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Its kind of sad how many people dont get this. Its like the first thing you learn when you study economics at any level.
@freemo Uh. Correct me if I am wrong, but isnโt the whole point of currency that it is based on something that is scarce, and thus, by extension, valuable? This was essentially how the gold standard functioned in the US previously.
This obviously does not directly apply to fiat currencies commonly seen today, however even in that case there are penalties for producing unending amounts of cash, so in practice there is a finite cap on circulating cash.
As well, then there are the accelerating returns of capital ownership in modern property-oriented society. People with capital will always make better returns on their wealth than those who do not, and more capital generates more returns. This is one of the mechanisms underlying the growing wealth gap in the US and of course in many other places.
So I guess youโll have to explain what I am missing here. ๐ค
@freemo I see now, but I still find the statement in the image misleading.
Also, in the example, would not such events change the value of gold in the society making the gold of other people equal to less wealth than before?
@gioypi The number of dollars you have is not an indication of wealth. think of wealth as "how well can I live" not "how many dollars do I have in my bank".
Lets think of another example to illustrate that. this time I use an axe I own to go chop down trees and mix some concrete and I use my own man power over 20 years to build a luxury house on a mountain top. All of the wealth here is also generated. It has significantly improved my quality of living, beautiful views, luxury home, I am now "wealthy" where before I had nothing. However in doing so I have not made anyone elses home any less appealing or luxurious. Everyone quality of life other than me is exactly the same as it was before I built my home off in the woods.
So again this is an example of me generating significant wealth for myself without needing to take that wealth from anyone else. Even though having one more home in the world may have reduced the money value of everyone elses home by a few pennies they dont actually have any less wealth than they did before, because wealth is not dictated by the money value over time.
@freemo I get it, nice example. Thanks for the clarification.
However, I wish this was how very wealthy people acquired their wealth. The higher I look, the less relevant it appears to me.
@gioypi Well I wouldnt say its less common as you move up the wealth scale. Its just hard to see as things become more complex. Some wealthy of course steal from others, but there is a great deal of wealth generation from large companies as well. It really just depends on the details as always.
Not really, if the wealth you have is generated and you can demonstrate you are exceptionally good at generating wealth, then it is not hoarding a festering pile, your existance is in fact a service to others and the nation by allowing you to have so much wealth since you can continue to generate more wealth for everyone (including yourself) more so than other people (who have not proven their abilities) might be able to do.
@freemo it is a festering pile unless it is necessary for whatever your wealth generation scheme is, which is unlikely as you have generated it without the pile in the first place. If it wasn't necessary before but is somehow necessary now, it's not exactly your skill it is just a gold mine you happened to stumble upon.
@gioypi
Generally wealth generating schemes generate more wealth the more money they have as an input. So generally every step along the way as they generate wealthy they use that to generate more wealth and a large portion of it is used for wealth generation in increasing amounts, sure.
But also some of it, as you suggest, is just money you have personally for whatever you want to spend it on. But since this is money that would have never existed in the system without you having generated it in the first place, then there is no harm or negativity associated with spending it. Especially when you consider that the spending of that money itself ultimately can go to fund other wealth generating enterprises of other people and helps ensure new people come into the game by winning over some portion of your free funds.
Accumulating wealth you generated isnt bad, it just isnt as good as spending it obviously. But if you generate a billion dollars and then dig a hole and burry it, you've done no more harm than if you never generated the billion in the first place. In fact you've probably done some good because you probably generated money for others along side generating that money for yourself.
With that said, all money will eventually get spent, even if that may not happen till after the person dies.
@freemo Even assuming best case scenario that it helped some, It is still bad if there are more people out there that need help. It's like coming across some food and destroying it, when you know your neigbour is starving. Their money being spent after their death doesn't mean they weren't greedy assholes their entire life. Also it might not be spent for a few generations if they teach their heirs(yeah that's still a thing) to be just as greedy and useless as they were.
@gioypi
That analogy isnt accurate.. It is more accurate to say it is like spending your summer growing tomatoes and instead of giving it to your starving neighbor you can them up and give them to your child, who then uses the canned tomatoes to feed himself or feed a starving naeighboor.
Yea its not "nice" that you had food and let your starving neighboor go hungry and all. But your neighboor is no worse off now than if you never grew that food in the first place.
@freemo I mistakenly assumed that by burry you meant destroy, and not save to dig up later, which makes it worse in my optinion. It's not "not nice" it's bad, really bad.
Also in the analogy you are fed for life (or foreseeable future). Obviously if you have to worry about not having enough food for yourself or your family tomorrow(during a harsh winter) that changes things, but would also be out of context.
@gioypi
@freemo
But is it wealth or money you are generating? If it is wealth then the canned tomatoes analogy is great. Can you generate money without having a country/bank print them?
Thinking about huge multinational companies that keep money in offshore accounts and never spend them I get concerned about inequalities. And since they are companies they could be immortal, so the money never return to the market, but they can be used as leverage. I hope I am not going out of context here, this is what pops into my head when reading @namark 's argument.
@freemo Well as usual I guess we are dancing around the same argument, that might not even be an argument.
