Wealth
Is wealth zero-sum? Or in other words, "can wealth be created?"
posted by Dollars and $ense at 4:28 PM |
4 comments
Is wealth zero-sum? Or in other words, "can wealth be created?"
posted by Dollars and $ense at 4:28 PM |
4 comments
4 Comments:
Well, according to classical economic theory of production possibility frontiers, the answer to that question is "no, not without the discovery of new resources." I'm inclined to agree with the text of that conclusion, but perhaps not with the spirit. The discrepancy here is that new wealth is a very vauge term in my opinion. What do we really term wealth? If wealth means an overall, macro-level value of everything, I believe it is possible to create wealth by simply finding more valuable uses for the resources we have.
Take for example, a computer. It's really just a hunk of metal, plastics, etc. configured in complicated arrangements that make the whole far more valuable than the sum of its parts. The same amount of raw material (and even work put into manipulating that material) would cost far less than a computer today. That difference is made up by entrepreneurial ingenuity, which creates the difference: wealth. So, with innovation and progress we can find new, inextinguishable human resources, thereby creating wealth.
October 25, 2004 at 7:44 PM
I was thinking about it more like this...
Say Bill Gates invented computers (of course he did not), but he creates Microsoft and people invest in it and it has shareholders and becomes the corporation that it is today. Others like this idea so they invest too and because computers are the new wave, people buy them and so the shareholders make money, and the employees make some of that money but in this whole process, isn't it just a redistribution of wealth? From the consumers to the investors and employees?
October 25, 2004 at 8:20 PM
Yeah, I think that you can't equivocate wealth creation and industry creation. Think about it like this: All that money is getting fueled into that industry by consumers buying the product. All those consumers pay for these products with the same income (for the most part), at the lowest level by those who work in food production, or other menial jobs that are still paid by using up the same resources. The only difference is that now that purchase is part of a regular market basket of goods. This has only really spurred on consumption and shifted purchasing priorities, not increased overall wealth.
October 25, 2004 at 8:28 PM
That's what I'm saying! That's where my question originally comes from. I mean, yes, we make life "better" by offering these things, but does that necessarily create wealth? Is wealth relative? I have a computer because I worked hard and bought one (which will be the case here soon hopefully), but am I wealthier because I bought a computer for $1000? This is a fairly circular discussion, but I thought that it would be an interesting thing to think about.
October 26, 2004 at 3:06 AM
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