Wednesday, January 23, 2008

It is Production That Leads to Wealth

A student in one of classes asked a question to the extent of, "but if companies are spending money on lawyers to lobby the government, aren't they still putting money into the economy?" Yes they are putting money into the economy, but they aren't producing anything. It is production that causes wealth because somebody gets to consume that production (like you are "consuming" this blog). Paying a lawyer to lobby the government is a waste of a lawyer (yes, they do occasionally do useful things). This creates a drag on the economy.