While it seems obvious, it needs to be stated conclusively. Laws do not create wealth. Innovation is the most likely creator of wealth. When we find an easier way to compute or a method which uses less resources, we are innovating and creating wealth. Laws do not create innovation and thus are unable to create wealth.

Minimum wage laws, for example, do not create wealth. They redistribute wealth or they redistribute jobs, depending upon the data you use and how you interpret that data. Job creation laws, like road construction laws, redistribute jobs by diverting cash from other areas of the economy through taxes or bond issues.

Laws can destroy wealth. The outlandish U.S. lead paint laws made some real estate nearly worthless. The anti-DDT laws destroyed crops and killed millions with the stroke of a pen.

One might argue that ordinances can produce wealth by creating special use zones of prosperity. The flaw in the argument is that there must have already existed laws which forbade that special use and a change of ordinance is more like a repeal of a law which destroyed wealth. The same is true of tax laws. While some new tax laws may encourage wealth building, it does so at the expense of the wealth destroyed by the law which made that new tax law illegal in the first place.

Do we need laws? Most definitely. We need laws to protect our property. What we don’t need is regulation of association. It is through association with others that we are most likely to stimulate innovation and in return wealth creation. Any law which limits or changes association destroys wealth and hurts everyone.