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Wealth isn't zero sum.
by missedthecue 6y ago
Wealth isn't zero sum.
- sp332 6y agoYeah I think that's the point.
- missedthecue 6y agoTherefore, it's not a real problem that Jeff Bezos owns 10% of Amazon. You wouldn't be any better off if he owned 9% or worse off if he owned 11% instead. It's a wedge issue.
- mistermann 6y agoIf half of Jeff's shares were transferred to a non-profit organization that assists homeless people, would that make a physical difference in the world, or would it have no effect?
- wizzwizz4 6y agoThat in no way follows.
- mac01021 6y agoWell.... If he owned 9% instead of 10% and I owned the difference of 1%, then I would be better off.
- missedthecue 6y agoAnd if my grandmother had wheels she'd be a bicycle.
- sp332 6y agoRight. It's much more of a problem that his employees are getting less value than they create for the company, and he is taking a lot of the difference. Since all billionaires have made their fortunes this way (or inheriting from someone who did), billionaires should not exist. P.S. He owns 11.1% and had more before his divorce.
- option 6y agoPeople often like to say that economy is not a zero sum game. But reality is that economy is not a game and, arguably, can be better modeled as a set of games, some of which are zero sum.
- dvt 6y agoAcademically, this might be true, but in the real world, wealth (like most scarce things: high-quality partners, precious metals, Michelin stars) tends to be zero sum.
- deleted 6y ago[deleted]
- btilly 6y agoI strongly disagree. In the real world, wealth is very much not zero sum. Look around where you live, at the things that you value. How many of them were created with human effort, versus just existed in nature? Look at everything from computer you're typing on to the chair that you're sitting in to the roof over your head. EVERYTHING that was created with human effort is an example of wealth creation.
- dvt 6y ago> EVERYTHING that was created with human effort is an example of wealth creation. Without dismissing your point, I would strongly push back against effort being synonymous with wealth creation. Having grown up in post-Communist Eastern Europe, there was no virtually correlation between the two.
- btilly 6y agoExcellent point. The wealth created is not strongly correlated with the effort put out. And we've all gotten wealthier as we've moved from high effort low return activities (eg sowing fields by hand) to low effort high return activities (eg computer programming).
- jjoonathan 6y agoLikewise, "a rising tide floats all boats" is a lot more convincing when the tide is rising and the boats are floating.
- rayiner 6y agoWe’re living in an unprecedented area of the rising tide lifting all boats! Annual consumer expenditures in the US have doubled since 1990: https://www.statista.com/graphic/1/247455/annual-us-consumer-expenditures.jpg https://www.statista.com/graphic/1/247455/annual-us-consumer.... In my home country of Bangladesh it has tripled since 2000: https://www.ceicdata.com/datapage/charts/ipc_bangladesh_annual-household-expenditure-per-capita/?type=area&from=2000-12-01&to=2016-12-01&lang=en https://www.ceicdata.com/datapage/charts/ipc_bangladesh_annu....
- jjoonathan 6y agoAsia is a growing economy. I have no trouble believing that the tide is rising and the boats are floating in Asia. In the United States, it's a different story. The tide is rising, but most boats have not been rising with the tides for about 40 years, and that's troubling. https://www.epi.org/publication/swa-wages-2019/ https://www.epi.org/publication/swa-wages-2019/ The figure you linked does not indicate adjustment for inflation and does not segment expenditures by wealth, which is important, because the US economy as a whole is growing, but more than 100% of the growth is flowing to the top. The rich get richer, the poor (and middle class) get poorer. You have to segment by income to see this trend.
