5 ms·

War does not seem to destroy wealth, but redistribute it?

rmchugh 10y ago
the argument is that increased taxation to fund a war effort plus increased industrial output to produce weapons of war leads to redistribution of wealth from the wealthy (who are disproportionately taxed) to the working class (who work in the factories and related industries to produce the armaments).
- mtanski 10y ago
  I'm not sure that holds up in practice post WW2. At least here in the US. As long as we're running wars or never ending wars, wealth gets redistributed from all tax payers to owners of factories building war machines or war services (defense contractors). These owners can be direct or "indirect" stock owners. Sure the people who work in that industry get a "cut" but owners get the most and pay the lest to fund it as taxation on cap gains is lower then earned income.
jellicle 10y ago
When a bomb destroys a building, to whom is the value of the building redistributed to?
- JBReefer 10y ago
  Moloch
- misja111 10y ago
  To the building company that will rebuild it.
  - wiz21c 10y ago
    hence to the people working for that company
  - jellicle 10y ago
    Oh, so the rebuilding is done for free, funded by the value of the original building? No. The rebuilding requires additional work/money inputs to create the new building. The value of the original building is lost forever.
    - RobertoG 10y ago
      "The value of the original building is lost forever." Of course, but if you are a building company, why would you care about that?. There is this idea, that, in a society with very little scarcity, would be almost impossible to make a profit. Your only chance would be to burn everything and start again. I really hope that theory is false.
      - njharman 10y ago
        Why? What is so great about profit? I would be very glad to give up profit for no scarcity.
        jacobush 10y ago
        The ferengi is weak in this one.
        gm-conspiracy 10y ago
        Sorry, I cannot resist adding a reference to gold-pressed latinum.
    - logfromblammo 10y ago
      The resources and energy invested in creating the building are lost forever. The value of the building was never intrinsic to the arrangement of its bricks, but to the desires of its tenants. If all of them died when the building was destroyed, most of the value of the building is indeed lost. The crater still inherits the unrealized potential value of an expansion or remodel of the old building, from those people who were not tenants of the original building, who possibly might have wanted to occupy building space in the place where it stood, yet were somehow unable to do so. Perhaps the old building was full, or didn't have enough contiguous floor space left, or the space available was too expensive, or installing network fiber was not economical. Otherwise, if all the tenants survived and continue to have a desire to occupy building space, the value attributable to them is likely to pass mostly to other buildings in the area, as they seek to relocate. They can also impart potential value to the crater, if they wouldn't mind occupying a new building in the same spot where their old one blew up. Once the potential value of rebuilding in the crater is estimated to exceed the market value of the construction inputs, someone will make the necessary investment and capture the difference by constructing a new building. Value is only limited by the bounds of human desires. The economy only produces a finite quantity of resources and energy per unit of time, though. Whatever is spent on rebuilding in a crater cannot also be spent on new building in a fresh development site, or on building a luxury yacht, or on programming a machine to make a different kind of "ping" noise, or on making all new Taco Bell menu items from the same old ingredients. The value per thing ratio is continuously recalculated, and market prices eventually follow. So when you blow up a building, and don't kill all the people who gave it its value (or at least diminish their desire to consume in relation to their willingness to produce), that excess unmet desire redistributes to everything else in the economy. You're making most things imperceptibly more expensive, and a few things noticeably more expensive, such as the cost of occupying the nearby vacant building space. Flows of resources are easy to calculate, but change in value is nearly impossible to predict.
