The knowledge society increases income with less effort

Enrique Blasco Garma
Consejero Académico en Libertad y Progreso

INFOBAE – We tend to admire particular achievements without understanding the deep causes and truly relevant factors. The most visible dazzles us. We focus on what looks best, even if it is not decisive. Like the one who searches under the lantern light, the lost object elsewhere. Inquire where he sees, not where he is. They stun us with magic formulas. One cause of progress would be investment. Countries would be poor because they do not invest. Error. The apparent is not the cause, but the consequence. Countries, companies and people are not rich because they invest. The true sequence is the reverse: they invest because they obtain benefits with the certainty and in the respective term. In reality, nations prosper because their institutions invite you to act productively. They are not surprised by powerful rulers and leaders who disempower them until they are expropriated.

The activities are oriented according to the probable incentives. Meanwhile, ignorance – uncertainty, surprise – misleads, disorients. We better serve our needs as we enjoy freedom and variety in personal interactions. And security of enjoying individual rights and properties. The book “For a more just and flourishing country”, by me, explains and develops well-founded proposals to enrich Argentines. Countries, companies and people are not rich because they invest. The true sequence is the reverse: they invest because they obtain benefits with the certainties and in the respective term

The income data of the 195 countries of the IMF show the impact of institutions, freedoms to trade and contract. In short, 50% of humans, almost 4,000 million people, live in 100 countries that produce 10% of the world’s GDP, with an average income of just over 2,000 dollars per year per head. While 10% of humanity, about 800 million, lives in 25 countries that produce half of the world’s GDP, averaging $ 54,000 per year and head. Back we hear misdiagnoses. Even authorities attribute the cause of poverty to the greed of the successful. Our view is that countries are ruined by leaders who usurp and deprive their subjects of property. The extreme is the $ 900 per year averaged by the nearly 1 billion inhabitants of the 44 poorest countries. Among them 3 Latin Americans, Haiti, Venezuela and Nicaragua. The last two had been prosperous with other leaderships. The “commodification” of people is an achievement of the institutions that protect individual rights and property, to which the dispossessed flee, risking lives and families. Looking for better living conditions, security and income. The “commodification” annoys ideologues, but excites the “commodified.”

We review the wonder of freedoms and securities that earn income and make people successful. The Knowledge Society.

Individual exchanges. Productive possibilities grow as they are integrated into societies that develop increasing exchanges, freeing them from unnecessary obstacles. Thus they take advantage of skills, jobs, works, useful, without dedicating time, energy, to learn or carry them out. A huge saving of effort.

A constellation of incentives, values, properties, prices, costs, can drive us to work and satisfy the needs of others so that they benefit us by exchanging goods. And they encourage efforts of others to meet our demands.

Voluntary exchanges of rights, which we call transactions, take advantage of the knowledge, skills, achievements, dispersed among all humans, more effectively, without arbitrary interference. Much more productive than that of any central entity. Transactions are all the more satisfactory the more voluntary, less obstructed with arbitrary fences, meddling, violations, corruption. Transactions provided with stable rules, the same for all those affected.

Knowledge. I include teachings from the Nobel Laureate in economics Frederich Hayek:

  • The institutions of the system of voluntary exchange of rights –transactions– incorporate all the effects of individual actions. And they automatically issue resulting guides by integrating all individual activities.
  • Benefits tell us what we have to do to serve people we may not know.
  • The Knowledge Society rests on the fact that transactions benefit us, with skills that we do not possess. And one of the ways in which society helps us to overcome the limitation of individual resources is to overcome ignorance and scarcity without having to acquire the missing ones, but by taking advantage of knowledge that already exists widely dispersed.
  • The transaction system should teach people how little they really know about what they imagine they can drive. The arrogance of legislators, judges, officials insisting on ignoring them is disastrous.
  • The School of Salamanca was one of the first to oppose economic proposals that exceeded our knowledge and perception. Perhaps the invisible hand of Adam Smith interprets that imperceptible and inscrutable set of tendencies that are implicit in that order. Guided by the constellation of interests and personal properties, prices, for example, we are induced to perform various acts whose final consequences we have not intentionally sought and cannot attempt. We are not able to consider all the impacts of our productive efforts. And much less of the efforts of others that will attend to our needs.
  • The Knowledge Society is a mechanism capable of collecting and taking advantage of a vast set of disseminated skills that no central body is in a position to apprehend or control.
  • The more restrictions the State imposes, the more it hinders individual decisions. The prosperity of the whole is achieved with transparent agreements of the individuals. Instead, the impositions violate the agreement and impoverish.

Transactions. Partnerships and transactions are completed to the extent that they are voluntary, without obstructions or violations. Which requires fair rules of conduct and contract, equal for all, stable, in all circumstances and people. The opposite is the corruption of the absence of stable rules. I emphasize that corruption, in the most general form, is the lack of stable rules, the same for everyone, every time. Not only in relation to the state.

Voluntary implies that no private rights are violated. That is, a private contract can harm someone, but it only violates rights if it alters the rights of some according to existing norms.

Violations. The opposite of transactions. Theft, expropriation, usurpation, any redistribution of rights imposed against wills. Frequent in countries that are therefore poor or impoverished.

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