- rayiner 6y agoWages are a bad metric because they exclude various non-wage compensation, tax transfers, etc. Consumption is a more direct measurement of whether things are getting better. It’s also better because it naturally excludes the super wealthy that making a bunch of paper income from the growth of equity value, but it actually consuming proportionally to that increased wealth. The idea being that I don’t really care about how much Bezos’s stock is worth except insofar as it impairs my own ability to buy stuff. Inflation adjustments are tricky because it’s not really obvious how to measure inflation. But even adjusted for CPI inflation personal consumption expenditures have been steadily increasing in the 20th century: https://alfred.stlouisfed.org/series?seid=A794RX0Q048SBEA https://alfred.stlouisfed.org/series?seid=A794RX0Q048SBEA
- ChomskyNormal4m 6y agoWealth is not zero sum, but whether the wealth a worker creates is kept by him or sent to an heir in a dividend check is zero sum.
- missedthecue 6y agoThe labour theory of value has been proved irrelevant for 200 years now. Quackery of that nature should not be promoted in this day and age.
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- ChomskyNormal4m 6y agoYou mean the quackery of Benjamin Franklin, Adam Smith, Ricardo and so on? Someone should tell the record companies who say when you pirate a song, you're stealing from the artist who will not be properly compensated for the time they labored to write and record that song. I see corporate spokesmen expounding the labor theory of value all the time.
- missedthecue 6y agoYes, I meant the quackery of those you listed. Isaac Newton had a very distinguished mind, but was a proponent of young earth creationism; being right about one thing does not make you right about all things, and so it goes with Franklin, Smith, Ricardo et al. As far as LTV is concerned, we know it to be a flawed theory today because we understand the time value of money. LTV will hold in the long run with constant returns to scale. Without constant returns to scale, only the marginal consumer matters. In simpler terms, demand will affect price, not just supply. Now, if we make the errant assumption that the supply curve is completely flat in the long run, then LTV does in fact hold. That is, the LTV is not a terrible description of economic reality, as long as you note that a) an isomorphic argument can be made for “the land theory of value” or “capital theory of value”, so labor is in no way special, and b) LTV can only apply for goods with flat long-run supply curves. In any case, there’s a reason the early great economists used it! Smith, Ricardo, and others were not all idiots. However, today, we know better and it flies in the face of modern science and understanding to promote its use.
- ianai 6y agoActually I suspect there may be a connection between the currency the economy uses to divvy up scarce resources and whether wealth is zero sum. If wealth were tied explicitly to the amount of gold humanity had extracted from the earth then the sum total of both are assumed equal. In that case, wealth definitely appears to be zero sum. It could even become negative sum if some quantity of gold is being made useless or unavailable. If currency is not tied directly to some hard-finite asset like how ever much gold has been pulled out of the ground then maybe wealth can be positive sum.
- nickff 6y agoWealth doesn't depend solely on currency; the value of people's other assets is very important. Reliable cars, comfortable houses, and amazing electronics all contribute to our material wealth.
- nafey 6y agoWealth leads to power. Power is zero sum.
- tim333 6y agoNot necessarily. Power over nature / viruses for example.
- Loughla 6y agoI'm not sure you know what zero sum means. Or I'm just super confused by your statement.
- yeuxverte 6y agoI think he means that even if you believe that power is zero sum (debatable) the system in which that power extends is not. E.g. technological advancement can shift power away from violent storms, earthquakes, viruses, etc and into humanities hands. Thus I think it's pretty clear that 'power among humanity' would not be zero sum
- tim333 6y agoI kind of do. I guess zero sum is ill defined when it comes to power as it doesn't really have numbers attached you can add up.
- taurath 6y agoThen perhaps we should split up money from power.
- scotty79 6y agoBut the money is. And money is the way how we decide who has the right to what share of wealth.
- StavrosK 6y agoIsn't it really? Given that wealth is the amount of resources you can command, and resources are finite, doesn't increasing your wealth decrease everyone else's? It's why printing money reduces the value of everyone else's money and gives it to you.
- missedthecue 6y agoWe are able to use existing resources more and more efficiently. This is why the global wealth per person is higher than it was in say Roman times, despite the global population being orders of magnitudes higher
- StavrosK 6y agoThat only means that you can add wealth up to the new delta. Anything more is zero-sum.