- mtanski 10y ago
  Skanska? But in all seriousness I would look at multi-national companies and industries "selling shovels" that benefit for rebuilding both sides of war.
  - VMG 10y ago
    Contrast the sale of a car to the sale of a bomb: in the first case, both parties are clearly better off. In the second case, some people would argue that the commons is better off by funding a public good (national defense). If the sold weaponry is not increasing security for the public, or even decreasing it, wealth is destroyed. It's like buying a car and burning it on the spot.
- RobertoG 10y ago
  To the owners of the other buildings, I suppose, they own a more scarce good now. Also, capital destruction give a chance for building again, and it's building again that you can extract value and make a profit.
  - philh 10y ago
    At most a portion of the value of the building has been redistributed. Some of it has just plain been destroyed. Also, capital in its undestroyed form can typically be used to extract value and make a profit. If that weren't true, there'd be little value and profit in building it in the first place. For example, a building can be used to provide people warmth and shelter in exchange for money. That's why the owner desires to own it, and that's why the owner (or someone down the chain) is willing to pay other people to build it.
- mason240 10y ago
  It's troubling that this has to actually be explained.
noarchy 10y ago
The Parable of the broken window: https://en.wikipedia.org/wiki/Parable_of_the_broken_window https://en.wikipedia.org/wiki/Parable_of_the_broken_window
VMG 10y ago
What's the opportunity cost of the defense budget?
jerf 10y ago
You have to consider wealth over a historical time frame, and how it has changed, to understand why people think war might be a mean towards wealth and how that's changed over time. Wealth used to be food, livestock, people (because they can make food and manage livestock), and things generally coveted by all, like jewelry. It was easy to imagine how going to war might increase one's wealth; you simply take their food, livestock, jewelry, and enslave their people. You have to whack their warrior class to do it, but beyond that, conquest was a pretty good deal. Nowadays, actual physical conquest is not that useful for wealth acquisition. Bombing a skyscraper does not give you a skyscraper; it gives you an enormous mess to clean up. Too much modern wealth is in people's heads, or immobile infrastructure, or even just embedded in the ambient relationships between companies and people. A lot of that wealth is so fragile that it can be destroyed by a bad tax policy or poorly-conceived regulation, to say nothing of being literally bombed. Modern wars are still about wealth, of course... it's just a lot more subtle than it used to be, and no longer has much to do with redistribution. Now it's about suppressing a rival, or enforcing your economic will on another country (like what appears to be our current war in the middle east because we wanted a pipeline to go here instead of there, which has since spiraled out of control), but to a large degree even these actions are the exceptions. A lot of what used to be armed conflict now happens in treaty negotiations and diplomacy, threats of embargo and threats of tariff, negotiations in the UN, stuff like that. So it depends on your point of view. The really old ideas of war, that involve actually violence, is generally wealth destructive. If a war is going to stimulate an economy, it's going to be a subtle sort of economic stimulus from producing real goods and providing an impetus to reorganize the economy, not because of the spoils of war, which are all but useless in the modern era. But if you look at war in the broader sense, it has been almost entirely about redistribution, albeit mostly of future wealth (since current wealth is generally too expensive to move around). For instance, you don't really understand modern international climate negotiations if you think it is truly just about "climate"; it may be about that, but it is also a battle on the redistributive battleground.
xyzzy4 10y ago
If you're hungry and you attack someone, you can get their food.

