even a moment—can fall to a negative price. This was something people could hardly have imagined. If oil is not even a safe asset, then what on earth is worthy of being called money?

To put it plainly, money is utility. If the person using something—whether a good, a service, or anything else—can derive utility and satisfaction from it, then money arises precisely there. That is why money is created not only when one produces something or provides a service for oneself, but even more so when one does so for others. There are more people who desire such satisfaction among many others than in the single person called “me.” That is why oil has a price, why gold has a price, and why labor has a price. It is all for the same reason: because a given action provides utility to others.

It may in some ways seem natural that oil, which powers almost everything in the real world, appears to be the source of money. But neither the Middle East nor Venezuela, despite their vast oil reserves, is the number one country in the world, nor can they become an economic superpower, at least not on that basis alone. That is because they do not possess the essence of money.

As noted earlier, money is produced the moment utility is created. This is also why GDP is calculated on the basis of value added. If so, it can be said that what generates the greatest amount of value added in the world is not oil but business. Oil does not create value added by itself, whereas business does. Until it is consumed by someone, oil is merely “cursed black water” underground. But once it is processed for consumption and then consumed, it is given life and becomes “oil, a blessing from heaven.” In other words, even oil—which people think of as the source of money—becomes money only through the businesses that give it life.

The essential force that creates money in the world lies in business. That is why countries with many good businesses, and that help such businesses thrive, become strong. Every advanced country we know is a country with many such excellent businesses, and those countries lead not only economically but also in the international order. In fact, this is obvious if you think about it. Businesses exist to help consumers who are experiencing difficulties—in other words, who want problems solved—and if there are many good businesses, then they are helping many people in the world. People express their gratitude by paying money, and they follow that order in which service is rendered for the sake of others.

The reason various welfare policies are possible in our country, which does not produce even a drop of oil, is that businesses that help others create real money. They are more infinite and more precious than visible oil. But when one points to the moon called money, many people see only the finger called oil. In the direction that finger points, businesses stand in a row.

Businesses that create money are the source of national wealth, the source of the social safety net, and the source of welfare. If you cut open the belly of such businesses, then even if Korea were to produce as much oil as the Middle East, it would not gain a single penny. Money comes from acts that inspire gratitude and from the human heart, and individuals or nations with much such gratitude are bound to prosper. That is because people do not stop at merely quenching their thirst; they are grateful to the one who made the well. Water does not come from the well; it comes from the person who dug it.

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Original title: 물은 우물이 아니라, 우물을 판 사람에게서 온다

Author: Gyeong-mo Son

Date: 2020-07-02

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=free_opinion&pn=13&idx=22891