- atomicity 6y agoBut we don't value things solely based on their natural resource composition; we pay far more for "labor" and other intangibles. As a result of the above, the value of a natural resource changes over time. For example, natural resources used in electronics and batteries are relatively more expensive now than they were 100 years ago. So, you can be technically correct by saying that wealth is zero-sum, but that's pretty much the same thing as saying "the world's 'wealth' traded for natural resources sums up to 100% of all natural resources"
- fock 6y agoand we are also much better at exploiting resources. Which ultimately run out. Oh, wait...
- tim333 6y agoYou can make stuff. Writing a book say, doesn't cause the other books to cease to exist.
- lumost 6y agoThat's not a given. There are multiple historical periods where wealth was effectively zero-sum. These periods often aligned with strong income inequality and an inability for individuals to purchase productive assets e.g. Feudal Europe, and Tzarist Russia. On an individual basis there are multiple portions of the economy for which wealth could be modeled or interpreted as a zero-sum game. Examples include landlord/renter relationships in high rent burden environments, or other segments where an individual is unlikely to ever be able to afford a "share of future economic growth" in order to fund retirement etc.
- jjoonathan 6y agoIf a market isn't growing, it's zero sum. Lots of markets (most markets?) aren't growing at any particular moment. We should really figure out how to fix our system in the low-growth zero-sum regime because it's common and important.
- Ma8ee 6y agoNo it isn’t. It hurts the economy when too much wealth is concentrated in too few hands while too many people don’t have enough to spend.
- missedthecue 6y agoWealth isn't money. Wealth isn't something you spend. It is the value of the things you own. Jeff Bezos owning 10% of amazon does not place prohibitions on the amount of dollars you can spend.
- Ma8ee 6y agoIf Jeff pays his workers more money, his wealth accumulation will be slower and after a while he will have less wealth than he would have had if he had paid his workers more. Also, if Jeff's workers have more wealth, they don't have to spend a lot of their disposable income on paying student loans or mortgages, and they will have more money to buy more stuff.
- missedthecue 6y agoIs this true? Amazon shares have had a sharp rise in the time since he raised many of their wages by 50% to $15 an hour. There seems to be little correlation, much less causation, between the amount he pays his employees and the value of the firm in which he holds interest.
- Ma8ee 6y agoYou seemed to not understand the relationship between income, spending, and wealth, so I gave a simple explanation. Of course the world is more complicated, and for example Henry Ford realised (at least according to the myth) that he had to pay his workers enough so they could buy his products, otherwise he wouldn't have enough market. But that doesn't change the fundamental relationships between income an wealth.
- 6y ago
- smcg 6y agono, but income and wealth have diminishing marginal utility, so those with excess should have it redistributed.
- crocodiletears 6y agoWealth isn't, but political influence seems to be. I'm all for the existence of billionaire, so long as they don't muddle up the lives of the little people. Unfortunately they've shown little restraint on that front.
- sillyphus 6y agoThat's why you have to throw the ring in Mordor. It corrupts absolutely.
- username90 6y agoThat is mostly an American problem. The top 1% has much less influence in Europe. You should probably work at fixing your democracy first since it is the real issue here.
- viklove 6y agoBrexit and the yellow-vest riots are proof that what you're saying is incredibly poorly thought out and probably comes from a nationalistic bias. The title "président des très riches" wasn't born out of nowhere, was it?
- clairity 6y agoi tend to flag and move on, but i'm making an exception to note that simplistic, identity-based tropes like this are so damaging to real discussion and should be flagged and ignored because the post was not made in good faith (in short, it's a troll). gdp (national wealth) is a made-up metric, it's aggregate, it's dynamic, incomplete relative to its stated rationale for existence, inapplicable to the discussion, and a whole host of other irrelevances to a real understanding of wealth and its distortions.