the argument is that increased taxation to fund a war effort plus increased industrial output to produce weapons of war leads to redistribution of wealth from the wealthy (who are disproportionately taxed) to the working class (who work in the factories and related industries to produce the armaments).

mtanski 10y ago
I'm not sure that holds up in practice post WW2. At least here in the US. As long as we're running wars or never ending wars, wealth gets redistributed from all tax payers to owners of factories building war machines or war services (defense contractors). These owners can be direct or "indirect" stock owners. Sure the people who work in that industry get a "cut" but owners get the most and pay the lest to fund it as taxation on cap gains is lower then earned income.

jellicle 10y ago

When a bomb destroys a building, to whom is the value of the building redistributed to?

JBReefer 10y ago
Moloch
misja111 10y ago
To the building company that will rebuild it.
- wiz21c 10y ago
  hence to the people working for that company
- jellicle 10y ago
  Oh, so the rebuilding is done for free, funded by the value of the original building? No. The rebuilding requires additional work/money inputs to create the new building. The value of the original building is lost forever.
  - RobertoG 10y ago
    "The value of the original building is lost forever." Of course, but if you are a building company, why would you care about that?. There is this idea, that, in a society with very little scarcity, would be almost impossible to make a profit. Your only chance would be to burn everything and start again. I really hope that theory is false.
    - njharman 10y ago
      Why? What is so great about profit? I would be very glad to give up profit for no scarcity.
      - jacobush 10y ago
        The ferengi is weak in this one.
        gm-conspiracy 10y ago
        Sorry, I cannot resist adding a reference to gold-pressed latinum.
  - logfromblammo 10y ago
    The resources and energy invested in creating the building are lost forever. The value of the building was never intrinsic to the arrangement of its bricks, but to the desires of its tenants. If all of them died when the building was destroyed, most of the value of the building is indeed lost. The crater still inherits the unrealized potential value of an expansion or remodel of the old building, from those people who were not tenants of the original building, who possibly might have wanted to occupy building space in the place where it stood, yet were somehow unable to do so. Perhaps the old building was full, or didn't have enough contiguous floor space left, or the space available was too expensive, or installing network fiber was not economical. Otherwise, if all the tenants survived and continue to have a desire to occupy building space, the value attributable to them is likely to pass mostly to other buildings in the area, as they seek to relocate. They can also impart potential value to the crater, if they wouldn't mind occupying a new building in the same spot where their old one blew up. Once the potential value of rebuilding in the crater is estimated to exceed the market value of the construction inputs, someone will make the necessary investment and capture the difference by constructing a new building. Value is only limited by the bounds of human desires. The economy only produces a finite quantity of resources and energy per unit of time, though. Whatever is spent on rebuilding in a crater cannot also be spent on new building in a fresh development site, or on building a luxury yacht, or on programming a machine to make a different kind of "ping" noise, or on making all new Taco Bell menu items from the same old ingredients. The value per thing ratio is continuously recalculated, and market prices eventually follow. So when you blow up a building, and don't kill all the people who gave it its value (or at least diminish their desire to consume in relation to their willingness to produce), that excess unmet desire redistributes to everything else in the economy. You're making most things imperceptibly more expensive, and a few things noticeably more expensive, such as the cost of occupying the nearby vacant building space. Flows of resources are easy to calculate, but change in value is nearly impossible to predict.
mtanski 10y ago
Skanska? But in all seriousness I would look at multi-national companies and industries "selling shovels" that benefit for rebuilding both sides of war.
- VMG 10y ago
  Contrast the sale of a car to the sale of a bomb: in the first case, both parties are clearly better off. In the second case, some people would argue that the commons is better off by funding a public good (national defense). If the sold weaponry is not increasing security for the public, or even decreasing it, wealth is destroyed. It's like buying a car and burning it on the spot.
RobertoG 10y ago
To the owners of the other buildings, I suppose, they own a more scarce good now. Also, capital destruction give a chance for building again, and it's building again that you can extract value and make a profit.
- philh 10y ago
  At most a portion of the value of the building has been redistributed. Some of it has just plain been destroyed. Also, capital in its undestroyed form can typically be used to extract value and make a profit. If that weren't true, there'd be little value and profit in building it in the first place. For example, a building can be used to provide people warmth and shelter in exchange for money. That's why the owner desires to own it, and that's why the owner (or someone down the chain) is willing to pay other people to build it.
mason240 10y ago
It's troubling that this has to actually be explained.

noarchy 10y ago

The Parable of the broken window: https://en.wikipedia.org/wiki/Parable_of_the_broken_window https://en.wikipedia.org/wiki/Parable_of_the_broken_window

VMG 10y ago

What's the opportunity cost of the defense budget?

jerf 10y ago

You have to consider wealth over a historical time frame, and how it has changed, to understand why people think war might be a mean towards wealth and how that's changed over time. Wealth used to be food, livestock, people (because they can make food and manage livestock), and things generally coveted by all, like jewelry. It was easy to imagine how going to war might increase one's wealth; you simply take their food, livestock, jewelry, and enslave their people. You have to whack their warrior class to do it, but beyond that, conquest was a pretty good deal. Nowadays, actual physical conquest is not that useful for wealth acquisition. Bombing a skyscraper does not give you a skyscraper; it gives you an enormous mess to clean up. Too much modern wealth is in people's heads, or immobile infrastructure, or even just embedded in the ambient relationships between companies and people. A lot of that wealth is so fragile that it can be destroyed by a bad tax policy or poorly-conceived regulation, to say nothing of being literally bombed. Modern wars are still about wealth, of course... it's just a lot more subtle than it used to be, and no longer has much to do with redistribution. Now it's about suppressing a rival, or enforcing your economic will on another country (like what appears to be our current war in the middle east because we wanted a pipeline to go here instead of there, which has since spiraled out of control), but to a large degree even these actions are the exceptions. A lot of what used to be armed conflict now happens in treaty negotiations and diplomacy, threats of embargo and threats of tariff, negotiations in the UN, stuff like that. So it depends on your point of view. The really old ideas of war, that involve actually violence, is generally wealth destructive. If a war is going to stimulate an economy, it's going to be a subtle sort of economic stimulus from producing real goods and providing an impetus to reorganize the economy, not because of the spoils of war, which are all but useless in the modern era. But if you look at war in the broader sense, it has been almost entirely about redistribution, albeit mostly of future wealth (since current wealth is generally too expensive to move around). For instance, you don't really understand modern international climate negotiations if you think it is truly just about "climate"; it may be about that, but it is also a battle on the redistributive battleground.

xyzzy4 10y ago

If you're hungry and you attack someone, you can get their food.