Your cruise ship sinks, you and one other person, a stranger, are the only survivors, and your lifeboat lands on a deserted island. The two of you have no provisions. Your survival depends on wresting your sustenance from the island. You quickly learn the essentials of both economics and moral philosophy. Or you die.
Lesson one, the foundation for everything else: you are more interested in your own survival than that of your companion, and likewise. You’re both self-interested, because you have to be. The next lesson: production is the foundation of your island economy, not consumption. You can’t eat a coconut that hasn’t been gathered. Fruit must be picked, fish caught, huts built, and fresh water found. Production requires effort and an accurate assessment of reality. There are penalties, not payoffs, for sloth or delusion.
If the two of you grow tired of living hand-to-mouth and want to make life easier in the future, perhaps by setting up a fresh water delivery system or cultivating plants, you will have to plan, forego leisure time and current consumption, and use some of your resources. That’s savings and investment: using today’s surplus and effort to generate tomorrow’s improvement and wealth.
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