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<h3>One of the basic beliefs of the social justice movement is that wealth inequality is wrong. In support of this view, several leftist memes have been making the rounds on Facebook recently, memes that denigrate some super rich villain because he's “hoarding” his wealth away from the rest of us.</h3>

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The point of these memes is that the rich hurt society by hoarding wealth. So what's the solution? Most people who share these memes admit that if the rich won't spend their money the way liberals want -- for example, on social injustice, poverty, hunger, or infrastructure -- then the government should confiscate that wealth so it can be spent properly.

This leftist “solution” is actually an amusing variation on a Wall Street theme: trickle-down economics. Conservatives on the right argue that the rich need tax breaks so they can <b>spend more</b> on Wall Street (causing a trickle). But the Left makes a similar argument that the rich must be forced to <b>spend more</b> on Main Street (causing a trickle). Both arguments assume trickle-down is the answer, as if <b>more spending</b> by the rich is the key to prosperity for the rest of us.

But this spending remedy demanded by liberals and conservatives alike actually results in increased debt, higher levels of consumerism, and inflation -- re-read some economic history if you doubt this. Their spending remedy is the theory driving the government's decades-old “tax and spend” policies, and is based on the belief that the rich fail to spend their money wisely.

But what are the rich actually doing with their evil hoards? 

Some of them do give to charity. Bezos, maybe not so much, but he has given several million dollars to fund cancer research, college tuitions, museums, and Princeton University. Granted, that sounds like small change. But charity is really just another form of a spending remedy, albeit a voluntary form.

Still, it's true: most rich people are guilty of spending money on themselves. Selfishly, even. They live in lavish homes, drive impeccable cars, wear gorgeous clothes, eat the most fanciful food. They employ personal chefs, trainers, assistants... in short, the rich live rich lives. And I'll be honest: I suffer from rich-envy, too, just like many of my leftist friends. When I drive by a mansion or see castle interiors on television, I sometimes react... negatively. It may be immature, it may be unsportsmanlike, but it's hard for me to believe that any one person or any one family could deserve such opulence.

But living a rich, opulent life isn't hoarding. It's spending conspicuously on expensive luxury items and services. For example, owning a yacht presumably required an initial expenditure into the economy. Ongoing yacht ownership further requires licensing and maintenance fees, not to mention the fact that yachts depreciate. Owning a yacht is not an act of hoarding wealth; it's an act of consuming wealth.

So what are the rich hoarding? Money? OK, but when someone hoards money, what are they actually doing?

They're saving.

Is saving a bad thing? Is it bad when you or I save money? Is it bad when Jeff Bezos saves money? It probably is if you believe in trickle-down theory. But hang on: if Jeff Bezos has deposited some of his Amazon wealth into a savings account, then it's not being hoarded, either. His bank is injecting it back into the economy and paying Bezos interest for the opportunity.

OK, but what if, in his depraved, nefarious self-centeredness, Bezos is actually stashing bills under his mattress? How would this act of hoarding affect the rest of us? Would it hurt us? And what if, instead of hiding bills under a mattress, he burned them in his fireplace? Would that hurt me? Would it hurt society?

Would it hurt you?

I can't answer that because any individual's perception of being “hurt” is subjective and involves externalities like psychological tendencies, beliefs based on past experiences, and unique personal perceptions. But I can tell you this: Bezos hoarding money would help you financially.

In an economy, there is a circulating supply of money. As that supply is increased, the value of each dollar goes down. As the supply of money is decreased, the value of each dollar goes up. So if Jeff Bezos effectively removes, let's say, a billion dollars from your economy, each of the dollars you're planning to spend in that economy just went up slightly in value. (Google cryptocurrency “coin burn” if you don't believe me.)

But let me ask you this: if you ***don't*** believe in trickle-down theory, is hoarding still a bad thing?

In the 1980s, back when greed and money were in style, economist Irwin Schiff wrote a comic-book story about how hoarding is necessary to capitalism. In fact, we can't create any wealth without it. The good news is, hoarding can benefit everyone and anyone, not just the super rich. The better news? The act of hoarding can benefit you even if you're not personally hoarding anything.

