Creation of wealth = when does it happen?

[Gary Allan]

Okay = let's see how we can spin this one up.

Let's see what you would consider a "wealth creating" anything (process, invention, discovery) and what is your basic criteria for determining the "creation" part of it.

Just want to see how many are fooled by "wealth conversion".

 

[Amkeer]

You create wealth when you have more assets than debt. The key is to spend less than you make enabling you to diversify the remaining cash into instruments that will allow growth, ie, real estate, stocks, bonds, notes, cd's and collectibles.

It sounds simple yet the majority do the opposite.

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[brianl703]

I thought wealth creation was taking raw materials and turning them into a finished product which has a value that is much more than that of the raw materiels.

 

[Gary Allan]

Well ..we're not going on the course that I intended here....


Okay ...this is NOT personal wealth creation. This is "creating new markets" that I'm talking about. And by "new markets", I don't mean that I come up with a new PlayStation ...so I "rob" from the gaming and TV sales electronics markets to "make my wealth" ..but in fact, enable an "expansion" of oportunity.

Take the development of one fuel source over another. Wood being the first. When coal was first mined ..it may have merely displaced members of the "wood choppers guild" and employed coal miners guild workers instead. If the relative output (in relative productivity of the product) was merely an exchange ...so what? You just robbed Peter to pay Paul. If on the other hand, when you developed a way to make coal production support a vast expansion in industrial development ..you've effectively "created wealth".

The point I was hoping to get sloshing around here is that antiquated technologies or fads come and go ..but if you don't have a continually expanding economy ....you're not doing anything except figuring out how to turn someone else's money into yours. Any rhetoric to the contrary is BS. This is why most of that "pull yourself up by your bootstraps" horsecrap that Limbaugh and the likes (many here) tout as some "life ethic" canNOT work for everyone UNLESS you have continued expansion. If not ..you've merely created a new "loser" since you are a winner. So the philosophy is effectively a socially preditory one. "Go ahead! Take it from them! They don't deserve it!! while also saying ..."Those people just don't get it!

Take an expasion in the tool machine business. If I invest and work it right ...I win. But if not me, two things happen ...either the lack of competition raises the price of the service ...or someone else enters the market. No new wealth is created. It's just distributed among the current members. If not accompanied by a expansion to the total economy ...you've just exchanged money with some other sector.

 

[TooManyWheels]

Gary - Are you talking about the cooperation vs competition meme, ala Dr. Deming, some religions, and the social justice movement?

By cooperation you use the shared intelligence of the whole system to "make the pie larger" (create value) and everyone gets a share of the larger pie, as opposed to just appropriating the pie slices from others, the dominant characteristic of American society.

 

[Bob Woods]

Some of the wealthest people in this country have gotten that way by using other peoples money to make money that is then converted to assets. Aquired and held assets are wealth. Its the old "He who dies with the most wins" After one earns enough to pay for lifes expenses money is just a way of keeping score.

 

[GROUCHO MARX]

Gary, did you put an increasing population into the equation? Not much opprtunity for wealth creation with just Adam and Eve.

 

[TooManyWheels]

Simply put, wealth is created when an idea is put into action which creates more value for the society as a whole than it consumes to implement.

The value part of that gets very convoluted. Some things that create value are ideas and devices which create new capabilities to do "good", or time saving devices which allow people doing "good" to do more of it. The idea of "good", should, as a first approximation, be considered to be the health and welfare of the society. Past that is where it really gets tricky, as the idea of good is really a philosophical question, and a relative one at that, as different societies have different philosophies.

Some things that are not considered value are remediation costs for a social problem like air pollution, or crime, or rebuilding costs after 911, or the costs of wars.

The cost part is convoluted also, but you start looking for them in the social and environmental area, per the spirit of Triple Bottom Line accounting.

[ August 06, 2004, 04:17 PM: Message edited by: TooManyWheels ]

 

[nortones2]

War, pillage and piracy. Its not complicated Otherwise our aristocracy wouldn't be.

 

[rpn453]

I'd say wealth creation is the creation of something physical that makes our lives better. This includes discovery of a resource or refinement of a resource.

[ August 06, 2004, 07:35 PM: Message edited by: rpn453 ]

 

[k1xv]

It happens when the owners take the enterprise public with an Initial Public Offering (IPO), cash out, and take the small investors to the cleaners

 

[tweeker43]

wealth is neither created nor destroyed, merely changed in form.

 

[Al]

China is creating wealth. We aren't. If you add up the total money supply and subtract public and private you would have some idea. The other thing you need to do is add invested capital (including unsold goods) but that gets hairy bc you might not realize gain from the goods and invested capital.

So in our case I would think it obvious that we as a nation have stopped creating wealth. The only thing we have created is more Gov/Private Debt,illegals and Lawyers-all things that hurt the equation.

.

 

[1sttruck]

Wealth on a large scale is created when engineers design and develop products that people manufacture and buy. This happens regardless of historical precedent, culture, type of government, race, religion, etc. Even resource extraction relies upon processes, materials and equipment designed and developed by engineers that people manufacture and buy. Wealth on a smaller scale can be generated by developing and selling land, financial instruments, insurance, etc., but it also relies upon products being designed, developed, manufactured, and purchased. I guess you could build a 'wealth pyramid' with manufactured products serving as the foundation.

 

[Gary Allan]

quote:

---

Gary - Are you talking about the cooperation vs competition meme, ala Dr. Deming, some religions, and the social justice movement?

