Saturday, October 16, 2010

Different kinds of capital

My friend Matt Ridley has an interesting discussion on his Rational Optimist blog about whether we owe modern prosperity to the accumulation and amassing of capital over generations or to the bursts of innovation that allow each successive generation to produce more at lower cost. The "innovators" appear to win the debate hands down over the "accumulators," which I think is another reinforcement of the point I made the other day about inherited wealth. A rational and prosperous society is one that encourages and rewards the accumulation and bequest of wisdom, not cash, from each generation to the next.