Schiff's comic book explains why. Imagine three men living on a desert island: Able, Baker, and Charlie. Each one catches one fish per day by hand to survive. It's the equivalent of entry-level work and takes all day just to earn enough to scrape by. Able feels trapped, living “paycheck to paycheck” like this. He wants a better life.

So he spends an entire day inventing and building a fishing net. He's so busy that day, he doesn't have time to catch his daily fish to eat. But he makes the decision that he'd rather underconsume (not eat) and get his net put together. When he's finished the net, he's created capital, made possible by his choice to underconsume. Underconsumption is a form of savings, just as consumption is a form of spending.

The next day, Able fishes with his net and catches two fish! Baker and Charlie, still fishing by hand, each catch one. Since Able only eats one fish a day, he's generated savings with this extra fish. He chooses to save his extra fish for a rainy day. It's Able's first act of hoarding.

Since Able denied himself food for one day (underconsumption), he was able to create the net, which is capital equipment. Capital is always the result of saving. In fact, savings really *are* capital. Even Jeff Bezos, if he borrowed from a venture capitalist to start Amazon, was borrowing some other guy's savings. So when we talk about the system of “capitalism,” we're really talking about a system of using savings (ours or somebody else's) to generate wealth.

Back to the story: now that he has a net, Able doesn't have to spend every day fishing. So he starts building himself a better shelter and some tools to till the soil. After a few weeks, Able is living in an expansive house while Charlie and Baker are still sleeping outside. And Able has a garden that's beginning to sprout vegetables. But Charlie and Baker are still just eating one fish every day. It's all they have time to pursue.

But Able's improvements to his own lifestyle represent growth in the entire island economy. His bigger home, tools, and garden make his life easier, but they also exist as measurable wealth. And because Able now has more wealth, the whole island economy is now bigger and healthier than it was before he made the fishing net. But Baker and Charlie haven't yet benefitted from this bigger economy because they have no savings of their own. They can't participate in this larger economy because they're too busy fishing all day in order to consume.

So far, this story is showing us that when people are encouraged to consume their daily fish rather than save, they miss out on participating in the wealth-creating opportunities out there in the growing economy.

Baker and Charlie recognize that Able has created wealth for himself through the process of savings → capital → wealth. And now, they want to do the same, so they ask if they can borrow Able's net.

But Able worked hard on that net. He didn't eat for a whole day so he could have the time to build it. Taking time off from fishing and eating was a huge risk for him – what if the net hadn't worked? He invested his own time and effort, and he endured hardship and risk to make his fishing net a reality. So he didn't want to just loan it out to others. What if they broke it or lost it?

Baker and Charlie understand Able's concerns, so they ask if they can borrow his extra fish, instead. That way, they'd have something to eat while they spent a day building their own net. And when they were done, they would repay Able with their own extra fish.

But Able isn't having it. He points out that if they failed in building a net, Able would lose his savings. This “straight” loan – where he lends them something and later they pay back the same amount – would give Able no incentive to take the risk of loaning. If they failed in their attempt to build a net, he'd never get his extra fish back. In that scenario, Able would have everything to lose and nothing to gain, while Baker and Charlie would have everything to gain and nothing to lose. That doesn't seem fair.

But Baker and Charlie are motivated to make this work; they want better lives. So they offer to pay Able more in return than he would be loaning them. If he loans them one of his extra fish, they'll pay him back two fish! The hope of receiving back more than he loaned out gives Able an incentive to take the risk: the three men have discovered the concept of interest.

In this scenario, both sides benefit – it's a win-win. Able would be richer (have more fish than he had before) without doing any more work, and Baker and Charlie could use Able's capital (his savings) without having to go hungry, themselves.

But what made this loan possible was the fact that Able had hoarded a fish. If he was still consuming everything he produced (having seconds with his extra fish) , or if he'd given the extra fish to the island seal he felt sorry for, he'd have nothing left over to loan his friends. And without the ability to borrow, Baker and Charlie would have a much tougher time generating wealth for themselves.

Saving -- the act of hoarding -- is what makes this entire scenario possible. Once you understand the role of saving in wealth creation, you don't malign others for attempting to hoard. In fact, you see that hoarding is how we help ***others*** create wealth for themselves. It's not a guarantee, that's true; but it's a better method than confiscating the hoarded wealth of some rich guy, consuming it, burping, and then wondering why our economy sucks so bad.

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