4 ms·

'In a free market society, wealth is created, it is not "concentrated".' That's a theory from economists. Economists have a lot of theories.

WalterBright 1y ago
It's a fact, not a theory. The wealth in the economy did not exist 100 years ago. Therefore it must have been created. And where did Musk's money come from? Who did he transfer it from?
- oh_my_goodness 1y ago
  Come on. Sometimes wealth gets created. Sometimes wealth just gets moved around. That is a fact. Musk's wealth is mostly notional. Most of it is based on people's guesses about the future of electric cars and so forth. It's not clear yet whether that is creation or transfer or what.
  - WalterBright 1y ago
    Musk's wealth was transferred from nobody. It was created. When wealth gets "moved around", that is not the market doing that. It's force. Like social security payments. That's why I prefaced it with "free market".
    - oh_my_goodness 1y ago
      Maybe a startup can have a high valuation for a while and ultimately be worth nothing. Maybe that has happened. Maybe Musk will turn out to have created 10x more wealth than he has now. Maybe he will screw up and go broke. Maybe both. Where did Bernie Madoff's wealth come from before he got caught? Where did Sam Bankman-Fried's wealth come from? We can't just point to a unit of wealth and automatically applaud its legal owner as having created it. Maybe they created it. Maybe they stole it. Maybe we all wigged out and handed it to them voluntarily. It's case by case. We all read Ayn Rand back in the day. And I can groove with that at a certain dosage, but you're taking way too much.
      - WalterBright 1y ago
        Bernie Madoff defrauded people by selling them fake investments. Note that I remarked that free markets did not include fraud.
        oh_my_goodness 1y ago
        Excluding fraud, theft, and so forth, just by definition, means we're talking about a utopia. It's not a system, it's some beautiful subset of what's really going on. The subset would have to be carefully selected, using information we don't actually have until (maybe) much later. Maybe never. This 'free market' is a bit like clean matter-antimatter power stations. They sound like a great idea. We could build them if we knew how.
        WalterBright 1y ago
        I never claimed free markets were utopian. The purpose of government in a free market economy is to provide justice for acts of force or fraud, and provide enforcement of contracts. There is no such thing as a perfect free market. However, history shows that the closer we are to them, the more prosperous the country is. BTW, when the Soviet Union was formed, the communists did away with the police because there would no longer be a need for them. Oops.
- jay_kyburz 1y ago
  Some wealth is created. People build new things and sell them. Video Games or Programming Languages for example. Some wealth is just transferred, like rent or interest. It would be nice if everybody had somewhere to live for free, unfortunately, most people have to pay rent or interest on a mortgage to those that came before them.
  - WalterBright 1y ago
    > Some wealth is just transferred, like rent or interest. Both of those are an exchange, not a transfer. Taxation is a transfer.
    - jay_kyburz 1y ago
      They may be an exchange, but they are not "creation". We are arguing whether wealth flows to people who already have it, rather people who "create it". My augment is both.
      - WalterBright 1y ago
        An artist creates wealth by painting a beautiful painting. Then he exchanges that wealth for money. At no point was wealth "transferred" to the artist. McDonald's creates wealth by designing and building a system to deliver hamburgers. McDonald's then exchanges that wealth for cash from its customers. BTW, who gives money to people who already have it? Not me. I doubt you do, either. I don't know anybody who does. The transactions are always exchanges - you are getting something in return.
        jay_kyburz 1y ago