---

No not really. Interesting though ...(thought cloud appearing above head).

quote:

---

Wealth on a large scale is created when engineers design and develop products that people manufacture and buy.

---

Not if they merely take the place of obsolete or antiquated products out of the same reveue pool. Let's say I build a better airplane. It moves more people cheaper ..so more people fly. What did those people do with their money before I made airfare more affordable? Take trains ..busses, their cars? That is, you've merely "exchanged wealth" with a former sector (there are exceptions to this, naturally ..but for the moment we'll ignore some "side effects").

quote:

---

Gary, did you put an increasing population into the equation? Not much opprtunity for wealth creation with just Adam and Eve.

---

Good point to ponder GM. I look at an "emerging market" like China as "creating wealth". There is something there that wasn't there before. This also happened in the industrial revolution and during the development of our nation (railroad, gold, coal, and oil barons).


On the other hand if China merely robs S. Korea and Japan of market share ...where is the 'creation'?

If you just go out and make an new "pet rock" ...and YOU become wealthy because of it ..

...then typically this theory applies..

quote:

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wealth is neither created nor destroyed, merely changed in form.

---

In the absense of expansion ..there is NO wealth creation ..merely "conversion" (as in from yours to "theirs").

This exercize was just to see if anyone thought that making a bonanza for the individual is truly a creation of wealth (like one infamous blow hard entertainer masquerading as a conservative commentator would lead you to believe on his radio show

)...and not merely being the fittest of the pack and getting the lions share of the "pie" (which the fittest most certainly do deserve).


With that thought in mind .......(sliding in a

) ..how do you now feel about the upper tier taxation? That is, does an entrepeneur (in the absense of "expansion") truly employ that many people and do all that much for the society without displacing just as much income somewhere else? Hasn't he just unemployed or underemployed just as many in his or her aquisition of individual wealth???

Just another "spin"

..and I'm always open to opposing points of view

 

[GROUCHO MARX]

Gary, my point about an increasing population is that "creation" of wealth is ultimately a ponzi scheme.

Everything is ultimately zero sum.

 

[Dan4510]

From all the floundering here, I guess no one on the board has a passing acquaintence with Adam Smith's "An inquiry into the Nature and Causes of the wealth of nations?"

Below is an excerpt from Book IV in which Smith discusses what is wealth and what wealth is not.

***************************************************
POLITICAL economy, considered as a branch of the science of a
statesman or legislator, proposes two distinct objects: first, to
provide a plentiful revenue or subsistence for the people, or
more properly to enable them to provide such a revenue or
subsistence for themselves; and secondly, to supply the state or
commonwealth with a revenue sufficient for the public services.
It proposes to enrich both the people and the sovereign.
The different progress of opulence in different ages and
nations has given occasion to two different systems of political
economy with regard to enriching the people. The one may be
called the system of commerce, the other that of agriculture. I
shall endeavour to explain both as fully and distinctly as I can,
and shall begin with the system of commerce. It is the modern
system, and is best understood in our own country and in our own
times.
***************************************************


Dan

[ August 07, 2004, 01:56 PM: Message edited by: Dan4510 ]

 

[Pitbull]

I would define wealth as a clear conscience and feeling at peace with yourself. You create it by being intouch and aware and following your true nature. You will find that ego is involved with most other definitions of "creation of wealth".

 

[nortones2]

Gary: I'm not sure I accept this entirely "Millions of the rabble aquired gainful employment and afforded themselves a higher standard of living", When concentrated into urban areas, what would suffice in uncrowded rural areas became a cause of high infant mortality, as we all know from continued habits of rural animal co-habitation, and from lack of clean water supplies and other sanitation measures. IIRC the IR transformed society from an agricultural, dispersed, largely self-sufficient population to one with a significant and growing number crowded into towns, depending on paid employment, reducing feed-stuff production, indutrialised food of debatable quality and with a deadly infrastructure, until the age of municipal cleansing and interference in the market re food adulteration. In turn, the improved urban countermeasures on contamination of water from sewage, etc, depended on a sufficiency of (talking of the UK here) of municipal revenue and the will to use it for social purposes. So between the influx into towns and a "higher" standard of living, there was a significant spell of problems and suffering by a popualtion whose situation was approaching chaos. Hence Marxian and other utopian ideas. All this took quite some time to resolve, involving the growth of counterbalances to the market (the dreaded Gubmint!) and there are still issues of urban tension, which place doubt on whether wealth is adequately measured via GDP alone. which is quite enough for now!

 

[Gary Allan]

I didn't say that my belief or understanding didn't have minor flaws. That is, you can "pick appart" my examples all that you care to. We're not debating on whether the industrial revolution was "beneficial" or not. It's only "worth" in this discussion was that it was "expansionist" in nature. As in 300 times as many widgets could be produced ..and therefore sold ..yadayadayada (ripple effects).


...but can you describe a true "creation of wealth" that is so touted by our right wing popagandists that has little or no basis in reality? That is, the aquisition if individual wealth, in the absense of an expansionist economy, is merely a "shift" in wealth from several to few. There is "no creation" per se'.

This point is sorta a back door assault on the delusional theory that you get more from a jar full of dimes than you do from a jar full of quarters (taxing the higher earners less and the lesser earners more). The fact is, even if the moderately wealthy do employ many ..in the absence of expansion, you've merely moved MORE income into a sheltered state ...increasing the burden upon the middle rungs of the ladder.

This is where most of US dwell ..and get to pay for those who escape the "toll".