You are only wealthy if you have saved a good proportion of your income over the years, rather than consuming it all to sustain your lifestyle. It is your wealth that makes a large income and consequent spending tolerated by the wider society.
This essential understanding makes it possible for the talented, diligent and hard-working and, most important for a growing economy, the enterprising and innovative successful risk-takers, to earn high incomes legitimately and enjoy their consumption.
These are the savings that add to wealth and, most important, are invested productively by income-seeking businesses that also save and borrow on behalf of their owners. These firms are given the responsibility to manage the capital stock and all the complementary scarce resources that are entrusted to them — including workers and managers, whose wages and rewards will depend on the returns on capital (savings) their employers are able to realise.
The more such capital is created and made available to the economy in the form of plant, equipment, dams, roads and ports, and the more efficiently they are managed, the higher will be the incomes earned by poorer households. More capital raises the relative scarcity of labour and improves productivity and incomes, which makes people understandably willing to protect wealth against damage, theft or violent expropriation.
The protection and respect for property (capital or wealth) in turn encourages potentially higher-income earners to venture more, to earn more, and to save and invest more in capital stock. This too serves the essential interests of the wider community.
The spending of others is not helpful to you — it adds to the competition for scarce resources. However, saving, accumulating wealth and realising its productive disposal is helpful to the many without much wealth. It is the large-scale waste of capital, extracted by taxes — as has been the case with our state-owned enterprises — that should be condemned.
Such willingness to protect property is to be found in the Bible and the rabbinical commentaries on it, as I was pleased to discover at a recent joyous bar mitzvah. The substance of the readings that day were the laws and regulations governing the protection of property and compensation for damage. All food for my economist soul.
I said I would ask this question of the Torah and rabbinical commentary, the Talmud, using AI. Rab AI, so to speak. Here is a summary of the responses received, with my reactions in brackets:
“The Talmud places a strong emphasis on the importance of hard work and diligence. It acknowledges that while effort and work are important, ultimately one’s success may also depend on divine blessing.” (Unbelievers will call this luck.)
“The Talmud establishes the principle that those who are wealthy have a responsibility to support the less fortunate. The act of giving is seen as a valuable pursuit, and generosity is highly praised. Wealth is viewed as a trust that comes with significant responsibilities — that one should use their wealth not just for personal pleasure but also for the betterment of society. This includes supporting community needs and contributing to public welfare.” (My point about the social purpose of wealth being the creation and preservation of the productive capital stock for the benefit of the greater society has not apparently been recognised.)
“The Talmud warns against excessive attachment to wealth. A person should not let the pursuit of wealth dominate their life to the detriment of their spiritual and ethical responsibilities, that through work and the creation of wealth one can achieve personal and communal fulfilment.” (Ancient wisdom that is clearly consistent with human aspiration and economic development that implicitly recognises inevitable differences in economic outcomes as socially helpful.)
• Kantor is head of the research institute at Investec Wealth & Investment. He writes in his personal capacity.
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