Monday, November 2, 2009


What is wealth?
Is the money I have wealth? Not really. Most of my money is stored in the form of a database entry at my bank, with the occasional bit of green-colored paper in my wallet. It's only useful to me only because I can trade it for what I really need.
Are gadgets wealth? To some degree, but I'm not going to appreciate a stereo much if I can't afford food. Or rent.
Is food wealth? Kinda. Some amount of food I need to sustain my body, but the excess tends to rot without some expensive treatment. I literally can only eat so much.
Is gold wealth? Hell no. I can trade gold for things, I'm sure, but most grocery stores aren't willing to trade a small fleck of gold for the food I need. I'd have to go through intermediaries, selling the gold ingots, then spending the resulting money.
So what is wealth?
Is the knowledge that I'm gaining by attending a university wealth? I could answer either way. It will help me earn money in the future, but it's not going to help me until I have the entire body of knowledge. And in the meantime, I'm kind of poor. Tuition and books and lost time.
Wealth is having your needs and desires met. Basically, a combination of all those things.
I want to increase the amount of wealth worldwide. Probably the best way to do this is labor. Pay people to do things that increase utility for other people.
There's an article out about the beliefs of Adam Smith, the English economist who is cited as the father of modern capitalism. Turns out that he didn't believe what he is attributed to have said. He argued that regulation is necessary for the best possible economies.
How come? When you own a business, the best possible position for you is a monopoly, in which you are the sole source of a need. When you're the sole source, you can demand basically any price you want for it. This is the worst possible position for the rest of us, who are now beholden to you. So a society with anti-monopoly rules, and with it definite competition in all fields, is better off than one with monopolies. Your money buys more when businesses have to compete against each other, either by more quality, or by lower prices. Now, this is not saying that business is inherently evil. Ideally business is win-win, earning money in exchange for something that people want more than money. (In my case, food and shelter to survive and then machines for fun and convenience.) However, allowing them to do anything they please is probably a bad idea, because what they want is to take over the field.
Take the health care issue. Health insurance is wealth -- knowing that a serious medical emergency is already paid for. But universal health care would be more wealth. It would mean care even if I became indigent. (In such troubled times, such a prospect seems almost likely.) The government's interest would be my continued health and well being, because healthy citizens work more, pay more taxes, and are more likely to serve in the armed forces. (I may be a lifelong civilian, but I may have children, and they might join up.) Insurance company's interests are to get me to pay and pay, and then not have to pay for a doctor. I would become unprofitable to them if I lost the ability to pay, or if I required something expensive.
There are two big theories on wealth. One is that wealth is like a pie, and one person having more inherently means another having less, as suggested by rules like entropy, conservation of energy and matter, and the like. The other is that wealth can be created, as operated by entrepreneurs worldwide.
That wealth can be created as can be demonstrated by the computer I'm using being worth considerably more than the sand, metal, and plastic that went into it. However, bad actions can also destroy wealth. If the country sinks in to anarchy, people will need to pay for security guards to prevent violence from the chaos, and trade will collapse. This is a definite major loss of wealth (order is one kind, for sure), and one we should strive hard to avoid.

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