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> The question is whether money spent by individuals on daily necessities would ultimately be better for the economy than money spent by high speed traders exch

> The question is whether money spent by individuals on daily necessities would ultimately be better for the economy than money spent by high speed traders exchanging commercial paper or by a surgeon buying a second yacht. I don't know the answer to that question, but in no case is the money 'pissed away' That isn't the only question, and it also presumes that lower-income people only spend their money on "daily necessities" and not cable, cigarettes, alcohol, etc. It also presumes that wealthy people only spend frivolously, and that they don't invest. Both of these presumptions are likely very wrong. Ignoring moral judgments about how people spend their money, these two propositions (frivolous spending versus "durable" spending) have very different economic implications--frivolous spending is pissing away the money. The cigarette/alcohol/etc industry works to produce a product that will ultimately be consumed--its value is immediately lost. So at one point in time, Joe had $10 and Budweiser had a case of beer--both existed simultaneously, but after Joe buys and drinks the beer, only the $10 remains (in Budweiser's pocket). The value of the beer is literally pissed away, and the economy is roughly $10 smaller (modulo Budweiser's margins). If it was a different product--a home, for example, the home would exist and retain value for a very long time into the future even while the money to buy the home is transferred to the contractors, etc and beyond. The money to buy the home and much of the home's value continue to exist simultaneously for a very long time.

vannevar 9y ago
There are certainly ways of spending money that are more clearly productive than others. But no, the money isn't pissed away just because what is purchased gets consumed. That just means that the path it's on may not be very efficient. It's that path efficiency that ultimately matters, not the value of any one stop. It's a harder thing to measure, because a short, fast path with a few low-productivity stops may be better than a longer, slower path with higher productivity stops, simply because the money gets somewhere else (with a much higher productivity use) faster.
- weberc2 9y ago
  It absolutely is pissed away. Going back to the beer metaphor, at one time, the economy contained the (let's say) $8 used to create the beer and the $10 to buy the beer. After the beer is consumed, only the $10 remains, so the economy is $8 smaller. $8 was pissed away. My whole point is that economics isn't zero-sum, which appears to contradict your point, although I'm confused by your path efficiency remarks.
  - vannevar 9y ago
    No. The $8 that was 'used' to create the beer passes through the hands of the brewer's suppliers and their suppliers, back into the wider economy. It is a medium of exchange, not a consumable. It does not leave the system, short of someone literally destroying it. Economically, the only question is how fast it moves and how many productive assets it leaves behind as it travels its path through the economic network.
    - cam_l 9y ago
      yes..and the economy is much more complex than that. even if I just take the eight bucks and burn it, the exchange value of the rest of the money in society increases. ..because both wealth and money only really exist in relation to the people that use it.

vannevar 9y ago

There are certainly ways of spending money that are more clearly productive than others. But no, the money isn't pissed away just because what is purchased gets consumed. That just means that the path it's on may not be very efficient. It's that path efficiency that ultimately matters, not the value of any one stop. It's a harder thing to measure, because a short, fast path with a few low-productivity stops may be better than a longer, slower path with higher productivity stops, simply because the money gets somewhere else (with a much higher productivity use) faster.

weberc2 9y ago
It absolutely is pissed away. Going back to the beer metaphor, at one time, the economy contained the (let's say) $8 used to create the beer and the $10 to buy the beer. After the beer is consumed, only the $10 remains, so the economy is $8 smaller. $8 was pissed away. My whole point is that economics isn't zero-sum, which appears to contradict your point, although I'm confused by your path efficiency remarks.
- vannevar 9y ago
  No. The $8 that was 'used' to create the beer passes through the hands of the brewer's suppliers and their suppliers, back into the wider economy. It is a medium of exchange, not a consumable. It does not leave the system, short of someone literally destroying it. Economically, the only question is how fast it moves and how many productive assets it leaves behind as it travels its path through the economic network.
  - cam_l 9y ago
    yes..and the economy is much more complex than that. even if I just take the eight bucks and burn it, the exchange value of the rest of the money in society increases. ..because both wealth and money only really exist in relation to the people that use it.