Policy overview

Asset values and real wealth are not the same.

Wealth-accumulation comes through acquiring assets and boosting their value. Houses are a good example. When prices rise, houses themselves don’t become more useful or valuable. Only the asset value increases, which makes the owner wealthier. That wealth is not new. It comes from people who now have to spend more money to get a house of their own.

Conversely, building more houses does increase real wealth, since there are more places for people to live. Reducing the shortage of houses, however, could reduce their asset value by making them cheaper.

For people who have wealth, it is easier to get richer by investing in assets than by investing in production. That is why, over recent decades, economic activity has focused increasingly upon wealth-accumulation rather than creating new, real wealth. Without sufficient new wealth, wealth-accumulation by the few means that the rest get poorer.

What about the huge increase in GDP?

If not much new wealth is being created, how come GDP has more than doubled in the last 30 years? The answer is that GDP measures all money-based activity, so activity that helps people accumulate wealth counts the same as the production of new wealth. And because accumulating wealth is easier that making new wealth, wealth-accumulation causes GDP to grow faster still.

Wealth accumulation affects the health of people and the environment.

Wealth accumulation involves people struggling for possession of a share of existing wealth. In the process, a proportion of wealth is actually destroyed, since the work that goes into wealth accumulation consumes resources without producing anything new. The waste associated with all this unproductive work creates stress, breaks down productive relationships and places an unnecessary burden upon the environment.

The policies embraced by Human Politics are designed to encourage the creation of real wealth, discourage asset inflation and reduce this destructive waste.