        I think perhaps you are discussing too many threads simultaneously. I'm fully onboard with Maccas and Artists creating something thus creating wealth. Also, yes, transaction are exchanges. Nobody is arguing that. You pay rent and in exchange you may use the land (productively or not) My argument is that people are forced to pay rent to people who didn't create anything, but because they hold a piece of paper that says they own it. The argument is, did the person who owns the land "create" anything. My argument is no.
- SJC_Hacker 1y ago
  If I cut down trees to build a house, then I may have created "wealth" but I've also destroyed trees. Now the net affect may be that wealth has increased, but it may also have an effect which actually destroys wealth like for instance if those trees existed on a hill, and the roots were holding the soil in place, the act of cutting down "Free market" economics does not capture this destruction of value. It only cares that some value was extracted out of the trees in the form of a new home sale, etc. I'm sure all those slaves brought over to the New World created tremendous wealth, but I'm also pretty sure they would have rather preferred to stay in Africa.
  - WalterBright 1y ago
    > "Free market" economics does not capture this destruction of value. Oh, but it does. It turns out that people who own land take care of it, so that it keeps producing. People who own timber land tend to manage it so it continues to be productive. Destruction happens with government owned land. For a related example, why are we not running out of cattle, hogs, and chickens, despite slaughtering them on an epic scale? And why are we running out of fish?
    - SJC_Hacker 1y ago
      They might take care of their land, but they don’t generally care what happens to other peoples land. So excess fertilizer creating dead zones downstream? Well sucks to be them I guess. Markets are not good at pricing in externalities such as those
      - WalterBright 1y ago
        A proper function of government is to internalize the externalities (with fines or taxes).
  - nradov 1y ago
    Your first example is completely wrong. Trees are a renewable resource. In North America, most of the trees that are cut down to build houses were intentionally grown for that purpose and are selectively harvested in a way that preserves the long-term value of the land.
- worik 1y ago
  > And where did Musk's money come from? No body (?) is contending that in a free market wealth is not created. The contention is that when wealth is created it tends to head to other wealth. When a bank lends capital and has a choice of lending to, say, Elon Musk or me, I think the bank will make that rational choice and lend to Elon. Thus once you have some wealth attracting more wealth is less difficult than from before you had wealth This pattern is repeated over a d over. See Captain Grimes' boot theory of economics: https://en.wikipedia.org/wiki/Boots_theory https://en.wikipedia.org/wiki/Boots_theory
  - WalterBright 1y ago
    Lending money is not transferring wealth, nor is it creating wealth. It nets out to zero. This is clear when one does accounting. Accounting is based on the idea that (Equity = Assets - Liabilities). When one takes out a loan, the assets go up by the amount of the loan, and the liabilities also go up by the amount of the loan. The Equity stays the same. That this balances out is literally called "balancing the books". BTW, banks are happy to lend out money to people that have a track record of paying it back. This includes poor people. Poor people have credit cards, too, which is how they borrow money.
    - oh_my_goodness 1y ago
      This part is true, and the folks who equate new borrowings with income are liable to do some real damage if anybody ever listens to them.
      - worik 1y ago
        Totally and utterly wrong, a complete misunderstanding of capitalism Let me explain. Access to capital is key. If you have it you can do business, if you do not you cannot, in general terms There is more than one way to access capital, debt is very common. And to get rich you have to do business So if you are already rich getting more money, in a free market, is easier than getting started, in a free market That is the point, and one small example,e. This pattern repeates o er and over. Once you have money getting more money is much easier than getting the first money So in free markets the wealth divides tend to increase. This is very elementary, stage II economics

