If I create a masterpiece work of art, am I wealthy?
If I sell it to you for $10,000,000 which I then pile in my living room, in place of the canvas, am I wealthy then?
If I then take that $10,000,000 and spend all of it to buy an awesome house, lavishly furnished and my dream car, am I wealthy then?
Yes, the application of time and talent to a few raw products that someone else values.
Incorrect. The value of the taco is not the physical thing, it’s the enjoyment and nutrition from eating it. For a more extreme example: if you were extremely sick, and you take medication that heals you, has wealth been destroyed? You are healthier, so there was value in using the medication.
My wife and I spend about 80% of our disposable income on travel. And the problem with that is that once spent that money is gone. You can’t save or store travel, it is an experience. But I feel we’re wealthier as a result, and will continue to spend money on travel. Some people we know envy us, others think we waste our money. In the end, we’re happier for it.
One man’s trash is another man’s treasure. If collecting wrappers is important to him, then he’ll feel wealthy. In fact, lots of people do that with stupid little figurines and mint condition comic books.
There is a big however to all this and that’s if he stops valuing it. What does that mean? Well, if some day he decides he wants a new car, he might take all his wrappers to the bank and ask to use them as collateral for a loan. The bank will laugh at him because the bank doesn’t value wrappers to the same extent he does.
The same thing can (and has) happen with Apple stock. He may hold it for years thinking it has value, until he goes to sell and finds it’s worthless. It happens with houses as well. Note that a house has an inherent value as a living residence, and you may feel wealthy have it, up until the day you want to sell.
Only when it comes time to sell. The problem with that definition is it means you have to hold on to something you yourself my not value. I don’t care about gold and diamonds, to me they’re just hunks of rock. I would literally rather have a pile of rocks that I could climb.
Only if you measure your wealth based on what other people think, which in my opinion is a terrible way to live.
But that doesn’t change the original question you posed about wealth generation. Where the point I can make something I personally don’t value (like a taco) but that you desperately want. You pay me for the taco, now I have cash that I value, and you get to enjoy a tasty taco. We are both wealthier has a result.
Yes it does.
First, if you steal my apples, you may be happy/wealthy but I will be sad. I was going to use those apples to buy wheat, and now I can’t. If you want, you can call THAT a transfer of wealth. It was taken from me without providing me compensation.
In the case of a raw deal, again it will be ultimately measured in our happiness at the end of the transaction.
Because the end result of the deal isn’t the same. I work all summer to produce wheat (which I don’t like), so that I can trade it for apples (which make me happy). You work to make apples so you can trade them for wheat.
We each want as much as we can get for our labours. If you swindle me into a raw deal, I’ll have fewer apples, and be less happy. I needed two bushels to last through winter, but now I’ll starve some time in March. If I die as a result of your actions, can we still say the same wealth was generated?
There is a huge difference, and it shapes how you participate in all of these economic threads. When you consider all transactions as theft, it allows you to say that the wealthy are thieves. And as criminals it is only right that the rest of us take their stuff, which rightly doesn’t belong to them, but rather to society at large that allowed them to get wealthy. It also allows you to say that the poor, by your logic, are good and pure because they aren’t thieves. Anyone that’s poor got a raw deal, and therefor deserves a chunk of what the wealthy have.
So no, theft and fraud are not valid in contractual obligations.
I disagree. The value of the taco is that it can be consumed. It’s not a Royal Doulton whose value is sitting in a display case. My grandmother started life very poor, and ended up rather wealthy by retirement. And to her wealth meant Royal Doulton Figurines, so she collected and amassed nearly a hundred of them.
Eventually, she decided it was time to sell them so that she could give the money to her family (who didn’t value Royal Doulton). So she handed them to my brother, along with a thick book that details the value of each one, and he sets about selling them on ebay.
Well, turns out, no one valued these little hunks of clay. Ebay was full of people desperately trying to get rid of them, and they were selling for a fraction of what the official price guide said they’d be worth.
That’s wealth generation for you. The market based economy giveth, and taketh away.
Wealth <> happiness. Wealth is used to purchase goods and services that provide some degree of utility, but are often consumed in the process.
How much is a taco worth after it is eaten?
If it kept me alive then a lot.
How much is a vacation worth after you take it? Or a movie worth after you’ve seen it?
How much is chemotherapy worth after you’ve used it?
A taxi driver generates wealth for himself by providing utility to others. Both parties benefit from the transaction, thus wealth is generated.
Not all wealth generation requires an object you can hold and valuate, some wealth is intangible and that’s okay.
2 things hear. If you spent 1000 hrs of your labor you probably lost wealth in the form of lost opportunity. You could have done virtually anything job related and generated more than $505.
To answer your question directly, yes wealth was generated. That’s based on the assumption that the money came from a bank and not a mattress. Banks don’t have the currency deposited to them. It’s lent out on some percentage basis. If it was withdrawn from a bank then that transaction plus millions of others caused the bank to borrow money from the Federal Reserve. At some point more money is printed to match the presumed assets that were purchased with it even though those assets are arguably a secondary event or may not exist at all. It’s a leveraged series of events that can work both ways. Money can be borrowed and the asset purchased with it can evaporate like a dot-com company or even items like houses where the value is dramatically reduced in a short period of time.
My point is that taken on a very large scale those things will be the same, using any reasonably logical method of measuring value. The only way to measure something’s worth is by what people are willing to sell it for, and the only way to figure that out is to see what things are actually being sold for.
“Wealth” is just another word for “stuff”. There’s a lot more stuff in the world now than there was in the past, if only because there are a lot more people in the world than there were in the past, and people don’t have noticeably less stuff than they used to have. Ergo, stuff is being created.
Which ties into what I was saying about the money supply; as the economy grows, it has to grow as well, otherwise each dollar will end up gaining in value (deflation), which has a whole bunch of negative economic effects, not the least of which is that people quit investing, because the money’s going up in value instead of the investments.
So the money supply grows, the number of dollars in circulation grows, and the value of each goes down (inflation). That’s why inflation is good over the long haul; it means wealth is being created.
*Wealth is the term for added value. Currency is the means of exchange, and a way to quantify wealth. That’s I think where **emacknight **and Whack-a-Mole are going off the rails.
I thought it was on the crazy train.
Tomato, tomahto.
It’s spelled tomato.
tomato, tomato.
From an economics and accounting definition, the wealth represented by the taco is destroyed when you eat it in exchange for some (intagible) utility you get from eating the taco. Wealth is the potential to provide utility.
Well, in that case eating the taco has increased it’s potential to provide utility by being converted into macronutrients and stored in my body. The taco is still there, as energy stores in my body.
And what isn’t usable has been converted to fertilizer.
You certainly won’t say the value of oil is destroyed when it’s refined into gas.
Now, what about the chemotherapy drugs? Is its value destroyed when I take it, or increased by saving my life?
Yes. I would. What part of this are you not getting? The value of the drugs and oil is destroyed when you use it. You can’t sell exhaust fumes or used chemo drugs. It has already been converted into another form of wealth.
Converted, not destroyed.
The way the economy is reported on, it isn’t surprising. It gives people the impression that wealth is generated by buying low and selling high. With that level of understanding it’s a miracle we aren’t all back living in caves and eating grass.
I think he meant it is converted to another form of matter that is valueless.