The wealth might a be a pie or might not be a pie, dependent on the situation. You might be doing some good, no harm, or some harm. Regardless of all of that, once you have accumulated more than you need (that is can reasonably plan to spend in foreseeable future), it is immoral to not share/spend, if there are people in need.
Mostly agree, but the more than you need being immoral might need some clarification.
A billionair who uses much of their money to create programs to feed the hungry, even if they still have billions in their bank account is acting perfectly morally as they are using those large funds to generate some good for others. So even though they may own far more than they need to survive, it is all perfectly ethical because it is put to good use, even without exhasting that collection of funds.
I dont think it has anything to do with pride or showing off for many (some). Its just that keeping the money means they can generate more and help more.
If I have a billion dollars and give 100% away to buy food for the starving if im lucky ive fixed hunger issues for a short while. at best.
However if I have a billion and only spend 1 million a year to feed the hungry and leave the other 999 million that means I can use that money to regenerate what I spent to feed the hungry by next year and do it again, over and over, and help far more people.
@freemo not convinced that needing 999 million to make 1 a year is any sort of skill. Makes one wonder where did the 999 million come from in the first place (there has got to be some maths to that, I admit I haven't done). And as discussed before if you need it for any actual projects that involve other people the "input" doesn't have to be yours (or remain yours) for the money to do its work.
@freemo @gioypi I agree that wealth can be โcreatedโ from outside of the existing financial system in that basic sense, but in practice, I think it is fair to say that most of what we see today is the shuttling of wealth from one person (or persons) to another within what is fundamentally a finite pool which slowly expands.
I also agree that wealth is not money, but frankly that is somewhat beside the point when money exists solely to act as a means of making wealth liquid/transforms led into other kinds of wealth. This is why we left the bartering system behind.
As well, wealth creation becomes far easier the more wealth you have to begin with. Anyone, hypothetically, can mine asteroids for untold billions, but itโs a lot more accessible when you have the resources to build an asteroid mining company with rockets and mining equipment and staff rather than starting with a few sticks and a rock, metaphorically speaking.
So I find your statements somewhat practically misleading. ๐
@freemo @gioypi As well, of course you took your wealth from someone else when you dug it up. You took it from the environment, from other organisms, etc. It simply wasnโt known or tallied wealth before that, and arguably is only โfreeโ to take because humans really only recognize property ownership as something attributable to other humans, at best.
The Earth is essentially a closed system, more-or-less, so there is no new wealth being created, only unfinished accounting being updated.
In the purest sense, one could perhaps argue that knowledge creation is perhaps the purest form of โwealth creationโ, as the efficiency gains and reworking of existing wealth in ever-more-valuable forms is perhaps one of the most powerful ways to take low-value resources and convert them into higher-value resources.
Not really, it only seems that way until you start trying to model actual economies and make predictions. It breaks down really fast when you try to take that assumption and actually prove it out through models.
The fact is, if we want to accurately model how money flows and changed over time we inevitably wind up with massive wealth generation at every level.
It is really just that its very hard, perhaps impossible, for most of us to see past the indoctrination that has been drilled into most laypeople suggesting money as a finite pie is somehow remotely accurate, in practice, it is not.
I would say your initial posit that most of wealth today is through theft rather than generation isnt really true. Not to say it isnt a significant factor, but I'd say there is a mix of both and much of the wealth that is moved rather than generated is not always the fault of the wealthy person either, it is nuanced.
generally speaking if two people involved in a trade are both acting within their best interests, and are responsible, then wealth is generated through that trasaction. For example if I buy a shovel off a shovel conglomerate, and I use that shovel to go build things with it, then the person who sold me the shovel helped me facilitate the generation of wealth. so the big company selling shovels is helping the world generate wealth more so than stealing it.
On the other hand if I go buy a video game and spend all day playing that video game, and pretty much waste my life away buying and selling video games, then no wealth will be generated by the big company trying to sell video games. But is that the fault of the video game salesman or the person buying it and using it to waste their own time? After all if you just play video games occasionally, as a way to relax, they may ultimately cause you to work harder and better when you are on the clock as you are well rested and energized.
Long story short, as long as people are making responsible choices in their purchases and invest, mostly, in buying things that enable them to generate wealth, then the big companies selling the goods that enable that are themselves generating significant wealth in their communities.
As for the "wealth is not money" argument, you seemed to mis the point... Money is wealth, wealth is not money. Money is a small subset of wealth.
I do agree that as you generate wealth it becomes easier to generate more wealth as well. but thats a good thing because as I stated above the wealth large companies generate is not solely their own, when people are buying responsibly they are also enabling that wealth generation for others. that says nothing of the share holders, of which any one can be one with only a few dollars to their name. So that wealth generation is something we all benefit from and have access to usually.
@gioypi
I am not.
I think it is best understood with an example. You have to understand going in that money is not wealth, and that money is only a small portion of what determines wealth. a person can have no money (a room full of gold bars) and still be extremely wealthy.
With that understanding in mind it is important to realize that wealth is constantly being generated and destroyed. If I buy a shovel for 5$ and go dig up 10,000$ worth of gold in my back yard with it, I have just generated 9,995$ in wealth that didnt exist before. I did not need to take wealth from anyone else to do it.
This is a simple counter example but the idea of wealth generation is in every venture we do, sometimes it is more obvious than others however.