When it coems to human versus physical capital, human always wins. This is why redistribution plans never work.

Throughout history there are those who can as compared to those who cannot. As we progress, more opportunities arise yet the only thing that keeps expanding massively is excuses.

There was a time when knowledge was very expensive. Consider the amount of information that President Reagan had when he was in the White House. It is safe to guess that he probably had more than anyone else on the planet.

If we compare that to today, it is a smidgeon of what anyone with a smartphone can tap into. Much of the world's knowledge base is online. This is only improving with AI. With each new improvement (iteration), we see the ability to present knowledge in a more coherent fashion.

Source

All of this is available for basically nothing.

Human Capital Versus Physical Capital

The best example of this was post-World War 2.

Both Germany and Japan were obliterated by the war. These two countries saw massive bombing. Casualities were enormous while infrastructure was almost non-existent.

Another factor is these countries has few natural resourcs. Unlike the Soviet Union, it was not a country that had an abundance of precious metals.

The same is true for China.

Yet, notice what happened. In 1991, the Soviet Union imploded. As for Japan, Germany, and China, each of these served as the second largest economy in the world.

How did countries that were poor in physical capital (resources) develop booming economies whereas one of the wealthiest in the world, the Soviet Union, fell apart?

The answer lies in the human capital. We see the resourcefulness, innovation, motivation, and drive of each nation. Certainly, other factors such as demographics ultimately caused issues. Nevertheless, the rise from total destruction was very impressive.

Currency

This is a major factor in currency.

There are still many who believe that currency backed by metals is the way to go. That is not what gives it value.

We see this by looking at monetary history. Roman coins were the most desired during that Empire. This was not due to the metallic content. There were coins from neighboring kingdoms which surpassed the Roman coins, even in the same denomination. This means they had greater intrinsic value yet were less desireable.

Why?

The Roman Empire was the strongest in the world at the time. It had the largest economy, most powerful military, the best education, and the greatest trade. In other words, the physical capital of the other kingdoms could not overcome the human capital of the Romans.

Until, of course, the Romans lost it.

It is not the guns or jails that make a currency strong either. Instead, we look at the economic productivity that is tied to a currency. Naturally, this comes in many forms, with advancements in law, banking, manufacturing, comptuers, science, education, and a host of other innovated areas.