Is it really possible for a nation to become wealthy (or is wealth just a temporary perception that ends up bursting like a bubble?)
The reason I ask is this: When you think about it, all revenue is simply a transfer of money. You can't earn money without taking it from someone. So can an economy really grow larger?
I have the answer to this, it will be in an upcoming post.
Editor's note: The issue has since been addressed in this article.
Yes if I mine gold out of my back yard. And sell my booty for the lump some of $10000. Then I go and buy a new 10000 dallor dirt bike I have boosted the economy buy 10000 as nobody lost and I won and the dirt bike dealer won. Win Win. So yes an economy can get better and bigger buy creating things to sell that are worth more than they cost to make. If I am happy with the deal and you are happy we both win increasing the economy.
ReplyDeleteAnonymous,
ReplyDeleteyou are correct that wealth can seemingly appear from nowhere if the objects are mined or grown (meaning no money has been paid for them).
But there is a negative effect, though. The more you mine, the less wealth there is left to mine in the future, so it's not entirely a positive.
Also, did you REALLY get that gold for free? After all, you did pay money for the land, didn't you?
It doesn't "appear out of nowhere". It is produced. And yes, this creates wealth.
ReplyDeleteIt seems that you are claiming that the amount of real wealth in existence has never, and can never change. By this theory (and definition of wealth) Adam and Eve, assuming they existed, must have been VERY rich. And each person today is, on average, about 1/6000000000Oth as rich as they were combined. How is this at all logical?
By the way, the other Anonymous never claimed that he got the gold for free.
Anonymous,
ReplyDeleteyou write:
"It seems that you are claiming that the amount of real wealth in existence has never, and can never change. By this theory (and definition of wealth) Adam and Eve, assuming they existed, must have been VERY rich. And each person today is, on average, about 1/6000000000Oth as rich as they were combined. How is this at all logical?"
Of course wealth can't change (due to trade). Perhaps I shouldn't say "of course", because that fact is not obvious except to the most intelligent minds.
The only way the wealth of trade related items in the world can increase is when the resources of the earth accumulate. Money can be created by printing it (which isn't truly creation of wealth, because it results in inflation and dilutes and devalues other money already in existence). It's obvious that printing money isn't creation of wealth, because if it was, nobody would need to work, everybody would print money.
As for the value of total assets now being greater than they were when early humans were around...well, obviously there's one primary reason for that: inflation. People decide to charge a bit more each year for the goods they sell (say, 2%). That is NOT a creation of wealth, because although they then receive more money for the goods, someone else offsets that by paying more for the goods.
As for Adam and Eve, we are no wealthier now (through trade) then we were when the first humans existed. All wealth initially came from earth resources. Either food was grown or items were transformed from the rocks etc.
Being began to barter items, to purchase with other items, with gold, with money. People began to value land and pay for it with money etc. Governments assigned land to people who decided to colonize the area. In that respect, the government was giving up the value of the land in order to attract a population.
There has NEVER been an actual increase in wealth from trade. I don't know why you can't figure this out. Wealth is either in a form of currency or in the form of a resource or asset (or intangible asset) that you sell to or exchange with someone.
EVERY product originally comes from materials from the environment. That is not wealth that is created.
To be created, it has to come out of nowhere, literally. Environmental resources don't come out of nowhere. They come out from a location, and when those items are used, the earth's resources dwindle. You can't get someone for free.
And about the gold. I never said he claimed he got the gold for free. But if he wasn't claiming he got the gold for free, then there was NO POINT being made, because if he paid for the gold then it meant he would have agreed with me (that wealth is transferred between buyer and seller, not created).
You just dont get it. PUT DOWN YOUR CALCULATOR.
ReplyDeleteExample
Say I build a machine that takes $1,000 worth of raw materials and produces a vehicle worth $10,000. I then sell that car to someone else. I have created $9,000 to the economy.
Wealth is gained EVERY TIME people exchange goods and both are more happy with the trade than they were before. Wealth is not a measure of gold or silver it is a measure of worth. If that car is worth $10,000 or more to all the people who buy it than wealth is gained. They are gaining a $10,000 car and I am profiting $9,000.
Also please quit bringing up you intelligence level it is making you look dumb(seriously though it is)
I read on about the resources and this is your main problem. Non tangible goods hold value. Like education for example. Education is a everlasting resource and can keep coming making more out of the natural resources we have.
ReplyDeleteFor example a large section of iron ore would have held little or no value to Adam and Eve. But now days it is a very profitable resource.
Anonymous,
ReplyDeleteI've countered every single argument made. You haven't.
you write:
"PUT DOWN YOUR CALCULATOR."
Are you saying that it doesn't matter, logically, whether the numbers add up?
You write:
"Say I build a machine that takes $1,000 worth of raw materials and produces a vehicle worth $10,000. I then sell that car to someone else. I have created $9,000 to the economy."
False. The economy isn't $9,000 wealthier.
Upon the sale, you would be $9,000 wealthier and the people who bought the raw materials from you would be $1,000 wealthier. But the person paying the $10,000 to you is then $10,000 less wealthy. Overall, the economy is no different after the sale. There is no increase in wealth.
You refuse to explain how an increase in wealth can occur when an equal amount of money is added to the economy and then subtracted at the same time.
You write:
"They are gaining a $10,000 car and I am profiting $9,000."
Again, the economy isn't wealthier overall. You have a profit, but you took the money from someone.
Anonymous,
ReplyDeleteyou write:
"Non tangible goods hold value. Like education for example. Education is a everlasting resource and can keep coming making more out of the natural resources we have."
There is no wealth gain from the actual purchase of education, because the student pays an amount equal to the amount the school receives.
However, education can result in productivity gains (but not wealth gains).
I never said non-tangible goods don't hold value. But regardless of the value, they cannot increase wealth of the economy.
Whatever the value of the non tangible good is (according to a buyer and a seller), the seller's wealth increases but then the buyer's wealth decreases by the same amount. No change overall.