WalterBright 1y ago

It's a fact, not a theory. The wealth in the economy did not exist 100 years ago. Therefore it must have been created. And where did Musk's money come from? Who did he transfer it from?

oh_my_goodness 1y ago
Come on. Sometimes wealth gets created. Sometimes wealth just gets moved around. That is a fact. Musk's wealth is mostly notional. Most of it is based on people's guesses about the future of electric cars and so forth. It's not clear yet whether that is creation or transfer or what.
- WalterBright 1y ago
  Musk's wealth was transferred from nobody. It was created. When wealth gets "moved around", that is not the market doing that. It's force. Like social security payments. That's why I prefaced it with "free market".
  - oh_my_goodness 1y ago
    Maybe a startup can have a high valuation for a while and ultimately be worth nothing. Maybe that has happened. Maybe Musk will turn out to have created 10x more wealth than he has now. Maybe he will screw up and go broke. Maybe both. Where did Bernie Madoff's wealth come from before he got caught? Where did Sam Bankman-Fried's wealth come from? We can't just point to a unit of wealth and automatically applaud its legal owner as having created it. Maybe they created it. Maybe they stole it. Maybe we all wigged out and handed it to them voluntarily. It's case by case. We all read Ayn Rand back in the day. And I can groove with that at a certain dosage, but you're taking way too much.
    - WalterBright 1y ago
      Bernie Madoff defrauded people by selling them fake investments. Note that I remarked that free markets did not include fraud.
      - oh_my_goodness 1y ago
        Excluding fraud, theft, and so forth, just by definition, means we're talking about a utopia. It's not a system, it's some beautiful subset of what's really going on. The subset would have to be carefully selected, using information we don't actually have until (maybe) much later. Maybe never. This 'free market' is a bit like clean matter-antimatter power stations. They sound like a great idea. We could build them if we knew how.
        WalterBright 1y ago
        I never claimed free markets were utopian. The purpose of government in a free market economy is to provide justice for acts of force or fraud, and provide enforcement of contracts. There is no such thing as a perfect free market. However, history shows that the closer we are to them, the more prosperous the country is. BTW, when the Soviet Union was formed, the communists did away with the police because there would no longer be a need for them. Oops.
jay_kyburz 1y ago
Some wealth is created. People build new things and sell them. Video Games or Programming Languages for example. Some wealth is just transferred, like rent or interest. It would be nice if everybody had somewhere to live for free, unfortunately, most people have to pay rent or interest on a mortgage to those that came before them.
- WalterBright 1y ago
  > Some wealth is just transferred, like rent or interest. Both of those are an exchange, not a transfer. Taxation is a transfer.
  - jay_kyburz 1y ago
    They may be an exchange, but they are not "creation". We are arguing whether wealth flows to people who already have it, rather people who "create it". My augment is both.
    - WalterBright 1y ago
      An artist creates wealth by painting a beautiful painting. Then he exchanges that wealth for money. At no point was wealth "transferred" to the artist. McDonald's creates wealth by designing and building a system to deliver hamburgers. McDonald's then exchanges that wealth for cash from its customers. BTW, who gives money to people who already have it? Not me. I doubt you do, either. I don't know anybody who does. The transactions are always exchanges - you are getting something in return.
      - jay_kyburz 1y ago
        I think perhaps you are discussing too many threads simultaneously. I'm fully onboard with Maccas and Artists creating something thus creating wealth. Also, yes, transaction are exchanges. Nobody is arguing that. You pay rent and in exchange you may use the land (productively or not) My argument is that people are forced to pay rent to people who didn't create anything, but because they hold a piece of paper that says they own it. The argument is, did the person who owns the land "create" anything. My argument is no.
SJC_Hacker 1y ago
If I cut down trees to build a house, then I may have created "wealth" but I've also destroyed trees. Now the net affect may be that wealth has increased, but it may also have an effect which actually destroys wealth like for instance if those trees existed on a hill, and the roots were holding the soil in place, the act of cutting down "Free market" economics does not capture this destruction of value. It only cares that some value was extracted out of the trees in the form of a new home sale, etc. I'm sure all those slaves brought over to the New World created tremendous wealth, but I'm also pretty sure they would have rather preferred to stay in Africa.
- WalterBright 1y ago
  > "Free market" economics does not capture this destruction of value. Oh, but it does. It turns out that people who own land take care of it, so that it keeps producing. People who own timber land tend to manage it so it continues to be productive. Destruction happens with government owned land. For a related example, why are we not running out of cattle, hogs, and chickens, despite slaughtering them on an epic scale? And why are we running out of fish?
  - SJC_Hacker 1y ago
    They might take care of their land, but they don’t generally care what happens to other peoples land. So excess fertilizer creating dead zones downstream? Well sucks to be them I guess. Markets are not good at pricing in externalities such as those
    - WalterBright 1y ago
      A proper function of government is to internalize the externalities (with fines or taxes).
- nradov 1y ago
  Your first example is completely wrong. Trees are a renewable resource. In North America, most of the trees that are cut down to build houses were intentionally grown for that purpose and are selectively harvested in a way that preserves the long-term value of the land.
worik 1y ago
> And where did Musk's money come from? No body (?) is contending that in a free market wealth is not created. The contention is that when wealth is created it tends to head to other wealth. When a bank lends capital and has a choice of lending to, say, Elon Musk or me, I think the bank will make that rational choice and lend to Elon. Thus once you have some wealth attracting more wealth is less difficult than from before you had wealth This pattern is repeated over a d over. See Captain Grimes' boot theory of economics: https://en.wikipedia.org/wiki/Boots_theory https://en.wikipedia.org/wiki/Boots_theory
- WalterBright 1y ago
  Lending money is not transferring wealth, nor is it creating wealth. It nets out to zero. This is clear when one does accounting. Accounting is based on the idea that (Equity = Assets - Liabilities). When one takes out a loan, the assets go up by the amount of the loan, and the liabilities also go up by the amount of the loan. The Equity stays the same. That this balances out is literally called "balancing the books". BTW, banks are happy to lend out money to people that have a track record of paying it back. This includes poor people. Poor people have credit cards, too, which is how they borrow money.
  - oh_my_goodness 1y ago
    This part is true, and the folks who equate new borrowings with income are liable to do some real damage if anybody ever listens to them.
    - worik 1y ago
      Totally and utterly wrong, a complete misunderstanding of capitalism Let me explain. Access to capital is key. If you have it you can do business, if you do not you cannot, in general terms There is more than one way to access capital, debt is very common. And to get rich you have to do business So if you are already rich getting more money, in a free market, is easier than getting started, in a free market That is the point, and one small example,e. This pattern repeates o er and over. Once you have money getting more money is much easier than getting the first money So in free markets the wealth divides tend to increase. This is very elementary, stage II economics