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You are right about the macro/micro point. That occurred to me during the writing of that post, but I decided to leave it in there because I was wrong and I did

You are right about the macro/micro point. That occurred to me during the writing of that post, but I decided to leave it in there because I was wrong and I did not want to confuse anyone else interested in the discussion. You are correct, obviously, that wealth is created by people doing things that satisfy demand. For the purposes of our discussion, wealth is measured in dollars. Let's say there are two people on earth. One has 100 dollars, the other has 0 dollars. The person with zero dollars creates some widget that the dude with 100 dollars wants and charges the other guy 80 dollars for it. Guy 1 now has 20 dollars and guy 2 now has 80 dollars. Guy 2 created his wealth (his 80 dollars) by doing/building/whatever something that guy 1 wanted. Am I thinking about this too simply? How is it possible that wealth (measured in dollars) is introduced into an economy without it coming from another participant in the market?

bedhead 13y ago
I admit it's a bit abstract but here goes. Guy 2 (inventor) had to employ himself, other people, and capital in order to create the widget. He has to pay those people and the owners of the capital, and in turn they now have income which they do "stuff" with. Some of it's consumed (spent) and some is saved (invested), in each case having yet more downstream effects. Maybe Guy 2 realizes he can sell more widgets to more people but needs to employ more labor and capital in order to do so. Multiply this sort of ripple effect by a kajillion, every second of the day, and that's sort of how it works. It's never stagnant, and the more activity there is, generally speaking, the more wealth creation is taking place. But in a capitalist world, nothing is stopping anyone from being Guy 2, which is kind of my original point.
- swalkergibson 13y ago
  I see what you are saying, and after some additional reading on the subject can now see your point. I guess it breaks down for me when you actually bring dollars into the model. You are absolutely right, widgets made of resources come from the combination of those resources and ingenuity. However, in modern society, refined resources are quantified in terms of dollars and once dollars are part of the equation, it must be zero-sum because people cannot just create dollars for themselves to buy stuff. They must create stuff to convert into dollars so they can buy other stuff. You can absolutely create stuff from nothing, but that does not mean that anyone is going to buy it, which would convert it into dollar wealth.
  - bedhead 13y ago
    The introduction of dollars is irrelevant...you're overthinking it. There is a banking system that deals with the money supply, but that's another (possibly confusing) matter. Wealth is not not fixed, that is the only idea you need to get for this. Me being wealthy, even extraordinarily wealthy, does not therefore mean that you cannot be. If you get this concept you're already ahead of 95% of the world in terms of economic literacy.
    - swalkergibson 13y ago
      What if I built my wealth exploiting child labor in Malaysia? What if it wasn't half a world away, but there was a source of similarly cheap labor in my neighborhood? I suppose that you are saying that the people working 12 hours/day for maybe 1 USD are getting more wealthy themselves than before, so a rising tide is lifting all boats?
      - bedhead 13y ago
        Well, this is starting to drift from the original point, but it's all just supply and demand, my man. The guy taking a job for a pittance wage is presumably doing so because the alternative is worse, otherwise why take the crappy job? Is it really "wealth" as we know it? I suppose not, but it's still a better alternative, as uncomfortable as that might seem sometimes. But life isn't always all sunshine all the time. Wealth is not fixed...repeat that 1,000 times. That's all that matters here. Capitalism is a system that allows people - anyone - to create wealth. Hell, look no farther than all these crazy tech companies coming public, the saas and social media revolutions or whatever. Why are they almost always US companies? Why isn't this stuff happening in Romania? We have a system that lets people create wealth for themelves no matter how rich others are, and it attracts talent and hard work and all that stuff, and it becomes a big virtuous circle. Anyway, my point is just that wealth in this country isn't a real problem. It is not suppressive. It's the opposite, actually. If there is one problem though, and this is something more recent, it's that with technology we all seem to have our faces rubbed in others' wealth. This is sort of a real problem...sort of. There are tons of really interesting behavioral economics studies that deal with this and show how it makes people feel worse about themselves. A topic for another day I suppose...

bedhead 13y ago

I admit it's a bit abstract but here goes. Guy 2 (inventor) had to employ himself, other people, and capital in order to create the widget. He has to pay those people and the owners of the capital, and in turn they now have income which they do "stuff" with. Some of it's consumed (spent) and some is saved (invested), in each case having yet more downstream effects. Maybe Guy 2 realizes he can sell more widgets to more people but needs to employ more labor and capital in order to do so. Multiply this sort of ripple effect by a kajillion, every second of the day, and that's sort of how it works. It's never stagnant, and the more activity there is, generally speaking, the more wealth creation is taking place. But in a capitalist world, nothing is stopping anyone from being Guy 2, which is kind of my original point.

swalkergibson 13y ago
I see what you are saying, and after some additional reading on the subject can now see your point. I guess it breaks down for me when you actually bring dollars into the model. You are absolutely right, widgets made of resources come from the combination of those resources and ingenuity. However, in modern society, refined resources are quantified in terms of dollars and once dollars are part of the equation, it must be zero-sum because people cannot just create dollars for themselves to buy stuff. They must create stuff to convert into dollars so they can buy other stuff. You can absolutely create stuff from nothing, but that does not mean that anyone is going to buy it, which would convert it into dollar wealth.
- bedhead 13y ago
  The introduction of dollars is irrelevant...you're overthinking it. There is a banking system that deals with the money supply, but that's another (possibly confusing) matter. Wealth is not not fixed, that is the only idea you need to get for this. Me being wealthy, even extraordinarily wealthy, does not therefore mean that you cannot be. If you get this concept you're already ahead of 95% of the world in terms of economic literacy.
  - swalkergibson 13y ago
    What if I built my wealth exploiting child labor in Malaysia? What if it wasn't half a world away, but there was a source of similarly cheap labor in my neighborhood? I suppose that you are saying that the people working 12 hours/day for maybe 1 USD are getting more wealthy themselves than before, so a rising tide is lifting all boats?
    - bedhead 13y ago
      Well, this is starting to drift from the original point, but it's all just supply and demand, my man. The guy taking a job for a pittance wage is presumably doing so because the alternative is worse, otherwise why take the crappy job? Is it really "wealth" as we know it? I suppose not, but it's still a better alternative, as uncomfortable as that might seem sometimes. But life isn't always all sunshine all the time. Wealth is not fixed...repeat that 1,000 times. That's all that matters here. Capitalism is a system that allows people - anyone - to create wealth. Hell, look no farther than all these crazy tech companies coming public, the saas and social media revolutions or whatever. Why are they almost always US companies? Why isn't this stuff happening in Romania? We have a system that lets people create wealth for themelves no matter how rich others are, and it attracts talent and hard work and all that stuff, and it becomes a big virtuous circle. Anyway, my point is just that wealth in this country isn't a real problem. It is not suppressive. It's the opposite, actually. If there is one problem though, and this is something more recent, it's that with technology we all seem to have our faces rubbed in others' wealth. This is sort of a real problem...sort of. There are tons of really interesting behavioral economics studies that deal with this and show how it makes people feel worse about themselves. A topic for another day I suppose...